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January 2012

Labour Market Information: A Review of the CSC Labour Market Model and Background for Construction Looking Forward. January 2012. Introduction. The purpose of this review To review core concepts and the structure of the CSC model To answer questions about Construction Looking Forward.

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January 2012

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  1. Labour Market Information:A Review of the CSCLabour Market Model and Backgroundfor Construction Looking Forward January 2012

  2. Introduction The purpose of this review • To review core concepts and the structure of the CSC model • To answer questions about Construction Looking Forward

  3. Introduction The purpose of this review • To help participants see where their interests are identified in the system • To explain the tables and figures in the Construction Looking Forward reports and PowerPoint presentations: • measures used, methodology and background • findings and interpretations

  4. Introduction The purpose of the CSC labour market model • To track the state of construction labour markets across Canada • To promote awareness and discussion about the state of markets and implications for industry and government initiatives • To offer an analytical tool to industry participants (e.g., “what if?” simulations)

  5. Introduction The purpose of Construction Looking Forward • Annual reports and PowerPoint presentations on the state of construction labour markets in all provinces and five Ontario regions • The reports are based on: • A current macroeconomic and demographic scenario • A current inventory of major construction projects • The views and input of provincial LMI committees

  6. Introduction Construction Looking Forward is driven by a scenario-based analysis • Each forecast is based on several important assumptions. For example: • global commodity prices • lists of very large construction projects in each province • One set of these assumptions creates one “scenario.” • Each scenario is just one of several possible outcomes.

  7. Outline • Core concepts • Model structure • Market adjustments • Rankings and mobility • Frequently asked questions

  8. Core Concepts The core formulas Labour force = Employment Unemployment Participation rate = Labour force Population

  9. Core Concepts Stocks are measured at one point in time • Examples: • Employment • Labour force • Housing stock • Population • Registrations

  10. Core Concepts Flows measure the change in the stocks across a period of time • Examples: • Investment • Housing starts • New apprenticeship registrations • Apprenticeship completions • Immigration

  11. Core Concepts Statistics Canada measures • The reliability of labour market statistics is restricted by: • smaller markets and limited samples • respondents who self-identify occupation and industry • employment attributed to region of residence • CSC research and LMI committees improve reliability

  12. Model Structure Labour markets in the wider economy Demand Investment in construction of new buildings and structures, renovation and repair work, activity in other industries 0 Construction labour market 0 Supply Population by age, gender, education, qualifications, source (natural increase or immigration), ethnicity and participation

  13. Model Structure Labour markets in the wider economy Labour requirements (Demand) Macroeconomics Demographics The available workforce (Supply)

  14. Model Structure Macroeconomics • Business investment • Government • Households • Other International • United States • Canada • Provinces • Non-residential investment • Commercial • Industrial • Engineering • Institutional • Residential • High rise • Low rise • Renovations Tracking major projects 0 • Labour requirements • Trades • Occupations • Managers(Demand)

  15. Model Structure Demographics • Age profiles • Participation • Mobility • Population • Gender • Education • Birth rates • Mortality • Immigration • Labour force • New entrants • Retirements • In-mobility Post-secondary programs 0 The available workforce • Trades • Occupations • Managers • (Supply)

  16. Model Structure Labour markets in the wider economy Demand – Macroeconomics 0 Employment Construction labour market Unemployment Labour supply 0 Supply – The available workforce

  17. Model Structure Sources of labour requirements • There are two distinct sources of labour requirements (demand) in the model: • replacement demand related to retirement and mortality • expansion demand related to growth in construction activity • Replacement and expansion demand are measured for 33 trades and occupations (see next slide)

  18. Model Structure • Insulators • Ironworkers and structural metal fabricators and fitters • Painters and decorators • Plasterers, drywall Installers and finishers, and lathers • Plumbers • Refrigeration and air conditioning mechanics • Residential and commercial installers and servicers • Residential home builders and renovators • Roofers and shinglers • Sheet metal workers • Steamfitters, pipefitters and sprinkler system installers • Tilesetters • Trades Helpers and labourers • Truck drivers • Welders and related machine operators • Boilermakers • Bricklayers • Carpenters • Concrete finishers • Construction estimators • Construction managers • Construction millwrights and industrial mechanics • Contractors and supervisors • Crane operators • Drillers and blasters • Electricians (including industrial and power system) • Elevator constructors and mechanics • Floor covering installers • Gasfitters • Glaziers • Heavy equipment operators (except crane) • Heavy-duty equipment mechanics • Industrial instrument technicians and mechanics

  19. Model Structure Expansion demand • Expansion demand is measured for: • Industry: • construction • all other industries • Provinces and five Ontario regions: • Greater Toronto Area • Southwest Ontario • Central Ontario • Northern Ontario • Eastern Ontario

  20. Expansion demand Expansion demand is driven by construction spending by sectors: residential commercial industrial institutional engineering maintenance Model Structure

  21. Expansion demand Expansion demand is driven by construction spending by sectors: the macroeconomic model forecasts spending employment is reported for residential and non-residential totals specialized analysis tracks project detail Model Structure

  22. Model Structure Building requirements Population by age/ retirement Labour requirements Employment Construction Other Industries • Available labour force • Managers • Contractors/supervisors • Trades • Apprentices • Unemployment • Annual • Peak • Natural Mobility Sector Region Industry Training apprenticeship Available population Immigration Aboriginals Women Youth Does not identify people by trade and occupation Identifies people by trade and occupation

  23. Market Adjustments What happens when conditions change? • The model has three rounds of adjustments: • Unemployment changes • Labour force changes • Immigration, apprenticeship and other institutional systems adjust The unemployment rate is the first, pivotal point.

  24. Market Adjustments Unemployment is an essential feature of the labour market • Acts as a cushion to absorb shocks • A social cost across the cycle • Creates benefits in a balanced market

  25. Market Adjustments First round adjustments Unemployment Unemployment

  26. Market Adjustments Unemployment • There are three different measures: • Seasonal • Cyclical • Natural

  27. Market Adjustments

  28. Market Adjustments

  29. Market Adjustments The normal unemployment rate estimates the annual unemployment rate in balanced markets.

  30. Market Adjustments

  31. Market Adjustments Second round adjustments Other regions Increased participation New entrants Other industries Increased labour force Unemployment Unemployment

  32. Market Adjustments Change in the labour force • New entrants • Mortality • Retirement • Net in-mobility

  33. Market Adjustments Change in the labour force • New entrants • number of residents 30 years of age and younger entering the labour force for the first time • Determined by: • change in population (age 30 years and younger) • construction share of the workforce • labour market conditions

  34. Market Adjustments Change in the labour force • Mortality • number of persons in the local labour force that pass away during the year based on age-specific mortality rates

  35. Market Adjustments Change in the labour force • Retirement • number of persons permanently leaving the labour force; persons that take a pension and move to another trade or take contract work are not included • Determined by: • change in participation rates above the age of 55

  36. Market Adjustments Change in the labour force • Net in-mobility • recruiting required by the construction industry from other industries, other trades or occupations outside construction and/or outside other provinces or countries to meet labour requirements • Determined by: • residual labour requirements • >0 implies recruiting outside • <0 implies losses to other industries/regions

  37. Market Adjustments

  38. Rankings and Mobility Rankings on a scale of 1 (weak) through 5 (strong) summarize the market conditions • Regional rankings are a weighted average of four measures (see next slide) • Differences in market rankings signal the potential for mobility

  39. Rankings and Mobility Measures • Estimated unemployment rate relative to natural unemployment rate • Employment growth • Net in-mobility as a percentage of the labour force • Industry survey

  40. Rankings and Mobility Annual weighting of the criteria • Surveys only applied for one year • Weight attached to replacement demand rises in more distant forecast periods • Comments on tables note the potential impacts of mobility

  41. Rankings and Mobility

  42. Rankings and Mobility Available workforce (Supply) Labour requirements (Demand)

  43. Rankings and Mobility Mobility • Differences in market rankings indicate the potential for mobility in the model • Dimensions to mobility: • across industries • across regions

  44. Rankings and Mobility Adjacent markets, heavy equipment operators in Saskatchewan in construction Heavy equipment operators Saskatchewan Other industries Heavy equipment operators Manitoba Construction Heavy equipmentoperators Saskatchewan Construction Heavy equipment operators Alberta Construction Heavy equipment operators Manitoba Other industries

  45. Rankings and Mobility Mobility across adjacent labour markets 16 14 12 10 Unemployment rate 8 6 4 2 0 1 2 3 4 5 Market Market with unemployment below the natural rate will attract workers from other markets

  46. Remember – the CSC LMI system: Includes the model, reports, PowerPoint presentations and website Depends on industry input to refine reliability and market assessments Is a tool that the industry can use for assessing labour market risks Conclusions

  47. Thank you For further information contact: Construction Sector Council (613) 569-5552 info@csc-ca.org

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