The Canadian Government Labor Market: Competing for Scarce Resources in a Highly Competitive, High-Demand, and Low-Supply Environment

Author(s): Christine Coz

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In preparing to write this note, I had to reflect on my first role in provincial government. I came in at a time when mainframes, COBOL, and Db2 were all being phased out, and with them the precious human resources who not only had years of history with the technology but also understood the programs and imperatives of the government mandate and had many important stakeholder relationships. It was difficult to watch as the staff became sidelined, waiting to see if they would be offered retraining or new positions and sadly were not. The impact on me was profound and influenced my strong belief that it’s better to retrain than to let staff go.

Canadian labor shortages are widespread, affecting almost every sector. The underlying characteristics differ between the Canadian and US markets. As a result, government employers need to get out there quickly to ensure that public service is attractive to the next generation of workers and that the fundamentals of service delivery do not decline as we compete for scarce resources and implement new strategies. According to a recent report from BMO, Canada currently stands at full employment and the supply shortage is expected to continue to affect many sectors, even with an anticipated market slowdown.

According to a 2018 Fraser Institute study, public sector jobs account for 20.8% of all jobs in Canada. Post-pandemic, Canadian employment has in fact recovered more quickly than our neighbors to the south. Canada’s participation rate of people between the ages of 15 and 64 is above pre-pandemic employment rates and that of the US: “there are more people employed than in any prior year. Even with the recent step back, employment is still up 2.2% from the pre-pandemic peak.” The fundamentals, however, show that while absolute numbers are increasing, the participation rate has declined over the past three years, largely attributed to the growing percentage of the population over the age of 65. According to the same study, indicators do not support a Canadian “great resignation,” but the pandemic has resulted in “earlier retirements, lifestyle change and job switching.”

On the demand side, expectations for a hot economy persist. According to “the Bank of Canada’s Business Outlook Survey, share of firms planning to increase hiring has trended at record levels, and almost twice historical norms.” Canada’s tech sector “is growing faster than in the United States” – the Canadian tech sector has grown 1.6% in the past year compared to 1.1% growth in the US. Underlying factors include a “surge in domestic venture capital” and continued investment by large brand-name organizations in large urban centers. According to a recent Toronto Star article, “The labour shortage will also give workers more bargaining power than they’ve seen in half a century … [and] the relatively small working-age cohort will likely last for decades.”

In a challenging labor market, provincial and municipal governments and agencies must compete in an already constrained labor pool. Some key points to consider in preparation for the expected ongoing high-demand and low-supply market include the following:

Increase the implementation of digital services as a way of augmenting limited resources and providing alternative service delivery methods that often increase employee and constituent satisfaction. Digital services not only provide alternative and streamlined service delivery options but also help direct employee focus to areas in need of their expertise, providing new career options.

The old paradigm is customer experience design as an ideation mechanism, but the new paradigm is business resilience for value protection and risk reduction.

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Encourage workers to continue to participate longer in the market through hybrid, part-time, and other alternative work strategies. Ensure that the culture and technology environment is considerate of the needs of management and employees and promotes effective collaboration and communication.

An image of people on a videoconference call. Below the image is says 'Hybrid Workplace Research Center.'

Hybrid Workplace Research Center


Invest in retraining and redeployment strategies that not only enable employees to fill needed roles but also enhance employee satisfaction and minimize non-voluntary work turnover. Employees view strong training programs as a key component of a positive work culture.

A graph showing the percentage of employees who feel training is provided and required in their IT departments. Technical skills or certifications training is the most provided, and technical skills or certifications and general leadership are the most required.

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Engage students before they join the market. The Canadian post-secondary participation rate in STEM (science, technology, engineering, and math) curricula has not seen the dip in recent years that some of the social sciences and arts programs have. According to an EdTech report that looked at trends from 2016 to 2017, “STEM majors were a big exception. Campus Technology reports that enrolments in STEM majors went up 2.2 percent. Majors related to computer and information sciences grew by 24,919 enrolments.” When coupled with the high demand for technology resources, government agencies need to look at ways to partner with post-secondary education programs through curriculum development, co-op opportunities, and job fairs, among other strategies, as a way of reinforcing the benefits of public service and attracting and competing beyond salary.

Curriculum speciality in post-secondary in Canada versus the US. The US has a higher percentage of Arts/Social Science, Health, and Other enrolments than Canada does. Canada has a higher percentage of Business//Law, Education and Stem enrolments than the US does.

Source: “The State of Postsecondary Education in Canada,” Higher Education Strategy Associates, 2021


Make IT cultural transformation a strategic imperative in your hiring and training practices. Tap into immigration programs and encourage diversity, equity, and inclusion in your hiring practices to create a healthy culture within your team. Government as an employer should encourage facilitated foreign credential certifications as part of a complete staffing program.

Visit our IT Cultural Transformation Center. Good business, not good philanthropy.

IT Cultural Transformation Center


Create an engaged employee environment that drives innovation and resolves needs creatively and collaboratively. Disengaged employees are 70% more likely to indicate they intend to leave an organization (McLean & Company Employee Engagement Survey; N=5,902).

A graph depicting the impact of engagement on innovation. Engaged employees are over twice as likely to say they are not afraid of trying out new ideas in their job compared to disengaged employees, and over five times more likely to say they believe their suggestions for improvement will be taken seriously and they believe the organization encourages innovation.

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Implement the required organizational structure that is needed to complement evolving government needs and that strategically focuses on value generation. A successful organizational redesign requires a clear understanding of why it is needed and what will be achieved by operating in a new structure.

The technology value trinity: delivery of business value and strategic needs happens at the intersection of the IT operating model, the digital & technology strategy, and I&T governance.

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Our Take

Public service delivery has had to evolve dramatically in recent years in response to changing constituent and employee expectations, and most significantly, the pandemic. This has been and will continue to be further challenged by the high demand and short supply of labor resources, especially in highly skilled areas like technology. A comprehensive set of strategies designed to fortify and streamline service delivery is required to maintain needed staffing levels and optimize your human resources’ value-add.


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