Smart talk plans

Canada plans to double housing construction in a decade, but where are the workers?

OTTAWA, April 10 (Reuters) – Canada has an ambitious plan to double the pace of home building within a decade, but the first big challenge is finding enough skilled workers as the country grapples with the tightest labor market on record and with construction already at a multi-year high.

Building more homes is a key part of the C$9.5 billion ($7.5 billion) in housing spending announced by Prime Minister Justin Trudeau’s Liberal government in its budget Thursday. Read more

The average sale price of a home in Canada has jumped more than 50% over the past two years, due to historically low interest rates and tight supply. Construction failed to keep pace with immigration-induced population growth. Read more

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But the plan to build hundreds of thousands of new homes flies in the face of the reality that home building is typically the responsibility of municipal and provincial governments, leaving the federal government with little role beyond handing out money. .

“It’s very ambitious. I would say it will be just as difficult to achieve it, simply because the construction sector is already operating more or less at full capacity,” said Robert Kavcic, senior economist at BMO Economics.

“And we’re already building a record number of homes in this country.”

Canada has the lowest number of housing units per 1,000 people of any Group of Seven country, and that number is falling due to population growth, Bank of Nova Scotia economists said in a report last year.

There are nearly 300,000 units under construction in Canada, up from around 240,000 just two years ago, according to government data.

Canada is building “a lot and not enough,” said William Strange, a professor of economic analysis and policy at the University of Toronto. “We’ve taken decades to find ourselves in this situation and we’re not going to get out of it in six months.”

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Canada has added more than 100,000 construction jobs in the past four months alone, a series of historic increases for the sector. The overall unemployment rate fell to a record 5.3% in March. Read more

“The sheer volume of work that exists within the industry (creates) a lot of pressure on different trades,” said Jim Ritchie, chief operating officer of Tridel, which develops condominiums in the Toronto area.

“So there’s a lot of demand for that workforce.”

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Canada’s immigration program could be a double-edged sword, as it attracts more skilled workers to replace a rapidly retiring workforce, but it also fuels housing demand. There is also a disconnect between the workers Canada currently targets and those it needs.

“Right now, our immigration policies are more about attracting white-collar workers than blue-collar workers,” said Mike Moffatt, senior director of policy and innovation at the Smart Prosperity Institute.

Construction costs rose nearly 10% in 2021 and are expected to rise further, due to rising labor and material costs, adding to near-term challenges, Tridel’s Ritchie said.

Municipal and provincial approval delays, which the federal government hopes to resolve with a C$4 billion “housing acceleration fund,” and land availability add to the hurdles.

“There are a whole bunch of levers that need to be pulled and increasing the supply of labor … is one of them,” said Justin Sherwood, spokesperson for the Building Industry and Land Development Association in the Toronto area.

Yet Canada’s Finance Minister, Chrystia Freeland, was undeterred.

“We’re going to do everything we say we’re going to do,” she told reporters on Thursday when asked about the challenge of sticking to the plan.

“A growing population needs a growing housing supply.”

($1 = 1.2588 Canadian dollars)

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Reporting by Julie Gordon in Ottawa and Nichola Saminathar in Toronto Editing by Nick Zieminski

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