Outsource more work to solve our labour woes, says economist

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May 31, 2010

Outsource more work to solve our labour woes, says economist

Provincial government says idea won't solve future problems

Immigration isn't the answer to New Brunswick's future labour shortage, says Peter Hall, vice-president and chief economist for Export Development Canada.

Instead, it's more efficient for this province to outsource and offshore work, he told the luncheon session of New Brunswick Manufacturing Day in Fredericton on Friday.

"We have very lofty immigration targets," Hall said in an interview. "My worry is, are they achievable?"

Moving manufacturing jobs to other countries where wages are lower - the so-called offshoring strategy - has been going on for more than a decade in North America.

But it's been controversial, with many advocacy groups worried that countries such as Canada and the United States can't maintain their quality of life without high-paying manufacturing jobs.

Canada's manufacturing sector has countered by saying it has to offshore jobs because of a labour shortage caused by low birth rates and an aging workforce with many workers getting ready to retire.

"We are not the only nation with a shrinking population," said Hall. "We need those skilled immigrants. There is a fixed number of them, and other nations need them too, so we are competing. There aren't enough to go around."

Hall also said economic growth in developing countries can be up to five times higher than in the West, and that means there's more opportunity at home than ever before for skilled immigrant labour.

"Are we going to be able to attract them?" he said. "It is not entirely clear.

"What I said in the meeting today was, 'Why not try to import that labour without having to move it? Why not go to where the labour is?' "

Hall said New Brunswick should take those low-value, labour-intensive parts of the province's production system and move them to a country which has an ample supply of suitable labour.

"We take the remaining labour that we have and actually move it up the value chain so we can do the parts of the process that we are really good at," he said.

That allows companies to maintain overall control of production, be efficient and capture more market share, said Hall.

"It sounds almost idyllic, but many companies are doing this and the companies that have done this have experienced incredible success," he said.

Hall said there would be some social dislocation in the process of making that changeover.

"You can't avoid dislocation," he said. "It is a paradigm shift. What saves us in all of this is that we don't have an endless supply of overall labour."

Hall said government has a role to play in minimizing that dislocation with proper skill-training programs.

But industry will also do the necessary training to meet demand for certain skills, he said.

The oilpatch in Alberta proved that by flying in labourers from all over Canada and training them up to the right skill level to meet demand, said Hall.

Don Arseneault, New Brunswick's minister responsible for the Population Growth Secretariat, didn't think much of the idea of importing labour without physically bringing people here.

"The last thing we want to do is send jobs away," he said Friday.

Arseneault, who was in Toronto co-chairing a meeting of Canada's labour market ministers Friday, said he understands the demographic challenge businesses are facing when it comes to finding skilled labour.

"But I am not keen on outsourcing jobs," he said.

Arseneault said boosting immigration remains an important strategy for New Brunswick's future.

The provincial government has often stated that immigration helps the province collect the taxes to fund social programs.

But the Population Growth Secretariat is also working on repatriating New Brunswickers from other parts of the country, helping persons on social assistance overcome barriers to find work and bringing more First Nations people into the workforce, said Arseneault.

"It is not one initiative that is going to resolve the whole issue of the demographic challenge," he said.

Published Saturday May 29th, 2010

By STEPHEN LLEWELLYN

http://dailygleaner.canadaeast.com/

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Outsource more work to solve our labour woes, says economist