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Forecast Model

The EHRC Supply and Demand Model

The Labour Market Information (LMI) Project was initiated to help decision-makers - in industry, government and education - to accurately and effectively develop human resources. Through the LMI Project, Electricity Human Resources Canada (EHRC) determined the anticipated shortfall of electricity employees due to upcoming massive retirements. Using this information, as well as actual and prospective employee counts from recent surveys, EHRC developed a Supply and Demand Model to measure Canada's electricity labour market from 2007-2012. The result is the Supply-Demand Gap, the difference between labour supply and demand - or the anticipated shortfall of electricity employees - from 2007-2012.

Definitions

The following terms are used in the EHRC Supply and Demand Model.

Canadian Electricity Labour Market:

  • Labour demand - the number of employees the electricity industry will require over a period of time (D)
  • Labour supply - the number of employees who join the electricity industry during that same period (S)
  • The difference between Supply and Demand - the anticipated shortfall of employees and, in time, an equivalent number of unfilled positions

Units and time periods

  • Two broad categories of electricity employees are covered in the Supply & Demand Model - engineers, and trades and other non-support occupations
  • Data was examined annually for two three-year periods
  • Data were aggregated at the national level

Hypotheses (high and low growth demand scenarios)

  • EHRC estimates that the industry will grow at a constant rate - 1.8% annually - from 2007-2012. It also estimates that the demand for electricity will grow at the same rate during that period.

Total labour demand
Four independent variables make up total labour demand:

  • Projected number of employees who retire and whose positions will need to be filled
  • Additional employees needed as the result of technological advancement
  • Additional employees needed as the result of infrastructure replacement
  • Additional employees needed due to voluntary separation

Projected retirement

  • Projected retirement patterns in the Supply and Demand Model are based on the results of a 2008 EHRC survey. In the survey, employers estimated actual retirement rates at 4.7% in 2009 and 6.2% in 2012.

Technological advancement

  • The following scenarios were used to measure the number of employees required as the result of technological advancement:
    • Low growth - assumes labour productivity growth keeps up with industry growth, resulting in a zero net demand for new employees
    • High growth - assumes productivity growth does not keep up with industry growth, resulting in a 1% net demand for new employees

Infrastructure replacement

  • The following scenarios were used to measure the number of employees required as the result of infrastructure replacement
    • Low growth - assumes there is no infrastructure replacement, resulting in a zero net demand for new employees
    • High growth - assumes there is some infrastructure replacement, resulting in a 0.9% increase in the required number of employees

Voluntary separation

  • The following scenarios were used to determine the number of additional employees needed as a result of voluntary separation:
    • Low growth - assumes minimal historical rates for voluntary separation, approximately 1% per year
    • High growth - assumes voluntary separation rates (as reported by employers in 2007), approximately 1.3% per year

Total labour supply
The total labour supply is the total of engineering graduates, apprenticeship completers and certified immigrants hired by the industry. It is based on the following ratios:

  • Estimated number of engineering graduates attracted to the industry - 5% per year
  • Estimated number of completed apprenticeships - 20% per year
  • Estimated number of immigrants who meet requirements for speedy licensure and certification - 23% per year

It should be emphasized that the projected supply-demand "gap" represents a hypothetical gap between industry needs and the capacity of the education and training and immigration systems to produce sufficient numbers of qualified graduates. In reality, electricity employers will access other potential labour pools to address hiring needs. These other labour pools include:

  • existing staff to be promoted into management/supervisory roles;
  • trained staff currently working in other sectors;
  • contractors that act as a "contingent workforce" for the electricity industry;
  • use of contract positions for recently retiring staff; and
  • increased proportion of recent graduates who decide to work in the electricity sector.

Nevertheless, the extent of the supply-demand gap (estimated to be as high as 7% of the current workforce) suggests that there will be an immediate need for employers and education/training institutions to develop a coordinated strategy to address current and potential hiring needs in this sector.


Funded by the Government of Canada Sector Council Program