March 1, 2010

Skilled worker shortage leads to rising construction costs on Truro, Nova Scotia hospital project

HALIFAX

Experts say the escalating price of a new hospital in Truro, N.S., is symptomatic of growing cost pressures on public and private projects, brought on partly by a growing shortage of skilled workers.

The hospital, a major construction project in Atlantic Canada, was initially priced at $104 million but has since grown to $180 million.

Krista Wood, spokeswoman for the Colchester East Hants Health Authority, says contractors are building in the extra costs of transporting and housing skilled workers, which could be as much as $100 a day for each worker.

“Contractors responding to bids are having to build in the cost of bringing in people to do the work,” said Wood. “It seems to be coming more commonplace.”

Like the rest of the country, Nova Scotia is experiencing what experts say will be a steady decline in skilled workers, the product of an aging workforce and a declining birthrate.

Statistics Canada says 15.3 per cent of Canadian workers are 55 or older and there are just as many Canadian workers over 40 as under.

The practical effects are already being felt in capital projects undertaken by provincial departments and municipalities alike.

Almost every municipality in the province is running into the same problem, says Port Hawkesbury Mayor Billie Joe MacLean, who is also a vice-president of the Union of Nova Scotia Municipalities.

He cites a tender his town put out for a water treatment plant, thinking bids would come in at about $2.2 million. It came in at $3.8 million. “We were astounded,” he said.

MacLean said the lack of qualified labour is also having an impact on smaller contracts, including one in neighbouring Antigonish County to plow snow from sidewalks.

“They got one bid on a job that was estimated by their people at $260,000. It ended up at $585,000.”

None of this comes as any surprise to Jim McNiven, a senior policy research adviser and professor emeritus at Dalhousie University.

Nova Scotia will likely be looking at almost zero unemployment by 2015, he says, with a lot of jobs that can't be filled.

“From brain surgeons right down to people who make beds in hotels, it doesn't matter what it is. You're still going to be short,” said McNiven. “The story you're hearing out of Truro is going to be commonplace.”

McNiven said the Canadian birthrate dropped below the level needed to replenish the workforce 40 years ago and the number of immigrants that would have to be brought in to address the shortfall would be unrealistic - half a million over the next 20 years for Nova Scotia alone.

He says governments are going to have to start getting creative to address the problem, beginning with changes to labour market rules designed in the 1980s when people outnumbered jobs.

“For instance, we're finally getting rid of mandatory retirement, where we've been telling people that 'We don't care if you want to work. You can't, because young people need jobs,' ” he said.

“We also need to find a more efficient system to match up people who say they are looking for work with those who need them for work.''

Michael Atkinson, president of the Canadian Construction Association, says the current economic downturn has temporarily created a larger labour pool.

But he says that will quickly disappear once the recovery begins to ramp up. ``We're going to have to find 320,000 new workers by 2017 just to keep pace with retirees and to keep pace with what expected demand will be at that time,” he said.

Atkinson says he's not sure a labour shortage can be blamed for escalating costs in public building projects.

“Was it a realistic estimate of costs, or was it done three years ago when they were getting through all the approvals and hasn't been touched since?” he asked.

“They may have a budget but is that a realistic estimate of what the construction costs will be? No way.”

-Canadian Press

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