Labour shortages in the residential construction sector are contributing to the rising cost of housing and increasing insurance claims costs, according to a report released by The Conference Board of Canada (CBoC).

“Building Under Pressure – Skilled Trades Shortages and Rising Construction Costs” finds that unless urgent action is taken by governments, the labour shortages will get worse, drive-up inflation and cost Canadians close to an extra $8 billion annually by 2045.

“The construction sector will continue to face challenges as it deals with an aging workforce and an increased demand in housing, among a variety of other factors,” stated Tony Bonen, executive director, Economic Research, at CBoC. “Stakeholders and all orders of government will need to work collaboratively to ensure Canada has the skilled workforce necessary to meet the growing need for housing.”

Key findings in the report include:

• Job vacancies among skilled trades in the residential construction sector have grown at an average rate of 11% per year and that number is expected to increase to 13% per year between 2026 and 2045.
• By 2045, the shortage of skilled trades could reach 32,000 people, which would likely cause prices in the sector to increase by 2.3% and add $7.9 billion to the annual cost of residential renovations and repairs.
• The rising frequency and severity of natural catastrophes, as well as increasing demand for housing, is adding to the strain on the labour supply.
• Skilled-labour shortages contribute to insurance claims cost pressures by increasing construction labour costs and by lengthening timelines for rebuilds and renovations. These factors go into insurers’ calculations for premiums.

“Insurance Bureau of Canada (IBC) has been raising concerns about labour shortages for years, as they have a significant impact on insurers’ ability to help Canadians recover in a timely manner after a natural catastrophe,” said Maximilien Roy, vice-president, Strategy, IBC. “At the same time, we are seeing governments across Canada rush to tackle the ongoing housing crisis and, too often, planning decisions are being made that place new housing in areas at high risk for flooding, fire or hail.”

IBC recently released its Three-Point Resilience Plan to Better Protect Canada from Natural Disasters, which outlines key priorities for governments aimed at better protecting communities across the country.