Supply and demand for workers with specific qualifications fluctuates constantly. Fluctuations are caused by a wide variety of factors, including technological innovations, changing tastes of consumers and demographic patterns. These fluctuations, in turn, lead to imbalances in the various occupational markets because of adjustment costs, such as long-term labour contracts between workers and employees, time to set up job interviews, time to train new employees and acquire new equipment, legal fees in case of contested layoffs and lower employee morale following massive layoffs. In that context, it is not surprising to observe that, at any point in time, employers will report that jobs exist that are unfilled due to a lack of skilled workers. That percentage, however, varies depending on the business cycle phase.
Most skill shortages correct themselves in Canada's competitive environment.
Employers tend to substitute other more abundant types of labour for those in short supply. Training programs may be implemented by a company experiencing skill shortages. These labour market corrective mechanisms, however, don't always operate efficiently. Correction can be hampered by excessively rigid wages or institutional control over supply and demand for skilled workers. For government interventions to be successful, several conditions must be met.