Food service labour shortages in Canada: exploring average hours worked as an indicator
The COVID-19 pandemic has hit the accommodation and food services sector harder than any other.
Now, even as the broader economy recovers, the food services sector is facing unique challenges bringing people back to work. There have been many recent media stories suggesting food service labour shortages across Canada.
Translating this anecdotal evidence into clear metrics, however, remains a challenge: there is no accepted measure of labour shortages.
To clearly measure labour shortages we would ideally observe both the supply and demand of different types of jobs in different regions and analyze the differences.
However, this kind of data is not widely available in Canada, especially by occupation and for small regions.
In the absence of this data, current analysis often relies on employment trends, vacancy or job posting rates, and wage growth (or the lack thereof) to identify shortages.
An additional, but often overlooked, way to signal a possible shortage is to look at average hours worked: if employers can’t find more workers, encouraging current employees to work more hours through longer or additional shifts can help meet increasing labour demand.
In this article, we investigate the average hours worked in key food service occupations as one potential indicator of labour shortages in Canada (spoiler alert: the available data in Canada can’t tell us as much as we might hope).
It’s important to note that average hours worked cannot be considered a single clear indicator of labour shortages: as with other indicators, average hours worked is just one indicator among many that can help signal labour shortage trends.
Do wage and employment trends point to labour shortages?
The food services and accommodation sector is dominated by cooks, bartenders, food counter attendants and kitchen helpers, hosts/hostesses, maîtres d’hôtel, and food and beverage servers who together account for nearly 3 out of 5 workers in this sector.
These workers are primarily shift workers, often working part-time hours. More than 50% of individuals employed in these occupations report working less than 30 hours per week.
Figure 1 presents the employment level across these food service occupations relative to September 2018 (not seasonally adjusted).
As of September 2021, employment in the food services industry remains 16% lower than three years ago. Conversely, since April 2021, employment has recovered steadily across other occupations and is now 4% above the level in 2018.
This may be partially explained by the fact that across the country, capacity limits for restaurants have remained in place.
Another potential reason for the depressed level of employment is that the food services sector is having trouble attracting people back to the industry – there are too few applicants for the available positions.
One solution to this challenge is to incentivize workers to return by offering higher pay. However, there has been little to no nominal wage growth in recent years – increasing from $15.70/hr in 2019 to $16.30/hr in 2021 (including tips and commissions).
Adjusting for inflation, the real wage has, in fact, declined.
If wages have not increased, this raises the question of whether employers may have adjusted to staffing shortages by increasing hours among current staff.
Figure 1: Employment in food service jobs peaked in August before sinking back in September 2021
Hours worked are an important component of overall labour demand
A lack of wage growth may be consistent with the idea of labour shortages at the current wage level. If employers are not increasing wages, a solution to shortages is to increase the number and/or length of shifts worked by current or new employees.
Figure 2 shows the average hours worked among the food service occupations. It broadly follows the employment pattern seen in Figure 1.
Restaurants, bars, and other food service businesses were significantly impacted by the health regulations put into place in 2020. Both employment and average hours worked in food service occupations fell dramatically, with average weekly hours dropping from 23.0 to 15.2 in March 2020.
Hours worked continued to fluctuate during the second and third waves of COVID-19 and reintroduction of stricter limits on in-person activities.
By the start of Summer 2021, a successful and rapid vaccination campaign allowed many restaurants to open to indoor and outdoor dining subject to capacity restrictions – and both employment and average hours worked rose rapidly, peaking in August 2021.
The average hours worked returned to a pre-pandemic high of 25 hours per week, while employment peaked at only 95% of its September 2018 level.
Both metrics then declined in September 2021, when hours fell to an average of 23 per week and employment to 84% of its 2018 level.
We would expect a labour shortage to increase hours worked, especially if employment falls, but this hasn’t been the case.
Figure 2: Food service workers now back to pre-pandemic work hours on average
Making sense of the data
Employment and wage growth are often used to investigate possible labour shortages; however, over recent months, neither of these metrics clearly signal the presence of a shortage – at least not yet.
Employment is rising, which signals employers have increasing demand for labour, but employment rates dropped in September.
Increased hours of work among current staff could indicate that employers are facing challenges recruiting. However, average hours worked have not surpassed pre-pandemic levels, meaning the average worker in food services is working about the same number of hours as before the pandemic.
This is not to say labour shortages are not an issue in the sector, but rather that quantifying it is complex.
Importantly, labour market data can lag the reality faced by businesses and workers – for example, wage increases might be slow to show up in official statistics.
Further research into labour shortages should examine the interaction of the key indicators such as the ones we have discussed. And where possible, analyze the difference in both the supply and demand of different types of jobs in different regions.
We’ll continue to track and report on these key metrics as new data become available.
Brittany Feor is an economist at LMIC.
She contributes to the accessibility and analysis of labour market information. She brings expertise in quantitative analysis and macroeconomics.
