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Occupation Outlooks

Identifying potential future labour market imbalances.

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Definitions and Sources

Occupation outlooks — also called “labour market outlooks,” “occupational demand and supply outlooks” and “job outlooks” — assess future labour market conditions by occupation.

The outlook assessment is conducted by comparing future trends in labour demand and supply by occupation as defined within the National Occupational Classification (NOC). By looking at prospective changes in both the demand and supply sides of the labour market, occupation outlooks help identify the occupations where labour market imbalances could develop.

Occupation outlooks are used in several countries, including the United States and Australia. In Canada, a complex ecosystem of public and private initiatives serves to identify imbalances in different labour markets. Notably, the federal government, along with several provinces, develop and distribute occupation outlooks on a regular basis. Stokes Economics is the main private-sector provider of occupation outlooks in Canada and is responsible for the occupation outlooks produced by Saskatchewan, Manitoba and New Brunswick. It also provides results for Nova Scotia and Prince Edward Island, although not on a regular basis, as well as provincial and sub-provincial insights and services for British Columbia and Ontario.

Table 1. Overview of Federal, Provincial and Territorial Occupation Outlooks

Timing Granularity Geography
ESDC-COPS1 10-year outlook, updated every 2 years 292 custom groups of NOC 2016 4-digit categories National; provincial demand estimates developed and shared bilaterally
ESDC-3 years 3-year outlook, updated yearly NOC 2016 4-digit (certain results for occupation and region not available) Province, territory and economic region
British Columbia 10-year outlook, updated yearly 500 of NOC 2016 4-digit Province and 7 economic regions
Alberta Provincial: 10-year outlook, updated every 2 years

Regional: 5-year outlook, updated every 2 years

494 of NOC 2016 4-digit Province and 8 economic regions
Saskatchewan 5-year outlook, updated yearly 500 of NOC 2016 4-digit Province
Manitoba 7-year outlook, updated yearly 500 of NOC 2016 4-digit Province
Ontario 5-year outlook, updated every 2 years 228 of NOC 2016 4-digit Province
Quebec 5- and 10-year outlooks, updated every year 500 of NOC 2016 4-digit Province and 16 economic regions
New Brunswick 10-year outlook, updated every 2 years 500 of NOC 2016 4-digit Province
Nova Scotia Uses ESDC’s2 (Service Canada) 3-year Employment Outlook Model
PEI Uses ESDC’s (Service Canada) 3-year Employment Outlook Model
Newfoundland and Labrador 10-year outlook, updated yearly 186 of NOC 2016 3- and 4-digit Province
Yukon No regular outlook
Northwest Territories No regular outlook; however, in 2016 the Conference Board of Canada developed one for the Northwest Territories
Nunavut No regular outlook

 

Understanding the Purpose of Occupation Outlooks

Occupation outlooks are designed to support policy decisions in the fields of immigration, education and training, as well as help inform individuals about the employment prospects across different occupations. Importantly, outlooks are not forecast models meant to predict the future level of employment or unemployment. Instead, these outlooks aim to answer this question: All else being equal, which occupations are likely to require policy interventions to prevent a possible imbalance between future labour demand and supply?

General Approach

Despite their differences, most Canadian occupation outlooks use a similar step-by-step approach. Detailed methodologies for the occupation outlooks conducted by the federal and provincial governments are presented in Table 2. This section provides an overview of the common elements generally found in outlooks.

Projection of Labour Demand

The core of any occupation outlook is the projection of total labour demand. In other words, the number of job openings expected for each occupation over a specific period (e.g., the next five years). Total labour demand has two components: expansion demand and replacement demand.

Expansion demand refers to the level of labour demand (i.e., job openings) due to economic growth. As the economy grows, additional workers will be needed, resulting in a net increase in the number of job openings. In all occupation outlook models, the rate of future economic growth is taken as given (i.e., is exogenous) and is typically aligned with official (e.g., finance ministry) gross domestic product (GDP) forecasts. The expansion demand of labour is then modelled on the relationship (e.g., elasticity) of the demand within an occupation and economic growth.

Replacement demand refers to the level of labour demand (i.e., job openings) due to the departure of workers from the labour force. As workers age, die or emigrate, additional workers will be needed, resulting in an increase in the total number of job openings. The rate of future departures of workers from the labour force is taken as given (i.e., is exogenous), and is typically aligned with historic departure rates. The replacement demand of labour is then based on the expected natural outflow of workers from an occupation.

Both expansion and replacement demand are specified at the occupational level. The sum of these two types of labour demand, for each occupation, yields the total labour demand. This estimation is the final demand-side output of models underlying occupation outlooks.

Projection of Labour Supply

Many, but not all, occupation outlook models include projections of the supply of labour. Labour supply refers to the number of qualified workers expected to be able to work in each occupation.

Total labour supply typically has three components: 1) individuals having completed education or training programs (school leavers)3, 2) newly arrived immigrants and interprovincial migrants, and 3) other entrants into the labour force. The expected level of each type of supply is projected independently.

The labour supply from the education system includes those who have left the education and or training to enter the labour market. The labour supply from immigration is based on forecasts of the number of working-age persons expected to move to Canada each year to join the labour force. At the provincial and territorial level, net migrants from other provinces or territories are also a source of labour. Finally, labour supply from other entrants are those entering the labour market for the first time (e.g., 15-year-olds) or re-entering the market after a period of non-participation (e.g., maternity leave).

Labour supply is allocated to occupations using different techniques. In some cases, additional labour supply is allocated proportionately to demand, in other cases it is based on past observed occupational structure for each of the three respective populations.

At an aggregated level, across all occupations, the unemployment rate projected by the macroeconomic model for the end of the projection period must match the aggregated components. In other words, the labour force at the start of the period plus new entrants (school leavers, immigrants) minus exits (retirements, emigrants, deaths) must match the projected labour force determined by the macroeconomic scenario.

3In BC, school leavers are referred to as Young People Starting Work and are separated into two subgroups: young people entering work with post-secondary credentials and those without.

Identification of Imbalances

Different approaches are used to identify occupations where potential labour market imbalances could develop. In some cases, the focus is on the aggregate supply gap, and it is assumed that the labour market will efficiently adjust to allocate supply in proportion to demand growth over the long term. In other cases, occupation-specific indicators are observed, including the estimated future levels of labour demand and supply but also current labour market indicators such as unemployment and vacancies.

Key Assumptions

Requirements Approach

The approach typically used focuses on the demand for workers. In fact, certain models do not estimate labour supply at all. When labour supply is considered, however, the projection is done independently from labour demand (i.e., there is no feedback effect). When estimated, labour supply is used to observe the potential imbalances between supply and demand at the occupational level by subtracting the number of job seekers (supply) from the number of job openings (demand).

“Normal” Unemployment

The total labour supply (i.e., across all occupations) is equal to labour demand plus a “normal” unemployment rate (Quebec is an exception and does not use this assumption). The “normal” unemployment rate is defined and estimated differently in each model but is typically close to the region’s average unemployment rate. Different approaches are used to ensure overall supply equals demand plus the unemployment level. For example, in the Stokes model, labour supply is allocated to occupations based on historic unemployed rates by occupation. In other cases, such as British Columbia, a separate component of the aggregate labour supply (e.g., “other additional supply”) is set to ensure overall supply equals the projected labour demand and unemployment level.

Wage Adjustments

Macro-level wage rates respond to changes in supply and demand. As supply tightens, overall wage rates will rise to attract additional people to enter the labour force. Occupation-level wages are assumed to remain constant over the projection period, so the relative wage attractiveness of occupations is fixed. In other words, occupation-level wages will not adjust as the ratio of labour demand and supply change.

No Substitution

The approach assumes no substitution between different kinds of labour, which means that the potential supply of workers in other occupations, even occupations requiring similar skill sets, is not considered in determining imbalance in a specific occupation.

Different Approaches

An overview of the main differences in approaches to develop occupation outlooks is presented in Table 2.

Table 2. Overview of the Main Approaches and their Key Differences

Labour Demand Labour Supply Identification of Imbalances
Expansion Replacement New migrants Education system leavers Other entrants Occupational mobility
ESDC-COPS Based on custom GDP forecast by the Conference Board of Canada Consider retirement (LAD4), in-service mortality and emigration (both estimated using STC5 population forecasts) Estimated as a share of the Canadian population (LFS6)

Allocated to occupation based on past occupation structure (census)

Estimated as a share of the Canadian population

Allocated to occupation based on past occupation structure (LFS)

Estimated as net re-entrants and working students

Allocated to occupation based on past occupation structure (LFS)

Estimated as the probability of moving from one occupation to another (based on SLID7/LISA8 data)

Used to balance labour demand and supply

Expert evaluation of recent and future labour market conditions
ESDC-3 years N/A N/A N/A N/A N/A N/A Composite indicator of recent and future labour market conditions
British Columbia Based on the BC Ministry of Finance GDP and employment forecast (for the first five years), BC Stats 10-year demographic projections, in-house industry employment forecasts run through the Stokes BC modelling framework Consider retirement and in-service mortality (based on STC and BC Stats population forecast and Stokes model) Total net international and interprovincial migration from the BC Stats population forecast and projected labour force participation rates

Net international immigration allocated to occupations based on past occupation structure for recent immigrants in the census (alternative allocation to demand growth also projected)

Net interprovincial migration allocated proportionately to occupation demand growth

New labour market entrants 29 and younger projected based on BC Stats population forecasts and projected labour force participation rates

With the exception of management occupations, total young people starting work are allocated to occupations based on demand growth

Post-secondary education graduates represent a subset of young people starting work

Projected by the BC Post-Secondary Supply model, which allocates graduates to occupations based on post-secondary outcome surveys

Other entrants (re-entrants, people delaying retirement or entering the workforce for the first time) are included in “net other mobility,” which overall is used to balance labour demand and supply At an occupation level, occupational mobility is included in “net other mobility”

A subset is projected for occupational mobility facilitated by post-secondary education for graduates 30+ years old from the BC Post-Secondary Supply Model, which allocates them to occupations based on post-secondary outcomes surveys

At an occupation level, see other entrants

At an aggregate level (across all occupations), “net other mobility” is called “additional supply requirement”; identified as demand to be filled through either increased labour force participation or more rapid automation; the key overall indicator of labour market imbalance

At an occupation level, a composite indicator (opportunity score) of recent and future labour market conditions is used identify “high opportunity occupations”

Alberta Based on GDP forecast by the Alberta Treasury Board and Finance Macroeconomic Model Consider retirement and in-service mortality (census) and outmigration Based on STC and the Alberta Treasury Board and Finance population forecast Based on Alberta Advanced Education data and an in-house model Based on Statistics Canada data and in-house model

Sources of other labour force entrants and exits include occupational mobility (movements of labour between occupations) and labour force re-entrants, net of other separations not captured in retirements, deaths and outmigration

Based on in-house model Cumulative difference between net labour demand and supply
Saskatchewan See Stokes
Manitoba See Stokes (beginning in 2020, Manitoba’s approach to producing occupational outlooks may be changing)
Ontario See ESDC-COPS See ESDC-COPS See ESDC-COPS See ESDC-COPS See ESDC-COPS See ESDC-COPS Composite indicators based on current data and ESDC-COPS and ESDC-3 years outlook results
Quebec Based on custom GDP forecast by the Conference Board of Canada Consider overall replacement rate estimated Considers only new permanent residents

Based on immigration ministry administrative data

Allocated to occupation based on past occupation structure (census and ministry administrative data)

Based on Ministry of Education forecast

Allocated to occupation based on past occupation structure (census)

N/A N/A Expert evaluation of recent and future labour market conditions
New Brunswick See Stokes
Nova Scotia
PEI  
Newfoundland and Labrador Based on GDP forecasts (Newfoundland and Labrador Econometric Model and input–output model) Uses COPS retirement rates to project retirements

Uses COPS age-specific death rates to project mortality

Based on NL population projections

Allocated to occupation based on labour demand

Considers all young entrants (15–34) as the yearly change of NL population N/A N/A Composite indicator of recent and future labour market conditions
Yukon
Northwest Territories  
Nunavut  
Stokes Based on in-house GDP forecast (national, provincial and territorial macroeconomic model) Consider retirement (based on ESDC data) and in-service mortality (STC population forecast) Optimal level of immigration used to balance labour demand and supply Considers young entrants (15–30) as the yearly change of population

Allocated to occupation based on labour demand

N/A Labour supply by occupation is adjusted due to changes in participation rates Depends on the user

Data Access

Different resources are publicly available to better access and understand the different occupation outlooks. The Table 3 provides direct links, for each occupation outlook, to the main publication and online tools (when relevant), methodologies (link to LMIC documentation) and raw data (i.e., results in a machine-readable format such as csv).

Applications

Occupation outlooks are used by individuals, industry, educational organizations and governments to make information choices and decisions about the labour market, including policy and program development and funding.

Individual Canadians

  • Occupation outlooks are typically presented as a report. In certain cases, they are presented as an online dashboard tool to help users better navigate the results.
  • The results are usually presented alongside other complementary labour market information such as description of occupations, current wages or related training. These products aim to support Canadians making education, training and career decisions.

Employment

  • Occupation outlooks are used to identify governmental priorities and inform employment, skills and training strategies at the federal and provincial levels.
  • At the provincial level, the results are sometimes used to identify potential imbalances, prioritize certain occupations, and fund specific training or employment support programs (e.g., training for vulnerable populations, retraining after work-related injury).
  • They are also shared and promoted with provincial employment service providers who use them to provide counselling. In certain cases, specific training is provided to career practitioners so they can better embed the occupation outlooks in their practice.
  • Employers use the occupation outlooks to inform the development of strategic workforce plans.

Immigration

  • Occupation outlook results are used by employers to inform Labour Market Impact Assessments when submitting a request for hiring a foreign worker under the Temporary Foreign Worker Program. For sectors (e.g., agriculture) in which temporary foreign workers make up a significant share of the workforce, projections of labour demand based on LFS data may need to be adjusted. Since survey respondents are required to reside in private households, temporary foreign workers, who often reside in collective dwellings (e.g., hotels and motels), may not be included in the survey.
  • At the provincial level, they are used to inform provincial nominee programs (i.e., level and characteristics of nominee).
  • They are also used in federal–provincial planning for immigration levels.

Education

  • At the provincial level, occupation outlook results are used to evaluate, authorize and fund educational and training programs (mainly for college or technical education).
  • They can also be used to inform the provision of scholarships for priority occupations.
  • They are used by educational institutions (colleges and universities) to evaluate existing programs and plans for new curriculum.
  • In certain cases, they are used in high schools to inform priority skills and to provide career counselling.

Economic Development

  • At the federal level, occupation outlook results are used to respond to ad hoc requests from businesses (e.g., to inform investment or site selection decisions) and other federal stakeholders (e.g., Minister of Global Affairs).
  • At the provincial and municipal levels, they are used to inform public endeavours to attract new business investments.
  • They are also used by provincial business services to inform human resources programs and strategies.

Footnotes

1 COPS is the acronym for the Canadian Occupational Project System.

2 ESDC is the abbreviation for Employment and Social Development Canada.

4 LAD is the acronym for the Longitudinal Administrative Databank.

5 STC is the abbreviation for Statistics Canada.

6 LFS is the abbreviation for the Labour Force Survey.

7 SLID is the acronym for the Survey of Labour and Income Dynamics.

8 LISA is the acronym for the Longitudinal and International Study of Adults.

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