Knox on Labour Mobility Barriers

An hilarious aspect of various inter-provincial “free trade” deals is how proponents struggle to identify the barriers they hope to remove. While there are essentially no “trade barriers” between provinces, concerns about labour mobility have a whiff of substance.

This morning, the C. D. Howe Institute released a paper by Robert Knox on “Barriers to Labour Mobility in Canada.” The press release states:

For instance, registered psychiatric nurses are not recognized east of Manitoba; foot specialists, podiatrists and chiropodists are recognized in some provinces but not others; and certified general accountants and certified management accountants who practice public accounting outside Ontario cannot be licensed as public accountants in Ontario. These are just three examples of professions that are recognized in some provinces but not others.

As far as I can tell, those are the paper’s only examples. In terms of psychiatric nurses, podiatrists and chiropodists, the issue is not differing provincial standards for these professions. The issue is that some provinces do not have these regulatory categories at all.

However, there is no obvious solution. Every time a province decides to recognize a new rarefied profession, should the other nine provinces automatically follow suit in the name of labour mobility?

I addressed the Ontario accounting issue here. But I would add that the wake of the financial crisis seems like an odd moment to demand that Ontario loosen up its accounting standards.

At worst, Canada has inter-provincial issues with a handful of professions. Those few issues could reasonably be sorted out on a case-by-case basis.

Instead, Knox advocates facilitating legalistic challenges and ramping up enforcement through the Agreement on Internal Trade’s labour mobility chapter, which is already nearly ubiquitous. To justify this disproportionate response, he twice claims, “Canadian officials found that 35 percent of about 13,000 regulated workers who moved to different provinces in 2004 did not have their qualifications recognized by the regulators in the receiving province.”

That statistic is from a Forum of Labour Market Ministers’ report, which concludes, “Follow-up activity is warranted to identify why approximately 35% of all workers are not being registered. The reasons may vary. Some applicants may not meet the provincial standard in the new jurisdiction where they are applying and therefore this would not be a compliance issue” (emphasis added).

Finally, Knox argues, “The most important reason for fixing mobility issues in Canada is the impending labour crunch. Sometime in the next 10 years, there will not be enough workers in Canada to fill the jobs available.” For the sake of Canadian workers, I hope that this hypothesized labour shortage materializes.

But simply positing full employment as the basis for policy is classic C. D. Howe Institute thinking. It does not propose solutions to macroeconomic problems like unemployment that have reduced GDP by a few percentage points.

Instead, the Howe fixates on alleged microeconomic inefficiencies like provincial occupational regulations that might reduce GDP by fractions of one percent given a tight labour market. It is as though the economic crisis never happened.