Labrador City’s huge worker shortage threatens small businesses – by John Shmuel (National Post – December 3, 2012)

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Finding employees is one of the biggest issues businesses here have

When construction began on a new hotel in Labrador City this year, the developers didn’t even have to finish building it before every room was booked for the next three years.

Welcome to one of northern Canada’s most rapidly growing boom towns. The fuel behind it all are the massive iron ore mines near Labrador City and its twin town, Wabush. The area’s mines have been ramping up in recent years as rising global demand for steel is creating an insatiable appetite for iron.

High pay for working in the mines, which can start at nearly $50 an hour even with minimal experience, has attracted a flood of workers from Atlantic Canada and the rest of the country. It has also, however, created a series of challenges in a region of Canada that is more accustomed to losing workers to other provinces.

“Finding employees is one of the biggest issues businesses here have,” says Jeannot Gamache, of Labrador Rewinding Inc., a motor repair business in Wabush that has been around since 1994.

“We’ve had to resort to finding workers elsewhere. We first tried to get local workers, of course, then we looked to the rest of the province, and after that we tried across all of Canada.”

While small businesses such as Mr. Gamache’s pay competitive wages for their industry, they cannot approach those paid by the giant multinational operators of the local mines, which include Rio Tinto Inc. Mr. Gamache said he’s resorted to human resource firms to help him find workers, with many recently hailing from outside of Canada.

Mr. Gamache is one of the lucky ones. Other companies have already succumbed to the chronic worker shortage. In June of this year, a refrigeration company in nearby Wabush was forced to shut down after it could not find enough workers to keep the business running.

The prospect of businesses shutting down is certainly odd in a city where building cranes appear to be everywhere and businesses are now experiencing more demand for goods and services than ever before.

At the same time, the flurry of economic activity has created an acute housing shortage in Labrador City. Home prices have soared by 500% in the past few years. The situation has especially become critical for many renters in the town of 10,000. Newfoundland and Labrador do not restrict yearly rent increases and opportunistic landowners are taking advantage of that to hike rents to astronomical levels. In one apartment building in Labrador City, rents for a two bedroom unit recently jumped to $2,000 a month, from $900 — a 122% increase.

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