The nation of two labour markets

AlbertaBy: Stephen Chartrand- Specialty News Editor

As Tavia Grant of the Globe and Mail puts it, “Canada is a nation of two labour markets: Alberta and everywhere else.” According to the Canadian Chamber of Commerce, out of the 94, 700 jobs created across Canada last year, 82, 300 of them were concentrated in Alberta; or 9/10 of net new jobs. Employment growth in Alberta has averaged 3.8% year-over-year, well-above the national average.

A significant proportion of that job creation is being driven by Alberta’s expanding resource sector; particularly its oil and gas market in the Tar Sands. Not only is the labour market growing and expanding in Alberta but is attracting workers from across Canada seeking better paying work.

On March 6, the government of Alberta released its budged, tabled by Finance Minister Doug Horner, in which, due largely to the Tar Sands and higher tax revenues, is projecting a $2.6 billion surplus next fiscal year.

In terms of wages, Alberta’s average median hourly wage is nearly $3 above the national average and, according to the Bank of Montreal, the highest its been in nearly 17 years. For many years now, the economic situation in Canada has shifted from east (Ontario and Quebec) to the west (Alberta). As BMO senior economist Robert Kavcic said recently, “Now it looks like Alberta and the rest.” Mr. Kavcic has estimated that economic growth in Alberta will average or exceed 3.5% per year. A claim no other province in Canada can make.

According to Statistics Canada, the labour market in the rest of Canada is stagnant. Worse, Canada lost 7,000 jobs this Jan. while the unemployment rate remains steady at 7% as it was for last year.

While Canada’s slow recovery from the recession largely explains the stagnant economic performance across the provinces, one reason in particular is a stagnant labour force participation rate which this February reached a 12-year low of 66.2%.

The all-time low reflects the fact that baby boomers are now retiring and workers are simply not filling demand. According to Paul Ashworth, chief North America economist for Capital Economics, “our best guess is that it reflects a mix of the two, meaning that the Bank of Canada shouldn’t necessarily take comfort from the fact that the unemployment rate hasn’t risen.” While not as good as Alberta, some employment gains have been measured in Ontario and Saskatchewan over the last year. In every other province, however, like New Brunswick, for example, the figures have remained flat or declined.

For the country as a whole, increases in employment and job creation have remained steady at 3,000 per month with an average employment growth rate of 0.5%. A rate which is “among the slowest … in the past 30 years,” said David Watt, chief economist at HSBC Bank Canada. Some of the weakness can be explained by the fact that the public-sector has experienced job loss or stagnant job growth because of government budgetary cuts since the recession.

Perhaps the best news is that much of the job creation has come from the resource and manufacturing sectors which have experienced heavy job losses since the recession.

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