Thousands of energy jobs lost to Alberta downturn are gone for good, economist says

Thousands of oil and gas jobs lost during the Alberta recession are gone for good, predicts ATB financial chief economist Todd Hirsch.

'Because of the use of better technology and innovation, the energy sector will not need as many people'

Alberta's oil and gas industry is slowly recovering from the downturn, but the sector's workforce demands have permanently changed, says Todd Hirsch. (Cenovus)

Thousands of oil and gas jobs lost during the Alberta recession are gone for good, predicts ATB financial chief economist Todd Hirsch.

Even if the price of oil surpasses $100 a barrel, Alberta's energy workforce will never return to pre-recession levels, Hirsch said.
Todd Hirsch of ATB Financial says the price of oil may rebound but the energy workforce will not. (Dave Gilson/CBC)

"I've learned as an economist to never say 'Never,' but even if it were to come back, because of the use of better technology and innovation, the energy sector will not need as many people going forward."

Since the calamitous drop in oil prices in 2015, the industry has been forced to find new ways to cut labour costs, he said.

Technological advances, the growth of automation, robotics, and other labour-saving efficiencies will ensure some jobs remain obsolete even after a full rebound, Hirsch said in an interview Wednesday with CBC Radio's Edmonton AM.

"From an economic perspective that's actually a good thing, that they are making better use of technology to be more efficient, but the downside is that it does mean fewer jobs in the energy sector going forward.

"It does mean a chance for better diversity in the Alberta economy."

 'Things are booming but the energy sector turns into a bit of a black hole.'- Todd Hirsch

Job losses in the energy sector are allowing other sectors such as financial services, agriculture, tourism and tech to address chronic skill-shortages, Hirsch said.

After staggering layoffs in the energy industry, the private sector has a deeper talent pool and have been able to hire skilled workers "without backing up the money truck."

"Back in 2013-2014, when oil was at $100 a barrel, it was pretty difficult to do that," he said.

"When energy prices are high, things are booming, but the energy sector turns into a bit of a black hole that sucks everything into its own gravity and it leaves other sectors sort of scrambling to compete."

There are other bright spots too.

Oil has been holding steady around US$60 a barrel since December, after having bottomed out to about $26 in early 2016.

Employment gains have been modest but steady after hitting rock bottom — along with all other financial indicators — in July 2016, he said.

Nearly 90,000 full-time jobs were added between January 2017 and January 2018 with 12,500 in mining and oil and gas production, nearly 23,000 in manufacturing, about 8,000 in the financial and real-estate sector, 7,100 in transportation and warehousing and 5,700 in the accommodation and food-service sector.

The province lost 43,000 part-time jobs during that period.

"If you just look at that number, the job creation number, it is encouraging, but the composition of the labour market has changed.

"Consumer confidence is not as strong because people are making less money. And job prospects, they're still there, but they're at lower-paying opportunities."

 'There is still a sense that everything could still go sideways.'- Todd Hirsch

Despite the recovery, Albertans are still feeling browbeaten by the downturn, he said. Consumers are skittish and investors are far from bullish.

The recession has proved hard to shake off and there is lingering uncertainty, he said.

"Even though businesses consistently tell me, 'Yeah, it's better than it was,' but there is still a sense that everything could still go sideways," Hirsch said.

"It was a punishing recession and this will now be the recession against which every future recession will be measured."

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