The era of people being able to work in their hometowns may be over, New Brunswick Premier Shawn Graham said Thursday.

The crisis in forestry industry has been the biggest challenge for the Liberal government in 2007, Graham told CBC News in a year-end interview.

Graham's government has been under pressure from mill workers and the opposition to create jobs in the communities hit by closures.

Of 85 mills that were running in the province in 1995, only 16 are fully operational today. The others have permanently or temporarily closed or are running at reduced capacity.

The most recent closures by UPM-Kymmene Group and AbitibiBowater left 535 workers without jobs in Miramichi and 330 in Dalhousie.

Graham said his government is doing what it can to help the laid-off workers but they may want to start looking elsewhere in the province.

"Traditionally, where you could remain in a community, today New Brunswickers have to look at New Brunswick as a community," Graham said, "and we may have to travel a little bit further within our home province."

There are labour shortages in other regions that the mill workers could be filling, Graham said.

"I'll use an example: Ganong chocolates in St. Stephen. They could hire 100 people today but they can't find the people," Graham said.

The suggestion amounts to a death sentence for communities like Dalhousie and Miramichi, said Conservative Leader Jeannot Volpé.

"If you try to bring all the people to Moncton or Saint John or Fredericton, those regions and the province will not be strong," Volpé said. "Those municipalities out there still have to support the same infrastructure with less people."

The premier suggesting that people move to find work amounts to an admission of failure by the government, Volpé said.

"As a government you should show leadership and try to create the proper environment to create jobs in New Brunswick," he said.

The government offered the companies large subsidies to keep the mills in Dalhousie and Miramichi running but global market conditions are so bad that they were turned down.