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Jobs will be top Alberta issue for 'decades to come,' economist says

The slump in oil prices is not the only factor when talking about employment in Alberta, says University of Alberta labour economist Alice Nakamura.

Long after election is over, employment challenges will persist

Employment, the top issue in the current Alberta election campaign, is going to dominate for decades, says a labour economist. (Jason Franson/The Canadian Press)

During his introductory remarks at last week's leaders debate, UCP Leader Jason Kenney wasted no time raising the issue that has dominated the Alberta election.

"Welcome to what I hope will be a good discussion about how to get Alberta back to work," Kenney said.

The need to tackle Alberta's unemployment rate has provided some common political ground this election, with parties pledging to create tens of thousands of new jobs.

Mount Royal political scientist Lori Williams said politicians are capitalizing on what remains the top issue across the province.

"It is clear from surveys that [the economy] is what is most concerning to Albertans," Williams said, adding later it was "high on the agenda" of all Albertans long before the election.

"The question is, which of the parties has the best plan for getting those who are unemployed or underemployed back to work?"

The latest monthly Statistics Canada figures, released last week, showed Alberta's overall unemployment rate was 6.9 per cent in March, the fourth-highest among the provinces.

The update included some positive news: the rate dropped slightly from 7.3 per cent in February, and the province also has the highest employment rate in the country.

There were still more than 170,000 Albertans looking for work last month, however, and the unemployment rates in Calgary and Edmonton were the second and third highest, respectively, for metropolitan centres in Canada.

By contrast, in March 2014, Alberta's unemployment rate was 5.1 per cent. And on average, it took unemployed people seven more weeks to find work in 2018 than it did in 2014.

Automation, other factors at play

No single dataset captures the full picture, and parties will cherry-pick the numbers that best fit their messaging.

But University of Alberta labour economist Alice Nakamura says the reality in Alberta, and across Canada, is concerning in the longer term.

"I think that employment is truly going to be the issue of the decades to come," said Nakamura, a former president of the Canadian Economics Association.

The slump in oil prices is not the only factor, she said. Growing automation in the manufacturing and retail industries has killed jobs in sectors that are traditionally major sources of employment.

"Instead of interacting with a salesperson at a desk when you're paying for your products, you're increasingly just interacting with the machine," Nakamura said.

"The machine doesn't take home pay. And the machine doesn't go and buy things from others."

'Human workers' are facing challenges from automation, and from workers in other labour markets around the world. (Joshua Lott/Reuters)

Nakamura said there is also competition from "human workers who are working in other parts of the globe and producing goods and services for a lot less money," which can drive down wages and lead to lay-offs.

The trade-off, she said, is that the global economy allows consumers, especially those in the lower- and middle-income brackets, to buy products at much lower prices.

Competing plans for job creation

While Alberta's political parties all acknowledge the need to create more jobs, they disagree on how best to do it:

  • The NDP wants to create 70,000 jobs over the next 10 years by attracting $75 billion in new oilsands investments that will fund major expansions in refining and upgrading. The party's platform calls it the "largest diversification plan Alberta has seen since Peter Lougheed."
  • The UCP would implement a "job creation tax cut" that would slash the corporate income tax rate by four per cent, a move it says would generate at least 55,000 full-time, private-sector jobs.
  • The Alberta Party wants to cut the corporate income tax rate by two per cent, and increase incentives for small businesses, as part of a plan to create 65,000 new jobs.
  • The Liberal Party promises to focus on interprovincial trade, cut the corporate tax rate, significantly lower income taxes, and introduce a sales tax. In addition, the party has pledged to give grants to unemployed Albertans who want to pursue job training and post-secondary studies.
  • The Freedom Conservative Party would reduce the large-business tax rate and abolish the provincial small-business tax. The party says it would also create an "Alberta Labour Corps" that would provide work on public-works projects for all unemployed Albertans.

Nakamura did not comment specifically on the parties' job-creation plans, though she did discuss the policies that underpin them.

She pointed out there will always be pressure on governments to cut the corporate tax rate. But she said that when tax revenues go to the government, it is certain that they will be spent in the province.

"Whereas when you leave money with companies, they don't necessarily spend it in your jurisdiction," she said. "In fact, they don't even necessarily keep the same number of jobs there that they had before."

If a government could successfully refine more oil in Alberta, "it would make it possible, then, to build other industries on top of that," she said. "And the refined product would be, in some cases, a lot easier to move somewhere else."

Median income down since 2013

Even for Albertans who find work, there is another issue.

Statistics Canada data shows that in 2013, the median employment income for Albertans aged 16 and over was $44,200.

That means half of Albertans earned more than that number, and half earned less. Median income is often cited instead of average income because a high number of large earners can skew the average.

The most recent data available, from 2017, shows that after adjusting for inflation, the median employment income in that year was $41,800 — $2,400 less than in 2013.

"Certainly in terms of people who have been in the middle class, they are not getting the wage growth that they would have expected," Nakamura said.

Williams, the political scientist, said the plans proposed by the political parties will likely create jobs. She warned, however, that whichever party governs the province for the next four years should be prepared for a slower recovery than Albertans would like.

Certainly in terms of people who have been in the middle class, they are not getting the wage growth that they would have expected.- Alice Nakamura

"These solutions aren't going to be instantaneous, and it is even debatable whether we are going to see a significant shift before the next election, because most of these plans are much longer term," she said.

Nakamura said policymakers and the public must look beyond the "up and down of the unemployment numbers" when gauging Alberta's progress on unemployment.

"Rather, for the major industries which are in Alberta, or any industry that you think maybe you could develop in Alberta," she said, "what are the factors for each one of them that is affecting likely outcomes over the next year, over the next five years, over the next 10 years?

"That is where the policy action, I feel, should be directed. Because those different industries are going to be the determinants of the bulk of the employment."

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