February 6, 2012

"Jobless boom" hits Saskatchewan

RICHARD GILBERT

staff writer

The shortage of skilled labour in Saskatchewan could be intensifying despite slow employment growth, which isn't keeping pace with robust economic expansion and record capital investment in the province.

“The 2011 statistics are a bit puzzling because most of the economic indicators for the province are strong, but there has been almost no growth in employment,” said a recent report from Sask Trends monitor.

“We seem to be in a jobless boom.”

According to the report, the number of people working in Saskatchewan in 2011 increased by only 1,600 or 0.3 per cent, which is too slow to keep up with the growth in population.

During the same period, the number of adults, which is defined as people above the age of fifteen, increased by 9,100 persons, which is an increase of 1.2 per cent.

The employment rate, which is defined as the percentage of the population who are working, fell from to 65.7 per cent in 2011 from 66.3 per cent in 2010, which is the lowest it has been since 2006.

“Employment in the construction sector was effectively flat,” said Doug Elliott, publisher of the monthly statistical newsletter.

“This is not a decline, we have just stopped growing.”

Regina and the northern section of the province were the only two regions to experience employment growth in 2011, while the southeast, west central, Saskatoon region, east central and southwest areas all saw declines.

In a separate report, RBC Economics said that Saskatchewan led the country in economic growth in 2011, with a 4.5 per cent increase in real gross domestic product (GDP).

The two provinces following Saskatchewan in growth were Newfoundland and Labrador (4.4 per cent) and Alberta (4.0 per cent).

Paul Ferley, RBC assistant chief economist predicts that Saskatchewan will lead the country in economic growth in 2012 (4.2 per cent) and 2013 (4.7 per cent).

Elliot said there are several competing theories about the cause of this so called “jobless boom” in Saskatchewan.

“The consensus here seems to be that there is a labour supply problem, which means there is a skill shortage,” he said.

In this case, the demand for skilled labour is greater than the supply of qualified applicants.

However, there is no data available to measure this supply gap, which is called the vacancy rate.

Saskatchewan likely has a serious shortage of skilled labour, because construction employment has remained flat in 2011 and 2010, at about 40,000 people.

In sharp contrast to this trend, construction activity is extremely strong, with building permits, housing starts and non-residential investment at or near record levels.

In a building permits report released on Jan. 9, non-residential construction was up 118 per cent in November 2011, over November 2010, which is the largest rise in Canada.

Another theory that explains how employment remains flat, while the provincial economy expands, looks at the impact of windfall gains on international commodity markets.

“We need fewer people due to the nature of the economy right now,” said Elliot.

“So much of the current boom is driven by price increases for existing commodity production, as opposed to an increase in total production or actual economic growth.”

For example, Canola is worth twice as much as last year, but it doesn’t take any more people to harvest the crop.

Elliot said he prefers this explanation.

Another theory is based on the methodology used by Statistics Canada to measure employment.

“A lot of work, particularly in construction, is being done by out-of-province workers or people who don’t live in Saskatchewan,” he said.

“This is a data problem because Statistics Canada counts employed people by their province of residence, not necessarily where they work.

“However, this is a two-way street, as people who live in Saskatoon and work in Fort McMurray are classified as employed in Saskatchewan.”

This theory may not explain the jobless boom as out migration and in migration counteract each other.

One area of job growth is employment among recent immigrants (living in Canada less than ten years), which increased by 27 per cent in 2011.

However, this growth was generated from a very small base, with employment among this group accounting for less than 4.0 per cent of the provincial total.

Among Aboriginal people living off reserve, employment increased by 6.0 per cent for the First Nations population.

It increased by 3.7 per cent for the Métis population

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