Can Alberta employers breathe sigh of relief?

Downturn only temporary ceasefire in war for talent, say industry experts
By Suzy Thompson
|Canadian HR Reporter|Last Updated: 04/20/2009

For nearly a decade Alberta has experienced a serious worker shortage. But the province is not immune to the global economic slowdown. Beginning late last year, Albertans started losing their jobs. Does this mean the province’s infamous labour crunch is over?

As early as 1996, Alberta’s frenetic growth meant many employers simply couldn’t hire enough people to keep up. The shortage peaked in 2007, when the unemployment rate was 3.3 per cent and the provincial government predicted a shortfall of 110,000 workers within 10 years.

But then the United States slid into a recession last spring, eventually dragging down the price of commodities, including oil, and creating a global credit crisis.

“We started to see really significant change in the last quarter of last year,” said Elsbeth Meher, workforce development manager at Calgary Economic Development. Although some sectors “had started to see a turnaround and certainly a flattening of their market through most of last year.”

That evaluation is shared by most of Alberta’s economists. In a very short time Alberta’s unemployment rate has jumped after years of steady decline. Yet this isn’t occurring across the board. The majority of people facing layoffs and wage cuts work in construction or the oil patch, the same sectors where the most intense worker shortages were felt just one year ago. In both industries, the unemployment rate has doubled over that time, said Meher.

The reason behind the decline is people are reluctant to invest in building new properties, either residential or commercial, she said. Also, resource extraction, particularly in terms of the oil sands, is very expensive. When money is short, these operations must trim back quickly.

“You can’t help but feel the effect of the change in the economy. It’s certainly not the marketplace it was a year ago,” said Mike Corbett, vice-president of David Aplin Recruiting in Edmonton.

Employee ‘arrogance’ gone

Employee “arrogance” is disappearing, he said. Before the recession, “the negotiating power really rested with the candidates because of the shortage and the demand. That pendulum has swung to the other side.”

As jobseekers become hungrier for work, employers have the luxury of being a little choosier, said Corbett.

“Having said that, though, there still are a lot of things going on. It’s still relatively buoyant,” he said.

There has been a shift in the focus of Alberta’s economy, and in the skills employers are looking for, more than a wholesale decline in the need for employees, he said. Some major projects may be delayed but infrastructure upgrades are still going ahead and they all need workers. In fact, some employers are having as much trouble as ever filling positions, with sectors such as financial services seeing unemployment rates at less than one per cent. Finding highly skilled professional employees is still a challenge, said Corbett.

Prepare for next frenzy

This is probably a minor lull in what’s expected to be a long-term worker shortage, said both Corbett and Meher. It’s a period companies should use to prepare for the next frenzy.

“Economic conditions aside, in many ways the reality of demographics is going to continue to pull us into a labour shortage,” said Meher. “As baby boomers start to leave the workforce in droves, we are not going to have replacements.

“We sort of have this confluence of having a lot of economic growth and starting to see some of those demographic realities hitting, which over the previous three years have given us an indication of what it will be like to be in a situation of such labour shortage.”

In the boom, HR departments around the province were forced to come up with creative ways to recruit and retain employees. Flexible hours, compensation incentives, benefits programs and opportunities for educational upgrading are some of the most common programs that have been put into practice, alongside the famous wage hikes that brought Alberta’s average hourly wage to almost $25 in 2008. Salaries are now dropping but few HR professionals believe they can abandon those other programs.

“As bad as this is, it’s not going to last forever. And when growth does return, those organizations that weren’t smart enough to realize (they should) use this opportunity to clean up and get things ready, to position themselves for the next bull run, will be in trouble,” said Corbett.

Addressing long-term labour needs

Alberta employers and the government are continuing to look at the province’s long-term labour needs. They are looking for ways to create a bigger workforce, creatively retain staff and, perhaps most importantly, make them more productive, said Meher. Even increased immigration is not expected to fill every job opening, so businesses must discover ways to increase productivity without burning out the workforce.

Organizations that see this as a short-lived opportunity to make more selective hires will be able to use incentives put in place during the boom to recruit exactly the kind of workers they are looking for, as opposed to whoever is available, said Corbett and Meher. Also, jobseekers can improve their education with the understanding advanced skills will be in demand for a long time to come.

“I understand, fundamentally, in certain cases, you can’t (recruit),” said Corbett, pointing to small-scale construction and drilling companies that have been forced to lay people off to survive. “But even now we’re talking to employers and are really trying to make sure they have the right team in place to capitalize on what’s coming once we get to the other side of this.”

Bad news about the economy should not frighten managers into making bad decisions, he said. Instead, Alberta businesses hopefully will hold on to employees, with an aim to improve them and, therefore, make them want to stay.

“Keep them challenged, keep them engaged, keep them part of the decision-making process as best you can,” said Corbett.

Suzy Thompson is a Calgary-based freelance writer.

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