Boom-bust economy faced with labour, productivity challenges
Alberta is ready to vault back to the top as a booming economy but the province is facing several challenges that include an upcoming labour shortage, the attraction and retention of workers and weakening productivity. To plan Alberta’s future workforce and the next evolution of its labour force development strategy, more than 130 officials representing employers, industry associations, labour and professional organizations, educators and government gathered in Edmonton at the end of October.
Alberta was slow to turn but the recovery is now gathering momentum, according to Glenn Hodgson, senior vice-president and chief economist at the Conference Board of Canada. With firmer oil prices, oil sands investment is slowly strengthening and the province will become a preferred employment destination once again, he said.
“It’s really (about how) to get back on that strong growth track they were on before, ideally, to take some of the bumps out,” said Hodgson, who was the keynote speaker at the Alberta forum. “It’s a boom-bust economy — they said ‘never again’ and it happened again. Their single biggest challenge, in fact, is to have enough skilled people to sustain the strong economic growth that they could have. They have to get the combination right between investments and skills in the workplace and what happens in terms of the global crisis… and they’re well-aware of that.”
There are factors employers have little control over, such as a low natural birth rate and increasing retirement rates, said Thomas Lukaszuk, Alberta’s minister of employment and immigration, in a speech at the forum. But there are other factors that can be controlled, such as: creating desirable and innovative workplaces that retain workers; offering competitive salaries and benefits; employing under-utilized segments of the workforce; creating diverse and inclusive workplaces; and using new technologies to improve workforce productivity.
“We need to shift our thinking: from labour surplus to labour shortage; from employers setting the terms to employees setting the terms; from mono work cultures to diverse work cultures; from short-term skills to long-term transferable knowledge; from regional labour markets to international labour markets.”
While Alberta is facing the same phenomena as the rest of Canada, it will be in better shape in attracting people, certainly from central and Atlantic Canada, said Hodgson.
“That will continue, particularly as oil sands investment comes back — that magnet effect will be very strong.”
Major shortages predicted
Alberta is predicting a cumulative shortage of 77,000 workers by 2019, according to Alberta Employment and Immigration. And that’s the biggest challenge facing Alberta’s workforce, said Mark von Schellwitz, vice-president for Western Canada at the Canadian Restaurant and Foodservices Association.
“What we’re going to be left with in Alberta is a pretty acute demographic shortage and, certainly, that really impacts an industry such as ours because one out of three people get their first job in the restaurant industry and, with those young people not entering the workforce anymore, we’ve got to find an alternative source of employees.”
By 2020, the oil and gas industry is going to need an additional 105,000 workers across Canada, with 70,000 people retiring and 35,000 new jobs, said Cheryl Knight, executive director and CEO of the Petroleum Human Resources Council of Canada in Calgary.
One solution is looking at other sectors that might not be seeing the same growth, such as the pulp and paper industry, where skilled people are looking for jobs, so the association is helping with “labour market transition,” said Knight. “We think this is an innovative approach and industry is starting to see the importance of not only being competitive and hiring skilled workers from within industry but outside our industry.”
Better engaging under-represented groups in the labour force, such as Aboriginals, women, people with disabilities and mature workers, was another solution discussed at the Alberta forum. Between 2001 and 2006, Alberta’s Aboriginal population grew by 20.3 per cent, nearly double the 10.2 per cent increase for non-Aboriginals. However, that only partially solves the labour shortage problem, said Hodgson.
“Frankly, I don’t think we can solve the problem… but that shouldn’t prevent us from trying, by having a multifaceted strategy, where you think about attracting migrants, immigrants, under-represented parts, upskilling the existing workforce, ensuring that kids stay in school and somehow try to create the right structural incentives for older workers so they stay attached longer.”
Many chains, such as Wal-Mart, have specific recruiting strategies for some of those groups, such as older workers, said Schellwitz.
“What we need is some more concrete ways we can move hiring some of those non-traditional employment sources forward.”
The oil and gas industry is continuing to work on attracting under-represented workers and the association is trying to show there are sources of trained labour already available, without looking outside the country, said Knight.
“While our growth in the past several years in terms of improving the representation in our workforce hasn’t been phenomenal, I’m hearing, anecdotally, industry is working on it and understanding the importance of more immigrants, more Aboriginals, more women.”
3 ‘levers’ no guarantee
To grow its labour force, Alberta has relied on three migration levers: interprovincial migration, immigration and temporary foreign workers. In 2009, there were 6,566 inter-provincial migrants (mostly from Ontario, British Columbia and Saskatchewan), 23,200 immigrants and 28,610 foreign workers, according to Alberta Finance and Enterprise. However, in 2009, Alberta had two consecutive quarters of negative interprovincial migration, for the first time since 1994.
Boosting the population by trying to increase fertility rates generally doesn’t work in the industrial world, said Hodgson, so an active immigration policy is important.
“Alberta is a net receiver of internal migration and that’s going to carry on but they have to go the next step and have a very active immigration policy that’s aligned with what the feds are doing,” he said. “That won’t solve the problem, that’ll help to lessen the blow.”
In 2009, 4,216 certificates were issued through the Alberta Immigrant Nominee Program and the province’s target for 2010-2011 is 5,000 nominations. But with a boom economy or resource economy, it becomes extremely difficult to accommodate the labour, said Schellwitz, adding a number of CRFA’s members have had to find accommodation for workers in certain areas.
“I think we’re all in agreement that immigration’s got to be part of the solution but you’ve got to bring them in, integrate them into the community, you’ve got to have the infrastructure to support them, so government’s got a big role to play in that as well,” he said.
Temporary foreign workers accounted for 3.2 per cent of Alberta’s labour force in 2009. This program helped one quick-service chain open 25 new stores when it lacked the labour, said Schellwitz.
“Without that investment or these temporary foreign workers to come help with their labour needs, a lot of Albertans wouldn’t have been employed either,” he said. “So there’s a really good example of how we’ve got to use these non-traditional labour sources.”
During the recession, the government felt some pressure to back away from the temporary foreign worker program but it did not, said Knight.
“That’s very important, recognizing that although there may be people in Canada that are unemployed, that doesn’t mean they are making themselves available to the oil and gas industry or to the province.”
Weakening productivity
Alberta’s productivity level is the highest in Canada (thanks largely to the energy sector) but, over the past 10 years, the province’s productivity growth rate was below the national average and well below the average of the United States and other countries, according to a Conference Board of Canada report.
Productivity is gained through having more skilled workers who can operate safely and efficiently, said Knight. The petroleum industry is still a big trainer and more employers are also starting to work more closely with retirees around the transfer of knowledge.
Upgrading the skills of the working population on an ongoing basis, through a commitment to lifelong learning and investments in college and university systems, also helps, said Hodgson.
“If you start having workforce shortages or tight labour markets, firms have to think about how to change their capital labour ratio, so invest in technology to boost productivity.”
