Is this the calm before the storm for Alberta’s labour market?
One national economist was speculating that on Friday as Statistics Canada reported that both the Calgary region and Alberta saw employment growth in December while the rest of the country shed jobs.
In fact, Alberta’s 2.9 per cent hike in employment from a year ago was the best in the country.
Robert Kavcic, senior economist with BMO Capital Markets, said the employment situation is “likely to change in the coming months as the steep slide in oil triggers a wave of cost cutting across the energy sector.”
He said it will take some time for unemployment rates in Calgary and Edmonton to rise in response to the oil price shock.
Doug Porter, chief economist with BMO Capital Markets, said the resource sector employment rose 1.3 per cent year-over-year.
Regionally, he said, this will be an area closely watched in 2015 “for signs of a big impact from the oil price plunge.”
Unemployment rates rose in December in the Calgary region and Alberta, according to Statistics Canada, despite the job gains in the province.
The federal agency reported that employment rates in the Calgary area and Alberta were 4.8 and 4.7 per cent, respectively — up from 4.4 and 4.5 per cent in November.
Nationally, the unemployment rate remained at 6.6 per cent.
Alberta saw monthly job gains of 5,700, up 0.2 per cent, and year-over-year employment was up 2.9 per cent, by 65,900 jobs.
In Calgary, on a month-over-month basis, employment was up by 2,600 positions or 0.3 per cent. The year-over-year increase was 17,400 jobs, or 2.2 per cent.
Nationwide, employment was down 4,300 positions month-over-month, although it was up one per cent (185,700 jobs) from December 2013. Full-time employment was up by 53,500 jobs, but that was offset by a decline of 57,700 part-time positions.
Todd Hirsch, chief economist with ATB Financial, said the rumours of the death of jobs in Alberta have been greatly exaggerated — at least so far.
He said employment growth was much better than the job loss that many economists had been anticipating, and right on average for monthly job creation over the entire year.
“Job quality was excellent too; 8,400 full-time jobs were gained, while 2,700 part-time positions were shed,” he said. “Even more curious about the job numbers is that jobs were stable in the oil and gas sector. As well, a category of employment labelled professional, scientific and technical — basically, many of the engineering and geological service providers to the energy sector — added jobs. A sharp drop of 11,000 of these workers in November was partially offset by a gain of 6,600 in December.
“Given the nervous tone rippling across Alberta’s economy and announcements of oil companies cutting their capital spending plans, it’s difficult to explain the upbeat job report. It could be, perhaps, that after having spent the last four years desperately trying to attract and retain workers, employers in Alberta aren’t ready yet to hand them a pink slip. How long this extends into 2015 will be interesting to watch.”
Alberta’s unemployment rate was second lowest in Canada behind Saskatchewan’s 3.6 per cent.
The Alberta government said the year-over-year employment growth accounted for 35.5 per cent of the overall employment growth in Canada.
The following industries had the most employment increases in December from the previous month: Professional, Scientific, and Technical Services, 6,600; Construction, 5,900; and Educational Services, 5,300.
Cameron MacGillivray, president and chief executive of Enform, the safety association for Canada’s upstream oil and gas industry, which also has the Petroleum Human Resources Council under its umbrella, said part of the challenge for the industry is not knowing how long the lower oil price environment will last.
“That will probably take a couple of quarters before we get a better sense of the nature and the duration of this downturn,” he said. “What’s going on right now is you’re seeing a lot of capital projects, which are largely the new work that hasn’t yet been committed to or was contemplated originally, and cuts to the capital budget … a 20-25 per cent capital reduction planned for 2015. How that translates into workforce changes is difficult because it depends somewhat on the nature of the expenditure.”
MacGillivray said the industry will tend to want to defer newer work and exploratory work first and retain workers in the core work of the operations. The people, though, who may be affected will be the ones connected with the projects down the road. He said that will impact contract workers, temporary workers or low-skill workers in the industry.
Randy Upright, chief executive of staffing agency Manpower’s Alberta region, said the million-dollar question is what to expect in 2015 in the oilpatch due to lower oil prices. He said there is skepticism around hiring right now but the city is also not seeing the level of anticipated cutbacks either that is being talked about and speculated on.
“Both Calgary and Alberta are seeing steady growth. That’s just the trend we’ve been seeing all through 2014,” said Upright, adding there’s no question that companies are taking a wait-and-see approach with the steep slide in oil prices and cost-cutting is definitely on people’s minds.
“We’re closely monitoring that at this point but the significant factor is going to be how long before we can anticipate to see a rebound. Employers learned, in my mind, very significantly from the 2009 era and recognized just how difficult it was to rebuild after significant cost-cutting was put in place. So the expectation this time of mass layoffs has been greatly exaggerated.”
Jeanette Sutherland, manager of workforce and productivity for Calgary Economic Development, said Calgary continues to be at full employment and many companies are still struggling to fill certain, high-skill and high-demand positions.
“A skilled workforce is going to continue to drive our economic growth in Calgary. Though we might see some softening in the market, it is a key time to focus on training and skills development to create an adaptable and fully utilized workforce to meet ongoing skills shortages,” she said. “This is not a time to take our foot off the gas in terms of training or strategic recruitment. It’s a time that many proactive employers will be investing in re-skilling or up-skilling their workers for succession planning. Providing continued development and growth opportunities will be key to retaining the talent that employers worked so hard to attract.”
Sutherland said companies should not stop looking for talent and business growth as they need to be ready for when oil prices rebound which will mean economic growth for Calgary and Alberta.
“And we still have a demographic shift where baby boomers will be leaving the workforce,” she said.
Also on Friday, the latest ATB Business Beat Economy Index is showing growing concern from Alberta small and mid-sized business owners and operators about what is store for 2015 in the province. The index, which measures optimism, has fallen to a low of 44.5, ATB announced on Friday. It said a score under 50 suggests more owners believe the province’s economy will be worse off six months from now than those who feel it will be better.
It is also the first time the index has fallen below that mark since ATB began tracking sentiment in 2013. The previous index, released in October, was at 68.6.
When asked about the impact of the lower price of oil, 69 per cent of SMEs surveyed said their business had not yet been affected. Sixteen per cent said their business had been negatively affected, while 13 per cent said the lower price had a positive impact. In the energy sector, the number of negatively affected SMEs jumps to 48 per cent, said ATB.