The employment numbers may not reflect it, but Alberta’s job market is shaky. Energy companies are cutting staff, either publicly, in the case of Suncor and Shell, or more privately such as recent moves by Husky and Cenovus.
But, we haven’t seen the kinds of layoffs that lead to a noticeable uptick in the province’s unemployment rate. Yet.
That’s about to change according to forecasts from private sector economists outside the province. Benjamin Tal at the CIBC says, conservatively, Alberta’s unemployment rate will increase from 4.5 per cent last month to 6.8 per cent by the end of the year. A 50-per cent increase — 55,000 jobs.
Alberta still adding jobs
‘”It’s different than it was in 2008, when we went through the global economic meltdown and companies seized up. It’s quite a bit more encouraging’– Randy Richie, Johnstone Richie
Since September, Alberta has been adding jobs every month, including 13,700 in January.
If you look more deeply at the numbers, there were losses in the oil patch — 1,000 jobs cut between December and January.
As well, there were 3,700 fewer jobs in the category that covers engineers, geologists and other skilled technical professions.
Those losses were offset by gains in health care, manufacturing and public administration.
Compare this to the last collapse in oil prices in 2008.
During that meltdown, Alberta’s unemployment rate more than doubled from 3.3 per cent in December 2008 to 7.0 per cent in May 2009. That does Make Tal’s forecast look conservative indeed.
Optimism in the oil patch
However, there continues to be guarded optimism in the oil patch.
Randy Richie, a partner with the executive search firm Johnston Richie in Calgary, says he is still placing executives in jobs, and that companies are interested in talking to him about hiring when the eventual rebound occurs.
A skeptic might say that is overconfidence, but Richie says this downturn feels different.
“It’s different than it was in 2008, when we went through the global economic meltdown and companies seized up. It’s quite a bit more encouraging and it’s even more encouraging than when we went through the last (natural gas) glut.”
Richie says the downsizing so far has been selective. High-paid consultants go first, because they aren’t staff, next up are early retirements and then the under-performers.
“Companies have learned that if they do massive layoffs without examining what they’re doing, they’re going to end up paying for it, six to seven months down the road.”
How quickly can Alberta bounce back?
The optimism in the province is largely based on how quickly the economy can bounce back from a downturn. After all, we’ve been through this before. Looking again at the 2008/2009 unemployment rate, it stayed about 7 per cent for just six months before heading back down.
In that cycle, oil hit bottom in February 2009, with an average price of US$39.09 a barrel. By December of that year, it hit US$74.
Oil at $20 a barrel
Which brings us back to the eternal question. Where is oil going? Will it stabilize at $60 a barrel, as the Conference Board of Canada suggests. Or $20 a barrel, as Citibank forecast this week. Only the brave are making a firm guess on crude, certainly Tal isn’t .
“You tell me where oil prices go and I’ll tell you where Alberta will go.”