Why Edmonton’s unemployed are getting a raw deal from Ottawa

Special to The Globe and Mail
Published Friday, Apr. 22, 2016


Those who have never spent much time in either Edmonton or Calgary could be forgiven if they think the two cities have identical characters. After all, on the surface they are much the same: young cities of just more than one million, fuelled by oil, rodeos, hockey and pickup trucks. (Although don’t get stuck in stereotypes. Both are also home to superb universities, arts and culture, and culinary excellence.)
But after that, the Edmonton-Calgary comparisons end and the stark contrasts appear. Once you start peeling back the layers, there are more differences than similarities. And none of this is more evident than in the recent changes in each city’s labour market.

Between March, 2012, and March, 2016, Edmonton’s unemployment rate rose from 5.6 per cent to 6.9 per cent – an increase of a little more than one percentage point and still below the national average.
Over the same period, however, Calgary’s unemployment rate jumped from 5.1 per cent to 8.6 per cent – an increase of three-and-a-half percentage points. It now has the highest unemployment rate of any large city in the country, and is closing in on Nova Scotia’s provincial rate of 8.9 per cent. Even Windsor, Ont., and Saint John – cities that have famously struggled with weak job markets – currently have lower rates of unemployment at 7 per cent and 8.3 per cent, respectively. (All rates quoted are for March, 2016, three-month moving averages, adjusted for seasonality).

What accounts for the difference in joblessness between Alberta’s two major cities?

The major factor is economic diversity. Edmonton is relatively more diversified, home to proportionately more jobs in the public sector, health care and education. And unlike the approach taken by previous provincial governments in times of economic downturn, Alberta’s current government has emphasized that it is not going to reduce employment in the public sector.

Calgary also has these sectors, to be sure, but petroleum head-office jobs account for a greater share of employment. Calgary’s total labour force is almost 5 per cent larger than Edmonton’s, but the latter has the larger university and is the centre of Alberta’s public sector.

The other difference is the type of energy sector jobs in each city. Edmonton is also an oil town, but jobs in the region tend to be more closely connected to the servicing and manufacturing of current oil production. Oil prices may have dropped, but the volume of oil being produced and refined in the province has not wavered significantly. That means jobs servicing existing production have been affected less severely.
Head-office jobs in Calgary, on the other hand, tend to focus on the planning, engineering and financing of future oil-patch investments. With many of these projects being shelved or cancelled, disproportionately more employees have lost their jobs.

The fact that Calgary’s jobless rate has jumped higher and more quickly than Edmonton’s has handed the federal government a conundrum. To address the deterioration in the petroleum sector, Ottawa has extended a few more weeks of employment-insurance eligibility to certain regions in Alberta and Saskatchewan. The program is formula-based, depending on the increase in the rate of unemployment in the region.

But because Edmonton’s rate has risen less than Calgary’s, unemployed workers in the provincial capital are not afforded the same number of weeks as their jobless counterparts in Calgary. That, Edmonton’s business and labour leaders claim, is unfair.

And unfair it is – especially to those unemployed Edmontonians in the petroleum sector. The fact that Edmonton has more government and quasi-public sector jobs than Calgary is cold comfort to a laid-off oil-field worker.

Although both cities are suffering from energy-sector woes, they both, fortunately, remain strongly entrepreneurial. This will spur new industries, new products and new services – even if the nature of these seems a bit elusive and difficult to pinpoint at the moment. The good old days of $100 (U.S.) oil are gone, and they may never return. But new days will come, better than before, anchored in a new and more diversified energy sector.
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Todd Hirsch is the Calgary-based chief economist of ATB Financial and author of The Boiling Frog Dilemma: Saving Canada from Economic Decline.