JOBLESS YOUTH
Cause of high rate unclear
Alberta's June youth unemployment rate — the highest in the country — looks staggering, but it's not the most important measure showing the province could be an economic outlier in the COVID-19 pandemic recovery.
The province lost a total of 37,000 full-time jobs in June, with most of those being replaced by part-time employment, which increased by 36,800. Overall unemployment sat at 9.3 per cent, but Alberta's unemployment rate for youths 15 to 24 years of age spiked to 18.1 per cent in June — the highest in Canada.
Joseph Marchand, University of Alberta economics professor with a focus on labour, said labour force survey data for this age group is especially “noisy,” which makes it difficult to interpret.
“When we talk on a month-tomonth basis, I wouldn't worry too much, because there are huge jumps,” he said, adding part-time hirings failing to entice back some workers who received the Canada Emergency Response Benefit (CERB) might distort the labour market across the country, especially among young people — but it's still really too early to tell by how much.
Mikal Skuterud, a professor at the University of Waterloo who specializes in labour economics, agreed monthly youth unemployment numbers should be taken with a grain of salt, and said because it's a federal program, Cerb-related distortions will likely play out in Alberta in the same way they do everywhere else.
Marchand pointed to the minimum wage as a big factor separating the province, noting Alberta's $15 hourly rate for those over the age of 18 is 20 cents lower than B.C.'S but higher than Saskatchewan's $11.45. Saskatchewan's June unemployment rate of 9.9 per cent is just over half of Alberta's.
“What would our youth labour market look like without that policy? It could look exactly like Saskatchewan, or close to it,” Marchand said.
Skuterud said minimum wage could be playing a role, but he's skeptical about it being the biggest factor in Alberta's unemployment numbers right now.
“There are issues there that are that are beyond that,” he said, adding if you are looking at the supply side of the labour market, specifically the number of job postings, Alberta is weak.
He noted that the latest data, from April, show Alberta has four job seekers for every job — a “slack” job market that shows structural challenges in Alberta, unlike many other provinces. “There's only two provinces where that number is higher: Newfoundland and Prince Edward Island. In every other province, it's lower, and it's a lot lower,” Skuterud said.
Unemployment numbers also do not necessarily reflect those who are not seeking a job, since the rate reflects the unemployed portion of the labour force, not the overall adult population.
“The difference is, in other parts of Canada those folks who enter the labour force and start looking for work, they're more likely to find a job. In Alberta they're less likely,” Skuterud said.
Both Marchand and Skuterud said the strength of the energy sector, and how workers might transition to new jobs, will likely determine if high overall unemployment in Alberta can be beaten back in the long term.
“It's the energy industry that was struggling before the pandemic. There were a lot of folks that were jobless before the pandemic, and I think that's a big part of what's happening,” said Skuterud.
He adds that there's a mismatch in the types of skills workers have and the types of jobs that are available, a “structural problem” that will continue unless the energy sector rebounds.
Marchand said the energy sector has been slow to rebound and grow compared to other industries, a factor when comparing Alberta to other provinces.
“It would be hard to ignore the fact that the energy industry hasn't picked back up quite yet,” said Marchand.
“Our comparative advantage is still toward energy, and I don't think that's going away.”
On the transition to green energy, he said “that's the long-term story for Alberta and there's a lot of uncertainty there, too.”
Premier Jason Kenney said last week he was surprised to see such underwhelming employment rates as the provincial economy began Stage 2 of reopening some businesses in early June, but predicted growth later in the year.
The premier pointed to a recent CIBC forecast that projects a 7.9-per-cent GDP expansion in Alberta this year — the biggest growth in the country. However, Alberta was hit hardest during the pandemic in 2020, with real GDP diving 8.2 per cent, according to that same report.
NDP finance critic Shannon Phillips charged last week the forecasts from Canada's major banks, including a projection that unemployment in Alberta could exceed the national average through the end of 2022, illustrate economic mismanagement by the UCP government.