Stephen Gordon has some good news and some bad news for Quebec.
As the Quebec government gets ready to bring down its budget, the outlook looks reasonably promising. After years of austerity and tax increases, the provincial government has finally balanced its budget, inspiring a certain amount of pre- budget speculation about tax cuts, restored spending or some combination.
Moreover, the Quebec economy has been showing some surprising signs of strength. Recent estimates for the unemployment rate have come in at 6.5 per cent or lower, a level that has not been seen since the current version of the Labour Force Survey started in 1976. Quebec’s unemployment rate is also lower than the Canadian average — a rare occurrence. And in 2016, the census metropolitan area ( CMA) with the lowest unemployment rate was Quebec City, at 4.6 per cent (Guelph, Ont., was the only other CMA to come in under five per cent).
But of course, t hings aren’t as rosy as that. Population aging is no longer a serious concern about the future in Quebec, it’s a stern reality: the number of Quebecers between the ages of 15 and 64 peaked in 2013. If employment has been increasing since then, it’s due to an increase in the participation rates and the continuing trend of more workers continuing to stay in employment after the age of 65.
So those low unemployment rates are a bit misleading as measures of the strength of the Quebec economy ( or the Canadian economy, for that matter). We’re used to thinking of low unemployment rates as a sign of strong labour demand, and all that implies: increasing production and incomes. But in Quebec and in Atlantic Canada — and soon, to a lesser extent, in the rest of Canada — lower unemployment rates are more likely to reflect a shrinking supply of workers.
It gets worse. Population aging and low birthrates are not the only factors acting as a drag on labour supply in Quebec: there’s also the question of retaining the people who are already here. In every year since 1971 (that’s where the most recent data start), more people have moved from Quebec to other provinces in Canada than have moved from elsewhere in Canada to Quebec. The largest surge of interprovincial emigration occurred just after the election of the first Parti Québécois government in 1976. During the decade 1976- 86, net interprovincial emigration from Quebec amounted to some 240,000 people — almost four per cent of the 1976 population. Things have settled down since then, but net outward flow remains substantial: more than 90,000 people in each of the three subsequent decades, for a total net loss to interprovincial migration of 600,000 people over the last forty years. If Quebec had been able to retain these emigrants, demography would be much less of a challenge than it is. And not all of these emigrants are anglophones and allophones: f rancophones have been moving from what is now Quebec to the rest of North America as long as there have been francophones in North America. According to one study, almost one million Quebecers decamped for the U. S. between 1840 and 1930.
Of course, losing people to other regions of Canada is not necessarily a sign of demographic stagnation: Toronto loses some 25,000 people a year to internal migration. Toronto’s population is largely sustained by a massive and continuing flow of immigrants from outside Canada.
This brings us to the other problem: Quebec’s difficulty in attracting and retain- ing immigrants. The best illustration is Quebec City, the eighth most populous CMA, with just over 800,000 people. Any visitor who is familiar with large Canadian cities is immediately struck by Quebec City’s homogeneity: immigrants account for only 4.4 per cent of its population, compared to the Canadian average of 20.6 per cent. There’s no use blaming the gap on the ferocity of Quebec City’s winters: Winnipeg, with its 800,000 population and its even colder climate has an immigrant population of 20.6 per cent, the same as the Canadian average. My Laval colleague Gérard Bélanger argues that Quebec City’s low unemployment rate is more an artifact of its inability to attract immigrants than of a strong labour market.
And then there’s the question of retaining immigrants who do choose to settle in Quebec. According to a recent study done by the Quebec Ministry of Immigration, Diversity and Inclusion, less than 75 per cent of immigrants admitted to Quebec over the period 2005- 2014 were still living in the province in 2016. Even among i mmigrants who know French and not English — a category that the Quebec government struggles to attract — the retention rate was just under 86 per cent. And among the i nvestor class of immigrants, the ratio is below 20 per cent.
It’s easy enough to explain why Quebec and the Atlantic provinces find it difficult to retain people, whether they are native- born Canadians or immigrants: low incomes. According to estimates published recently by Quebec’s Institut de la Statistique, Quebec’s average disposable income is the lowest in Canada: $ 26,857, compared to an average of $32,648 in the rest of Canada.
Demographics and economics can act in a positive feedback loop, where the effects of one amplify the effects of another. Sometimes the effect is welcome: clusters like Silicon Valley attract talent with the high incomes it offers, and the arrival of new talent increases incomes. But it can work the other way, as well: people deserting a region in search of better economic opportunities elsewhere. Moreover, these trends are difficult for policy- makers to reverse: clusters are hard to reproduce, and it’s even harder for governments to pull out of demographic and economic decline.
QUEBEC’S AVERAGE DISPOSABLE INCOME IS THE LOWEST IN CANADA: $26,857.