TO THE POINT
As Atlantic Canada’s population and economy declines, it’s had a big impact on this region’s importance relative to the rest of Canada
Don Mills, an expert in data trends in Atlantic Canada, looks at why Nova Scotia has such a chronically underperforming economy.
One of the objectives of this column is to provide fact-driven analysis of key challenges facing our region and advocate for the kind of changes needed to increase prosperity in Atlantic Canada.
As someone who has spent my life analyzing data to uncover trends, understand consumer habits, behaviour and attitudes, and the cause and effect of key issues, I have long tried to understand why Atlantic Canada has trailed the rest of the country in terms of economic growth.
Relative to the rest of the country, Atlantic Canada has suffered from a chronically underperforming economy for decades. The reality is that this region becomes a smaller and less important part of the economy every year. Atlantic Canada represented 7.8 per cent of the Canadian economy in 2000. By 2017, that percentage had dropped to 6.3 per cent. In Nova Scotia, the size of the provincial economy relative to the Canadian economy has shrunk from 2.9 per cent of the national economy in 2000 to 2.3 per cent in 2017.
Over that same period, the Canadian economy has grown nearly 58 per cent, while the Nova Scotia economy has only grown 24 per cent (the weakest growth in the region). In other words, the provincial economy is about a third smaller than otherwise would be the case if the province had only grown at the average national rate over the last 18 years.
In 1973, Atlantic Canada represented 9.5 per cent of the total Canadian population. By 2017, this had decreased to 6.5 per cent. Over the same time frame, the population of Nova Scotia has declined from 3.6 per cent to 2.6 per cent. With declining population comes declining political clout.
There is a relationship between economic growth and population growth. In fact, population growth is, in my opinion, essential for economic growth. Unfortunately, there has been little population growth in the region since the 1990s, except, interestingly enough, in Prince Edward Island, which has outperformed the rest of the region economically.
What are the causes of this chronically under-performing economy? Let’s start by looking at employment. For years, I have wondered why the region leads the country, year in, year out, in terms of unemployment rates. Were we less educated, less entrepreneurial, less motivated than those living in other parts of the country? One of the consequences of higher unemployment rates in Atlantic Canada relative to the rest of Canada is that the region has had proportionately fewer workers helping to build economic prosperity on a year-round basis. It also means there have been fewer taxpayers to fund public services and equalization payments from other Canadians are needed to subsidize those services.
Why has Atlantic Canada had the highest unemployment rates in the country? The key reason, in my view, is the higher-thannormal reliance on seasonal employment within the region than elsewhere in the country. That higher reliance on seasonal employment is driven by the high percentage of the population in Atlantic Canada who live in smaller, rural communities relative to other parts of the country. Not surprisingly – and this is the case for much of rural Canada – rural communities are challenged to provide year-round employment opportunities for all those living in those communities.
While this challenge is no different elsewhere in Canada, the problem for Atlantic Canada is that, as a percentage of the population, there are more than twice as many living in rural communities in this region. In Nova Scotia, 43 per cent live in rural communities (defined as communities of less than 5,000 population). This compares with only 19 per cent of the population in Canada that live in rural communities.
Rural communities have a higher reliance on natural resource development and a greater dependence on seasonal work than their urban counterparts. Added to that challenge is the growing resistance to resource development – of any kind, it seems – and there are limited opportunities to create full-time, year-round jobs in most of these rural communities.
The key to greater economic prosperity is the creation of more full-time jobs, in nearby urban communities within a reasonable commute, for those living in these rural communities. By focusing economic development efforts on these urban areas, there is an opportunity to serve those living in nearby rural communities with full-time employment.
A future column will be devoted to the establishment of economic hubs across the province for this exact purpose.
“For years, I have wondered why the region leads the country, year in year out, in terms of unemployment rates. Were we less educated, less entrepreneurial, less motivated than those living in other parts of the country?” Don Mills
Don Mills is the former owner of Corporate Research Associates and a recognized expert in data trends in Atlantic Canada. After selling his business recently, he remains passionate about data – and learning the guitar. He can be contacted at dmillshfx@gmail.com or on Twitter at @donmillshfx.