Advantage Employers

Alberta is a great place to do business. Is it a great place to work?

By David Bright

As a place to work, Alberta has always had a mixed reputation. The province’s minimum wage ($8.80/hour), for example, is the second-lowest in Canada. But the proportion of Alberta’s population actually working for minimum wage (1.4 per cent) is lower than in any other province. Some see this as evidence that business-friendly, free market Alberta does in fact benefit all Albertans, pushing the wages of most workers above the legal minimum. But on closer inspection, the low number of minimum-wage earners actually hides a serious problem. Alberta faces a looming labour crisis, one born of the provincial government’s continued overdependence on a single economic sector—the oil patch—on the one hand, and of its historical antagonism toward the interests and rights of workers on the other.

These two realities are inextricably interconnected. The roots of anti-union sentiment in the province go back 60 years. Before 1945, organized labour was relatively strong and accepted as part of the industrial landscape by employers and government alike. With the discovery of oil at Leduc in 1947, Social Credit premier Ernest Manning sought to attract much-needed foreign capital by promoting Alberta as a safe place to invest, free from union “interference.” Thus began a pattern that continued through successive governments to the present day. Alberta’s laws limit the rights of workers to organize, strike or form picket lines so as to preserve the province as a natural heartland of free-market enterprise.

In this heavily pro-business climate, government policy has consistently favoured business growth and return on investment over the well-being of working people. Certainly, some working Albertans benefit enormously, notably the 6 per cent of the workforce directly employed in the oil industry and earning some of the highest average salaries in the country. But most of Alberta’s workers—retail clerks, nurses, carpenters, social workers, secretaries—don’t work in the oil patch, and haven’t benefited the same way from a “business-first, workers-second” model. 

A hundred years ago, agriculture was king in Alberta, employing fully half of the province’s workforce and generating three-quarters of the wealth. As late as 1941, the sector still employed nearly 50 per cent of all workers in Alberta. But by the 1960s, agriculture accounted for just 20 per cent of the workforce; by the 1980s, less than 10 per cent. During that same time, Alberta’s service industries grew from 30 per cent of the workforce (1940s) to almost 60 per cent (1980s). 

In terms of wealth production, Alberta’s resource extraction industries—oil, mines and quarries—outstripped agriculture by the 1960s, and by 1980 accounted for over half of the province’s wealth. Yet the oil industry was never a major employer of labour. Instead, by the end of the 20th century the five largest employers in Alberta were, in order, retail trade, healthcare and social assistance, construction, manufacturing, and accommodation and food services. Together, these industries employed 46 per cent of all workers. Construction and manufacturing have, of course, been important employers of labour throughout Alberta’s history, and are the bedrock of the province’s trade union movement. But the rank of the three service industries by 2000 shows how much Alberta’s workforce has changed. 

In 2005 the Alberta government painted a portrait of the province’s changing workforce in a discussion document, “Alberta’s Labour Force: Looking to the Future.” It was lengthy and detailed, breaking its subject down along lines of age, ethnicity and gender as well as by industry. The purpose of the report was twofold: to devise a labour force development strategy and to build a plan to guide the efforts of Alberta Employment & Immigration to address an imminent shortage of skilled workers. The document was also intended to help the government find ways to ensure a “vibrant and prosperous province” 20 years down the road. 

Alberta’s government favours business growth and return on investment over the well-being of working people.

The report made two key findings. The first was that Alberta was about to experience worker shortages due to a combination of slow labour-force expansion and high economic growth. The oldest baby boomers—that generation born between 1946 and 1960—were approaching retirement age and would not be replaced in sufficient numbers by younger workers. At the same time, the economic boom of the early 2000s had increased the demand for workers even further. In other words, an imbalance loomed in the demand for and supply of labour. 

The second finding was that the nature of work itself was changing and that the labour force would have to adjust—or be adjusted—to adapt. The key shift was toward continued growth in the service sectors dominated by relatively unskilled and low-paying jobs. At the same time, the economy needed high-skill, knowledge-based occupations to succeed. 

If Alberta’s existing population was unable to meet this new demand for labour in terms of neither quantity nor quality, a possibility was to import workers either from other provinces or other countries. But as all of Canada’s provinces were facing similar challenges, and as Alberta had historically trailed other regions in its ability to attract workers from outside Canada (“Alberta is not a preferred destination for immigrants,” the report noted bluntly), the government viewed neither in-migration nor immigration as an adequate answer to the problem. Instead, it proposed two alternative remedies: first, engage segments of Alberta’s population that were presently underemployed or underrepresented in the workforce; and second, increase the productivity of existing workers.

With respect to the first option, the government targeted Aboriginals and persons with disabilities as the two most underrepresented groups in the workforce. Noting that their participation rates were lower than the provincial average, the study estimated that the two groups might produce, annually, an additional 4,500 workers. It acknowledged, however, the problems inherent in this strategy, including the facts that “the education level among Aboriginal Albertans is lower than among non-Aboriginal people” and “many persons with disabilities face unique challenges, including lack of acceptance in the workplace and lack of willingness by employers to accommodate… specific disabilities.”

In terms of wealth production, oil outstripped agriculture by the ’60s. But it was never a major employer.

The study also identified women as “a potential source of additional labour supply in view of their lower rate of participation in the labour force and higher likelihood of working part time as compared to men.” However, while the female participation rate (67 per cent) was lower than the male rate in Alberta (80 per cent), it was already significantly higher than either the Canadian (62 per cent) or US (59 per cent) rate for women. Given this data, the government conceded that reducing the labour crunch by increasing the number of female workers might be difficult. Moreover, such a goal had “potential social policy implications, such as an increased need for daycare for children, provision for longer parental leave, and pension reforms.”

The study provided a sector-by-sector review of Alberta’s economy, highlighting the specific situation, outlook and challenges in each case. Construction and manufacturing, fast-growing sectors, were likely to experience labour shortages. The general aging of the workforce would affect all sectors, but it was particularly going to hit the construction industry, whose workforce was older than most others. The nature of work in all sectors was undergoing a transformation as the addition and integration of new technologies demanded new skills, training and levels of education across the workforce as a whole. 

Alberta was not unique among the provinces in this situation, of course, but the magnitude of the challenge it faced was, to some extent, a result of its own policies. Since the 1980s, Alberta’s GDP per capita had been growing faster than that of any other province in Canada. Fast growth created a tight labour market. When Stelmach became premier in 2006, he responded to questions about Alberta’s continuing economic growth with the familiar refrain: “There is no such thing as touching the brake.” As late as October 2008, Alberta’s unemployment stood at less than 4 per cent, well below the national average.

As Alberta’s workforce aged and baby boomers exited without being replaced by new workers, as replacements from other provinces or countries didn’t materialize, and as the economy and demand for labour soared, a crisis was simmering. 

Then came the great global economic collapse of 2008–2009. The fall was sharp and sudden. From Wall Street, it spread around the world at the speed of light, thanks to the interconnectedness of the global economy. The shock waves hit Alberta much harder than any other province, precisely because Alberta’s economy had grown so rapidly over the previous decade. Proportionately, Alberta lost more jobs (3.3 per cent) than anywhere else in Canada. Unemployment in the province shot up from 3.7 per cent in October 2008 to 7.5 per cent a year later. The number of Albertans claiming Employment Insurance went up dramatically. Following the start of the recession, Alberta experienced the largest spike in the number of EI beneficiaries of all provinces.

However, while the number of claimants more than doubled in virtually every urban jurisdiction, the number of Albertans actually covered remained low. Eligibility requirements are more stringent in Alberta. Covering fewer than one unemployed worker in four, in fact, Alberta had the lowest rate in Canada before the recession. Even after the economic downturn dug in deep, a year later (October 2009) Alberta’s rate was still the third lowest in the nation, covering less than half of the unemployed. As a result, out-of-work Albertans instead turned directly to Income Support (a.k.a. welfare, caseloads for which increased by almost 50 per cent between October 2008 and December 2009) and to private charities, such as food banks. Here again, Alberta led the nation, with a 61 per cent increase in food bank use. By March 2009, almost 54,000 Albertans, one quarter of whom were actually employed, relied on food bank support to some extent. Finally, bankruptcies were up, too, by more than 80 per cent, again higher than in any other province. 

This broad-brush picture of the recession in Alberta hides some important details. For example, female workers over the age of 20 actually saw a net gain in employment between August 2008 and June 2009. Male workers suffered a net loss of 29,000 jobs, while women experienced an increase of 12,800. However, as women are overrepresented in lower-paying jobs, this meant more families were now dependent on lower incomes in order to make ends meet. And this switch from high-paid, higher-skilled work to low-paid, lower-skilled jobs ran precisely counter to the warnings in the government’s 2005 study.

By the end of 2009, some signs of economic recovery were evident. Unemployment dropped to below 7 per cent and in May 2010 Alberta recorded its first year-over-year employment gain since February 2009. The employment rate for workers over the age of 15 was now 69 per cent—slightly higher than the national average of 68 per cent. By the end of 2010, the Royal Bank of Canada was forecasting that Alberta would “rank second among the provinces in terms of growth in 2011, behind only Saskatchewan,” and predicted an increase in employment of 2.3 per cent, the highest in Canada.

To encourage economic recovery, Premier Stelmach spent $25-million to relaunch Alberta as a place to do business. He jettisoned the 15-year-old “Alberta Advantage” slogan and unveiled the more nebulous “Freedom to Create, Spirit to Achieve.” “We want to attract more tourism, more investment,” Stelmach told reporters in 2009, “and it’s the appropriate time to rebrand the province… [People] feel that that’s the way to go.”

For Alberta’s workers this was not the way to go. The Stelmach government’s policies had made Alberta’s workers especially vulnerable to the global economic collapse. More rapid growth, more investment, a more business-friendly climate, fewer protections for workers, new legislation curbing the ability of unions to organize—all exacerbated an already difficult labour situation. 

The global recession hit us harder than any province, precisely because our economy had grown so rapidly.

As the recovery gingerly takes hold, those who would point to the low proportion of Albertans dependent on the minimum wage as a sign of the economy’s fundamental soundness miss the point. It’s not a question of how many people earn how much per hour. What is far more important for our province’s long-term economic prospects is what kind of workers are going to be employed in what kind of jobs, and how resilient the Alberta workforce will be in the face of continuous global economic changes, not least of which is the fluctuating price of oil.

Just as the recession hit different elements of the workforce in different ways, so too has the recovery. Consider the breakdown of the provincial labour force by age and gender. Youths aged 15 to 24 suffered especially during the recession, their unemployment rate rising from 7.5 per cent in 2008 to 12.3 per cent a year later. Within this group, young men were hit particularly hard, given that many of them were concentrated in the energy sector. For this group, unemployment actually reached 13.9 per cent by 2009. In comparison, female workers in this age group experienced an unemployment rate of 10.4 per cent by 2009, noticeably lower than their male counterparts, but still the highest rate in a decade. By May 2010, there was some slight improvement among both groups, but unemployment remained relatively high.

For the intermediate range of workers, aged 25–44, the recession’s impact was less severe. Unemployment reached 5.8 per cent in 2009, but returned to the 20-year average of 5.4 per cent in 2010. Older workers were even less affected. 

These facts suggest that the recovery has compounded the problems identified by the Alberta government’s discussion document of 2005. The workers who fared the best through the global recession were the older members of the workforce, those closest to retirement and least likely to undertake the kind of retraining envisioned by the government. Recovery has been quickest among the relatively low-paid and lower-skilled jobs, again undermining the government’s objective.

The government’s 2005 report noted that “issues are forcing us to pay renewed attention to the labour market and to rethink the strategies we use in labour force development.” But, more recently, RBC predicted that Alberta’s sustained recovery would rely on the fate of the oil industry and on the oil sands in particular. “This development will pump tremendous activity into the provincial economy,” the bank declared, “thereby acting as a catalyst for both faster job growth and stronger migration from outside the province.” The report predicted a rise in employment of 2.3 per cent for 2011.

In other words, the RBC report predicts precisely the nature of economic expansion the Alberta government identified in its 2005 study as not being the key to the province’s future: a continued reliance on an existing industry—oil—and dependency on workers from elsewhere, rather than the development of new industries and an increase in productivity among existing workers based on the application of new technologies and acquisition of new skills. 

As the economic crisis starts to fade from memory, many political and business leaders are banking on the continued rise of world oil prices and the future development of Alberta’s oil sands as a foundation for the province’s economic prosperity. Maybe they’re right, but if so their hopes fly in the face of the government’s own detailed study of the provincial labour force. The oil industry may continue to generate the lion’s share of Alberta’s wealth, but it doesn’t employ—and never has—more than a fraction of the province’s workforce.

Alberta is capable of change. Ralph Klein, progenitor of the so-called “Alberta Advantage,” is long gone. Ed Stelmach, blighted by the economic recession, faces a challenge from the right by the Wildrose Alliance and dissent from within his own party, all of which prompted his January decision to stand down. The Progressive Conservatives, in power in Alberta since 1971, face the real possibility of defeat at the next election.

If this happens, whichever party replaces them will need to recognize the urgent challenges facing Alberta’s workforce. Building a diverse labour force, investing in a broad foundation of employment skills, protecting the rights of workers to organize themselves as a way to guard against future global fluctuations—these should be the immediate goals of whoever forms the next government of Alberta.  

David Bright is author of The Limits of Labour: Class Formation and the Labour Movement in Calgary, 1883–1929.

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