A Commentary by Wendy Ferguson – BHRLR, CPHR
My sources indicate that Alberta’s dire employment situation has just started to turn around. I chose to inform you about the reality of our current labour market when yesterday I read CBC’s absurdly titled article, “Job vacancies soar in Alberta, led by surge in energy sector” to describe the state of employment in Alberta. I believe CBC’s comments to be hasty, although I do foresee a gradual improvement in the coming year. The reality is that we continue to observe high unemployment rates much like our lagging maritime provinces.
Just this week Statistics Canada reported that the second quarter of 2017 saw 50,925 job vacancies in Alberta (up 8,500 jobs or 19.9% from one year ago). Our federal government is reporting a job vacancy rate of 2.6% (up from 2.2% one year earlier). It is reported that 1,300 of the new vacancies exists in the energy sector, another 1,300 in construction and a further 1,100 in manufacturing. This is a good thing, but I wouldn’t use the words ‘soar’ or ‘surge’ to describe our current employment climate. True, our unemployment rate has dropped to 7.9% (from 8.7% one year ago).
To give you an idea of where we were at during recent boom times, we were hovering around 3.5% unemployment rate in 2007 and 2008 and about 4.5% in 2012 and 2013. That meant very low unemployment, and as a result our wages were driven excessively high because labour was scarce. To put this into perspective, experts in Canada consider full employment to be at about 5 to 6%. Full employment is the lowest rate of unemployment before a scarcity of job seekers initiate wage inflation. To the other extreme, economists consider 10% unemployment to be disastrous. We almost reached that 11 months ago in Alberta when we were at 9%.
My HR Association, CPHR Alberta, just released their latest independent Alberta HR Trends Report. The report was derived by responses from over one thousand CPHR members across various industries and sizes of organizations in Alberta. I pay particular attention to their Hiring Confidence Index, as it measures how Alberta employers feel about hiring over the next six months. We see that 33% of industry-wide respondents expect their workforce to grow by December, 2017, the highest level in 2.5 years. However, 15% of respondents expect their organizations to decrease in size. Of the energy sector respondents, 38% expect growth, 35% expect no changes and 22% expect a decrease in employment.
Also, it is notable that 64% of organizations who reported losing staff over the first six months of the year do not plan to fill the majority of those vacancies.
Of the survey respondents, 16% of organizations reported rolling back their salaries or wages in the past three years, most commonly in the energy sector. In terms of recovery, only 25% of the respondents have fully reinstated the rolled-back wages and another 22% expect to do so in 2018, 27% expect to do so in 2019/20 and further, 26% do not expect to reinstate the rolled back wages at all.
My consulting practice definitely witnessed an increase in hiring activity and job postings in the energy sector in recent months. However, Alberta isn’t close to being out of the woods yet. Besides the obvious reasons, the price of oil, employers are nervous about how our new labour laws will affect their businesses in the new year. Also, the recent minimum wage hike will also deter many Alberta employers in hiring in various positions. Organizations are cautious in their growth and understandably so. I will continue to provide you with well-rounded data in the coming months for you to understand the bigger picture of the labour market in our province.