A commentary by Wendy Ferguson
Trying to Understand the Unemployment Stats and Where Do We Go From Here?
School’s back in session and summer vacations are over, yet that September rush hour traffic in Calgary doesn’t seem as heavy as it should. Prime parking spots are available at peak times and the vacancy rate of our downtown buildings hovers around 27%. What with the Trans Mountain fiasco, NAFTA talk struggles, minimum wage adjustment, and the news last week that Canada lost 51,000 jobs in August…none of us are surprised when we hear the bleak monthly statistics.
Last November, Premier Rachel Notley stood at the podium and assured us of imminent economic recovery. She said confidently, “Alberta’s reclaiming what I would suggest is its rightful mantel as Canada’s economic engine. A few more quarters of this and we will be able to say truly that Alberta is back!” Wrong! Fast forward ten months and through a series of unfortunate events and circumstances, and here we are…unemployment is on the rise again.
What does a ‘healthy’ unemployment rate look like? Bloomberg suggests that a 3% to 4% unemployment rate should be a reasonable goal for policymakers to embrace (seems our southern neighbors have been able to achieve this goal). Alberta’s overall unemployment is 6.7% and will undoubtedly intensify in the coming months. Edmonton 6.4% and Calgary an appalling 8.2%. Compare these rates to our fellow provinces: BC 5.3%; Quebec 5.6%; Ontario 5.7% (an 18-year low); and Manitoba 5.8%…we are really suffering in comparison. Our governments have seriously failed us.
It got me thinking…does that unemployment rate truly represent the state of Alberta? I’ve always been skeptical when it comes to unemployment statistics. In my opinion, the rates have seemed mistakenly low in Alberta throughout our latest economic downturn and the accuracy and reliability of employment stats is often a topic for debate in Alberta.
How are unemployment rates determined in Canada?
The monthly statistics related to employment are among the most watched indicators in our nation and I wanted to better understand how Statistics Canada (Stats Can) comes up with these numbers we see every month. They use 2 survey methods to determine unemployment and here’s how it works:
1. A monthly Labour Force Survey (LFS) is conducted, said to provide a ‘broader picture’ of employment. This survey allows them to gather information about those who are self-employed, which would otherwise be overlooked. The random survey is conducted monthly, by phone or via email/mail with an online questionnaire link, amongst 56,000 households across Canada (approx. 1 in 240 households). They use a statistical method known as ‘sampling’ to determine the characteristics of an entire population, much like polling. It is ‘mandatory’ to participate if you are contacted to complete this survey, although Stats Canada has indicated that about 10% of people contacted don’t respond. Whether you are working, unemployed or have left the workforce, you are expected to participate.
Stats Can says that their sample is allocated to provinces and to layers within provinces in the way that best meets the need for reliable estimates at various geographic levels. Recently, the monthly LFS sample size has been approximately 56,000 households, resulting in the collection of labour market information for approximately 100,000 individuals. However, the LFS sample size is subject to change from time to time to meet data quality or budget requirements. That leads me to believe that some months they survey way less people.
According to Stats Can, there are three categories of employment status:
- Employed – those who during the survey week: did any work for pay (including self‑employment); did any unpaid work in a family-owned enterprise operated by someone in their household; or were temporarily absent from their regular jobs (whether paid or not).
- Unemployed – those who during the survey week: had no employment; were available for work; and were either waiting to be recalled to a job from which they had been laid off, made specific efforts to find employment sometime during the 4-week period ending with the survey reference week or had a job to start within the next four weeks.
- Not in the labour force – persons who are neither employed nor unemployed, but rather were unwilling or unable to offer or supply labour services under conditions existing in their labour markets.
2. They also collect data using a business employment survey program called the Survey of Employment, Payrolls and Hours (SEPH). This survey provides a monthly snapshot of the earnings, payroll jobs (occupied positions) and hours worked by industry at the national and provincial/territorial levels. Estimates are produced by using a combination of a census of payroll deduction accounts provided by the CRA and the Business Payrolls Survey (BPS), which collects data from a sample of 15,000 businesses. The BPS also collects information on job vacancies.
The main difference between the household LFS and the business employment survey is that the former produces estimates of the number of employed persons, while the business surveys estimate the number of jobs.
3. Once that data is compiled then seasonal adjustments are applied. When factors such as changes in weather or reduced or expanded production are known to be yearly patterns their influence on statistical trends are said to be minimized by seasonal adjustment techniques.
All levels of government rely on this employment and unemployment information and are supposed to use it to make policy decisions. For example, the data is apparently used to determine Employment Insurance eligibility as well as the size and duration of the program’s benefits. The data is also factored into the calculation of gross domestic product (GDP), in turn determining the size of transfers from the federal government to the provinces. The survey findings even help to determine the Bank of Canada interest rate. Each month the media gives considerable coverage to the survey results as they are recognized as one of the most vital signs of how our economy is performing.
Clearly the LFS does not have the precision of pure mathematics. The purpose of sampling is to reduce the cost and amount of work that it would take to survey the entire population. If we surveyed the entire labour population that would be a monthly census and that is simply not feasible. But I would just love to see a thorough Alberta census to get some real numbers because I have always felt that self-employed/contract workers have never been captured properly in our statistics. I believe Alberta has way more contractors in the energy sector than we might see in other Provinces, so a cross-sectional Canadian survey wouldn’t capture that. These are individuals that also wouldn’t be accounted for in the business surveys because they wouldn’t exist in payroll or EI records.
As of June, 2018 there were 53,170 Albertans collecting unemployment insurance (Economic Dashboard Alberta) out of a 2.5-million-person labour force (Stats Can). So, that means that 2.1% of our labour force is currently collecting unemployment insurance. What about the rest of the unemployed? Have they reached the end of their EI support or were they contractors and they never qualified for government supports? Aren’t our government bodies supposed to use the monthly data to adjust policy to support the Provinces?
So here we sit in beautiful Alberta with an abundance of natural resources, a highly educated workforce, a relatively young population, a high rate of labour participation (72.4% and the highest among the provinces since 1976 of those who have work or are looking for work), the 3rd highest employment rate of off-reserve indigenous people among the provinces, yet we suffer.
Where will we find our next jobs?
Given the challenges our energy sector is facing, there are a few other areas I’ve been keeping an eye on in Alberta…
I’ve read the Cannabis industry could bring anywhere from 50,000 to 150,000 jobs to Canada, depending on the source. I think more likely 50,000 Canada-wide, as that’s how many Cannabis jobs exist in California which parallels the population of Canada. I would guest that this will mean Alberta could gain a few thousand jobs. Currently I see just 174 Cannabis-related jobs listed on Indeed in Alberta, many in rural areas such as Cremona, but I expect to see more in the coming months. Jobs ranging from ‘Cannabis Concierge’ to retail to growers to management jobs are now available in preparation for the ‘open-for-business’ date of October 17th.
Also, there is much buzz about the tech industry expanding, especially in Cochrane, AB. Garmin Cochrane is one company I continue to watch with plans for expansion. There are currently more than 12 tech companies in that area. Discussions have been in the works between the town of Cochrane and several developers to design and build a business centre for innovation and technology. One can only hope we may be able to lure some larger tech companies to Alberta. The Alberta government also just pledged $50M to boost enrolment in tech education in the next 5 years.
Additionally, if Calgary does pursue the 2026 Olympic bid with a multi-billion-dollar price tag, new jobs will be generated, however that could leave us in a much worse situation in Alberta in the long run.
Furthermore, our NDP government seems to have added jobs without restraint in 2018, having numerous capital projects in the works (including $400M school projects and $5.5B in healthcare facilities). Many of these projects have reached completion stage and this will most certainly impact the employment market. It goes without saying that the 3 largest areas of new public sector jobs will be in healthcare, education and public administration.
Our provincial government lists 52 high demand occupations at: https://alis.alberta.ca/occinfo/occupations-in-alberta/occupations-in-demand/.
The Director of Provincial Forecasting with the Conference Board of Canada seems to have a more realistic outlook of Alberta. She recently said, “Albertans should not expect a return to the boom economy of yesteryear, as we are not forecasting an investment boom for Alberta”. Yeah, no kidding. Well, fingers crossed we will see some big changes in Alberta and Canada in 2019.
I would love to hear from individuals or employers about your employment experiences in Alberta for my future pieces. I invite you to email me at firstname.lastname@example.org. Please follow me on LinkedIn for future articles about HR in Alberta.
Wendy Ferguson is a Human Resources Professional and owner of Stick People Solutions, providing simple, flexible and effective solutions for complex people issues.