Worker shortages loom once again for Alberta economy

April 29, 2012 | By | Reply More

The federal government is making changes to its foreign temporary workers program

In Alberta’s oil and gas sector, the average weekly wage is $2,434 – more than two-and-a-half times as high as the average Canadian weekly wage.

Troy Media – by Todd Hirsch    

Alberta’s economy has its groove back. In the latest provincial economic accounts released Friday by Statistics Canada, real growth in Wildrose Country spiked 5.2 per cent last year – the strongest 12-month period since 2006.

And of course, the province is starting to take on that boomtown glow once again. People are spending, industry is investing and companies are hiring.

The dreaded labour shortages

But with the boom times comes the predictable and familiar problem of worker shortages. The lack of available workers is not as severe or widespread in Alberta as it was in 2006 (remember the stories of the donut store workers earning $20 an hour, or the motels closing due to lack of staff). Still, worker shortages are already starting to choke Alberta’s economy.

To take some of the pressure off, Ottawa responded with changes around foreign temporary workers this week. The federal government committed to responding more quickly to employer requests for highly skilled workers by reducing the wait time for a Labour Market Opinion from 12 to 14 weeks to within 10 days. (A Labour Market Opinion is the approval required from the federal government for bringing a foreign temporary worker into Canada).

And not only will the wait time be shorter, Ottawa is altering the rules on how much Canadian companies must pay foreign workers. Currently, they receive the “average wage” that’s paid to a Canadian worker in the same region. However, under the new framework, employers are allowed to pay foreign workers up to 15 per cent less.

Alberta’s provincial government has applauded the changes to the federal framework, and for good reason. This province is the most afflicted by a shortage of workers, particularly in the north and within the energy sector.

But the federal government’s changes are causing controversy – and criticism. Some argue reducing the wait time for companies to bring in foreign workers also reduces the amount of time a domestic worker has to find a job within Canada. Take, for example, an unemployed welder in New Brunswick or Ontario. He or she may consider working in the oil sands, but finding that job in Alberta may take more than 10 days. If the window of opportunity is shortened, it could discourage interprovincial migration of domestic labour.

Critics also argue that allowing companies to pay foreign workers up to 15 per cent less will put downward pressure on average wages throughout the economy, even for domestic workers.

Both of these arguments have some merit. However, without these changes the result is likely lower overall economic output, which would have an even greater negative impact on employment and wages in the long term. If energy projects are unable to proceed because there is simply not enough workers – or worse, if wages rise so high as to make those projects uneconomic – investors may scale back or cancel them altogether.

If that seems improbable, consider what happened in 2009 when dozens of investors did just that. Activity came to a screeching halt (largely due to skyrocketing cost) and overall unemployment in the province jumped to 7.5 per cent.

Wages very high in Alberta

Additionally, if wages are brought down slightly by the new rules, allowing companies to pay foreign workers a bit less, that hardly seems catastrophic. Last week Statistics Canada also reported on average weekly earnings in Canada and paycheques in Alberta are a stunning 19 per cent higher than the Canadian average. In Alberta’s oil and gas sector, the average weekly wage is $2,434 – more than two-and-a-half times as high as the average Canadian weekly wage. Wages here could stand to be brought down a bit closer to earth.

Overall, the regulatory changes to foreign temporary workers make economic sense. Alberta needs the workers, and thousands of eager labourers from around the world would love the chance to work in Canada – even if temporarily.

What cannot be lost in the debate, however, is that these foreign workers are not commodities: they’re people. Even though they may freely choose to come here for work, their safety, needs and respect as human beings must remain the number one priority of their Canadian employers.

Troy Media business columnist Todd Hirsch is Senior Economist with ATB Financial.


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Category: Business

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