WE recently wrote about the effects of Covid-19 on Alberta’s economy and how unemployment will get worse before it gets better. The latest data from Statistics Canada says it’s not all that bad. The numbers should provide some optimism in an otherwise bleak jobs landscape.
The province’s unemployment rate fell 0.4 percentage point to 10.7% in the January. This puts Alberta just behind Newfoundland and Labrador which posted the highest provincial unemployment rate for January at 12.8%. Amid the pandemic’s second wave and restrictions imposed on businesses, this development should be welcomed.
Credit Union Central Alberta chief economist Charles St-Arnaud was quoted in a media report as saying the province is seeing an emerging divergence in the economy between sectors. As Covid restrictions are put in place, face-to-face sectors like food and accommodations have been negatively impacted but other industries that have adopted remote work or operate on safe-distance environments have performed relatively well. He cites construction as an example, which grew by about 15,000 jobs.
St-Arnaud wrote in Alberta Central’s Outlook 2021 report that Alberta is expected to continue to lag the rest of the country in consumer spending and housing. But higher cash savings and strong income-support from the government are positives that could help the province weather the proverbial pandemic storm. That, and a gradual increase in oil demand through 2021 and 2022, will be good for Alberta.
The main takeaway here should be the “emerging divergence in the economy between sectors.” Alberta—and Canada for that matter—has long been dependent on oil and gas. The sector has fueled economic growth over the past 20 years and has touched virtually every aspect of life in Alberta. However, there is always room for economic diversity and much of the profits from oil and gas could have been used to expand the economy into other fields.
Of course hindsight is always 20-20, but that should never be an excuse to keep the blinders on just because there’s still grass on our side of the fence. The cancellation of Keystone XL, and a lot of conversations about Enbridge 5, should wake up Alberta’s economic planners to the realities of energy’s future, and the political economy of the US. With a stroke of the pen, US President Joe Biden effectively killed 9,000 jobs, erased billions of dollars in potential revenues, and sent a chilling reminder to Premier Jason Kenney that the US’ energy policies have shifted.
Perhaps it is time for Alberta to draw up an economic development program that will not make oil and gas the centerpiece. Perhaps a change of mindset and outlook should be forthcoming, if only to truly secure the future for Alberta. The market constantly changes, and economic policies in key markets like the US are driven largely by political realities. Mr. Kenney can wait for the next Donald Trump to emerge (God forbid), or he can rearrange the paradigm and make a plan for a future that is, well, more attuned to the future.
