Insights

Last September, BCA brought attention to an issue we called the “silent crisis”.

Not only were more people out of work in Alberta than in many other provinces but also, they had been out of work for longer—and in many cases, much longer.

More recently, sandwiched between otherwise positive news stories of recovery in Alberta, the CBC pointed out that long-term unemployment still looms large in Alberta. In fact, it has remained stubbornly high, despite an otherwise strong recovery from COVID.

The provincial government has attributed this to Alberta’s “triple black swan” event: the drop in energy prices; the impact of the pandemic; and the related recession. But there is a little more to the story.

In this commentary, we uncover:

1. 1. 1. Why have so many people been out of work for so long in Alberta?
      2. How has COVID changed the face of long-term unemployment?

Pre-COVID

Over the last few months, about 12% of unemployed Canadians had been out of work for over a year. In Alberta, however, this figure was over 20%.

But the current state cannot be understood by the triple black swan events alone. To understand Alberta’s recent situation requires a trip back a few years.

As we noted in previous work, for many years, it was rare for Albertans to be unemployed for very long. Even when times were tough, the winds would quickly change, and new opportunities would crop up.

After the global price of oil tumbled to new lows in the mid 2010s, however, this changed. By June of 2016, many Albertans had been desperately searching for work for months and the province’s relative strength compared to the rest of Canada flipflopped.

Over the next few years, changes in employment in the province’s resources sector—especially oil and gas—largely set the trends in provincial long-term unemployment.

For instance, one year following the jobs cuts in 2014/2015, Alberta saw a large increase in the number of people who had been out of work for a year or more. The same was true just before the pandemic due to a decline in resource employment the year prior.

Though the inverse has also been true—when resources employment improves, long-term unemployment tends to decline—the general trend has been a decline in employment in the resources sector and an increase in long-term unemployment in the province.

COVID

Energy analogies might be overused in the province, but COVID really did add fuel to this long-term unemployment fire. The share of individuals actively looking for a job for more than a year without luck increased from about 1% in the late-2010s to 2.5% at its highest peak during COVID.

However, there wasn’t more fuel added in Alberta than other provinces; it just started with a bigger fire.

Alberta’s rate of long-term unemployment was—and still is—much worse than the national average, but the gap between the two did not really worsen during COVID. In fact, COVID actually hit labour markets in Alberta and other provinces with a similar amount of force.

And as the economy recovers, the same is holding true in the opposite direction. As of the most recent data, Alberta’s long-term unemployment rate has settled back to where it was pre-COVID, and so too has the national average.

Now what?

Will long-term unemployment continue to decline in Alberta?

At first glance, it appears likely that it will. Not only is the economy recovering well from COVID-related restrictions, but as oil prices soar and energy companies become more profitable, they’ve started to hire again. Employment is now over 10% higher than it was pre-COVID. As oil and gas companies continue to post new job openings in a tight labour market, they may be willing to take a chance on individuals with bigger gaps in their resumes. That is, if these individuals are able to meet the evolving skills requirements in the sector.

On the other hand, like in other provinces, the pandemic has had a lasting effect as consumer preferences change and new ways of doing things have grown in popularity. These trends could prevent long-term unemployment from returning to levels seen in the early 2000s.

Many businesses and industries have yet to fully rehire staff even over two years later (and, at this point, may never): restaurants and hotels, and gyms and performing arts studios, to name a few. In the absence of great data, we can call on personal stories of stagehands without gigs, fitness instructors without gym members, and English majors filtered out by “bots” (software used to sort swaths of online resumes) to tell a story of the changes and challenges for many.

As a result of these preference changes, the face of the long-term unemployed in Alberta has also changed. Previously, most were prime working age men (25-54). Now, they are more diverse. The share of women unemployed for more than a year is rising; as is the share of older workers.   

Conclusion

As of the latest data, Alberta still has a long-term unemployment problem, but it looks a little different than it did before. There are some good signs that things will continue to improve and the gap with the national average may close. But, overall, this serves to remind us that long-term unemployment is a changing and complicated policy challenge that continues to require our full attention.

Alicia Planincic, Manager, Policy & Economics