In this week’s EconMinute, we’re talking about the labour market in Alberta.
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There are two data sets that, when put together, can reveal a lot about the Alberta labour market: the unemployment rate (what percentage of the labour force is looking for work?) and the job vacancy rate (what percentage of jobs are unfilled?).
While each of these measures are valuable on their own, the combination paints a fuller picture. When mapped out over time, it creates a chart economists call the “Beveridge curve”.
There are two things we can learn from looking at this curve.
The one is labour market health. Data points at the top left of the chart represent a tight labour market and a growing economy: there are a lot of job vacancies and not many people left looking for work. The bottom right indicates the opposite.
The other is “job matching”—i.e., how well, and how quickly, workers are matching with open jobs. This is seen by movement in or out from the axis. For instance, a higher level of job vacancies for a given rate of unemployment could tell us that there is a poorer match between workers (e.g., skills, location) and the needs of businesses.
So what does the Beveridge curve tell us about Alberta’s labour market?
- First, the labour market is tight relative to pre-pandemic: fewer Albertans are unemployed and more jobs sit vacant.
- Second, the pandemic shifted the curve “out”—meaning employers had to search longer and wider to fill a given posting.
- Needs grew quickly in certain sectors while income support and barriers to work such as access to childcare left fewer individuals looking for work.
- As a result, the unemployment rate in November ‘21 was similar to that pre-pandemic but the vacancy rate was much higher: 4.4% versus 2.7%.
- More recently, the curve has begun to shift back “in.”
- Employers have fewer postings sitting open but unemployment remains low.
- Specifically, the job vacancy rate has decreased from its peak—5.3% to 4.4%—while the unemployment has fallen lower, too—from 6.1% to 5.7%.
This most recent trend is important and will be one to watch. In the best-case scenario, it will continue moving towards the axis. As economic growth slows, job vacancies will ease and, ideally, do so without driving unemployment (much) higher.