‘Loud’ survey data makes it difficult to explain massive youth unemployment rate in Alberta: economists

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Alberta’s youth unemployment rate in June – the highest in the country – looks staggering, but it’s not the most important metric showing the province could be an economic outlier in the resumption of the pandemic of COVID-19.

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The province lost a total of 37,000 full-time jobs in June, most of these being replaced by part-time jobs which increased by 36,800. The overall unemployment rate stood at 9.3 %, but Alberta’s unemployment rate for youth aged 15 to 24 reached 18.1% in June, the highest in Canada.

Joseph Marchand, a professor of economics at the University of Alberta specializing in work, said the Labor Force Survey data for this age group is particularly “noisy”, which makes it difficult. to interpret.

“When we talk month to month, I wouldn’t be too worried, because there are huge jumps,” he said, adding that part-time hires had failed to attracting some workers who have received the Canada Emergency CERB Benefit) could distort the labor market across the country, especially among young people – but it is still too early to say by how much.

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Mikal Skuterud, a professor at the University of Waterloo who also specializes in labor economics, agreed that monthly youth unemployment figures should be taken with a grain of salt, and said it is a federal program , CERB-related distortions will probably play out as they do everywhere else.

Marchand pointed out that the minimum wage is a big factor separating the province, noting that Alberta’s $ 15 an hour for people over 18 is 20 cents lower than in British Columbia, but higher. to Saskatchewan’s $ 11.45. Saskatchewan’s unemployment rate of 9.9 percent in June is just over half that of Alberta.

“What would our youth labor market look like without this policy? It could look exactly like Saskatchewan, or approach it, ”Marchand said.

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However, Skuterud said the minimum wage could play a role, but he would be skeptical if it is the biggest factor in the unemployment numbers in Alberta right now.

“There are issues that go beyond that,” he said, adding that if you look at the labor market supply, especially the number of job openings, Alberta is low.

He noted that the latest data for April shows that Alberta has four job seekers for every job – a “soft” labor market that shows structural challenges in Alberta, unlike many other provinces.

“There are only two provinces where this number is higher: Newfoundland and Prince Edward Island. In all the other provinces it’s lower, and it’s much lower, ”Skuterud said.

Unemployment figures also do not necessarily reflect those who are not looking for work, since the rate reflects the proportion of unemployed people in the labor force, and not the entire adult population.

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“The difference is that in other parts of Canada, people who enter the workforce and start looking for work are more likely to find a job. In Alberta, they’re less likely, ”Skuterud said.

The energy sector, the key to the rebound

Marchand and Skuterud both said the strength of the energy sector and how workers might transition to new jobs will likely determine whether high overall unemployment in Alberta can be overcome in the long term.

“It was the energy industry that was in trouble before the pandemic. There were a lot of people who were unemployed before the pandemic, and I think that’s a big part of what’s going on, ”Skuterud said.

He adds that there is a mismatch between the types of skills workers have and the types of jobs available, a “structural problem” that will persist unless the energy sector rebounds.

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Marchand said the energy sector has been slow to rebound and grow relative to other industries, a factor when comparing Alberta to other provinces.

“It would be hard to ignore the fact that the energy industry has yet to fully recover,” said Marchand, who added that the economy’s transition to renewables could be costly, especially for workers.

“Our comparative advantage is always towards energy, and I don’t think that’s going to go away,” Marchand said. On the transition to green energy, he said, “This is the long term story for Alberta and there is a lot of uncertainty there as well. “

Premier Jason Kenney said last week he was surprised to see such disappointing employment rates as the provincial economy entered the second stage of reopening some businesses in early June, but predicted growth later in the year.

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“I believe the second half of this year you’re going to see tremendous job growth in Alberta,” Kenney said.

The Prime Minister stressed a recent forecast from CIBC which forecasts 7.9 percent GDP growth in Alberta this year – the fastest growing in the country. However, Alberta was hit hardest during the pandemic in 2020, with real GDP down 8.2%, according to the same report.

NDP finance critic Shannon Phillips said last week that forecasts from major Canadian banks, including CIBC, illustrate the economic mismanagement of the UCP government, including that Alberta could have a higher unemployment rate than the national average until the end of 2022 .

CIBC expects the province’s unemployment rate to drop from 11.3% to 8.5% in 2021, which would be even higher than its projected national average of 7.6%.

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