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CALGARY — Albertans know all about the B-word: boom. For much of the past decade the economic pace was blistering, led by massive projects in the oil sands. The result was scores of high-paying jobs, a red hot real estate market and an influx of thousands of new migrants.
The party was good while it lasted. But in 2008, Albertans were blindsided by another B-word: bust. A collapse in energy prices, the result of the U.S. financial crisis, took the steam out of Alberta’s once-buoyant economy.
The oil patch shelved or cancelled billions of dollars worth of projects, jobs evaporated virtually overnight and ordinary Albertans struggled to pay their mortgages.
But after sputtering for much of the last three years, Alberta appears poised to regain its position as Canada’s economic juggernaut.
All signs suggest prosperity is sweeping the province. Unemployment is low, cash registers are ringing and the energy sector is once again on a hiring spree.
It begs the question: is Alberta headed for another overheated economy?
Economists are certainly bullish when it comes to the province’s prospects.
The Royal Bank of Canada predicts that Alberta’s rate of growth — four per cent this year and 3.9 per cent in 2012 — will outpace all provinces except Saskatchewan.
“Oil sands megaprojects will continue to generate tremendous economic activity and will be a boon to Alberta’s economy for years to come,” says RBC chief economist Craig Wright.
“The boom entirely emanates from the private sector — the source of an astounding 116,000 new jobs this year,” Wright said.
Improved employment prospects have translated into a record quarter for Sharlene Massie’s local recruiting firm, About Staffing.
Alberta is bucking the national trend, a welcome relief from the hiring freezes of recent years.
As long as there’s continued growth in oil sands production and Alberta’s unemployment rate holds steady at about five per cent, the good times should continue, Massie says.
But she admits the spectre of an overheated economy could spoil the party and usher in a labour shortage similar to that of 2006.
In the worst-case scenario for employers, Alberta’s jobless rate would return to levels seen in the last boom, driving skilled and unskilled wages to unprecedented levels.
“We’re not there right now. We’re comfortable,” Massie says. “There’s enough jobs out there and everybody’s happy. Let’s hope we can stay this way.”
A report this year warned that a looming labour shortage is the Achilles heel of the provincial economy and that industry should brace for a chronic scarcity of workers in the years ahead.
It comes as Calgary’s oil patch, and the rest of the natural resources sector, is set to lead the nation with the highest projected salary increases in the year ahead.
But boom or bust, Alberta’s shifting demographics will probably require a new approach to labour issues in the coming years, suggests Calgary Chamber of Commerce CEO Adam Legge.
The province has repeatedly looked to the federal government to change immigration policies so Alberta can hire the workers it needs.
There’s expected to be a shortage of everything from tradespeople and health-care workers to financial service employees, retail staff and public service jobs.
“We’re going to face a labour shortage whether we have a strong economy or not because there aren’t enough workers to backfill the retiring baby boomers,” says Legge.
He says he believes inflation pressure associated with rising labour costs could prove troublesome for Alberta.
“As soon as you see wages being driven up — as they are right now — people have more spending power and are able to bid up prices on everything from houses to goods and services,” Legge says.
“The Bank of Canada will want to keep an eye on Alberta because we will have stronger inflation in our economy than the rest of Canada.”
A heated labour market is only one indicator of Alberta’s changing economic fortunes.
For the rest of this article, please go to the National Post/Financial Post website: http://business.financialpost.com/2011/12/28/energy-revival-fuelling-another-alberta-boom/