Newfoundland and Labrador has become a “have” province—but only by the convoluted formula that defines Canada’sequalization program. Resource revenues have flooded government coffers enabling the province to more-than-exceed equalization’s fiscal capacity criteria and facilitating the generation offiscal surpluses. But the test of prudent economic management will be how those funds are used to ensure the full participation of the working-age population.
The reality is that unemployment is still running at double the national rate. Among youth it is around 20 percent and among aboriginals about 30 percent. Personal incomes in the province are less than 90 percent of the national average. The per-capita welfare case load is five time what it is in Alberta.
Unless efforts to ensure greater participation in the workforce and the development of skills appropriate to shifting labour market demands are undertaken, Newfoundlandand Labrador runs the risk of creating atwo-tier citizenry. Massive development projects will help ensure the need for professional and highly skilled workers—and international pricing will dictate wage rates in those categories.
But there is a worrisome incongruity. There is amble evidence that many lower level positions are proving difficult to fill. Next to Prince Edward Island, Newfoundland and Labradorhas by far the largest ratio of unemployment-to-job vacancies in the country. More than one-third of the 1300temporary foreign workers in the province are classified as clerical or labourer—and to be eligible to hire such workers employers must have first made every effort to fill the position domestically.
Industry analysts point to emerging shortages amongsuch basic trades as boilermakers, estimators, electricians, crane operatorsand construction managers etc.—skills well within the capacity of trainingprograms to provide for by ensuring greater engagement of poorly included communities such as aboriginals and youth: to say nothing of the twenty thousand-plus currently numbered among theunemployed.
Like the other provinces in Atlantic Canada, Newfoundland and Labrador faces a rapidly aging workforce. Especially in the heady economic environment of continued offshore energy growth, mining expansion and hydroelectric development, that means there should be an abundance of remunerative employment for a wide range of expertise.
When labour demands become sufficiently pressing, skilled wage rates will be driven high enough to trigger a welcome return ofsome of those who have perennially left in search of better economic prospects. But what of those who never left and don’t possess the high-demand skills? Will they face higher consumer prices driven up by their better-off neighbors without the ability to command higher incomes themselves?
Those resource royalties that have provided the province with fiscal choices represent a luxury that should be employedwisely. In this new high-growth era,economic forces will drive out structurally inefficient seasonal industries and produce a new generation of qualified and participating workers—but what of those who are left behind?
For many, it is a wonderful thing that university tuition in the province is so inexpensive—but as graduation rates move ever-higher, the economic value of a degree becomes less evident. Many of the needed skills may well require more hands-on training. Indeed, even before worrying about what sorts of instruction are needed, the priority should be ensuring the fullest social and educational inclusion of disillusioned groups. Targeting worker development should be a high priority of the government.
As economic prospects amplify while workforce growth erodes, the most unfortunate outcome for Newfoundlandand Labrador would be for well-paying jobs to remain unfilled at the same time as those with underdeveloped skills perpetuate high levels of unemployment. In light of the fiscal relief provided by resource royalties, the province’s residents deserve much better.
Don McIver is a Senior Fellow with the Atlantic Institute for Market Studies, a social and economic policy think tank based in Halifax, NS.