It is hard to believe that that we have been living with COVID-19 for a year and a half. We have endured three waves of the disease thus far and have yet to reach the peak of the worst fourth wave. Although we have a ticket to freedom from lockdowns; ironically, many eligible Albertan’s are still reluctant to accept the vaccine. As our hospitals fill to the brim and more ICU beds are added, the cracks in our health care system are evident. Our government had no alternative but to act. Like it or not, we must protect our health care system and our economy – they are intertwined. Navigating the more aggressive variant has proven to be economically disruptive and socially and politically divisive. Provinces that have managed to better control the infections will be rewarded with a healthier workforce, a more productive economy, and will be better positioned to attract labour, investment and tourism.
Data
On September 8, the Bank of Canada (BOC) held its target overnight lending rate. The BOC noted a weaker than anticipated gross domestic product (GDP) at 1%, due to weaker exports from supply chain disruptions – most notably in the automotive sector. Domestic consumer demand expanded by 3% with consumption, business investment and government spending all contributing to positive growth. Consumer Price Index (CPI) inflation continues to be above target at 3%, exacerbated by supply chain bottlenecks related to COVID-19 (Bank of Canada Sept. 8 Press Release).
The Alberta Activity Index (AAX) most recent update presented some promising gains that were led by the energy sector with the number of oil rigs increasing to the highest level since 2018. Strong retail, manufacturing and new truck sales contributed to overall growth. However, lower labour earnings resulted in a contraction in the labour market. Overall the AAX increased 9.8% higher year-to-date with most monthly indicators recovering to pre-COVID levels (refer to Graph 1).
Graph 1: Alberta Activity Index (https://www.alberta.ca/alberta-activity-index.aspx)
On the Horizon
To date, much of the Alberta economic forecast has been based on recovery from previous waves of COVID-19 and has not considered the implications of the fourth wave. At the time of writing this article, Alberta continues to struggle with balancing the health care system while managing public health restrictions. It’s unfathomable that Alberta will be able to avoid further restrictions in order to harness the record breaking infections and mortality. While many businesses have been able to adjust, the food and service industry has been hit the hardest and continues to struggle with fewer workers.
The biggest challenge for many businesses is finding enough workers to fill the labour shortage. Stats Canada data noted job vacancy rates ranging from 3.8-10.2% across the country – the construction industry vacancy rate was 6.2%, with accommodation and food services experiencing the highest vacancy rate of 12.7% nationally (https://www150.statcan.gc.ca/n1/daily-quotidien/210826/t003a-eng.htm).
The labour shortage remains one of the largest threats to post-pandemic recovery. Furthermore, medical data across the globe has flagged a concern about post-COVID syndrome with some patients experiencing disabilities severe enough to prevent them from working. A study out of the UK revealed that 10% of COVID patients experienced lingering effects beyond the course of the virus and a recent US study found that rate to be higher with only 65% of patients fully recovering within 14-21 days of COVID diagnosis. Factoring in surgery delays that may take years to get through and mental health issues, it is possible that Alberta could experience a significant surge in people suffering from disabilities. Not only will this have a lasting impact on the labour force, but it will undoubtedly impact the delivery and the cost of disability programs and benefits.
Looking Forward
Employee retention and retainment will be front and center. A robust, skilled and productive workforce is the back-bone to a strong economy, business expansion, GDP growth and is a key competitive differentiator. Challenges include finding enough of a talented and skilled labour pool to draw from, and then identifying which applicant(s) are most likely to be loyal and fit within your organization’s culture. Investing in your employees’ career development, providing them with competitive compensation and involving your employees in business decisions will go a long way towards engaging your employees and improving your ability to retain your skilled and talented workers (CIO.com).