Economic shocks prevail as COVID-19 recovery has been shadowed by further trade disruptions: border closures from truckers’ blockades, fallout from the war in Ukraine and rail disruption from the CP Rail strike. Over the past year, the Alberta economy has struggled to regain what has been lost since 2014. Transportation bottlenecks extended beyond limited pipeline capacity, creating supply chain disruptions and threatening the energy and agriculture sector with interrupting oil, grain, livestock feed and fertilizer transportation.
Data
Easing of COVID-19 restrictions, soaring energy prices and historical pricing of Western Canadian Select ($100 US/barrel) has impacted economic forecast and provincial growth. While the high cost of fuel is adding to inflation, it is having a positive effect on our provincial and federal budgets, paving the way to more fiscal spending and infrastructure and energy sector investment.
Alberta is expected to lead the country in real GDP growth for both 2022 and 2023 at 5.6 and 3.9 percent, respectively. Although home prices are on the rise, Alberta remains an affordable province in which to reside. Comparatively speaking, where in Ontario and BC the average home price has reached almost $1M, the average Alberta house price is a far cry from that at $401K, making home ownership and the cost of living signficantly lower in our province. In 2020, an RBC Economics study ranked “Edmonton, Alberta as the most affordable major Canadian housing market in the country.” The city of Calgary was not far behind. Alberta also enjoys the highest median after-tax annual income, no provincial sales tax and one of the lowest marginal provincial income tax rates.
On the Horizon
Alberta’s 2022 budget slated over $20B over the next three years to be invested in expanding the healthcare system, building schools and providing grants for municipal infrastructure. A further $175M in capital grants has been allocated to carbon capture and storage, which includes the Shell Scotford upgrader and Alberta Carbon Trunk Line; and an additional $305M is set aside for Technology Innovation and Emissions Reduction (TIER) Fund for investments into those initiatives. Non-residential construction, particularly in municipal projects, is expected to increase over the next several years.
As Alberta continues to diversify economic activity, employment shortages may persist. Employment has recovered and we have added 33,000 more jobs since pre-pandemic levels. Many employers, in Alberta and across Canada, are struggling to find suitable workers and this is only going to worsen as baby boomers retire. Stats Canada revealed a disturbing trend of 25-29 year old workers leaving Alberta for opportunities elsewhere – this will further compound our labour shortage (see chart below).
BuildForce Canada forecasts strong construction industry growth over the next year. Metal trades will be in high demand and in order to avoid labour shortages, a concerted recruiting effort will be required to keep metal buildings affordable and a viable competitive alternative to conventional steel construction.
Alberta’s low cost of housing and higher median incomes will bode well for industries attracting workers to this province. The provincial budget included $600M targeted to employment training. Businesses will need to engage in effective human resource planning strategies to take advantage of any government initiatives that may be available to support their employment, training and development needs.
Looking Forward
The past eight years has been a constant struggle and it’s time we stop looking in the rear view mirror and start focusing on the future. There is now a turning point where, although there are several risks ahead, businesses need to strategically plan for sustainable growth in three key areas: adopting innovative business solutions, adapting to technology and enhancing human resources (recruitment, retainment and development).
Planning is the first step to positioning your company to proactively deal with changes that are sure to develop in the near to midterm and impact your business over the long term. Implementing changes and measuring the impact of these changes on your organization will assist you with any modifications needed to achieve successful outcomes.
The biggest challenge facing companies over the next five years will be access to skilled human capital. Academy to Innovate HR (AIHR) concisely unpacks the necessary five steps for developing an HR plan: analyze, evaluate, forecast, develop and implement; and monitor, review and assess (https://www.aihr.com/blog/human-resource-planning-process/). Investing in your employees is the most important business decision you can make to ensure long term success!