25 March 2015

The ongoing saga of the remittance economy #nlpoli

A downturn in the economy in Saskatchewan and Alberta caused by falling oil prices will affect Newfoundland and Labrador.

This is hardly surprising.  Regular readers will know the phenomenon as remittance labour or migrant labour, something your humble e-scribbler has been writing about since 2007 or thereabouts.  One of the curious aspects of recent economic growth in the province has been that a sizeable chunk of it is actually driven by circumstances outside the province. 

Thousands of workers have been travelling to work in Alberta, Saskatchewan and the north on a cycle of so many weeks working followed by so many days or weeks back in the province. 

Curiously, no one outside government has been able to get a handle on how many people are engaged in this commuting economy.  Some parts of the province – like Stephenville,  or the Burin or Great Northern peninsulas appear to be quote heavily dependent on this economic activity.

One of the reasons some of us started talking about this phenomenon eight years ago is exactly because of that dependence. Like an economy that was heavily dependent on government spending,  one that also was propped up by external booms couldn’t be sustainable.

Some people think that the local construction economy will soak up the displaced commuters.  Maybe it will.  But we have to recognise that the peak construction on those projects seems to have passed. 

The monthly,seasonally-adjusted employment figures from Statistics Canada (November 2010 to January 2015) suggest we are well into an employment decline from a peak in 2013.  That black squiggle is the 12-month rolling average.  The unemployment rate remains relatively low, but the participation rate has tracked the overall employment level:  it’s on the down-swing as well.