NDIT and MNP have released the 2021 State of the north a few months late (it was delayed this year to capture data from the 2021 census), and it’s a good news/bad news sort of thing.
The biggest issue: a shortage of workers. Over the last two years, job vacancies have gone up 75 percent across the north.
Of course, that’s for the north as a whole; in the Northeast, unemployment has gone down from 6.3 percent in 2019 to 4.6 percent in 2021. That’s the fewest unemployed people in the province.
Surprisingly, that growth is not driven by natural resources like logging and mining, which has seen the number of people (by percent) drop by half since 1997. In 2016, there were 4800 people in the Northeast employed in oil and gas and mining. By 2020, that has shrunk to 3600. At the same time, the percentage of the province’s Gross Domestic Product (GDP) generated by these industries has stayed relatively steady at around 10 percent. Oil and gas production has been the driver of that, growing from around one percent of the economy in 1997 to nearly 3.5 percent in 2020.
“This year’s State of the North contains good news, bad news and a lot of uncertainty,” says NDIT’s Joel McKay, CEO of Northern Development. “Our region is faced with labour shortages, slow population growth and a myriad of other risks from floods, fires and a war in Eastern Europe. However, major project constructions along with strong commodity prices will likely continue to support various industry sectors for the next few years.”
While unemployment rates skyrocketed at the start of the pandemic, the north was quicker to recover, and by fall of 2020, levels were about the same as before the pandemic.
In the good news column, says McKay, the economy for the North remains stable and relatively strong. “Despite two-years of a global pandemic and ongoing consolidation in the forestry sector, major projects such as Site C, Coastal GasLink, LNG Canada and the Trans Mountain Expansion project have brought thousands of workers into our communities and injected billions of dollars of private sector investment, which has benefitted first-line suppliers throughout the region.”
He says that these major projects drove the north’s economy over the pandemic, but he says it is also worth noting these projects also highlighted the challenges faced in the north. “This incentivized government response in the form of support programs and infrastructure investments, which have also helped to buoy our economic fortunes.”
While coal prices have hit record highs recently, other minerals have not been so lucky. Both the Silvertip mine in the Northwest region and Mount Polley mine in the Cariboo-Chilcotin/ Lillooet region remain suspended due to market conditions. While the Silvertip mine is looking at restarting and maybe even expanding, there is no timeline in place.
In the North Central region, the Blackwater Gold project is set to begin construction later this year. It should employ 155 people once operational as well as 825 individuals per year during the construction phase.
Natural gas has seen a sharp rise in prices and a corresponding increase in new wells being drilled, though 2021 was still well below 2017 rates.
Major projects are ongoing, and will continue to bolster the economy of the north, says McKay, along with strong commodity prices and forestry. “The situation creates a window of opportunity for Northern BC to capitalize on these investments to grow small and medium enterprise, while at the same time utilizing the proceeds of public sector investments to improve infrastructure, amenities, and services in our communities to make them more sustainable and attractive places to call home.”
He says that these efforts will support long-term economic diversity and stability for the north.
That’s the good news. The bad news, he says, is the pandemic “decimated our service and hospitality sector. Although employment levels have recovered relatively well since this time two years ago, we’re left with a massive labour shortage.”
He says the data shows job vacancies in the north had hit 10,185 as of the third quarter of 2021, compared with 5,825 at the same time in 2019.
Also, he says, the 2021 census data doesn’t support the theory that people from the big cities down south are moving north to escape overcrowding and high housing costs. “In fact, among BC’s regions the north had the slowest population growth between 2016 and 2021, totaling only 0.6 per cent, compared with 5 per cent plus growth rates in virtually every other part of BC.”
What does this mean, asks McKay? Well, first off, it means those job vacancies are going to be hard to fill for the foreseeable future. “This means employers will either need to temper their expectations on scaling to growth or get creative to attract people.”
He says there’s also a skills gap. “Immigration would be a natural solution to this challenge, but the data shows migration to the region is largely intraprovincial not international,” says McKay. “And as we’ve shown, there’s not a lot of it to begin with, owing to the region’s relatively limited opportunities and distance from major centres and reputation.”
And with housing costs on the rise in the region, he says one of the big draws to the region is slipping away. “The average house price in a major centre such as Prince George now exceeds $400,000, which makes it difficult for youth and low-income earners to enter the housing market, leading to a widening disparity of wealth between top and bottom tier income earners,” he says. “We expect that while these issues will become the topic of news stories and discussion around dinner tables in the near-term, they likely won’t be acute enough to drive significant public policy shifts until the mid-2020s when the construction period for the region’s major projects comes to an end and overall regional employment and spending declines. This could be offset with new major projects or significant growth in small and medium enterprise in the region, but there are limited opportunities on the books for the former and the latter will be challenged due to issues we’ve just outlined.”
Add to that the possibility of a “prolonged inflationary period” and “there will simply be fewer dollars available in the marketplace to support reinvestment, innovation and growth. This is to say nothing of the other hazards that remain on the table: wildfires, floods, a new Covid variant and war in Eastern Europe that’s forcing nearly every nation on Earth to recalibrate trade relationships.”
In the Northeast, employment is being driven by is Site C dam and Coastal GasLink projects, as well as natural gas exploration and production.
In Tumbler Ridge, the median price for a house was down slightly in the third quarter of 2021 compared to the same time frame in 2022, from $318,500 to $308,961. However, that’s better than Dawson Creek ($197,000) or Chetwynd ($243,992). The only place in the Northeast where housing prices went up was in Fort St. John.
McKay says it would be wise for people in the north to capitalize on this relatively strong and stable economic environment. “We need to prolong it if we can and get creative to solve our labour challenges and invest in diversifying our income sources if we hope to surmount these challenges.”
Trent is the publisher of Tumbler RidgeLines.