A Bleak Forecast for Canada’s 600,000 Energy Industry Workers
We don’t know exactly what Chrystia Freeland, Canada’s deputy prime minister and finance minister, will present when she becomes the country’s first woman to deliver a federal budget later this month. But the Liberal government has made it abundantly clear that economic and employment recovery will be its broad theme.
And with good reason — a report came out this week from the economics department of the Toronto-Dominion Bank that paints a dire picture for one group of workers whose employment is threatened by much more than the pandemic. It forecasts that as the world grapples with climate change, reduced demand for oil and gas will cause to 50 to 75 percent of 600,000 jobs in Canada’s energy sector to vanish.
Beata Caranci, the bank’s chief economist and the main author of the report, told me that while she anticipates the budget will include something for energy workers, the work to transition them to new jobs in the low carbon world should already be underway.
“There are layoffs already occurring in the sector, so there already are people being displaced,” she said, adding that’s partly because of the current collapse of oil prices. “But this sector is not going to be turning around. The displacement has started.”
In the paper, Ms. Caranci compares the future of energy jobs to what happened to factory workers in Canada. The number of Canadians who make things in factories peaked in 2002. Nearly 625,000 of those jobs disappeared by 2010, because of new technology, a shift to offshore manufacturing and other factors, and they never came back.
Ms. Caranci said that the oil and gas industry saved Canada from being as hard hit by the loss of jobs in manufacturing as the United States was by that shift. The result down there was a hollowing out of middle income jobs. Wealth and jobs, in turn, became concentrated in a handful of cities.
But in Canada the loss of manufacturing work was offset by well paying jobs in the expanding Canadian energy industry. The rise of fly-in, fly-out work, in which residents of Atlantic Canada and elsewhere commuted to jobs in the oil sands, spread those economic benefits around the country.
“The oil and gas sector was a huge contributor, not just to middle income jobs but also a lot of them were above average in terms of income,” Ms. Caranci said. “I don’t think it’s really widely known or appreciated that this is a key reason Canada has deviated from some of the of the hollowing out of the middle class and inequality.”
The question now, of course, is how to offset the loss of those oil and gas jobs.
A shift to low carbon or carbon free energy sources may help, although Ms. Caranci said the number of jobs they are likely to create is difficult to predict. They also have another problem: It’s not likely that many of them will be in Alberta, Saskatchewan and Newfoundland, the three provinces with the most oil and gas jobs. Plants making batteries for electric cars are likely to be built — if they’re built in Canada — near auto plants in southern Ontario rather than in northern Alberta.
The more than 450,000 jobs that are expected to disappear won’t go away immediately, so there’s still time for planning. Canada’s experience with retraining those who lost factory jobs can give the country an example to avoid, Ms. Caranci said. Those retraining programs largely failed to prepare people for new work or help employers looking for people with new skills.
In the report, Ms. Caranci suggests that Canada replace what she describes as a “patchwork” of retraining programs and income support programs with something more like the system Singapore uses. It works with employers to first identify specific jobs and specific skills they are looking for in workers, then sets up training programs to build skills for those jobs.
“I think what happens is that for governments, the path of least resistance is to throw money at the problem: Here’s money to retrain, here’s money to help for a year,” she said. “We’ve got to throw out what we were doing before and just start over cleanly, thoughtfully with these workers in mind and not try to have programs for every worker in the economy — just the ones who are most impacted.”
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In The Times’s obituary of Prince Philip, who visited Canada regularly from 1951, Marilyn Berger writes that he “tried to shepherd into the 20th century a monarchy encrusted with the trappings of the 19th. But as pageantry was upstaged by scandal, as regal weddings were followed by sensational divorces, his mission, as he saw it, changed. Now it was to help preserve the crown itself.” And in Opinion, Tina Brown, author of the forthcoming book “The Palace Papers,” offers her assessment of the Duke of Edinburgh.
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Canada is among the nations seized by vaccine envy.
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Robert A. Mundell, the Nobel Prize winning economist who was born in Kingston, Ontario, has died. He championed the idea that low tax rates and easy fiscal policies should be used to spur economies, and that higher interest rates and tight monetary policy were the proper tools to curb inflation. Former President Ronald Reagan embraced Professor Mundell’s ideas. Their effects remain a matter of debate.
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Vaccine passports might reopen the world. But Prime Minister Justin Trudeau is among those concerned with the fairness of a two-tier system for haves and have-nots.
A native of Windsor, Ontario, Ian Austen was educated in Toronto, lives in Ottawa and has reported about Canada for The New York Times for the past 16 years. Follow him on Twitter at @ianrausten.
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