Economic Outlook

The Social Cost of Alberta’s Economic Downturn

The COVID-19 pandemic has significantly impacted Alberta’s previously weakened economy. The closure of non-essential businesses, travel restrictions, physical distancing measures, and the latest crash in oil prices has negatively impacted businesses and contributed to a surge in unemployment. In May 2020, Alberta's unemployment rate rose to 15.5 percent, up from 6.7 percent in May 2019. At the same time, Canada's unemployment rate was 13.7 percent, up from 5.4 percent in May 2019. According to ATB Economics, almost no sector of Alberta’s economy was left unscathed. Such a rapid increase in unemployment adds to the economic insecurity many households in Alberta are already facing. Further, the unemployment rate in the province is expected to be one of the highest in the country next year.

According to ATB Economics, almost no sector of Alberta’s economy was left unscathed. Such a rapid increase in unemployment adds to the economic insecurity many households in Alberta are already facing.

Though the pandemic has exacerbated social distress in Alberta, the fall of oil prices in 2014 and the ensuing recession kickstarted the deterioration of Albertans' social well-being over the last six years. Since 2014, the economic trajectory of Alberta has been stark, and the correlating distress, as captured by data from social conditions for the 2014 to 2019 period, exemplify why significant jobs lost, bears more weight than we may realize:

  • The number of unemployed individuals not covered by employment insurance has risen 53 percent;

  • Unemployment among young men is up 156 percent;

  • Food bank usage is up 80 percent;

  • Suicide hotline calls have increased by 85 percent;

  • The number of individuals seeking counselling support in Calgary has increased 46 percent;

  • The percentage of Alberta households relying on social assistance has nearly doubled;

  • Incidents of domestic violence in Calgary have increased by 150 percent;

  • Non-violent crime is up 34 percent;

  • Business insolvencies have increased by 58 percent; and,

  • Consumer bankruptcies are up 101 percent.[1]

It's common to conceptualize a business' contribution to society through economic factors such as the unemployment rate or GDP growth rate, however, it’s evident that the impact extends far beyond such quantitative factors. As exemplified by the data, the worsening of Alberta's economy and the loss of approximately 100,000 jobs in the energy sector, has had effects on the social well-being, and ultimately, the quality of life for Albertans. The rise in suicide hotline calls, incidents of domestic violence, and the number of individuals seeking counselling, exemplifies the dire and long-term consequences that accompany economic hardship. In turn, the healthcare system, the non-profit sector, and government agencies are strained by such increased social distress.

Though less visible than empty corporate offices, these longer-term, and often less cited aspects of economic hardship on individuals and their families, compound over time.

Though less visible than empty corporate offices, these longer-term, and often less cited aspects of economic hardship on individuals and their families, compound over time. Such consequences are not always resolved when the economy recovers, and “jobs come back.” As a result, it's imperative that we acknowledge the deeper and more meaningful cost of the approximately 100,000 lost jobs in Alberta, as it's not only about income loss for corporations and individuals. The reality is that the hardship – which permeates the lives and homes of Albertans following the sudden loss of employment – may be everlasting. 


About the Author

Flutra Kacuri is an incoming second-year law student at the University of Calgary, Faculty of Law and a summer research associate at Viewpoint Research. Her research focuses on ESG, energy governance, and policy.

State of the Nation: Canada’s 2019 Outlook

With trade wars, polarized politics, and big business shakeups across the world over the past year, many observers would opine that the political and economic state of many nations is in flux. With this in mind, it’s time we step back and take a big-picture view of Canada from a political and economic standpoint, as well as theorize what could be in store for 2019.

According to Edelmen’s 2018 Trust Barometer, Canadians' trust in institutions (government, business, media, and NGOs) did not change between 2017 and 2018, staying at a relatively low level of distrust from the general public (49 on a trust scale of 100) and a low level of trust from the “informed” public (62 out of 100). The US saw the steepest drop in trust by the informed public, from 68 in 2017, down to 45 in 2018. Canadians also have an increased trust in authority figures compared to 2017, choosing to believe academic experts, technical experts, and financial industry analysts above “people similar to themselves”.

On the business side, Canadian companies are the most trusted globally, beating Switzerland, Sweden, and Australia to claim the number one spot. However, trust in most business sectors within Canada is declining, except for the energy industry, which actually saw a 4 percent increase between 2017 and 2018, reversing a three-year downward trend. The top trust-building mandates for businesses in Canada is to drive economic prosperity, invest in jobs, and innovate, whereas the top trust-building mandates in the US are to safeguard privacy, investigate corruption, and ensure equal opportunity.

As for Canada’s 2019 economic outlook, the Business Development Bank of Canadafocuses on five analyses: 1) the Canadian economy is expected to grow by 2 percent, 2) trade tensions won’t affect the global economy with US-imposed tariffs expected to be removed, 3) the US is expected to lead most countries on economic growth, 4) a strong US economy will put downward pressure on the Canadian dollar, and 5) Canadian businesses will continue to struggle in hiring the people they need, stifling growth.

Additionally, a study by the International Institute for Sustainable Development shows Canada’s economy on shaky ground, with the growth of the nation’s “comprehensive wealth”, composed of five different types of capital (produced, natural, human, financial, and social), to be drastically behind other developed countries, and is in fact the only G7 nation undergoing a contraction of comprehensive wealth per capita. The risks to Canada’s economy include unprecedented levels of household debt, over-dependence on market-sensitive industries, zero growth in human capital, and climate change events (floods, wildfires, and storms).


Author

Viewpoint Research Team