As always, the intent of this summary is to provide some insight into Canada’s job market with input from many sources including our own “from the trenches” view. We want to bring value to both job seekers and hiring managers with these observations and opinions.
The first quarter started with a bang, and not a good one! The price of oil took a hammering from its mid-2014 highs above $100 a barrel down into the mid $40s. In addition there were a slew of layoffs in the retail space with Target, Sony, Mexx and Holt Renfrew all announcing cut backs or just closing up Canadian operations.
The unemployment rate at the end of Q1 was 6.8%, up from 6.6% at the end of the last quarter and Canada had added 50,000 less jobs in the 12 months to March 31, 2015 than it had in the 12 months to December 31st 2014.
As another economic indicator the TSX has been fairly steady, despite other volatility in the markets. At the end of Q1 it had a reading of close to 15,000 (and is up from there today). This reading was not a marked contrast from the reading of 14,700 at the end of the last quarter.
As already mentioned the price of a barrel of oil has plummeted and is currently sitting around $55 a barrel, but at the end of Q1 was below $50. This had a significant impact in the oil patch, resulting in cut backs, reduction in spending and layoffs. When coupled with a low Canadian dollar however it is not ALL bad news, and Canadian manufacturers and exporters are benefiting. One prediction suggests that the oil patch will ultimately lose about 8,000 jobs through this period, however in that boom and bust world we will see it come back with a vengeance at some point.
One of the largest employers in Canada is the financial sector, centered primarily in Toronto, but with a significant presence in Montreal. There are many reasons why this sector remains busy including its highly competitive nature, evolving technologies, regulatory change and volatile markets. In addition to these factors the booming US economy means that I expect this sector to remain busy.
The telecommunications sector is another big employer in Canada and remains busy. The demands on their infrastructure, technology advancements, retiring boomers and expansion into new markets are all drivers of their need for people in addition to the ongoing need to compete in a very competitive space.
The construction industry continues to be a great place to find work, both in the trades and in the head offices of the large companies. There are construction sites in most major cities with infrastructure projects, office towers and condo developments. There has been an impact, particularly in Alberta from the drop in oil price. I expect this to be a point in time “bust” and a recovery can be expected if not in the second half of 2015, then it should happen in the first half of 2016. There continues to be high demand for “trades” in the home renovation and small scale construction world.
Despite the need for governments to contain costs we have seen a fairly steady demand in Federal, Provincial and Municipal Governments. They are huge employers, and people with the right skills are always in demand. The required downsizing is generally achieved through attrition and there is always work to be done. Regulatory change, policy development and general administrative needs dictate the need for a large and skilled workforce that receives competitive incomes and very attractive pensions and benefits. The wild card here will be the effect of upcoming elections and the impact of lost oil revenue taxes.
The Canadian Staffing Index is an indicator of the strength of the largest provider of talent in any economy (the staffing industry) and an excellent barometer of the health of Canada’s economy. The index suggests a slowdown in the demand for talent in Q1 of 2015, and a slower quarter than the Q1 of 2014.
Here at Eagle we have seen significant impact on our Western Canada business however other markets remain busy. The first quarter saw a drop in demand by more than 30% in orders, most specifically from Calgary but with some impact in other Western markets too. The GTA remains very busy and the National Capital region is experiencing its annual government year-end slowdown, but nothing unexpected.
The GTA (Greater Toronto Area) is Canada’s and Eagle’s largest market. The number of head offices located here plus a population size that makes it the 4th largest city in North America mean there is a lot of business here. This market accounts for approximately 60% of Eagle’s business which comes from the major industries here, which include the financial, insurance and telecommunications sectors. The retail sector and the construction industry generate significant demand, in addition to the engineering space. The GTA is also home to a large part of the Ontario provincial government and multiple municipal governments. Hence the GTA offers the most opportunity in Canada, but is also the most competitive city in Canada. It is definitely the city I would want to be in if I were looking for work.
In Western Canada Calgary has taken the brunt of the hit from the drop in oil prices, and it has been a significant hit. Having said that, the city has always experienced a boom and bust economy, but just hasn’t had a bust for a while! Things will return, and as the “hub” for Western Canada, with the second largest number of head offices and the attraction of the low Alberta tax rate (for now) we expect it to boom again. Edmonton will also be affected by the oil price as The Alberta Government is dependent on taxes from oil revenues, although the impact has not as yet been significant. Saskatchewan is also generally a fairly hot market for talent but will feel the effect of a lower oil price. The opportunity in the current market is for companies to upgrade their low performers, taking advantage of the available talent which will quickly disappear as the economy rebounds.
Eagle’s Eastern Canada region covers Ottawa, Montreal & the “Maritimes”. Ottawa has been a steady government market for some time now and we don’t see that changing as boomers retire and new opportunities arise. Montreal continues to be steady, particularly in the financial sector, the telcos and the construction industry. There will be some impact from the oil price felt particularly in Newfoundland. This region is typically slower for job creation at the best of times, so I expect it to be even slower than normal until we see an uptick in oil prices
AT Eagle our focus in on professional staffing and the people in demand from our clients have been fairly consistent for some time. That would include Program Managers, Project Managers and Business Analysts who always seem to be in demand. It might just be our focus, but Change Management and Organizational Excellence resources are in relatively high demand too. Big data, analytics, CRM and mobile expertise are specializations that we are seeing more and more. On the Finance and Accounting, side we see a consistent need for financial analysts, accountants with designations and public accounting experience plus controllers as a fairly consistent talent request. Technology experts with functional expertise in Health Care is another skill set that sees plenty of demand
The first quarter has been a tale of East versus West. The West has suffered through the predictable fallout from a dropping price of a barrel of oil, the Eats have continued somewhat unabated. Now is a tough time to be looking for work in the oil patch and we are seeing an increase in willingness to travel to where there is demand for talent. While our crystal ball is no better than any other, we expect this situation to correct through the latter part of 2015 and first half of 2016.
While the impact in Calgary has been significant we have not seen too much impact in other markets, including Edmonton which we would have expected. This may happen yet, with an impending election and the impact of dropping revenues from oil taxes.
The other big verticals such as Financial, Insurance, Telecommunications and Construction have not been greatly affected by the price of oil. Demand for talent appears to be strong and we are seeing these sectors benefit from newly available talent, previously employed in the oil sector.
Despite the current crunch, we expect continued skills shortages in our knowledge economy, partly fuelled by the boomers retiring, but also caused by our education system not turning out the right skill sets and the advancements in technology creating a shortage as the skills catch up.
The unemployment rate at 6.8% is not great but it is also not terrible. When you factor in the fact that unemployment amongst professionals is probably more like 4% companies are still having trouble finding the right talent, at the right time for the right price!
That was my quarterly look at the Canadian job market and some of its influences.
Kevin Dee is CEO of Eagle (a Professional Staffing Company)
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