Each quarter I try to provide the reader with an understanding of the Canadian job market based on a regular set of indicators. In addition to public market indicators I use Eagle’s experiences serving our clients across Canada. The hope is that job seekers will gain some insight about where opportunities might be, and hiring managers will gain some value for their hiring aspirations.
Timing of course is everything, and while this is a retroactive look at the 4th quarter of 2014 I am acutely aware that 2015 has started with a bang, due to oil price dropping like a stone, the Canadian dollar dipping and large retail companies either closing shop or laying off (Target, Sony, Mexx, Holt Renfrew etc).
As of Q4 the employment situation in Canada was looking OK. The unemployment rate had dropped to 6.6%, from 6.8% at the end of Q3, and 2014 had seen Canada add about 186,000 jobs. Most of that gain had come in the latter six months of the year.
The TSX, like most of the markets had been fairly steady through 2014 but as the year ended it had a reading around 14,700 which was down from the 15,500 it had reached at the end of Q3. This was still better than its low point in 2014 which was around 13,700 and as I write this piece the index appears to be staying above that low.
Canada’s oil sector fell off a cliff in Q4 with the price of a barrel dropping from around $85 at the end of Q3 to less than $50. What is worse for this sector is there is no short term sign of recovery and forecasters are pessimistic that we will ever get back to the $100+ range. There are winners and losers with cheap oil but we can expect the Alberta economy to take a hit, and the Conference Board is predicting a recession in Alberta.
Another big employer in Canada is the financial sector, centered primarily in Toronto but with a healthy presence in Montreal. There are many reasons why this sector remains busy including its highly competitive nature, evolving technologies, regulatory change and volatile markets. I expect this sector to remain busy in the short term.
The telecommunications sector is another big employer in Canada. 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 will be some fallout from the drop in oil price, particularly since the oil sands are en expensive extraction method. Time will show the extent of the impact, but if oil prices rebound a bit over the coming months the impact should be minimal. If the price stays below $50 there will be a big impact. There will always be demand in the home renovation market, if you have ever tried such a job you will know how hard it is to find skilled tradespeople available.
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 lost oil revenue taxes, so this will be a space to watch.
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 overall seems to trend down slightly from 2013 but was rebounding slowly through the first three quarters. Q4 would suggest a slowdown of that recovery and a slip backwards. Having said that the index is 10% higher than its reading when introduced in 2008 just before the recession.
Here at Eagle we continue to see shortages of “in demand” skillsets, and a steady supply of candidates with skillsets in other areas. The flow of available talent over the fourth quarter was the same as Q3 and marginally down from Q4 of 2013. The demand from our clients was down about 10% in the fourth quarter and about the same as Q4 in 2013, suggesting a fairly normal seasonal swing.
The GTA (Greater Toronto Area) is the largest market in Canada with the most head offices and hence a big appetite for professional talent. 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. There has been plenty of retail demand although recent events might change that and a fair bit of demand in the engineering space, in addition to a fairly strong construction sector. A large part of the Ontario provincial government is here too, which is another sector that demands talent. This is the city offering the most opportunities in Canada, and where I would want to be looking if I were unemployed.
Calgary is the “hub” for Western Canada as the capital of the oil patch. The city has the second largest number of head offices and the attraction of the low Alberta tax rate (for now). The current oil price situation has created a ripple in this economy and many oil related companies are cutting back on investment and slowing projects. Edmonton will also be affected by the oil price as The Alberta Government is dependent on taxes from oil revenues. Saskatchewan is also generally a fairly hot market for talent but will feel the effect of a lower oil price. All in all Western Canada is going to be a little slow in hiring, we may seem some downsizing and it maybe some time before it booms again. Having said that, there are always opportunities for people with great skills, and in companies with a large Boomer population approaching retirement.
Eagle’s Eastern Canada region covers Ottawa, Montreal and “the Maritimes”. Montreal continues to be relatively busy, 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 has 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 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 fourth quarter had been following the predictable path demonstrated through 2014 of steady improvement in the unemployment rate and decent job creation. The huge drop in the price of oil right at the end of the year will have a ripple effect but it was harder to spot during the usual seasonal slowdown. Our expectation is that demand in Western Canada will be down significantly, creating an opportunity for companies to pick up the usually rare “top performers” should they become available. Companies will want to improve, but not necessarily increase the size of their teams. There will be some downsizing, we have already seen reduced investment but I don’t anticipate huge layoffs in the short term. If the price of oil does not improve soon we might see more drastic measures.
There will be an impact on the retail sector with the already announced layoffs due to Target and Sony exiting Canada plus the financial woes of Mexx and Holt Renfrew. The dropping Canadian dollar will only hurt those companies that import their stock but it will be a boon to Canadian exporters.
Elsewhere the other big sectors such as Financial, Insurance, Telecommunications and Construction should not be greatly affected by the price of oil. As such I don’t anticipate a big decrease in demand in the GTA, other than a “stutter” caused as companies assess the impact on them. There will continue to be skills shortages in our knowledge economy, partly fueled 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 6.6% is better than it has been for more than 5 years, and if we can avoid driving that up too much because of the oil patch then it will be a good sign for job seekers. It should also be noted that the employment rate for professionals is more like 3.5% or 4%, which is very near to full employment. This means that professionals should be able to find work if they are willing to be flexible in their demands.
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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