QUARTERLY JOB MARKET UPDATE
2015 was a tough year in Canada, with GDP contracting for each of the first two quarters, Canada suffered a "technical recession", and many businesses felt it! The primary reason for the malaise was the impact on the oil sector caused by a low price per barrel. Other impacts through the year have been the economic meltdown in China, which is a large consumer of Canadian raw materials, and of late the low Canadian dollar although that does help our beleaguered oil sector.
The unemployment rate at year end was 7.1%, which was 0.4% worse than 12months ago. Over the course of 2015 Canada added about 158,000 jobs with about 18,010,000 employed.
The stock market was extremely volatile in 2015 experiencing a steady decline since about April. One indicator that we follow for this report is the TSX which was at a high of about 15,500 in April and ended the year at around 13,000 but has actually declined another 1,000 since then.
As already mentioned the price of a barrel of oil has been a big factor in our tough economy and it does not look like it is getting better in the short term. From its highs of well over $100 a barrel we are currently seeing sub $30 prices. The impact in the oil patch has been layoffs, and more are expected with rates at this level.
To be expected with our economy struggling, the Canadian dollar has also suffered. The 2015 high saw the Canadian dollar fetch about 83c US, and by the end of the year we were around 70c US. Since then we have dipped below 70c! The good news is that this helps the oil patch because they sell in US dollars and most costs are in Canadian dollars. It is also helpful to our manufacturing sector; however, that sector has been severely depleted over the years when the dollar was stronger so we don’t expect that much impact for Canada. Given that our exporters have also been hit by the slowdown in China another expected area of benefit is reduced.
The banking sector continues to be a big user of talent and one of the largest employers in Canada. The primary demand for talent is in Toronto, but there is also demand in Montreal. While the competitive nature of the industry requires investment in innovation, technology and responsiveness to regulatory change there is also a need to control costs. We have seen some fluctuation in demand as certain parts of the financial sector have been reducing staff while others have been hiring. The banks have taken advantage of the economy to restructure and become more efficient, which is prudent business practice but again tough for the economy right now.
The telecommunications companies are big employers in Canada and are also very cost conscious. While they demand the best talent in order to compete, they are also careful about keeping employment costs under control. Some of the drivers of demand here include the highly competitive nature of the business, investment in infrastructure, technological innovation and a need to plan for a retiring "Boomer" workforce. The recent purchase of Wind by Shaw might increase competition and potentially open up opportunities should all of the regulatory approvals go through.
The US economy has been adding more than 200,000 jobs a month and in 2015 added 2.65 million jobs. This, in spite of the impact of a low oil price in their oil sector, has resulted in some skill shortages in certain areas. This may result in more Canadian skilled workers being lost from the Canadian economy but is an opportunity for individuals needing to find jobs.
The construction industry in Canada appears to remain healthy and despite the slowdown in the big jobs like the oil sands, there appears to be a constant demand caused by infrastructure upgrades in many of our cities. From cranes dotting the landscapes of our cities, through infrastructure work on our highways and home improvement projects everywhere the signs of an in-demand industry are plain to see.
The Federal election saw a change in government which will have an impact on Canada’s economy. In the short term, tax increases and rhetoric from a left leaning government has caused some loss in confidence and willingness to invest. In the longer term I expect that as the government begins to implement its agenda it will create opportunities in various sectors such as Health, environment and education.
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 latest score suggests a continued slowdown in demand for labor in 2015, ending the year down slightly over 2014. This indicator is an aggregate of hours for all classes of labor and so it is my expectation that the impact has been greater on unskilled labor and that skilled talent has a much lower unemployment rate.
Here at Eagle the big impact on our business has been the impact on the oil patch. Year-over-year the number of people applying for jobs has been relatively consistent, but there was a decline of 22.5% in demand from our clients in 2015, almost exclusively attributed to the Calgary market
The GTA (Greater Toronto Area) is the hottest job market in Canada and generates about 60% of Eagle’s business. While it remains a busy market we have seen some impact from downsizing in large companies that has increased the availability of senior people in the market. Having said all that, if you’re looking for work, this is the place to be. The sectors that are always looking for people include the financial, insurance, government and telecommunications sectors in addition to the retail sector and the construction industry. There is also a fair amount of demand in the engineering and manufacturing space.
As already mentioned several times, in Western Canada it is Alberta, and more specifically Calgary as the "oil capital" of Canada, that has taken the brunt of the hit from the drop in oil prices. All of the major oil companies are headquartered in Calgary and cost cutting has resulted in many layoffs, with many more projected in the first half of 2016. These layoffs affect not just the oil companies but also the industries that serve them such as technology, services, engineering and transportation companies. The uncertainty facing the oil patch from the relatively new NDP government has reduced confidence and future investment is also at risk. The "oil sector bust" will pass but it remains to be seen whether investment will remain in Alberta, bringing back the jobs that have been lost to date. Elsewhere, the impact has not been as bad, with Vancouver, Regina and Edmonton still in need of talent but nervous about the longer term impact of the loss of oil revenues. This could affect everyone as provincial tax coffers suffer and the ancillary businesses are hit.
Eagle’s Eastern Canada region covers Ottawa, Montreal & the "Maritimes". With a new federal government in place, some projects that had been stalled have begun to move again, and there is optimism that a new agenda will lead to more business in the National Capital Region specifically. Montreal is relatively unchanged, not booming but a steady demand for resources particularly in the financial and telecommunications sectors. The Maritime Provinces have traditionally had higher rates of unemployment and this is not changing much so work is tough to find.
The Hot Client Demands
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, web (portal and self-serve) and mobile expertise (especially developers) 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. Expertise in the Capital markets, both technical and functional, tends to be a constant ask in the GTA. Technology experts with functional expertise in Health Care is another skill set that also sees plenty of demand. These demands fluctuate based on geography and industry sectors, so we advise candidates to watch our website and apply for the roles for which they are best suited.
Canada has been weathering somewhat of a storm, and if the oil industry picks up through 2016 then we should be in reasonable shape. We are adding jobs, and the bigger impacts of the downturn have been very regionalised, which has been bad news for Alberta but certainly some people are finding jobs in other geographies and sectors. Relatively new governments in Alberta and at the Federal level could mean new policies that will create opportunities. One question will be how much business confidence is affected by the new agendas of these governments.
While Alberta has suffered most, with recession-like symptoms, the rest of Canada endured a technical recession for the first half of the year but the second half saw some growth, and 2016 is expected to be better. Canada’s unemployment rate is at 7.1% which is not great, but the unemployment rate for skilled workers will be far lower. Even in these uncertain times we see shortages in niche skill areas.
There are definitely still opportunities created because of the demographic pressures (retiring Boomers) and the need for companies to remain competitive. We see opportunity in the construction industry, the financial sector, the telecommunications sector and the insurance sector. We see the markets with the greatest demand as being Toronto, Vancouver and perhaps Montreal. Ottawa is showing promise and could pick up if new projects are initiated by the new government. Edmonton is anxious because a large part of its business is tied to the provincial government and tax revenues are down significantly due to the oil crisis. The Conference Board, however, is suggesting that even Alberta will see GDP growth in 2016, with all provinces experiencing some modest growth.
The unemployment rate at 7.1% could be easily reduced with some positive news on the oil front and some positive moves by the governments (Federal and Provincial) in power. If that happens we could quickly move back to a full employment situation and start to run up against the different issue of finding enough people! Of course my crystal ball is about as good as anyone else’s, so we will wait and see how the economy unfolds over the balance of the year.