Tuesday, October 31, 2006

Employment hollowing

In the last 72 hours I've received some sad news and seen some wider disturbing patterns.

First, we've received news that a good friend of the family will be relocated in the new year to Alberta. He had hoped to complete one more major local project in this province and and then take his retirement here - he's been here a few years and grown to love it.

He leaves this province with reluctance.

At the same time I learned that another senior exec in the industry will also be leaving early in the new year to go to a new post overseas. His only choice will be whether to uproot his young family in mid school year or to leave them here until June. They have settled into the local community, their children are stable in local schools and they all have developed local attachments.

They also leave the province with reluctance; I wish I could have gotten to know them better .

Yesterday a job fair was held in St. John's which saw better than 9000* or so people head down to the Capital Hotel overwhelming Alberta employers who came on a recruiting mission to fill a crying need for bodies in the Alberta oil fields, particularly the tar sands projects.

I'm sure that those who get job offers, and there will be more than a few, will also leave the province with reluctance.

That raises issues which are demographic and labor market related. That's not even mentioning the political repercussions.

The emotional response to this job fair is worth noting. It's been all over the news and talk radio with a volume and intensity of response a level of magnitude higher than we've seen before for similar events. And the reason for that, I think, is because just so many people appeared at the fair with such little notice.

And the fact that it happened in St. John's. We expect an exodus out of Stephenville and Harbour Breton but we've been able to rest easy and say that at least St. John's and surrounding areas are doing relatively ok.

Apparently some 9000 local residents don't agree with that assessment - turns out St. John's can't take the hit after all.

All of these things taken together, the job fair and the exodus of senior executives, has important and subtle implications for the economic future of the province.

First there is no escaping the fact that all this movement of people is due to greater oil employment opportunities in other jurisdictions. We could have better opportunities here but Premier Williams feels we are better off awaiting a better offer in government royalties and equity.

In the meantime, we have low barriers to labour movement in this country and people are taking advantage of that - they have families to feed today.

Second is the hollowing out of the local oil-related employment knowledge base. Over the last 15 years or so, we had built up a critical mass of people with experience and knowledge in the oil/gas sector. They knew what they were doing and had a good sense of the best way to proceed in future projects. That kind of expertise base took a decade and a half to develop and now it's hemorrhaging away.

It won't build back up at the same rate it's bleeding now.

Finally, the companies whose senior executives are leaving the province may not be closing down shop - they leave skeleton crews of far junior people. That means the decision-makers are gone out of this jurisdiction so, for them, projects in this province are out of sight and therefore out of mind.

It also means that the left-behinds are farther down in the management chain than those they replace with less influence and input into future corporate investment decision.

We had big dogs located here because we had big projects to keep them busy. With no new projects in the pipleline, the big dogs are pulled to where there are big projects.

Oil/gas jurisdictions are a combination of oil/gas resource and the experience and expertise of the workforce to develop them. If we hope to negotiate any kind of industrial benefits in the future, we have to ensure that we still have a local industrial sector to take advantage of that.

Government royalties and equity does little to generate economic activity for anyone but government employees and only ensures generous make-work, income support and old age homes for the people that are left behind.

We should aim higher.

* Roughly the same number as voters in a typical provincial district, say Signal Hill-Quidi Vidi

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