Acute shortage forecast
B.C. will be unable to fuel its growing economy in 10 years as more than a quarter of the workforce retires, chartered accountants warn

Michael Kane
Vancouver Sun

British Columbia faces acute worker shortages within the next decade, which will be made even worse by an expected education gap, the province's chartered accountants warned Monday.

More than one million job openings will be created by 2015 as the economy grows and more than one quarter of the current workforce retires. But the province has only 680,000 students in kindergarten through Grade 12. If they all stayed in B.C., that would still leave a shortfall of 363,000 potential workers.

As well, 73 per cent of jobs will require some form of post-secondary education, although only 59 per cent of British Columbians currently earn a diploma beyond high school. The education gap threatens to erode the province's competitiveness in the future if it is not addressed, the CAs reported as part of the annual BC Check-Up released Monday.

One major challenge is convincing young people and their parents that there are good career opportunities in the trades. Journeymen plumbers and electricians, for example, can earn $45-$50 an hour in their early 20s, said Robert Wall, of North Vancouver's Wall Mark Homes.

With retirements accounting for 558,000 of 1,043,000 job openings between 2003 and 2015, trade careers have a solid future. Even if the province drops mandatory retirement, many workers will be physically unable to continue in trades beyond age 65.

In the short-term, conditions have improved from a worker's perspective, the reports states.

For the first time in years, the province's wage scale out-performed the rest of the country in 2004, with average real (after-inflation) hourly earnings of $18.48, largely because labour shortages drove wage hikes and overtime in construction and other industries using skilled trades.

Looking at what workers were actually paid last year, B.C. comes in second behind Alberta for salaried workers, and fourth for hourly workers behind Ontario, Alberta and the Canadian average. But prices in B.C. have only increased by about 12 per cent since 1997, while climbing by 20 per cent in Alberta, and 16 per cent in Ontario and nationally. As a result, wages in B.C. go farther, the CAs say.

In addition, 45,500 new jobs were created, a pace matched only by Alberta when compared with population gains. B.C. also had the country's second narrowest gender gap, with females earning 86.7 per cent of male wages, versus 85 per cent nationally. Manitoba leads at 89 per cent.

Women now account for 37 per cent of all managers in the province but more and more of them are also breaking down gender stereotypes by becoming welders, plumbers, electricians and equipment operators, said Bev Briscoe, chairwoman of the province's Industry Training Authority.

As job growth accelerates and retirements outpace the flow of entry-level workers, she said there is a unique opportunity for young people to find well paid and viable careers in the trades.

"Traditionally, parents have wanted their kids to go to university but we have to make sure that they are aware of opportunities in the trades, and that children can earn post-secondary credentials that will give them mobility and a career."

Unfortunately, while 59.3 per cent of the workforce has a post-secondary diploma, putting B.C. on top of the West, it continues to lag the national average of 61.6 per cent.

As well, B.C.'s employment rate (number of employed persons as a percentage of the population age 15 and over) is the lowest in the West at 60.8 per cent versus 62.7 per cent nationally. The CAs blame that on erratic job creation during the past 10 years coupled with steady growth in population.

The study released Monday is the second of three sections of the BC Check-Up. The CAs will issue their assessment of B.C. as a place to live on Oct. 11.

mkane@png.canwest.com

B.C.'S JOB SECTOR: BABY BOOM AND BUST:

1,043,000 jobs to open by 2015

By 2010 it is predicted that -- for the first time ever -- more people will be leaving the B.C. workforce than entering it.

Here's where the shortfalls are forecast to occur:

2003-2015:

913,000

jobs to fill through retirement and job growth

130,000

jobs through Olympics and related projects

The shortfall:

680,000 B.C. students in Kindergarten to Grade 12. In the unlikely event 100 per cent enter the job force here, the shortfall is still 363,000

Ran with fact box "B.C.'s Job Sector: Baby Boom and Bust",which has been appended to the end of the story.
© The Vancouver Sun 2005

Some say that the skills shortage in Canada is a myth. "You decide what type of future you want. If you are a native-born Canadian or a recent immigrant, one of the reasons you came to Canada was for a good quality of life. What if this good quality of life becomes unsustainable because you support adding labour supply to Canada without opportunities available for them. Would it be so bad if worker visa offers were tied to offers of employment?"

Would you want to know if there were not enough opportunities?
http://www.fraserinstitute.ca/admin/books/files/immigration.pdf

What do you think? Do you care about city sizes, traffic jams and lack of infrastructure?
See Downtown in 1978 vs 2003 (by clicking on on the year)
1978
http://www.city.vancouver.bc.ca/commsvcs/fade/stanley78web.jpg
2003
http://www.city.vancouver.bc.ca/commsvcs/fade/stanley03web.jpg

Hey, that tree grew.

100,000 jobs in B.C. there for the taking
Labour shortage isn't looming -- it's already here, provincewide study shows

Scott Simpson
Vancouver Sun

October 7, 2005

British Columbia's small business sector is already in the midst of an employment crisis as a new study Thursday revealed that as many as 100,000 jobs are unfilled across the province.

The study was conducted this summer by the B.C. Chamber of Commerce and the Community Futures Development Association in the expectation that it would give those groups a forewarning of the looming job crunch as millions of baby boomers retire over the next decade.

But the study found that the labour shortage is already here for operators of small companies in most sectors of the provincial economy -- leaving them scrambling for workers and willing to hire virtually anyone who expresses a positive attitude in interviews.

"Employers are having to take what workers they can rather than what they want," says the study presented to the provincial government by Community Futures and the chamber.

"When we initially embarked on the study, it was mainly because of concerns related to demographics," Paul Weist, of Community Futures, said.

"The thing that caught us off guard as we got into doing the focus groups throughout the province, was the strength of economic growth. It was so strong that the problem is here today -- let alone thinking about demographics and what's going to happen with the workforce in the next five to 10 years," Weist said.

"We weren't expecting this in terms of the urgency," B.C. Chamber of Commerce president and CEO John Winter added. "We aren't even beginning to feel the effect yet of those retirements. This situation, if we don't deal with it quickly, is only going to exacerbate and we'll be further behind the eight ball."

Winter said it was difficult to make an exact calculation of the number of unfilled jobs in his sector, but said that it would be in the range of "six figures."

Rick Lemon, vice-president of visitor services for Tourism BC, agreed that the situation is "critical."

"Our industry has traditionally relied on a younger workforce particularly in some of the entry level positions. There are fewer and fewer of those folks now, just from a demographic point of view.

"I can tell you, anecdotally, a number of resort operators have said to us, 'We've had general managers making beds in the resorts this summer and some days we weren't able to change the sheets because there wasn't the staff to do it.' "

Focus groups interviewed in the study said the province's school system is "not producing the skills that businesses require" and that they'd like to see government and business develop a partnership focused on workforce development.

Sectors having the most trouble are primary industry including manufacturing, food and accommodation, and construction -- all of which reported annual turnover rates exceeding 40 per cent.

The study involved discussions with employers in focus groups as well as a broader electronic survey for a total of 1,557 responses -- more than enough for a statistically sound survey of the province's 360,000 small businesses.

Among the focus groups, 50 per cent of participants said they had current job vacancies, with 34 per cent of telephone and web survey respondents reporting job vacancies in "difficult to fill" positions.

The biggest reason for an inability to fill positions was a lack of qualified applicants.

An absence of "life skills" such as a positive attitude and punctuality were cited as a key skill shortage by 53 per cent of electronic survey respondents.

The study says retraining of older workers is a key mechanism for filling jobs, as well as offering more flexible work hours.

Winter noted that the study also advocates consideration of a tax benefit for small businesses that elect to train workers, in recognition of the costs associated with training, and the risk that a newly trained worker may defect to a larger company that can afford to pay a higher wage.

"Small businesses are at such a disadvantage because they don't have the resources, financial, time or human, to invest in the training and development that's required."

ssimpson@png.canwest.com
© The Vancouver Sun 2005

So that's how they get such low unemployment numbers, they don't have enough people.

^ I think thats the case for many cities, in Canada there is a shortage of skilled workers and immigration is gonna be needed to fill those jobs.

Im a recently moved to BC, i have a electrician licence. It took me all of 1/2 hour to find a job. Out of the six companies I spoke to in that 1/2hour before being hired. Four of them later called me for interviews as well!

Im a recently moved to BC, i have a electrician licence. It took me all of 1/2 hour to find a job. Out of the six companies I spoke to in that 1/2hour before being hired. Four of them later called me for interviews as well!
Good for you.
Most of the jobs in BC are RE and construction related.
I met some tradesmen from Sunshinecoast after considering the high cost of rent and living in Vancouver, decided not to take the job offers.
The kind of Immigrants (accepted through point-system by Immigration Canada) are unlikely to pick up the tools and climb the scafolding wires.

Just a few days ago BCTV reported that Mexican blueberry pickers decided to quit their jobs because of poor working and living conditions.

In Saudi they recruited Koreans and Thai tradesmen for big construction projects. I wonder what's the policy here, will migrant workers be allowed to apply for permanent residentship and stay after the project is over?
And what happens after the RE and construction boom is over in the next 6 months or so?

Good for you.
Most of the jobs in BC are RE and construction related.

That trend is shifting.. Refer to article below.

B.C. leads Canada in job growth for 2005
Our jobless rate is at a 25-year low, while youth unemployment is the lowest ever, StatsCan says

Derrick Penner
Vancouver Sun

Saturday, October 08, 2005

British Columbia is posting the strongest employment growth of any province in 2005 leaving the provincial unemployment rate at a 25-year low and youth unemployment at an all-time low, federal reports released Friday show.

Statistics Canada, in its September labour force survey, said there was little change in B.C.'s employment picture from August, but for the year-to-date, the number of jobs has increased 2.2 per cent since the start of the year.

Statistics Canada reported that B.C. added 1,600 jobs in September to edge unemployment down to 5.7 per cent.

Robert Mattioli, an economist with Service Canada (formerly known as Human Resources Development), said that is the lowest that overall unemployment has been since January, 1981, when the number of jobless dropped to 5.5 per cent.

He added that unemployment among youth, those aged 15 to 24, fell to 8.7 per cent in September, which is the lowest it has ever been since records have been kept.

Jock Finlayson, executive vice-president of the Business Council of B.C., said rising youth employment is a natural result of the overall employment picture, which has, by Statistics Canada's Count, seen B.C. add 65,000 new jobs to the workforce in the last 12 months -- a growth rate of 3.1 per cent year-over-year.

"The kind of numbers we're seeing are indicative of an overall labour scarcity," Finlayson said. "And one of the things you would expect to happen when that occurs is a gradual drop in youth unemployment."

Mattioli said the sectors that tend to employ youth -- retail and wholesale trade, culture and recreation -- both posted gains in September. In the past year, the trade sector showed the biggest gain in jobs adding 27,900 new positions.

Construction created 18,400 new jobs over the past year, which was just ahead of the education sector, which saw 13,400 additional positions.

Mattioli said it is a positive sign that construction did not create a larger share of all new jobs in the province.

"About six months ago, [construction] was responsible for over half the job gains," he added. "If you look at the overall gains, 18,400 doesn't account for half the jobs, so growth is becoming more widespread, which is probably a good thing."

Mattioli said other signs of strength in the job market were that full-time employment increased by 4,100 in September hinting that people are shifting up from part-time, and private-sector paid employment rose while self employment dropped.

B.C. added a net 1,600 new jobs in September, with a large part of those coming in the gambling and recreation sectors, said Jeannine Usalcas, an analyst in Statistics Canada's labour statistics division.

Howard Blank, spokesman for Great Canadian Casinos, said his company alone hired 286 new employees in September to staff its casinos and its new hotel at Great Canadian's River Rock property in Richmond.

"We've been scrambling to fill all the slots there, if you'll pardon the pun," Blank said. "Plus with the [hotel's new] theatre, and auxiliary positions, we've definitely seen a huge increase [in employment]."

However, B.C. did lose 15,200 manufacturing jobs in the previous 12 months, Service Canada reported.

Finlayson said manufacturing is one of the sectors being hit by the risk factors that threaten to dampen provincial economic growth: a high dollar and rising fuel costs.

"The Canadian dollar is already squeezing the profitability and competitiveness of a number of Canadian industries," he said.

Nation wide, the economy lost just over 2,000 jobs in September though unemployment still edged down a notch to a near-30-year low of 6.7 per cent. That reinforces expectations that the Bank of Canada will raise interest rates further this month.

The job loss was a disappointment for economists who had predicted a gain of 20,000 jobs, but the details of Statistics Canada's report were less discomfiting, and expectations are that weakness in the job picture is only temporary.

Most indicators suggest the economy is still growing at or near its non-inflationary potential of about three per cent, he and other analysts noted.

The Bank of Canada said Friday that its survey of the mood of businesses found that while those in the resource-rich western provinces are a lot more upbeat than those in the rest of the country, "firms overall remain positive about the economic outlook."

depenner@png.canwest.com

FACT BOX

hed: B.C. tops jobs picture

deck: There was little change in B.C.'s employment picture in September, but the province is still posting the strongest employment growth in Canada. Below are September changes.

Employment: 2.134 million +0.1%

Unemployment rate: 5.7% -0.1%

Youth unemployment: 8.7% -1.5%

So that's how they get such low unemployment numbers, they don't have enough people.

Well, fact is, most of Western Canada wants more people :)

Indeed, the labour shortage is starting to have an impact here in Alberta. Projects are being held back and it is impossible to expand our infrastructure any further without either finishing current projects or getting more workers. That goes for any construction within the province: LRT, interchanges, ring roads, highrises, etc...

Why won't they just get temporary construction workers from other countries? That is the one thing that bugs me about Canada. I see foreign workers work in MidEast construction projects all the time and they are able to keep up with their mega projects. Plus the workers get paid a very decent wage that they remit to their home countries to help with their families. Or is this even being considered by the Canadian government?

Yes there are foreign workers here in Canada. We have workers who have come up from Mexico and South America as well as Europe at the moment in Alberta.

Construction industry 'so pumped up'
Contractors are scrambling to find sufficient skilled trades workers as the building boom grows

Derrick Penner, Vancouver Sun
Published: Tuesday, January 31, 2006

British Columbia is in the midst of a construction boom with some $83 billion in major capital projects listed in the B.C. government's major projects inventory and contractors scrambling to find skilled tradespeople to do all the work.

In 2005, B.C. also recorded some 31,043 housing starts -- the second-highest number on record after 1994, according to statistics from the Canada Mortgage and Housing Corp.

And while CMHC predicts starts will plateau at the 31,000 level in 2006, non-residential construction could continue to rise.

To the end of November 2005, B.C. builders took out residential building permits worth $6.3 billion, up 14.9 per cent from 2004. Non-residential permits for all of 2005, however -- for retail stores and offices, schools and hospitals -- were up a whopping 25.8 per cent to $3.9 billion.

Philip Hochstein, executive vice-president of the Independent Contractors and Business Association of B.C., said there is always a lag between growth spurts in residential development and non-residential construction. "You don't build a new shopping centre unless you've got new subdivisions," Hochstein said, and B.C. has built lots of new subdivisions, so shopping centres, schools, hospitals and offices are following.

"In my whole 18 years, 20 years [in the sector], I've never seen the construction industry in British Columbia so buoyant, so optimistic, so pumped up," Hochstein said of 2005.

Hochstein said public sector construction has also picked up as governments try to catch up on what he called an "infrastructure deficit."

Keith Sashaw, president of the Vancouver Regional Construction Association, said another positive sign is that the construction activity is broadly based within the non-residential field. "What we're seeing is strength in all sectors," Sashaw said. "Institutional and government permit volumes [in 2005] were up 138 per cent compared with the same period in 2004."

Manley McLachlan, president of the B.C. Construction Association, said construction levels are up all over the province. He cited an anecdote from a Prince George-based contractor who was organizing a construction trade show and looking for pieces of heavy equipment that could be used as displays. A year ago, operators made as many as 40 machines available.

"[The organizer] said [this year] he couldn't find four that weren't working," he said.

McLachlan said that in northern B.C., projects include the Prince Rupert port expansion and Enbridge Inc.'s $1.9-billion Gateway pipeline project to pump oil from Alberta's oil sands to the B.C. coast.

The construction boom has brought big gains in the industry's employment levels. In December, Statistics Canada's labour force survey counted some 178,800 construction workers in the workforce, a 14-per-cent increase from a year ago.

But Sashaw said finding skilled workers to build all the proposed projects is an increasing challenge, one that will be with the industry for some time as the workforce ages.

A 2001 industry analysis of the construction workforce found the average age of a qualified tradesperson was 42. Now, he said, the average age in some trades is 48, which means a considerable labour deficit is looming due to retirement

Hochstein said rising costs and changing bank rates are some of the unpredictable variables that will determine whether the construction boom continues.

"If interest rates go up, the game is over," Hochstein said. "If construction prices escalate at the rate they've been escalating, then projects will become uneconomical."

The ICBA released research Monday that showed construction costs have gone up 45 per cent since 2000 and could balloon by an additional 55 per cent by the end of the decade.

In the meantime though, Hochstein said 2006 looks like it will be better than 2005, "and 2007 looks pretty good."

McLachlan said while there are some concerns over labour shortages, no one is complaining about the current general economic conditions.

"It has been a marketplace that people who have been around for awhile haven't seen in a long, long time," McLachlan said. "For many people, this is really their first go at working in an economy with this level of activity."

depenner@png.canwest.com

ECONOMIC IMPACT:

CONSTRUCTION:

2004 EMPLOYMENT 178,800

+14.0%

2005 GDP $7.9 billion

+6.2%*

2006 GDP $8.4 billion

+5.7%**

Source: Statistics Canada, Service Canada, Credit Union Central of B.C.

* 1997 dollars

**Forecast, Credit Union Central B.C.

--

Resources, construction can fuel continued boom
Increased employment likely as industries struggle to keep up with demand for workers to support projected growth

Derrick Penner, Vancouver Sun
Published: Tuesday, January 31, 2006

British Columbia started 2006 in the midst of an economic boom the likes of which it hasn't seen in more than 20 years. And that remarkable growth is likely to continue until the end of the decade, fuelled by strong global demand for the province's resources and a multi-billion-dollar construction sector expansion.

The economy added 79,700 jobs in 2005, driving the unemployment rate to a 30-year low. The prospects for 2006 are for increasing employment as industries struggle to keep up with demand for workers to support projected growth.

Mining saw a $200-million injection into mineral exploration in 2005, the highest amount in more than a decade as companies scramble to find new resources that can feed Asia's insatiable demand for copper, zinc, coal and other resources, which are hitting record high prices on world markets.

Mining, fishing, trapping and forestry-support sectors, as well as construction, retail trade and the financial industries are expected to be the fastest-growing sectors of the economy.

The fishing and trapping category, an amalgamation of several small sectors that will add up to just $739 million of the economy in 2006, is predicted to see 10.7-per-cent growth over last year.

Companies also pumped up the provincial government's inventory of current and future major construction projects to $83 billion from $68 billion a year ago.

Projects contemplated include major infrastructure initiatives, such as Enbridge Inc.'s proposed 1,150-kilometre, $1.9-billion Gateway pipeline to carry oil from the Alberta oilsands across B.C. to Kitimat on the coast.

Billions more in investment are being contemplated to upgrade B.C.'s ports and improve road and rail transportation links in light of the province's overall strategy to create Canada's gateway to the booming Asia-Pacific region.

Helmut Pastrick, chief economist for Credit Union Central B.C., expects that the global economy will continue to expand, the United States economy will remain strong, and that investment spending in B.C. will continue to keep up with it all.

Pastrick is projecting that the value of the Canadian dollar, a key factor in the country's trade performance, will not rise so high against the U.S. currency as to hurt exports, and migration to B.C. will rise faster than to many other provinces, which will help keep "the housing market ticking along."

"I view that this growth-cycle phase we're in will extend further and perhaps be more robust than [other economists]," Pastrick said.

Pastrick, in Credit Union Central B.C.'s most recent provincial forecast, estimated that the economy "will be in a faster growth phase" until 2010, and could grow by as much as 20 per cent over the next five years.

That is higher than the previous five years, which saw the economy grow some 15 per cent between 2001 and 2005.

Labour shortages will factor into the forecast, Pastrick added, both on the positive and negative sides. The Credit Union Central's projection is that the workforce will grow by some three-per-cent per year until 2008, which will help to keep unemployment at record low levels within a workforce that is aging and shrinking.

Pastrick noted that wages have begun to rise in response to tighter labour supplies, which in turn increases the cost to build and make things.

"But [rising wages are] not necessarily a bad thing," he said. "Higher wages mean higher incomes," and better incomes, mean more consumer spending power.

The Credit Union Central forecast is for consumer spending to grow by 25 per cent over the next five years accounting for "the bulk of growth in total real [gross domestic product]."

For 2006, Pastrick estimates that growth in consumer spending will translate into some $53 billion in retail sales in B.C. stores.

Canada Mortgage and Housing Corp. also believes that rising wages and continued positive migration numbers will support strong demand for housing. The federal agency is projecting an estimated 31,000 new housing starts across B.C. in 2006 and some 95,000 total real estate sales.

Other economists, however, worry that a constrained labour supply could hold back some of B.C.'s growth.

David Baxter, director of the Urban Futures Institute, a demographics and economic forecasting firm, noted that Alberta's economy is also "roaring ahead" at the same time as B.C., so it could be difficult to find all the workers it needs to take on all the projects being contemplated.

"When we talk about interprovincial migration, we have to talk about where all those folks are going to come from," Baxter said.

He added that Alberta, Saskatchewan and Quebec also posted record low unemployment rates in 2005, which will cause those provinces to draw workers to them.

"We look forward in time and say we're going to have a modest labour supply constraint," Baxter said.

However, Baxter still predicts that B.C. will see healthy economic growth.

Rising construction costs could also affect B.C.'s ability to grow. The Independent Contractors and Businesses Association of B.C., borrowing the estimate of a major construction quantity surveyor, forecasts that construction costs could rise more than 50 per cent by 2010. That, the ICBA noted, follows a five-year period between 2000 and 2005 where construction costs rose 45 per cent.

Much of the growth will be fuelled by the booming resource sectors, mining and oil and gas exploration.

Experts in the oil and gas sector are predicting that natural gas prices will remain above $9 US per thousand cubic feet, a level that is expected to propel drilling activity in B.C.'s booming northeast to increase by some 20 per cent in 2006.

Miners too are scrambling to keep up with global demand for commodities such as coal and copper. It's predicted that zinc, gold and silver will all remain hot commodities, which is all good for B.C.

Technology industries are also enjoying a robust recovery from the tech meltdown of 2001.

A recent study conducted by the University of B.C.'s Sauder School of Business for the technology promotion agency Leading Edge B.C. concluded that B.C. tech companies had the best return on investment in North America.

B.C. was a hot spot for technology takeovers in 2005, such as Kodak's $1-billion takeover of local imaging firm Creo, and PureEdge Solutions by IBM.

Now Leading Edge president George Hunter has noticed that early-stage tech firms are having an easier time finding first-level financing. He said B.C. leads Canada in terms of the amount of money available to new companies, and predicts an unprecedented amount of activity in tech startups.

B.C.'s biotechnology sector is also positioning itself for growth. The provincial government, last September, introduced a tax break for profits earned on life-science-related intellectual property, so long as firms keep the ownership of those patents in B.C.

Karimah Es Sabar, executive director of B.C. Biotech, is characterizing B.C.'s big picture for biotech's future as good, and is focusing her efforts on building relations between this province and Europe's burgeoning life-sciences sector.

The province's film industry is also enjoying a resurgence, also with some tax help from the provincial government.

depenner@png.canwest.com

HOT IN 2006:

Here's what's going to sizzle:

Fastest-growing sectors in B.C.'s economy for 2006

Mining: $2 billion GDP +13.6%

Fishing, trapping, forestry support: $739 million GDP +10.7%

Construction: $8.4 billion GDP +5.7%

Retail & wholesale trade: $15.7 billion GDP +4.3%

Financial sector: $30.7 billion GDP +4.2%
© The Vancouver Sun 2006

Tourism revenues expected to break record in 2006, topping $10 billion
U.S. visitors dropped in 2005, but Olympic spinoff plus domestic and offshore markets give rise to optimism

Bruce Constantineau, Vancouver Sun
Published: Tuesday, January 31, 2006

It was a good news-bad news year for B.C. tourism operators in 2005, with more European and Asia Pacific visitors taking in the sights of Beautiful British Columbia but fewer Americans trekking north to spend their U.S. dollars in the province.

But even with the U.S. visitor slowdown, B.C. tourism officials still expect total industry revenues in 2006 will top the $10-billion mark for the first time ever -- a small but significant step in the goal to reach $17 billion in revenues by 2015.

Tourism BC president Rod Harris expects that any obstacles posed by the U.S. market this year will be offset by increases in visitors from domestic and offshore markets and by the increased exposure B.C. will receive as an Olympic destination following the Winter Games in Italy this year.

"There are challenges out there, sure, but I'm very optimistic as we move forward," he said in an interview. "It's all about the buildup to 2010 and getting more market-ready [tourism] products available through 2006 and 2007. Then we start to capitalize on the awareness of those products in 2008 and 2009, with the liftoff taking place through 2010 and beyond.

"I really believe we have laid a very, very solid foundation for some aggressive rates of growth."

B.C. attracted nearly 23 million overnight visitors in 2005 and the tourism industry generated about $9.8 billion in revenues, both figures that are up marginally from a year ago.

But the U.S. market is critically important for B.C. and the number of U.S. tourists continued to fall below expectations despite increased marketing efforts south of the border.

"The U.S. market was the most disappointing of all in 2005," Harris said. "The world of tourism marketing has grown intensively competitive and we're really feeling that competition now.

"U.S. tourists used to think about travelling within North America first before considering overseas destinations. But now they view the entire world as their stage, so places like Singapore or Thailand or Europe often come to mind before they think about Canada."

Analysts say the rising Canadian dollar, higher fuel prices and border issues have all contributed to declining U.S. tourist traffic to B.C.

The U.S. market traditionally accounts for about 70 per cent of all international overnight visitors to the province, so the 3.2-per-cent drop in U.S. visitors that occurred during the first 10 months of 2005 is extremely significant.

Harris said Canadian domestic travellers will take on even greater significance for the B.C. industry this year, as many operators face falling U.S. traffic. He noted that hotel room revenues throughout B.C. rose by more than four per cent in October 2005, even though the number of U.S. tourists dropped by nine per cent.

"Domestic visits more than made up for any international shortfalls and that speaks to the importance of marketing to places like B.C., Alberta and Ontario," Harris said.

Great Canadian Railtour Company president Peter Armstrong said his company's popular Rocky Mountaineer rail service from Vancouver to Banff, Jasper or Calgary attracted about 86,000 riders in 2005 -- up 10 per cent from 2004 -- but skyrocketing fuel prices cut into earnings.

Armstrong said one of his company's greatest accomplishments during the year was to keep its U.S. ridership at 2004 levels. Increases came from such markets as the U.K., Australia and New Zealand.

"We made major [marketing] efforts in the U.S. in 2005 because we saw that it was going to be a bit of a problem," Armstrong said. "We were extremely happy just to hold even."

Tourism Vancouver senior vice-president Stephen Pearce expects the recent decline in the number of cruise ship passengers visiting Vancouver bottomed out in 2005, with the total falling by about two per cent to 910,000. Vancouver has lost cruise business to Seattle in recent years, but other B.C. ports such as Victoria and Prince Rupert have benefited from Seattle-based ships calling on them during their voyage to Alaska.

bconstantineau@png.canwest.com

ECONOMIC IMPACT:

ACCOMMODATION/FOOD SERVICES

2005 EMPLOYMENT 181,700

-0.5%

2005 GDP $4.1 billion

+3.1%*

2006 GDP $4.2 billion

+2.9%**

* 1997 dollars

**Forecast, Central Credit Union

Source: Statistics Canada, Service Canada

Credit Union Central of B.C.

B.C. TOURISM INDICATORS: INCREASE FOR 2006:

Overnight visits Total revenues

2000 22.5 million $9.5 billion

2001 22.4 million $9.2 billion

2002 22.6 million $9.3 billion

2003 21.9 million $8.9 billion

2004 22.5 million $9.5 billion

2005* 22.9 million $9.8 billion

2006** 23.4 million $10.15 billion

*Estimate,

** Forecast

Source: Tourism BC
© The Vancouver Sun 2006

--

Expectations high for 2010 Winter Games
Studies estimate up to 77,000 worker-years of employment will be generated

Derrick Penner, Vancouver Sun
Published: Tuesday, January 31, 2006

Expectations are that the Vancouver 2010 Olympics will pump between $5.8 billion and $10 billion worth of new activity into the British Columbia economy by the time the Olympic flame is extinguished in 2010.

RBC Financial Group economist Derek Holt estimates that the Olympics could boost the size of B.C.'s economy by as much as 1.2 percentage points per year, with the economic lift adding up to two-times that amount in 2010.

"This is a significant, positive lift to long-term growth prospects in B.C.," Holt wrote in a November report.

John Furlong, president of the Vancouver Olympic Organizing Committee, has said that Holt's forecast would equate to an annual $2.1 billion to $3.3 billion direct and indirect boost to the economy.

"It's incredible," Furlong said to the Vancouver Board of Trade. "This is mostly due to construction and labour up to 2009."

Furlong noted that Vanoc will eventually award more than 10,000 contracts for goods and services. To date, some 300, worth more than $93 million, have been tendered.

Economic impact studies estimate up to 77,000 person years of employment could be generated by the Games with billions of dollars in new construction ranging from $660 million on direct venue spending and billions of dollars on indirect projects ranging from the Sea to Sky Highway upgrade, Canada Line rapid transit line and Vancouver Convention and Exhibition Centre expansion.

Vanoc will contribute some $145.6 million to projects in 2006 including the upgrading of facilities at Cypress Mountain for the Olympics' freestyle skiing and snowboarding events, construction of a new arena at the University of B.C. and the tenders for athletes villages in Vancouver and Whistler.

Venue costs, however, could escalate substantially before the games take place. The Independent Contractors and Businesses Association of B.C. estimates that construction costs in B.C. could rise 50 per cent by 2010.

Right now, companies beyond big construction firms are beginning to capitalize on the Games in some surprising ways.

Sitka Log Homes in 100 Mile House, for instance, won a $2.9-million contract from the provincial and federal governments to provide a log building for the B.C. Canada Place at the Turin 2006 Olympics in February.

Walter Bramsleven, Sitka's general manager, said the idea came from the provincial government's 2010 Olympic and Paralympic Winter Games Secretariat and Ministry of Economic Development "as a way to network the 2006 and 2010 [Winter Olympics] together, but also a great opportunity to promote British Columbia to the European sector of the world."

While the Turin project isn't directly part of the Games, Bramsleven is optimistic that his 30-employee firm in B.C.'s interior will receive additional benefits, not only for the 2010 Games but beyond.

"There's going to be a lot of private-venture developments that are happening and a lot of those will be log and timber buildings, we would expect," Bramsleven said.

As far as he is concerned, opening the B.C. Canada Place as a venue to showcase B.C. and Canada to the international audience at the Turin Olympics was "absolutely the right thing to do."

Economic Development Minister Colin Hansen, the minister in charge of B.C.'s Olympics secretariat, said the province is borrowing ideas tried by other Olympic jurisdictions and improving on them to make sure British Columbians wring all the opportunities that they can from the Games.

For example, the B.C. Olympics secretariat created the 2010 Commerce Centre, a spot where all Olympics-related contracts that are put out to tender are posted and can be accessed online.

The provincial government also created the arm's-length 2010 Legacies Now, a non-profit society aimed at encouraging and helping communities to initiate projects in sports and the arts, linked to the Games, that will have lasting impacts on their health and social wellbeing.

However, Hansen said B.C. has started these initiatives earlier than the governmentsof other Olympic-host jurisdictions, and is doing them better, which has put B.C. "much further ahead than any other Olympic jurisdiction has been four years out [from the Games]."

Hansen said his Olympics Secretariat, through the Commerce Centre, is also trying to encourage the winning bidders on venue construction and other large jobs to do their own purchasing through the centre as well to leverage all the local opportunities they can out of the Games. "The role of the Olympic Secretariat is to strategize and implement programs that will allow us to maximize the ongoing benefits that will result from the Olympic Games," Hansen said.

Bruce Dewar, chief operating officer of 2010 Legacies Now, added that some 94 communities have set up Spirit of 2010 committees to try and find ways to participate in and benefit from the Games.

Many of the benefits are expected to come in the areas of sports and the arts, but Dewar said some efforts will also have economic benefits.

He noted that through Legacies Now's "sports hosting" program, some communities, such as Prince George, are lobbying to serve as a pre-Olympics training venue for some of the teams coming to the Games.

That, Dewar said, helps set communities up to market themselves as sports-tourism destinations, which is one of the fastest-growing segments of tourism. So far, he noted, Legacies Now has handed out some $461,000 in grants to communities.

"[Communities] are really opening up their minds about what these Games can bring," Dewar said.

Hansen added that B.C. didn't pursue the Games just to host a major sporting event, it pursued them because it is a chance to showcase B.C. to the world.

"[The 2010 Olympics aren't] an end in themselves, they are a means to an end," Hansen said. "It's really [a chance to] catapult B.C. into the next decade and beyond in terms of economic opportunity and spinoffs that will come because of the fact we're hosting the Olympic Games."

depenner@png.canwest.com

---


Metal mania to keep boosting industry
Analysts expect prices to remain buoyant

Scott Simpson, Vancouver Sun
Published: Tuesday, January 31, 2006

Metal mania gave British Columbia's mining industry a huge boost in 2005 and it's expected to do the same in 2006.

Everyone from front-line prospectors to globe-straddling industry giants found plenty to cheer about last year, when soaring metal prices touched off a flood of exploration investment and filled to overflowing the coffers of establishing mining companies.

This year will bring more of the same, according to commodity analysts and industry soothsayers who expect continued strong global demand for metals and minerals -- coupled with scant supplies -- to keep prices buoyant and sustain strong interest in developing new mining projects in B.C.

Investment in mining exploration jumped $70 million last year to $200 million, the biggest amount in more than a decade and enough to sustain 600 projects and 4,000 field exploration jobs.

An even greater amount of investment cash is expected in 2006.

"If you'd asked me a year ago if we could have maintained this level of activity I would have said it was unlikely. But people are talking that this trend will continue into 2007. We're very pleased," said Dan Jepsen, executive director of the Association for Mineral Exploration British Columbia, which represents B.C.'s mineral exploration sector.

As an indication of this year's momentum, the association's annual conference in late January attracted record attendance.

The news has been just as good for established miners.

Don Lindsay, president and chief executive officer of Teck Cominco, expects continued strength in global commodity prices to deliver steady profits from its production of zinc, lead, copper, gold, coal, molybdenum and specialty metals.

The value of the Vancouver-based company's shares rose more than 75 per cent in 2005 on the strength of record prices for coal and soaring prices for copper -- but even if those prices back off, other Teck commodities should step forward to maintain the company's momentum.

"Expect the zinc market to be the strongest of all of the base metal markets as [global] inventories continue to drop. Expect continued strength in the metallurgical coal markets as well," Lindsay suggests.

"I would not be surprised to see some softening in the copper and molybdenum prices although these commodities are still at historically very good prices. This should translate into another very good year for Teck Cominco."

Scotiabank vice-president Patricia Mohr, who used the "metal mania" tag in her 2006 commodity price outlook, expects uranium to lead her "commodity price sweepstakes."

Close behind, she's picking zinc, gold, silver and natural gas -- all four of which play significant roles in B.C.'s resource sector.

Last year, Mohr notes, marked the third-biggest annual gain since Scotiabank started its commodity index in 1972 -- led by a 123-per-cent increase in the price of metallurgical coal, a key B.C. commodity.

In an interview, she said a late-year runup in metal prices has added a speculative element to markets, for "metals of all kinds, but particularly in zinc, copper, and also gold and silver."

"It's partly because there is tremendous interest by investment funds and hedge funds in commodities as an asset class as opposed to equities or bonds," Mohr added.

"If that's the case then gold and other precious metals like silver would be the place to be."

Michael McPhie, president of the Mining Association of B.C., says existing mines are going "flat out" to take advantage of strong commodity prices -- and "all regions" of B.C. are seeing increased exploration.

"Some veteran industry observers suggest this upward trend could well be the beginning of a sustained period of strength and growth for mining and minerals in B.C.," McPhie wrote in a recent sector review.

Terry Salman, president and chief executive officer of Vancouver investment and research firm Salman Partners expects metallurgical coal prices to drop a bit after a record peak in 2005.

But Salman doesn't see a big drop because producers in B.C. and elsewhere are still challenged in their efforts to bring extra supply onto the market to meet demand from Japan, Korea, China and Europe.

Even Canada's biggest and best-financed producer, Fording Canadian Coal Trust, is warning that its ability to expand operations is curtailed by a global shortage of the huge rubber tires needed to mobilize more trucks at its lucrative open pit operation in B.C.'s Elk Valley.

The year is expected to finish with some good news for at least two of B.C.'s hottest projects for new mines.

Galore Creek copper-gold project operators NovaGold Resources await a final feasibility study on their project near Eskay Creek in northwest B.C. and could begin construction by 2007 on an open pit mine with resources now estimated at 1.1 billion tonnes.

Elsewhere, New Gold Inc.'s plan to develop an underground copper-gold mine at the old Afton Mine open pit site along the Trans Canada Highway near Kamloops is awaiting the verdict of a $25-million feasibility study that should arrive upon president Chris Bradbrook's desk in October.

ssimpson@png.canwest.com

ECONOMIC IMPACT:

MINING/OIL AND GAS:

2004 EMPLOYMENT 11,000

2005 GDP $3.87 billion

+3.9%*

2006 GDP $4.2 billion

+7.7%**

* 1997 dollars

** Forecast, Central Credit Union

Source: Statistics Canada, Service Canada, Credit Union Central B.C.
© The Vancouver Sun 2006

--

$52 billion in sales expected in B.C. stores
Strong consumer confidence expected to push volumes higher

Bruce Constantineau, Vancouver Sun
Published: Tuesday, January 31, 2006

The B.C. retail sector will ride the wave of a growing economy and a continued strong housing market this year to post total sales of more than $52 billion -- the first time industry revenues will top the $50-billion mark.

That's the consensus among B.C. retailers and analysts as the industry shows no signs of falling significantly below recent annual growth rates of five to six per cent.

"I just don't see 2006 being much different than 2005, so we should keep rolling along for at least another year, driven largely by the regions," said Vancouver retail analyst David Gray, of Sixth Line Solutions.

He noted that while 2005 Vancouver retail sales increased by about one per cent over the previous year, sales outside the Lower Mainland rose by more than nine per cent as resource communities throughout the province rebounded from recent tough economic conditions.

Gray said Vancouver bucked that trend in fashion sales, which rose by about five per cent last year -- double the increase experienced in the rest of B.C.

Edward Chapman Ladies Shop Ltd. owner John Rea said he's extremely excited about 2006.

"As a retailer, it's all about consumer confidence and we have a huge amount of consumer confidence out there now because of all the strong economic indicators," he said, noting that sales at his ladies fashion stores rose by about five per cent last year.

Rea said the fashion industry needs new trends to help drive sales and expects that will happen this year because of the return of the skirt as a major fashion item.

"Skirts are going to be accessorized in a huge way this year, like they haven't been in years," he said. "They'll have a lot of detail -- with beads and shells and layers -- so it's great to have something new and exciting to talk about."

Retail consultant Peter Hume agrees 2006 looks like another strong retail year but noted the industry faces challenges that could slow growth this year.

"Personal debt loads in B.C. are still very high, which makes you wonder when people are going to hit the wall on that issue," he said. "No matter how confident people are in the economy, they can't keep pushing their debt levels higher and higher."

Hume also said rising energy prices and higher interest rates could hurt retail sales by cutting into people's disposable income.

But he noted retail development activity remains stronger than ever throughout B.C., as major retailers such as Wal-Mart, Home Depot and others scour the province for new development sites. Costco will open its new downtown Vancouver store near GM Place near the end of this year or early 2007 while Vancouver city council is expected to reconsider Wal-Mart's controversial proposal to build a new store along Marine Drive.

Some major new retail developments under construction in Greater Vancouver include the Costco project on Expo Boulevard, the Save-On-Foods/Winners development at 8th and Cambie, the London Drugs/Save-On-Foods/Canadian Tire project on Marine Way in Burnaby and the Famous Players/IGA development near 200th Street and Highway One in Langley

Gray said recent equity infusions into the Vancouver-based Lululemon and Aritzia retail chains will help those companies expand this year.

He said consumers should also expect more U.S. retailers to enter the B.C. market this year -- possibly home-furnishing chain Crate and Barrel, which is said to be considering potential locations, and clothing chain Urban Outfitters, which already has Canadian stores in Montreal, Toronto and Edmonton.

London Drugs president Wynne Powell said he hopes to add three or four new B.C. stores this year to the 40 that already exist throughout the province.

"We expect another very positive year in 2006, but things could taper off a wee bit," he said. "If 2005 sales were up by 10 cent, then we think 2006 would be around 8.5 or nine per cent, so it should still be a great year."

Powell said labour shortages and higher energy prices could constrain growth in B.C. this year.

bconstantineau@png.canwest.com

ECONOMIC IMPACT:

RETAIL:

2005 EMPLOYMENT 353,500

+13.3%

2005 GDP $15.0 billion

+5.5%*

2006 GDP $15.7 billion

+4.3%**

Source: Statistics Canada, Service Canada Credit Union Central B.C.

* 1997 dollars

** Forecast, Credit Union Central B.C.

B.C. RETAIL SALES:

Strong growth predicted for 2006:

2001 $40.71 billion

2002 $43.26 billion

2003 $44.42 billion

2004 $47.21 billion

2005 $49.8 billion

(Estimated)

2006 $52.54 billion

(Forecast)

Source: Sixth Line Solutions, Vancouver Sun
© The Vancouver Sun 2006

---


Wood: A mainstay of B.C.'s economy
79,800 workers to pump $10.4 billion into B.C.'s economy

Derrick Penner, Vancouver Sun
Published: Tuesday, January 31, 2006

British Columbia's forest industry remains the cornerstone of its economy, accounting for some 79,800 jobs in 2004 and in 2005, churning out some $10.3 billion of the province's overall economic output.

Add in multipliers -- the number of jobs that are required to help keep the forest industry supplied with the goods and services it needs, as well as the employment supported by the spending of forestry workers in the communities where they live, and the hewing of wood keeps much of the province outside the Lower Mainland occupied.

The forest industry's sectors are distinctly different, with distinctly different economic experiences. The coastal lumber sector and the pulp-and-paper sector are under intense pressure.

However, the Interior lumber sector and its firms -- prime among them Canfor Corp., West Fraser Timber Co. Ltd. and Tolko Industries Ltd. -- were some of the most profitable in North America in 2005.

"In B.C., we're more of a solid wood industry: lumber, [oriented-strand-board panelling] and plywood," said Craig Campbell, forest-industry practice leader for the consulting firm PricewaterhouseCoopers.

"The Interior is well positioned," he added. "[Companies have] made the investment, [have] got world-class mills and good world-class companies, and are doing things right."

Interior lumber producers have also had their challenges, with the Canadian dollar, soaring against the United States currency, being the biggest.

For firms that sell primarily into the U.S. market, it has meant less return for everything they ship south of the border.

The still-unresolved Canada-U.S. softwood lumber dispute has Canadian firms still paying billions in duties on shipments, rising oil prices have made it more expensive for companies to fuel their operations while lumber prices in the U.S. averaged lower in 2005 than they did in 2004.

Firms, however, were optimistic enough about their future to keep investment pouring into the industry.

Ainsworth Lumber Co. Ltd., in 2005, committed itself to investing $400 million to build one or two oriented-strand-board panel mills in B.C.'s Interior, specifically to harvest pine-beetle damaged timber.

Canfor CEO Jim Shepherd said his company has worked hard to strengthen the company following its merger with Slocan Forest Products two years ago.

It has sold off non-core mills, closed less-efficient plants and put money into improving the remaining mills to make them more flexible in serving the needs of different markets.

And in the end, Shepherd added, the company's production levels remained the same as they were in 2004.

"Over $300 million was invested in Canfor facilities in 2005, and we'll see the benefit of that going forward," Shepherd said.

Benefits include being able to produce its own electricity at its Prince George pulp mills, and expanding its OSB production with the start of a joint-venture mill in Fort St. John.

Shepherd said it is all part of his company's strategy to increase its building-products business in the U.S. and abroad to make higher-value structural lumber and specialized products for specific customer needs.

"Right now, we're in the process of reducing costs and improving technology in all our mills, and that will continue for another two to three years," he added.

However, the investment isn't only to reduce costs and improve margins in the U.S. market. Shepherd noted the technological improvements also allow it to mill lumber for the different needs of different markets, primarily in Asia.

Shepherd said Canfor remained the single largest supplier of dimension lumber to Japan, where he sees room for growth, and the firm made inroads into Taiwan, Korea and Malaysia.

Then there's the prize of China.

"China is the one a lot of people have interest in, but in opening Canfor's Asia office in Shanghai, hopefully we'll start to build [that market]," Shepherd said.

Hank Ketcham, CEO of West Fraser Timber Co. Ltd. added that the industry will continue to fight for a fair resolution to the softwood lumber dispute through 2006, and is confident one will eventually be found.

"We do believe very strongly, as this rolls along, we're getting closer and closer to an end point," Ketcham said. "And we believe very strongly we will be vindicated in the end."

depenner@png.canwest.com

ECONOMIC IMPACT:

FORESTRY:

2004 EMPLOYMENT 79,800

-13.9%

2005 GDP $10.3 billion

+4.2%*

2006 GDP $10.4 billion

+1%**

Source: Statistics Canada, BC Stats, Credit Union Central B.C.

* 1997 dollars

** Forecast, Credit Union Central B.C.
© The Vancouver Sun 2006

I think one of the issues that will continue to inhibit BCs ability to attract skilled workers is the cost of living.
BC is far and away the most expensive province to buy a house, no other province comes close. That means your wages don't go near as far.
When you look at Alberta most trades pay slightly more but with no sales tax, low income tax, better public services, and housing that although rising is still not even in Vancouver's category, BC has a real problem on its hand.

BC's in a catch-22 situation, in that it's the most highly demanded destination in Canada, and at the same time it has a scarcity of developable land. I doubt there's much BC can do except to encourage more high-rise development.

As for level of public services, I don't see much of a difference between Alberta and BC.

If BC had the same amount of oil reserves, then perhaps BC could lower taxes to the level of Alberta. But at this point, it's just not feasible. Instead, a slow & moderate approach should be taken to gradually lower taxation.

Even in areas of BC that a lot of arable land and room to grow housing is an outrageous cost.
Look at little Kelowna/Kamloops/Nanaimo. Small cities with high prices.
BCers have just gotten use to high prices and don't realize how completly out of line they are with the rest of the country.
Its still more expensive to buy a condo in Victoria than in Toronto and the GoldenHorshoe is very densly populated and definatly running out of open land in which to expand.

Remember that you are much worse off making $60,000 in BC as opposed to $50,000 anywhere else in the country because that extra 10k does not make up the difference in your housing costs and as your income rises you also pay disproportionatly more tax.
These are both part of the reason that BC has by far the lowest rate of home ownership in the countryt and its getting worse.
Coming to BC for a relativly same paying job from anywhere else in country means you are taking a major hit in your standard of living.

The Golden Horseshoe is running out of room because of the "Greenbelt", not because it's actually running out of room. There' still plenty of open space in K-W, and any place outside of the GTA.

As for Kelowna, Kamloops, Nanaimo, prices are high because they're all restrained by geography (e.g. mountains) on almost all sides, something the Golden Horseshoe doesn't have to contend with. Second, there's a lot of seniors moving into these areas, and by bringing their golden nest eggs over to BC, they're artifically inflating the provinces prices. Third, there's just so many foreign investors out there that are hungry for BC properties (e.g. Albertans). BC has the country's most desirable real estate, and no matter what the price, there'll always be investors snatching up properties.

The only way to contain real estate prices would be to restrict foreign and interprovincial investment (e.g. by taxing them heavily or by setting quotas) to BC, and discourage retirees from moving into the province. However, that will seriously damage the province's economy.

Remember that you are much worse off making $60,000 in BC as opposed to $50,000 anywhere else in the country because that extra 10k does not make up the difference in your housing costs and as your income rises you also pay disproportionatly more tax.
These are both part of the reason that BC has by far the lowest rate of home ownership in the countryt and its getting worse.
Coming to BC for a relativly same paying job from anywhere else in country means you are taking a major hit in your standard of living.

How would you solve this problem? What can the province really do to dampen demand and still retain a resiliant economy?

Highlighting a problem which has already been pointed out millions of times is easy, finding a viable solution is next to impossible.

Originally Posted by helsnkiborg
Good for you.
Most of the jobs in BC are RE and construction related.
That trend is shifting.. Refer to article below.
B.C. leads Canada in job growth for 2005
Our jobless rate is at a 25-year low, while youth unemployment is the lowest ever, StatsCan says
Derrick Penner
Vancouver Sun
Saturday, October 08, 2005
Job quality remains weak: CIBC
By ROMA LUCIW
Monday, January 30, 2006 Posted at 12:51 PM EST
Globe and Mail Update

Strong Canadian employment numbers are masking weak income growth and a rise in lower-quality jobs, a shift expected to continue in the coming months, a new CIBC World Markets report suggests.

“The bottom line is that while the economy is generating jobs at a very rapid pace, the quality of these jobs is on the decline,” CIBC economist Benjamin Tal wrote in a report released Monday. “Granted, a low-quality job is better than no job, but the headline employment figures exaggerate the real strength of the Canadian labour market.”

At 6.5 per cent, Canada's unemployment rate is near a 30-year low. Since 2002, the economy generated more than 1.3 million jobs, for a cumulative growth of 8.9 per cent. Furthermore, all of the jobs created in 2005 were full-time, suggesting that the Canadian economy is generating plenty of high quality jobs.

Still, even with those gains, real labour income growth has edged up only by an annual average of 0.5 per cent since 2002, a pace that is inconsistent with the number of full-time jobs that have been generated, CIBC said. Back in the late 1990s, 100,000 new jobs generated, on average, a 1.4 per cent rise in real labour income.

The number of Canadians turning to self-employment continues to soar, generating one-third of all new jobs in 2005. “Resuming its traditional late-cycle behaviour, self-employment activity is now working to mask some softening in the pace of job creation by the private sector,” Mr. Tal wrote.

The CIBC report maintains that the risk of replacing high-quality full-time jobs with lower-paying, less-secure jobs — such as part-time of self-employed work — is that wage growth could remain tepid and personal income growth could slow.
CIBC's employment quality index — which measures the worth of jobs created by the economy — has been falling since 2000. Financial compensation makes up 70 per cent of the job quality index, while part-time versus full-time and self-employment versus paid employment make up the other 30 per cent. The idea is that a job of a lower quality if it is part-time or self-employed. Self-employed people earn, on average, 20 per cent less than other employees.

The Canadian economy created 255,000 new jobs in 2005, a period when CIBC's employment quality index has dropped 1.4 per cent. In the past five years, employment has jumped 9.1 per cent while CIBC's employment quality index has dropped by 3.4 per cent.

The weakness in high-quality work was seen in the transportation, manufacturing and utilities sectors, CIBC said. At the same time, strong job gains in sectors such as construction, finance, and education worked to offset some of the damage to the quality index during the past few years.

Although the drop in job quality in Canada since the beginning of the decade is not as profound as the decline in the United States, “the long-term average suggests that the Canadian labour market, despite its recent surge, is unable to close the quality gap,” Mr. Tal said.

That trend is expected to continue in 2006. CIBC believes that while a housing market crash is not in the cards, even a gentle slowdown in the real estate sector will have a massive impact on construction jobs, which have experienced almost four times the employment gain seen in the economy as a whole in 2005.

With the loonie slated to rise even further, manufacturing is expected to be another weak job spot this year, CIBC said. “Look for manufacturing employment to continue to decline in the coming quarters — a clear negative for overall employment quality.”