JOCK FINLAYSON
The following piece by ICBA Chief Economist Jock Finlayson, in his role as a Senior Fellow of the Fraser Institute, was first published in the Toronto Sun on August 7, 2024.
BRITISH COLUMBIA – July 2024 brought another downbeat report on the state of the B.C. labour market, confirming that the province currently faces an unappetizing mix of feeble employment growth and rising joblessness. According to the July Labour Force Survey, total employment dropped by 24,000 from the month before (actual rather than seasonally adjusted figures). In the same period, B.C.’s unemployment rate jumped to 5.9%, up from 5.1%. Year-to-date, employment in the province has risen. But most of the net new jobs are in the public sector.
At the same time, the working-age population continues to expand, not just in B.C. but across the country. B.C.’s labour force – consisting of all employed individuals plus those who are unemployed but actively looking for work – stands at 3.04 million persons, up from 2.97 million a year ago. The Trudeau government’s announced plan to dial back the numbers of non-permanent immigrants admitted to Canada has yet to be implemented, with the ranks of international students, temporary foreign workers, and asylum seekers still growing. Unfortunately, many of these newcomers will struggle to earn a living in B.C.’s less-than-buoyant job market.
Most of the net new jobs are in the public sector, growing nine times faster than employment in the private sector.
A tale of two economies?
A striking feature of B.C.’s economy under the NDP government is the contrast between a rapidly expanding public sector and a flagging private sector (which still accounts for about 80% of all jobs). This is starkly evident in the labour market. So far in 2024, payroll employment in the overall business sector has bounced around 1.8 million, while more public sector jobs are being added month-after-month. (See Figure 1 for trends.)
Figure 1
More telling is the picture over the last two years: from Q2 of 2022 to Q2 of this year, private sector employment rose by a meagre 0.6%, even as the number of public sector jobs in the province climbed by 5.2%. Put differently, since mid-2022, public sector employment has been growing nine times faster than employment in the private sector. To say the least, this unusual pattern is neither healthy nor sustainable.
Another important data point is that every other province in the country has handily outperformed British Columbia in creating jobs across the broad business community in the last few years (going all the way back to 2019, in fact). This should be a top-of-mind concern for policymakers in Victoria. Yet instead of acknowledging and tackling the problem, they prefer to ignore it and persist with policies – higher taxes, mounting regulatory and paperwork burdens, massive deficits, more government intervention – that increasingly look to be sucking the life out of the private sector economy.
As for job creation/destruction by industry, since mid-2022 there have been outright declines in employment levels in several segments of the B.C. private sector, including agriculture, manufacturing, retail/wholesale trade, and accommodation and foodservices (see some key sector statistics in Figure 2 below).
Figure 2
In the professional, scientific and technical services sector, employment has been essentially flat. In construction, employment fell between 2022 and 2023 and so far this year is running 3% lower than in 2023. Meanwhile, employment has marched steadily higher across all segments of the public sector – health care, social services, government administration, and education.
B.C.’s faltering job market does not inspire confidence that 2025 will produce better economic results than we are seeing in a notably lacklustre 2024.
Source: ICBA
