Alberta Freezes Government Salaries As Canada's Oil Patch Enters Second Year Of Recession

On Wednesday, we documented the astonishing prices beleaguered Canadians are now forced to pay for groceries thanks to the plunging loonie.

Oil’s inexorable decline has the Canadian dollar in a veritable tailspin and because Canada imports the vast majority of its fresh food, prices on everything from cucumbers to cauliflower are on the rise, tightening the screws an already weary shoppers.

Soaring food prices are but the latest slap in the face for Canadians and especially for Albertans who have been hit the hardest by 13 months of crude carnage. Resources account for a third of provincial revenue and with oil and gas investment expected to have fallen over 30% in 2015, Alberta’s economy has is expected to contract  for the foreseeable future.

The economic malaise has had a number of nasty side effects including soaring property crime in Calgary, rising food bank usage, and sharply higher suicide rates.

With the outlook for oil prices not expected to improve in the near-term, ATB now says the province faces two long years of recession. “The pain is going to be concentrated in the first half of the year. But we don’t really see any ending in sight to a downturn at least until the end of the year. So we are calling for another contraction,” ATB’s Chief Economist Todd Hirsch says in The Alberta Economic Outlook Q1 2016 report. 

“This low price environment continues to discourage new investment and spending and has weighed down employment — not only in the oilpatch, but throughout most sectors of the province," Hirsch continues. "This downturn is longer in duration certainly than 2009 was which was a very quick downturn but very short-lived. This one is going to linger on longer."

Indeed. Here are some charts from the report which underscore the magnitude of the sharp reversal in fortunes.

It's against this backdrop that we get the latest sign of the times in Alberta where Finance Minister Joe Ceci has just announced a two-year wage freeze for non-union government employees.

"The move will freeze the salaries — and movement within salary grids — for roughly 7,000 senior officials, managers and other non-unionized government employees at 2015 levels until at least April 2018," As the Calgary Herald reports. "The freeze means senior government officials, including trade representatives, board chairs and deputy ministers, won’t get a scheduled 2.5-per-cent salary hike this April put in place by the former Progressive Conservative government."

“This is not a decision we made lightly," Ceci told the press. "The Alberta Public Service is made up of hard working and dedicated women and men who do valuable work each and every day in the service of Albertans. However, to maintain stability and protect jobs within the public service, we must deal with the economic realities we’re facing.”

As The Herald goes on to note, "the NDP government posted a record $6.1 -billion deficit in its fall budget released last October and, for the first time in two decades, is set to take on more debt to pay for operational spending."

"During a time of massive private sector job losses, Albertans want the government to reduce spending while protecting front-line services” Wildrose Leader Brian Jean said, praising the decision.

Right. But don't expect jobless Albertans to be overly sympathetic to the plight of the government employees subject to the salary freeze. The senior workers affected will all still make between $110,246 and $286,977.

Stay positive Canada...

Comments

[moonmac]

Working class folks only hope is to win the lottery, win a big lawsuit or hook up with a gubbermint worker. You wouldn't believe the stories. Senior managers have so much dirt on each other from way back during the good old whiskey and strip club days. Nobody rocks the boat all the way to DC.

[giggler321]

OMG cauliflower for 3.85GBP - isn't this inflationary?

I hired a car in Montreal when we were on holiday and the delivery driver was african immigrant.  He told me he was heading to Calgary because wages were more than double for the same job.

[12357111317]

Government workers should all become Policemen and Firefighters, because those two groups are SMART: they have unions and they work on political campaigns, and therefore they get pay raises.

This is not to say that there aren't too many government workers, and that they don't produce as much as they should.  I think I already shared my story about a government worker telling me, when I was also a government worker, that the worst thing I could say was, "I'm all caught up with my work", and that, instead, I should say, "I can't possibly ever get all my work done, so obviously I need an assistant, and then, when I have an assistant, that will make me, by definition, a manager, and managers have more responsibility, so they have to paid more, so I will need to be paid more".  I'm not kidding.  This conversation actually took place.  But the reason for this, if you think about it, was that we didn't get cost-of-living pay raises, even while inflation was reducing our buying power by 4% every year.  The Fed was stealing from all of us, and the only strategy we could figure out to keep even with the theft was to claim that we couldn't do our jobs without getting assistants.

In conclusion, those who want smaller government should End The Fed.

[abgary1]

The newly elected premier is union labour lawyer who reversed $780 million worth of cuts and increased spending by $110 million to reward the unionized civil service for electing her. She also increased corporate taxes by 20% and doubled a carbon tax and did all this during a recession and in th face of a $6 billion dollar deficit. To say that wage freeze, which will save Alberta $28.5 million of 2 years, is a joke is an under statement.

Alberta is in serious financial trouble as long as this government is in power.

Likewise this governmet condones carding of it's citizens. The NDP are as close to a communism party as you can get.

Is it any wonder the investment community considers Alberta a risky jurisdiction to invest in?

[Abbie Normal]

People get the government that they voted in.