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...