2015 was not a good year for job creation in Alberta.
In fact, the net 19,600 jobs the province shed marked the worst year for job losses since 1982.
Alberta is of course suffering from the dramatic collapse in oil prices, which look set to remain “lower for longer” in the face of a recalcitrant Saudi Arabia and an Iran which is hell bent on making up for lost time spent languishing under international sanctions.
Suicide rates are up in the province, as is property crime and foodbank usage. The malaise underscores the fact that Canada’s oil patch is dying. WCS prices are teetering just CAD1 above marginal operating costs, and the BoC failed to cut rates last month, meaning it’s just a matter of time before the entire Canadian oil production complex collapses on itself.
On Thursday, a new industry report shows that crude’s inexorable decline could end up costing 84% of oilsands construction jobs over the next four years.
“The oilsands sector is in danger of losing its reputation as a job-creating machine,” The Calgary Herald writes. “A new industry report shows the sector may require 84% fewer construction workers in 2020 compared to 2015 as project cancellations pile up amid a crippling oil-price environment.” Here's more:
“Overall workforce requirements for the oil and gas industry has been severely impacted by a reduction in investment,” said Carol Howes, vice-president of communications at Petroleum Labour Market Information, part of the industry-funded Enform based in Calgary.
As crude oil prices plunged, capital expenditures in the oilsands declined 30 per cent last year from $35 billion in 2014. Canada has led the world in project deferrals during the 16-month downturn, as oilsands projects with a combined production of three million barrels per day have been shelved, according to Tudor Pickering Holt & Co.
The downturn has taken the shine off Alberta’s job-creating engine and has wiped out 100,000 direct and indirect jobs according to one industry estimate.
Recruitment consultancy Hays estimates Canadian oil and gas workers saw a 1.4 per cent decline in their paychecks last year, compared to a cumulative eight per cent growth over the previous five years.
“Hiring has pretty much seized, unless it’s for a business critical position,” said Neil Gascoigne, global business development expert at Hays, based in Houston.
“A lot of the E&P business are going through significant restructure and looking to further reduce costs, and wages and salaries are one of their high costs.”
“Companies have cut as much as they can without jeopardizing their actual business."
That reflects something we said back in October. Namely, there's no more "fat" to be trimmed. In other words, further cost savings will have to come from salary cuts because going forward, cutting jobs altogether will imperil companies’ ability to operate.
Meanwhile, the number of people receiving jobless benefits in Alberta jumped more than 100% in December. "Statistics Canada said 62,500 Alberta residents received job-insurance benefits in December, up from 31,200 a year earlier and accounting for most of the 7.3% increase in job-insurance beneficiaries nationally," WSJ wrote on Thursday, adding that Vancouver-based Finning International Inc., the world’s largest dealer of Caterpillar Inc. equipment, "said it would cut 400 to 500 jobs globally on top of the 1,900 positions since the start of last year."
Going forward, the outlook is bleak as underlined by Canada's Conference Board which on Thursday reported that its business-confidence index "suffered its third consecutive decline in the fourth quarter of 2015, falling 1.5 percentage points to 86.6." That's the lowest level since the crisis.
But don't worry, "the decline was modest compared with the previous quarter, when the index plunged from 105.6 to 88.1."
So things are still getting worse in Canada. Just at a slower pace. Allahu akbar.