Not All “Birds” Fly West

Monday, July 31st, 2006
By Inya Ivkovic, MA for Profit Confidential

Although there are job shortages in western Canada, Canadians in other provinces are less willing to move to western provinces, even if they are currently unemployed. But, if they were more flexible, the overall Canadian economy would be much stronger and more resilient.

On the other hand, I just moved a measly 50 kilometers, and let me tell you, it was a nightmare. If I had to move 2,700 kilometers, which is roughly the distance from Toronto to Calgary, I, personally, would not survive.

Apparently, the promise of a job is not a good enough reason for Canadians to leave their old homes, family, and friends. There are other things to consider, such as costs of living, quality of life, traffic, etc. There are also costs of moving to consider.

I’m sure anyone who had to organize a move during their adult lives will agree–movers cost too much money, and more often than not, they are at the very epicenter of the moving nightmare. Perhaps this is why there exists a permanent gap between the unemployment rate on the national level and unemployment rates on provincial levels.

To illustrate, in June, the country’s national unemployment rate dropped to 6.1%, which is a 32-year low. However, the discrepancies on regional levels are huge. For example, in south- central Manitoba, March unemployment rate was an unbelievable 2.2%. In contrast, in north-western Ontario, the unemployment rate for the same period was 70% higher, or 8.3%.

Canadians’ reluctance to move impacts the overall economy more than people think. If fewer people gain employment, it means that fewer of them pay income taxes. And, without income taxes, the government’s ability to pool new money in is lesser as well.

Furthermore, labor shortages often result in hiring unskilled people who need to be trained first before they can be productive in their jobs. This adds pressure to companies’ already overstretched capital expenditures.

One of the contributing factors to the lack of labor mobility is also Canada’s employment insurance program. This is one of the programs that make Canada a great country to live in.

You see, while employed, workers contribute to the federal employment insurance fund. However, once they lose a job for legitimate reasons, such as layoffs or restructuring, and provided they were employed 29 to 40 weeks in a recent year, Canadian workers are eligible for a monthly allowance that can tie them over until they find a new job. Of course, this “safety cushion,” so to speak, could be poor incentive to Canadians to uproot their families and go to provinces with labor shortages, particularly those who are seasonal workers.

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Tags: economic analysis, job numbers