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A service station in Fort McMurray, Alta., advertises for workers in this photo from August, 2010. (Kevin Van Paassen/Kevin Van Paassen/The Globe and)
A service station in Fort McMurray, Alta., advertises for workers in this photo from August, 2010. (Kevin Van Paassen/Kevin Van Paassen/The Globe and)

Economy Lab

We shouldn't drain Atlantic Canada's labour force Add to ...

There is some concern in Atlantic Canada that the federal government’s proposed reforms to the Employment Insurance program are meant to stimulate more outward migration of workers from that region to western Canada.

This notion was reinforced by a recent story that uncovered a study commissioned by the federal government meant to determine what would motivate people to move out of their communities to take jobs elsewhere in Canada.

More related to this story

This thinking is not new. I saw a report prepared for the government back in the early 1990s that suggested the same thing - the federal government should create incentives for people to leave areas with limited economic opportunity - such as Atlantic Canada - for areas that face labour shortages.

On the surface, this sounds reasonable. There are places in Canada with high unemployment and places with plentiful job opportunities. If there are barriers to migration, why shouldn’t the government take steps to remove them?

Many think tanks have argued that fostering more labour migration will be good for both the sending and receiving jurisdictions. The receiving jurisdictions (i.e. Fort McMurray, Alta.) get the labour they need and the sending jurisdictions (i.e. Miramichi, N.B.) end up with a smaller but more dynamic economies unburdened by the social costs of high unemployment.

Labour mobility in the short term is positive for the national economy, but chronic out-migration without any effort to address the structural reasons driving the out-migration in the first place can be harmful to the country in the longer term.

If you combine the annual net interprovincial migration between 1992 and 2011, the four Atlantic Provinces saw a net outflow of nearly 126,000 people in just 20 years. That is an amount equivalent to the entire population of the cities of Saint John and Fredericton combined. While a small amount of this migration was within the region (i.e. New Brunswick to Nova Scotia) the vast majority of it was to western and central Canada.

This out-migration is causing a demographic crisis in Atlantic Canada.

From 1991 to 2011, Canada added 5.5 million people to its population. Of this amount, the four provinces in Atlantic Canada grew by a combined 5,500 people.

Next week, the population by age group from the 2011 Census is almost certainly going to show a dramatic increase in older Atlantic Canadians and a steep decline in the younger population.

In just four decades, Atlantic Canada has gone from having one of the youngest populations in North America to among the oldest (by median age).

Despite this, many of Canada’s economic think tanks say the solution is to double down and stimulate even more out-migration from Atlantic Canada.

This is not well thought out. More out-migration from the region will only exacerbate further economic stagnation and decline and lead to the need for even more transfers from the federal government.

Instead of an exodus, Atlantic Canada needs a population infusion. The region needs to attract tens of thousands of young workers (immigrants and migrants) over the next 20 years just to meet emerging labour market needs. In addition, the economies in the region need to grow to ensure they have the fiscal capacity to fund public services.

There is a need for more intra-provincial migration (moving down the road for work rather than across the country) but I would argue that even within provinces there are limits to the role of migration.

If the think tanks want to be helpful, they should build an econometric model showing the impact of turning a whole province (or a substantial region within a province) into one large retirement community. I think they would quickly realize the cost to the rest of Canada would end up being far greater than it is right now.

The only real alternatives in the long term are complete out-migration (i.e. like the closure of outports in Newfoundland from the 1950s to the 1970s) or fostering a sustainable (not necessarily larger) economic foundation. I prefer the latter approach.

There is growing anecdotal evidence that Employment Insurance is inhibiting business investment in many communities across Atlantic Canada. Rectifying that should be the main focus of any reform rather than fuelling more out-migration.

David Campbell is an economic development consultant and columnist based in Moncton, New Brunswick. He also authors a daily blog on economic issues in Atlantic Canada which can be found at www.davidwcampbell.com.

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