Anyone trying to make sense of the current Alberta election campaign could reasonably conclude there is one thing and one thing only that can help the province beat the depressive effects of a nasty oil recession: another pipeline.
If you believe the politicians, it is the panacea that would return Alberta to its glory days, when Bentleys roamed the streets of downtown Calgary and company Christmas parties were notorious for their over-the-top trappings and outlandish forms of entertainment. (Champagne aerialists, anyone?)
The problem is that increasingly fewer people believe a new pipeline is the magic bullet. Rather, there is an emerging consensus that the demise of fossil fuels is a when, not if, scenario. Consequently, oil companies are increasingly weary of investing in expensive capital projects, with the payback stretched over several decades that the industry may not have.
What this all means is that there are fewer people employed in oil and gas, especially young men. There are almost 40,000 of them in Alberta who were employed when the recession hit in October, 2014, but are jobless today.
Which brings me to a topic that political leaders in this province aren’t talking about, but should be: postsecondary education.
Now, now, I can see your eyes glazing over. But wait. While postsecondary education is not an issue that will get the blood of Albertans boiling the way Quebec and equalization do, it’s arguably far more important to the province’s future. In fact, there is an incipient crisis in this area that so far has been largely ignored by Alberta’s political masters.
Here is the problem.
Over the past several decades, young Albertans – especially young men – could get good-paying jobs in the oil patch right out of high school. That’s no longer the case – and likely won’t be ever again. And beyond disruptions in the global energy market, advances in the world of technology – robotics, artificial intelligence, among others – are also affecting job opportunities for low-educated workers.
In other words, some form of postsecondary education is going to become increasingly critical for future generations.
But Alberta has the lowest participation rates for postsecondary education in the country. According to a recent paper done for the Council of Post-Secondary Presidents of Alberta, between 2007 and 2014 the participation rate for men and women 18 to 34 averaged just 17 per cent. Nationally, that rate fluctuated between 22 and 24 per cent.
According to the council, reaching the national average for 19-year-olds would require adding 47,000 spots to the system. Then, if you’re going to accommodate population growth, capacity would have to grow by another 40,265 spots by 2026. So, just to meet the national average, the province would have to add almost 90,000 spots in the next seven years.
This is an issue.
In the good old days, Alberta could import brain power and highly trained workers from the rest of the country. That’s not as easy when your province isn’t awash in money and you can no longer entice people with wages that the rest of the country can’t match.
And demand for those positions isn’t going to stop either. The most recent Occupational Demand and Supply Outlook report is forecasting a cumulative labour shortage in Alberta of almost 50,000 workers by 2025. Among the areas that will be pining for qualified employees are fields such as computer and information systems, medical technology and nursing.
Others have tried to sound the alarm about Alberta’s dismal record on research and innovation, which is what the future is all about. The province received an overall grade of D from the Conference Board of Canada in its innovation report card, with a particularly poor mark for research and development.
In its paper, the council also points to something a recent TD Economics study called the “scarring effect.” This is the wage penalty associated with the period of unemployment for youth first entering the work force; the longer young people sit on the sidelines without a job, the greater the impact it has on both their future earnings and the economy overall. In a province with an outsized number of kids without any secondary education, this could be significant.
Stick to the status quo and Alberta is in for even bigger trouble. It’s a dilemma even a new pipeline won’t solve.