Skip to main content

A worker seals a pipe at an oil sands operation near Conklin, Alberta. The province remains a huge draw for job seekers in spite of its eroding market.TODD KOROL/Reuters

The biggest question hanging over Canada's economic outlook as we enter 2016 is how well the economy can adjust to the substantial and continuing fallout from the oil slump. A key to that could prove to be interprovincial migration – the capacity of the labour force to move to where the jobs are.

Labour accounts for more than half of Canada's economic output. So a big part of the Canadian economy's adjustment to oil's collapse, and the rotation of output away from resource sectors and toward non-resource exports, services and other economic segments, will necessarily require a redistribution of labour.

"Because migration is partly an adjustment mechanism to market conditions, it provides the necessary labour market flexibility to facilitate and encourage beneficial structural shifts in the economy," wrote Roland Tusz, Erika Rodrigues and Matthew Calver, authors of a new study on interprovincial migration trends from the Centre for the Study of Living Standards, an Ottawa-based economic research group.

The study showed that interprovincial migration last year added $1.23-billion to Canada's gross domestic product over what it would have been without migration; not a huge figure in a $1.8-trillion-a-year economy. But given that fewer than 1 per cent of Canadians (about 300,000 people) moved from one province to another last year, it's pretty significant; through relocating, each of these migrants raised their economic contribution by an average of 9 per cent.

And relocating isn't a one-year deal. The cumulative effect since 1987 of workers having migrated to other parts of the country, the study says, boosted last year's GDP by $15.8-billion over what it would have been if they had stayed in their home province.

"When a worker moves from a less productive to a more productive province, it not only increases its productivity for that year, but also for every following year in which that worker is employed in that province," the study said.

But human lives aren't anywhere near as instantly mobile as money is. On top of obvious personal issues that can discourage movement, there are certifications and licences for many skilled, regulated occupations that aren't transferable across provinces. The New West Partnership among British Columbia, Alberta and Saskatchewan has cleared this barrier for a large number of occupations among those three provinces, but regulations remain a big barrier to labour mobility across the rest of the country.

Canada's interprovincial mobility has also been slowed by the demographic evolution of the labour market. A quarter-century ago, about 1.1 per cent of Canadians migrated from one province to another each year; in the past several years, the typical pace has been only 0.8 per cent.

"The much greater importance of dual-earner families reflecting increased female labour-force participation is one factor that appears to have reduced geographical mobility," the researchers wrote. "The aging of the population has also contributed somewhat, since older workers have lower mobility rates than younger workers."

Canada's recent history of interprovincial migration has been all about Alberta. In the past two decades, nearly a half a million Canadians (net) have relocated to Alberta; the only other province to see a net inflow was British Columbia, with 69,000.

Now, with the oil market in what could quite possibly be a multiyear slump, the question is how much of that historical trend will reverse – and how quickly.

The numbers for the first half of 2015 suggest that, indeed, the economic disruption from the oil shock has gotten people moving. Interprovincial migration totalled more than 185,000, up 9 per cent from the same period last year, and 25 per cent above the 10-year average.

Yet, the flows don't yet show the patterns one might expect. Out-migration from Alberta has, indeed, jumped 13 per cent, but in-migration to Alberta has also risen; as a result, the province's net in-migration (nearly 17,000 in the first half of 2015) is still the biggest in the country. Meanwhile, although in-migration to Ontario – whose economy is a key beneficiary of the rise of non-energy exports – jumped 18 per cent in the first half of the year from the same period in 2014, the province continues to shed more migrants than it is bringing in.

At best, it looks like interprovincial migration is in as much flux as the rest of the economy in adjusting to the country's post-oil-shock economic realities. It also looks as if there's a great deal of inertia surrounding Alberta, which remains a huge draw in spite of its eroding job market. Meanwhile, even in regions that seem to have taken over the country's economic growth leadership, such as British Columbia and Ontario, there is nothing like the kind of slam-dunk case that Alberta presented for people to pack up and head there in search of prosperity.

"I think it raises a question as to whether other regions and sectors can truly replace Alberta and energy," said Jock Finlayson, chief policy officer at the Business Council of British Columbia and co-author (with BCBC chief economist Ken Peacock) of a recent paper on interprovincial migration. "The scale of in-migration to Alberta has been remarkable for a long time. If it ends [or reverses] over the next several years, it will entail a major shock to the national labour market."