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Unemployed youth peruse a jobs board at a resource centre in Toronto (Kevin Van Paassen)
Unemployed youth peruse a jobs board at a resource centre in Toronto (Kevin Van Paassen)

The economy

'Heart of the New West' beats much slower Add to ...

Michael Schneider stares at a computer screen in a Calgary employment office, hoping for a spark of good news. He doesn't find it. There are just two jobs open today, a far cry from a year ago when he had his pick of work.

Mr. Schneider, who has been welding for 23 years, was laid off by his employer two weeks before Christmas and hasn't had a full-time job since. He finds occasional temporary work when he can; on Monday, he managed four hours. On this day, 20 minutes.

Seven months ago, he was making nearly six figures. Now he averages about $400 a month. As the money dried up, he gave up first his car, then his home. He now lives at a shelter, the Mustard Seed Ministry. "It's either that or living under a bridge somewhere," Mr. Schneider says. "Until I find another job, I'm kind of stuck."

This is the new face of Calgary, the once-booming "Heart of the New West," a tagline it trademarked. The current boom is in unemployment, where Calgary leads the country's big cities for the pace at which jobless claims are rising.

Jobless claims in the city have more than quadrupled over the past year. It's not just Calgary, though; across Canada, the number of people receiving benefits surged 9.2 per cent in May from April, Statistics Canada said Tuesday, hitting the highest level since the government agency began collecting such statistics in 1997.

Those statistics show that Mr. Schneider lives in the worst-hit city in the worst-hit province: Between May of 2008 and May of 2009, the number of people on employment insurance rose by 340 per cent in Calgary, and 236 per cent in Alberta.

On the face of it, the continued rise comes as a jarring contrast to word that the recession is in its final days. Economists, however, say this is to be expected.

"The good news is, recovery is at hand. The bad news is … for many Canadians this isn't going to feel like a recovery yet," said Patricia Croft, chief economist at RBC Global Asset Management. Tuesday's numbers "are a very cogent reminder that we still have some challenges ahead of us."

Finance Minister Jim Flaherty predicts unemployment rolls will continue to swell in the coming months, and warned of the financial impact to the country.

"It's costing billions of dollars, but is what is supposed to happen at a time of significant unemployment increases," Mr. Flaherty told reporters in Ottawa. "That's a good thing. In our country we take care of people when they lose their jobs."

The surge in benefit claimants continues to spark controversy in Ottawa, with the Liberals blaming the governing Conservatives and arguing that the true number of unemployed exceeds what Statscan has tallied.

"The sad reality is these numbers only scratch the surface of the hardships many Canadian families are facing," said Liberal House Leader Ralph Goodale. "For everyone getting EI benefits, there's someone else who's lost their job but can't access employment insurance."

An estimated 778,700 people received regular employment insurance benefits in May. Far more Canadians - about 1.6 million people - were counted as unemployed in the same month, Statistics Canada's latest count shows. So roughly half of those counted as unemployed are receiving EI benefits.

Even so, "that's actually a higher proportion than the average of the last 20 years has been. In a very limited sense, that's good news," said Douglas Porter, deputy chief economist at BMO Nesbitt Burns.

Last spring, Liberal Party Leader Michael Ignatieff threatened to vote against the government if it failed to meet demands for an overhaul. The Liberals and Conservatives later agreed to set up a panel to study the issue amid debate over eligibility requirements.

Tuesday's numbers give a sense of "urgency" to the panel's investigation, Mr. Porter said, though any recommendations it make may come too late for this downturn. "It may be too late in the cycle, but it's more important they get it right in the long term," he said.

The Statscan report underscores how unevenly the recession is gnawing at the labour market. Alberta, British Columbia and Ontario are seeing, by far, the biggest spikes in jobless claims.

For Alberta, the Statscan numbers came as the merger of Suncor Energy Inc. with Petro-Canada threatens to add even more to the ranks of Calgary's unemployed. The newly merged company has not yet announced how severely it will cut its staff, but has begun issuing pink slips to vice-presidents, and plans to work out a full layoff schedule in the next six weeks.

In Alberta, the lucky ones are wincing through the pain on EI payments, and using the recession to upgrade skills. Syed Atharudduja, a process engineer who was laid off two months ago, is now applying for a master's program in mechanical engineering. An immigrant from Pakistan, he wants to wait out what he believes will be a long downturn, but doesn't want to leave Calgary, which he still sees as the best city in Canada to find engineering work.

"I'm thinking that it's not possible to get a job within two years or three years," he says.

A large number of unemployed workers don't qualify for EI, including Mr. Schneider; he wasn't able to work enough qualifying hours after moving to Calgary from Windsor, Ont., another of Canada's hardest hit cities. He won't return to Ontario because "it's even worse than here."

Others workers have fled Calgary. Two years ago, Luis Eduardo Gallego, a Colombian, moved to Calgary from Quebec with 19 other families. Only two remain. After having his own work cut back to three days a week, Mr. Gallego spent Tuesday applying for employment insurance, in hopes of continuing to support his wife and two children.

New claims suggest more people are entering joblessness. After two months of declines, the number of initial and renewal claims tallied in May rose 5.2 per cent to the highest level on record.

"That number was certainly disappointing," said Bank of Nova Scotia economist Adrienne Warren, who views new claims as a leading employment indicator.

She expects initial claims will peak over next few months, with the job market not rebounding until next year.

The Alberta government has sought to put the numbers into perspective. The province remains well below the national unemployment average, and 57,000 people on unemployment rolls is still a far cry from 1983, when a much smaller province had 95,000 people on unemployment. The province continues to expect a labour shortfall of 92,000 over the next decade.

Alberta's labour market is "dramatically different" from a year ago, said Todd Hirsch, senior economist at Calgary-based senior economist at ATB Financial. "But that has to be tempered with the fact that we were starting from such an extraordinarily low number [of claimants]- it really doesn't take many gains to see 200 per cent increases."

With files from Kevin Carmichael in Ottawa.

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