Friday, October 06, 2006

Wages rise fastest in non-oil sectors

Could the energy sector be responsible for an increase in the median wage in Alberta? Maybe not. At least, it's not directly responsible for average wage gains in the province, according to a report by Steve Chan, a TD Bank economist. Nurses, farm hands and hydro workers have benefited more, says Chan.

From The Financial Post (sorry there is no on-line link; I'm subscribed to a database):

TD bank report: Alberta's oilsands the catalyst for a boom in other fields in province, By Jacqueline Thorpe (4 October):

"It's a perfect inverse relationship," said Steve Chan, economist at TD. "Wage gains have been the slowest where employment is growing the fastest and fastest where employment is the slowest."

Alberta's overall labour market has been on fire, with cumulative gains over the 2002-2006 period totalling 17.4%. That compares with just 10% for the rest of Canada.That rise took Alberta's average hourly wage to $20.99 in the second quarter, catapulting it to to first place as the province with the highest wages from third only four years ago.With the boom being driven by the oil, gas and commodities sectors, many would expect wage gains in the so-called "rainmaker" natural resource sector to be outstripping all others. But this is not the case.

Wages for oilsands workers and miners have skyrocketed by a massive 42% or $6.80 an hour since the boom -- vastly outpacing the rainmaker industry average -- but wages in the natural resource sector overall, where employment has risen 39.4%, have gone up only 4.7%.Wages in industries that are direct beneficiaries of the rainmakers -- construction, manufacturing, building and professional services, etc., -- meanwhile, have risen 16.3%. Jobs growth here has been a more modest 12.9%.Wages for indirect beneficiaries such as agriculture, utilities, educational services, health care and social assistance where employment has expanded only 10.2%, have risen the most, experiencing a 20.1% gain over the period.

Mr. Chan said it was a classic case of demand outstripping supply. Rainmakers already offer the most competitive of all wages -- on average $25.50 per hour in the second quarter -- so workers gravitate there.Other sectors have to fight for a diminished pool of workers, so they have to raise pay more substantially. In addition, with money flowing into provincial coffers, the government has had the wherewithal to increase wages for public sector workers.

"With respect to wages, the strength in Alberta's resource sector has been a tide that lifts all boats," Mr. Chan added.

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