VANCOUVER, BC- Alberta had the best performing labour market
in North America between 2004 and 2008, the most recent years
for which data are available, according to a new study released
today by independent research organization the Fraser
Saskatchewan was the second-best labour market in Canada,
ranked eighth in North America, with British Columbia finishing
third in Canada and ninth among all 10 provinces and 50 U.S.
"During the period measured, Alberta experienced high
private sector employment growth, low duration of unemployment,
and high labour productivity, resulting in the best labour
market performance in Canada and the United States," said Niels
Veldhuis, Fraser Institute senior economist and co-author of
The peer reviewed study,
Measuring Labour Markets in Canada and the United States: 2009
, assesses the performance of labour markets and examines
characteristics that affect performance. The study includes an
overall measure of labour market performance based on five
indicators: total employment growth, private sector employment
growth, unemployment rates, duration of unemployment, and
labour productivity over the years 2004-2008.
The period studied is one in which most of North America
experienced strong economic growth but Veldhuis notes that
employment and unemployment data from the past 12 months show a
deterioration in labour market performance for most provinces
and U.S. states. However, he points out that even in an
economic downturn, the top rated jurisdictions have continued
to outperform those that are ranked poorly.
"The provinces and states that performed well in the past
five years have, on average, also done well in the past 12
months. For example, the top 30 jurisdictions have generally
experienced much better employment growth and lower levels of
unemployment than jurisdictions in the bottom half of the
rankings," he said.
"However, up to date data are only available for two
indicators: employment growth and unemployment. An overall
assessment of the impact of the recession on labour markets
will need to wait until all data are available."
Overall, the top labour markets between 2004 and 2008 were
found in Alberta, Nevada, Utah, Alaska, Idaho and Wyoming (tied
at fifth), Arizona, Saskatchewan, and British Columbia, with
New Mexico, Delaware, and Florida tied for 10th.
Manitoba is the fourth ranked province, finishing 21st
overall when compared to both Canadian provinces and US states.
Ontario and Quebec, Canada's most populous provinces, ranked
35th and 47th respectively. Newfoundland & Labrador was the
lowest rated province at 55th with the remainder of the
Atlantic provinces all ranked in the bottom half on labour
The study also examines four aspects of labour markets that
directly affect labour market performance: public sector
employment, unionization, minimum wages, and labour relations
Improving Labour Market Performance
"Many Canadian provinces have unfavourable labour market
characteristics and regulations that lead to poor performance.
This translates into fewer jobs, higher rates of unemployment,
and lower productivity," Veldhuis said.
"Provinces need to re-examine issues such as raising minimum
wages, biased regulations that lead to high rates of
unionization, and high levels of public sector employment."
The study details how Canadian provinces tend to have much
higher minimum wages than U.S. states, a factor that has an
adverse effect on labour markets. Seven Canadian provinces
(Ontario, New Brunswick, British Columbia, Nova Scotia,
Manitoba, Quebec, and Prince Edward Island) rank among the
bottom 10 in the overall rankings. Other than Alberta and
Newfoundland, Canada's provinces were in the bottom half of the
rankings with minimum wages accounting for a higher percentage
of GDP per worker.
"Except for BC, every province increased its minimum wages
in 2009, a move that will have adverse effects on employment
just as the country appears poised to come out of recession,"
Unionization is another aspect of the labour market where
Canadian provinces and U.S. states diverge. From 2004 to 2008,
Canada's average total unionization rate was 31.2 per cent
compared with 13.7 per cent for the United States. High rates
of unionization have been demonstrated to have an adverse
impact on economic performance including reduced employment
growth, profitability, and investment. One reason for high
unionization rates in Canadian provinces is their relatively
biased labour relations laws.
"Provincial labour relations laws inhibit the proper and
efficient functioning of the labour market because they favour
one group over another, prevent innovation and flexibility, and
are overly prescriptive," Veldhuis said.
There is also a clear difference in public sector employment
between Canada and the United States. From 2004 to 2008,
Canadian provinces consistently maintained higher levels of
public sector employment than U.S. states. Seven of the bottom
10 jurisdictions with the highest levels of public sector
employment were Canadian provinces: Quebec, New Brunswick, Nova
Scotia, Prince Edward Island, Saskatchewan, Manitoba, and
Newfoundland and Labrador. Research shows that different
incentives in the public sector result in lower labour
"As Canada emerges from recession, provinces need to
consider changes to labour characteristics and regulations to
encourage economic growth and boost the performance of their
labour markets," Veldhuis said.