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Octavius Hite
Joined: 28 Jan 2004
Location: Househunting, looking for a new bunker from which to convert the world to homosexuality.
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 Posted: Mon Aug 21, 2006 2:11 am Post subject: The downside of Alberta's boom |
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Seems like a damn good downside!
http://ctv2.theglobeandmail.com/servlet/story/RTGAM.20060821.wxalberta21/business/Business/businessBN/ctv-business
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The downside of Alberta's boom
DAWN WALTON AND KATHERINE HARDING, From Monday's Globe and Mail
CALGARY AND EDMONTON � Kix Marshall thought he had a solid business plan.
After travelling the world to learn his trade, the 24-year-old chef moved last year to booming small-town Alberta to open Fire and Flavour. Locals quickly began flocking to the casual, yet fine-dining restaurant.
Despite his profitable business, the Alberta native was forced to shut it down last week, after only 11 months in Olds, about an hour's drive north of Calgary.
He considers himself a victim of what is best described as the dark side of Alberta's emerging land-of-milk-and-honey economics.
"Jobs have become disposable here. If you go to work and you are tired or hung over, some people just quit. They can literally walk next door and get another one. It's ridiculous," Mr. Marshall said.
Even though people are flooding into the debt-free, energy-blessed province, the exhausted entrepreneur simply couldn't find and retain workers to keep his eatery open. Competitive wages and even rent money weren't enough to keep some employees from bolting.
"It's great that we live in a province that is enormously wealthy, but if you are in the middle of it and can't make a go of it, then what's the sense?" Mr. Marshall asked.
The signs of Alberta's growth are stunning.
There's the seemingly endless parade of eager newcomers. There's the economic fire that nothing can douse.
Wages and perks now defy all conventional human-resources wisdom. And real-estate prices are starting to make even Vancouver look affordable. But, as Mr. Marshall recently found out, there are also growing pains. Overworked funeral-home directors, empty liquor-store shelves and women's shelters filled with abused women desperate for a roof over their heads as the population surges, point to a deepening labour shortage and a housing crunch.
The province and the private sector are scrambling to come up with stop-gap measures before the boom goes bust and Alberta's super-charged economy implodes.
"An overheated economy with labour shortages is definitely a better problem to have than 15-per-cent unemployment and everyone going bankrupt," said Todd Hirsh, chief economist with the Canada West Foundation. "But that doesn't mean it's not without its challenges."
By any measure, Alberta's growth and wealth in recent years are staggering, especially when compared with the rest of the country.
The province's surplus hit a record $10-billion in 2005-06 (the original projection was $1.5-billion). For the 2006-07 year, Alberta announced record program spending of $28-billion and another big unbudgeted surplus of $4.1-billion, which is the highest initial projection in the province's history.
This summer, the Conference Board of Canada predicted that Alberta will lead the nation's growth this year, expanding by 6.6 per cent, compared with a national growth rate of 3.1 per cent.
Driven by commodity prices, especially oil, which the board expects will hover above $65 (U.S.) a barrel for the next five years, it says Alberta's boom is not a "temporary phenomenon" but a "permanent structural change in the economy."
According to the board, Alberta's per capita income for 2007 is expected to reach $44,788, compared with the national average forecast at $34,757.
During the first quarter of this year, Alberta's population climbed by 0.78 of a percentage point, or three times the national average of 0.24 per cent. About 25,900 people were added to the tally, including a net gain of 15,600 who moved from other provinces. Both increases set record highs for the first three months of the year.
More than 3.3 million people now live in Alberta, making it the fourth-largest province in the country by population.
But the massive population boom hasn't been enough to feed the economy's need for workers. The province recently released a 10-year work-force strategy that found that Alberta will need 86,000 workers in everything from trades to health care, professionals, and the retail and service sectors.
If nothing changes, the board worried earlier this year, by 2025 Alberta will face a shortfall of 332,000 workers. Already, the provincial economy is adjusting to avoid that kind of gap. But the casualties connected to it are mounting.
These days across the province, businesses are closing early, or shutting down altogether because they cannot find staff. There are delays in building new homes, roads and schools due to the labour shortage. And even if workers are found, the cost of materials and labour has skyrocketed.
Municipalities can't keep up.
Calgary is growing so fast that the city is moving ahead with plans to expand its footprint by annexing the countryside outside its boundaries. But the budget for infrastructure projects is being blown as costs of labour and materials both jump. One wastewater treatment plant, for example, now has a price tag of $370-million, up from last year's budgeted cost of $240-million.
The province's Progressive Conservative government recently met with federal Tory counterparts to try to hammer out a strategy to deal with labour and infrastructure problems caused by Alberta's growth.
The federal government recently committed to a new pilot project that would open special immigration offices in Calgary and Vancouver next month. The aim is to help employers quickly wade through the bureaucracy involved with hiring temporary foreign workers. However, it will still be an immigration officer who ultimately approves entrance to Canada.
The project is based on a similar program introduced three years ago in Quebec. It has already helped to double the number of cases reviewed in that province.
The use of temporary foreign workers has already dramatically increased in Alberta since the boom began. From January to June of 2006, Ottawa has already given out 8,558 first-issue, temporary foreign-worker visas in Alberta. In 2003, that number for the entire year was 9,875.
To receive federal approval, an employer must provide evidence that the job could not be filled locally. They must also ensure that the foreign workers don't spend more than 40 per cent of their wages on accommodation.
Alberta's chronically staff-starved service and hospitality sector -- where wages for everyone from cooks to cashiers often run as high as $14 an hour -- is quickly latching onto the program. Businesses such as the Edmonton-based Boston Pizza restaurant chain have applied for dozens of overseas workers to help keep their doors open. In recent weeks, workers from countries such as the Philippines and Sri Lanka have arrived to work in their restaurants that are sprinkled in towns and cities across the province.
But while short-term progress is being made in meeting Alberta's labour challenges, housing the province's workers continues to be a headache.
The Canada Mortgage and Housing Corp. said this week that Alberta is poised to break an almost 30-year-old record for new housing starts. The Canadian Real Estate Association recently reported the largest jump in sales volume for Canada, making the rise in resale prices seem like a lottery win.
As indicative of the wealth, waterfront cabins now fetch an average $900,000, according to a Maritz Research survey.
The rental market is as tough to crack.
CMHC just projected that Calgary's vacancy rate will drop to 0.6 per cent this year and stay that way through 2007 -- the lowest rate in Canada. Edmonton's rental market is similarly tight at what CMHC projects as 1.5 per cent this year and 1 per cent next year.
Many newcomers are forced to live in trailers, tents and illegal basement suites.
The number of homeless people also seems to be on the rise. In 1992, when Calgary began its biennial count of the number of homeless in the city, there were 447 people without permanent shelter; this spring, the number reached 3,436. In Edmonton, the homeless population hovers at about 2,200.
Even smaller urban centres are now struggling with the issue. Grande Prairie in northern Alberta recently estimated that about 1,159 people -- the majority being men between the ages of 18 and 24 -- didn't have a roof over their heads.
Companies operating in Alberta's oil sands have no choice but to build accommodation, with all the creature comforts of home, to keep and attract workers.
Shell Canada Ltd., for example, has asked ATCO Structures Inc. to build housing for nearly 2,500 workers at its Athabasca oil-sands project, which includes a gymnasium, track, lounge, lecture theatre and covered elevated walkways to protect workers from the cold.
The self-sufficiency expands beyond housing to keep the economy chugging along. Canadian Natural Resources Ltd., for example, is bringing in foreign workers, opening a training centre to apprentice trades such as welding and building a landing strip to handle Boeing 737 jets to bring in workers from elsewhere in the country.
Other initiatives are also emerging.
Calgary-based Canadian Pacific Railway Ltd., for example, has partnered with the Southern Alberta Institute of Technology for the past six years to offer several rail-related certificate programs. CPR supplies funding, cars, equipment, a track and a simulator to help groom a qualified work force. About 80 per cent of SAIT graduates have been hired by CPR.
Educating Alberta's much-needed worker has also become a top priority. Ambitious and pricey expansion projects abound at almost every postsecondary institution in the province.
When it comes to churning out more much-needed skilled tradespeople, Edmonton's Northern Alberta Institute of Technology rolled out a $750-million plan this spring that aims to make it the country's largest technical school.
NAIT is currently the country's largest apprenticeship trainer, with about 50 per cent of tradespeople in Alberta receiving their education at the school. The goal is to increase the number of students from 65,000 to 95,000 within 10 years.
While important strides are being made in training, ominous warnings are emerging that the province may have trouble looking after its residents.
Just this week, Dr. Tzu-Kuang Lee, head of the Alberta Medical Association, sent a letter to members outlining the province's immediate shortfall of 1,000 physicians, a number that could rise to 1,500 within five years.
"Despite a province with financial windfalls and prosperity, it is upsetting that many Albertans still do not have timely access to doctors or timely access to care," he wrote. Instead, patients turn to walk-in clinics and emergency rooms, which is contributing to massive backlogs, occasionally with devastating results.
Last month, Rose Lundy miscarried in a busy Calgary hospital emergency room while her husband, Rick, repeatedly asked for help over several hours as his wife bled in front of 40 waiting patients, but was told there were no beds.
An outcry about that case prompted changes to health region policy, but in the end, Mr. Lundy said officials blamed the event on a staff error, a busy night and a shortage of space.
"It's always disturbing to hear that people are not being seen as quickly as they might be," said Bob Holmes, senior vice-president of planning and capital development with the Calgary Health Region.
"At the same time, I've always said our staff are doing a heroic job in what is almost a crisis-management situation in the current circumstance."
The city is facing a year-round baby boom -- due to a growing number of young women and an unexplained hike in fertility rates -- that shows no signs of abating. The region has said it would consider sending city women to rural hospitals as they wait for more beds to be added to an overburdened system.
The region is also faced with an aging population, which requires more medical services and more complicated and intensive treatments, Mr. Holmes said.
That's why the health region is in the midst of a significant expansion phase -- about $2-billion in capital spending -- with plans to add hundreds of beds and expand support facilities by 2010.
Mr. Hirsh, the economist, sees an upside. The labour shortage could act like a brake and bring things into balance.
The growth, he said, is putting pressure on Alberta's infrastructure and environment. And a work ethic is also vanishing. Workers will cross the street for a dollar more and employers would rather have a lousy worker than no one at all.
Mr. Hirsh points to "that crazy story about the welding instructor" at a technical school to outline the problem. Mid-semester, the instructor announces he's quitting: " 'I've accepted a far more lucrative position . . . but they need me by noon today,' " Mr. Hirsh recalled.
The school cannot match the salary of the private-sector employer.
"So it has no choice," Mr. Hirsh said, "but to throw up its hands and watch the welding instructor walk out the door."
Here is a look at the total* number of visa for foreign workers that have been issued in Alberta. The number of visas provided between January and June, 2006, is almost outpacing the total number issued in 2003.
2003 - 17,140
2004 - 19,616
2005 - 22,462
2006Jan-June - 14,009 |
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fiveeagles
Joined: 19 May 2005
Location: Vancouver
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| Posted: Mon Aug 21, 2006 6:45 am Post subject: |
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| Open the doors to immigration. I really don't know much about the immigration laws in Canada, but we need to add another 100 mil to our population if we want to be contenders. |
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Octavius Hite
Joined: 28 Jan 2004
Location: Househunting, looking for a new bunker from which to convert the world to homosexuality.
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| Posted: Mon Aug 21, 2006 3:56 pm Post subject: |
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| Canada already lets something like 300,000 immigrants and refugees a year into the country. Frankly I never want to see a population of 100,000,000 in Canada that would be terrible. |
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mindmetoo
Joined: 02 Feb 2004
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| Posted: Mon Aug 21, 2006 4:14 pm Post subject: |
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The oddest situation happened at Apple computer back in the mid-90s. The tech boom was in full swing in Silicon Valley but Apple was shedding jobs. Now when you get laid off from a big firm, you customarily get a nice severance package... between half a year and two years pay depending on time served. Off course no one was worried about layoffs as you could get laid off on Tuesday morning and get a new job down the block by lunch. Lots of people quickly figured out the best thing was to get laid off from Apple. Pocket a year's salary, take a few months off, and then walk into another job when you're ready.
Many employees at Apple started to compete to be laid off. People were trying to be more useless than the next guy. "No really, boss, my job is just really pointless in this company. You can see I've only written 4 lines of code this week. I think it would be best if you laid me off..." |
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bucheon bum
Joined: 16 Jan 2003
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| Posted: Mon Aug 21, 2006 8:13 pm Post subject: |
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Good article OH. That's about all I have to contribute to this thread.  |
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Yesanman
Joined: 21 Jun 2006
Location: Chungnam
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| Posted: Mon Aug 21, 2006 10:23 pm Post subject: |
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Now if only Cape Breton had the 'problems' that Alberta's having...
I guess that would mean we wouldn't have Mr Hite here in Korea. |
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Octavius Hite
Joined: 28 Jan 2004
Location: Househunting, looking for a new bunker from which to convert the world to homosexuality.
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| Posted: Mon Aug 21, 2006 11:50 pm Post subject: |
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| Lol, how could I ever give the joys of Korea, cheap living, and hot men everywhere? What would I do in Cape Breton? Well at least 4:20 would be covered, lol! |
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Paddycakes
Joined: 05 May 2003
Location: Seoul
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| Posted: Wed Aug 23, 2006 12:36 am Post subject: |
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| Alberta... I wouldn't wish that place on my worst enemy.... |
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Moldy Rutabaga
Joined: 01 Jul 2003
Location: Ansan, Korea
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| Posted: Thu Aug 24, 2006 4:36 pm Post subject: |
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My first post in a month, since coming back. I've been in Edmonton, Alberta for a month. Good vacation, but it doesn't seem much like my hometown anymore. Traffic jams, bad service in restaurants, high prices, and a real loss of community after seeing so many young, drunk jerks even on residential streets at night. I gave up going to Tim Horton's because you can't get served.
For anyone on a fixed income or a tourist, the boom doesn't help them at all; it just makes everything more crowded and expensive. There's things I really like about Alberta-- the beauty, the people, the multiculturalism in Edmonton (really), the parks and festivals-- but it always seems like I'm not wanted! There's lots of jobs in skilled trades, but I still wouldn't get work there instructing-- a bunch of public teachers were in fact just laid off in the province. And even if I did find work, houses are selling for 3-4 hundred thousand dollars. The boom is a mixed blessing.
Ken:> |
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Captain Corea
Joined: 28 Feb 2005
Location: Seoul
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| Posted: Thu Aug 24, 2006 7:18 pm Post subject: |
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I agree. How much is it really making the average Albertan? If I own a house (why oh why did I not buy a few years back) and the price on it goes up a 100k, sure that sounds cool, but what do I actually have in my pocket? Nothing. Not unless I'm willing to refinance and wager my house on other investments. The truth is, this is costing the average person a lot... in higher property taxes. The people who are making money are those that are "flipping" houses or moving out of the province to retire.
I feel bad for all those on a fixed income (my parents). Rents have doubled for some people and they just can't keeep up.
I thought this was interesting though..
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| According to the board, Alberta's per capita income for 2007 is expected to reach $44,788, compared with the national average forecast at $34,757. |
It seems that when i am moving back, I'm learnin' myself a trade! |
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mithridates
Joined: 03 Mar 2003
Location: President's office, Korean Space Agency
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| Posted: Fri Aug 25, 2006 12:37 am Post subject: |
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I got an email the other day from my dad who has worked as a researcher in the oil industry ever since a few months after I was born and we all moved from Nova Scotia and I thought I would share the parts that apply to the state of Alberta at the moment:
| Mith's dad wrote: |
| It's somewhat the same as it was when we moved out to Calgary in 1980 - more jobs than people to fill them and more people than places to live but nothing like it is up north in Fort McMurray. I hear up there they've brought in lots of carpenters/construction workers to built houses for everyone and ironically the builders are living in tents because there's no other places to stay. That's what I would call crazy. There are some positions at Shell where retirees have been rehired back to help with the oilsands development projects but it's mainly engineers that they need. My position is more specialized (materials testing research) so I won't likely be in a similar position to be rehired back on as a contractor after I retire. Yes, these rehires get paid more as contractors than they did as permanent employees mainly because they don't get a benefits package, just an hourly rate but that's where it works so well for retirees since they already have benefits as part of the retirement package plus a retirement income (approximately 50% of their full-time salary) + their contractor income. Some have also retired with stock option bonuses which have already made them millionaires so they have more money than they know what to do with. These are probably the people you hear about making so much money in Calgary - engineers who have the knowledge required to design and build projects and happen to be in the right place at the right time. But it's still basically the same Calgary as you would remember it, just a lot more activity in the downtown core and the construction industry. |
So yes, I suppose with the right kind of skills you could be making quite a bit if you decide to move back. I still wouldn't though. Is your wife interested in the idea? |
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Captain Corea
Joined: 28 Feb 2005
Location: Seoul
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| Posted: Fri Aug 25, 2006 3:37 am Post subject: |
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Thanks for posting that Mith. Good to hear from Pappa_Mith 
As for my wife, well, sometimes I think she want's to move back more than i do. We're both worried about the jobs we might get, so basically we're saving as much as we can and considering going back to school.
/shrug |
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