Strong BC Economy Creates Opportunities and Challenges

Beyond Numbers,  Oct 2007  by Brkich, Kerri

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A Snapshot from the 2007 BC Check-Up (Provincial Edition)

The ICABC's annual BC Check-Up report once again focuses on British Columbia as a place in which to "LIVE," "WORK," and "INVEST." By the time you read this article, the INVEST and WORK sections of our ninth provincial Check-Up will have been released to the media. The LIVE section is slated as the final release, and will go public on October 12, 2007. The following article offers a brief summary of some of this year's research findings.

As its economy continued to boom in 2006, British Columbia saw an unemployment rate of 4.8%,1 the lowest rate in the province's recorded history. This marked a one-year decrease of 1.1 %, the biggest drop of any region in our comparison study. Fuelled by robust economic growth and an increased number of retiring workers, BC's low unemployment rate affected everything from graduation rates to real wages.

General trends

Investments

Business investment was up in British Columbia in 2006, and the ratio of real business investment to real provincial GDP increased by 12.9% in 2006, up almost a full percentage point from 2005.

The largest share of BC's investment dollars went to machinery and equipment in 2006, continuing a five-year trend. In fact, BC's GDP share of machinery and equipment investment rose by 22% over five years, increasing from 6.6% in 2001 to 8.1% in 2006.

Incorporations

For the second year in a row, business incorporations in BC rose dramatically in number, reaching 7.7 incorporations per 1,000 population in 2006-a rate exceeded only by Alberta, which saw 13.4 incorporations per 1,000 population last year.

Job growth

Job growth in BC and Alberta has led the other comparison regions since 2004, when rising resource values and construction activity began driving the demand for workers. BC had to relinquish the fastest job growth title to Alberta last year, but its growth rate of 3.1% still ran one-and-a-half times higher than the national job growth rate of 1.9%.2 Overall, BC saw a net gain of 65,000 workers, which represented 21% of all new jobs created in Canada.3 This was due in part to employment in BC's mining and oil and gas sector, which jumped a staggering 40.6% last year.

BC's high technology sector is also growing and beginning to take a higher profile in the provincial economy. High technology comprised approximately 5.1% of BC's economic production in 2005.4 Of particular strength in this sector is BC's world-class status in fuel cell development and motion picture production. In addition, our biotechnology and research and development fields are growing, with corresponding job creation occurring in the natural and applied sciences and related occupations.

Labour force participation

Two factors affect the unemployment rate: labour force growth and job creation rates.

Labour shortages

Last year, the rate of job growth outpaced the number of people entering the labour market. To combat labour shortages, business and government have implemented programs focused, in part, on in-migration, education, wages, and technology.

The province's need for workers also produced a number of initiatives to engage underrepresented sectors of the labour force. This led to a drop in youth unemployment from 10.1% in 2005 to 8.2% in 2006.5

Education levels

Unfortunately, a slightly higher number of the young people now entering the labour force are doing so without high-school diplomas. BC's youth-at-risk indicator6 has been edging up over the past two years, and rose 0.3 percentage points in 2006. BC's robust job growth-particularly in the construction and resource industries, which often do not require high-school accreditation for entry-level positions-likely account for this slight increase.

Conversely, while the hot economy seems to have caused an increase in BC's youth-at-risk levels, it has also stimulated an increase in post-secondary certification. Last year, the number of British Columbians with post-secondary certificates and diplomas increased by an additional 7,600. The number of British Columbians with bachelor degrees or higher rose steadily in the past five years, increasing by 29.2% since 2001. The number with masters degrees or higher increased by 21.8% during that same period.7

Real wages and disposable income

A higher average wage

Low unemployment rates affected wages in 2006, with real wages in BC increasing by 1.8% to an average wage of $21.73 per hour. This increase was more than double the national growth rate of 0.8%, putting BC ahead of the national average by the largest margin in the past decade. It's also interesting to note that although BC's wage rate is currently below Alberta's rate of $23.15 per hour, the rate of wage growth in Alberta slowed to just 0.4% last year, less than a quarter of the increase seen in BC.

BC's largest wage increases in 2006 occurred in the province's mining and oil and gas sector-already the highest-paying sector in the province-which climbed 12.9%.8 The following sectors also saw large wage increases: information and culture industries, such as telecommunications, motion pictures, and Internet services; government, with many workers renegotiating contracts with signing bonuses in 2006; and enterprise management, the small industry associated with the management of holding companies and head offices.