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Commuting to 4.6% Unemployment From 13% Is New Canada Way

August 01, 2012

Commuting to 4.6% Unemployment From 13% Is New Canada Way: Jobs

Alberta also paid the highest weekly wage of any province in May at C$1,057 compared with C$919 in Newfoundland and C$745 on Prince Edward Island, the country’s lowest rate. Photographer: Norm Betts/Bloomberg

Kirk Penney has endured commutes of eight-hour flights and one-hour refueling stops between his home in Charlottetown, Newfoundland, and Canada’s booming oil industry out west for the past five years.

The 30-year-old electrician works 14 days in and seven out at Alberta-based Suncor Energy Inc. (SU)’s Firebag oil-sands project for contractor URS Corp., nearly tripling his pay to around C$150,000 ($149,500). He stays in touch with morning phone calls to his two young children and night calls to his wife.

“It provides a good lifestyle for my kids,” Penney said around dawn in Toronto’s airport at a stopover on a midnight flight from Fort McMurray, Alberta. “That’s the only reason I’m doing it. Living in Newfoundland is mostly hand-to-mouth.”

While Penney and his wife have talked about whether to move to Alberta, they have chosen to stay in Newfoundland, on Canada’s eastern coast. With two small kids, “we like the local atmosphere,” he said. “Everybody knows everybody.”

Long-distance commuters such as Penney are filling the gap in Canada’s labor market as western companies are desperate for workers to develop the world’s largest crude-oil reserves outside Saudi Arabia and Venezuela. Meanwhile, seasonal laborers in struggling forest and fishing towns in eastern provinces face government cutbacks in jobless benefits they draw on in off- seasons.

Federal rules starting this month may oblige frequent users of employment insurance to take a job that pays 70 percent of their past wages and in some cases to accept work that has a one-hour commute or face a cutoff of benefits that pay a maximum of C$485 a week.

Accelerate Exodus

Fisherman Michael McGeoghegan says the policies are another blow to a region suffering from drops of as much as 50 percent in the prices for some catches and will accelerate the exodus of young workers.

“The weather makes it seasonal; it’s not seasonal because we make it that way,” said McGeoghegan, president of the Prince Edward Island Fisherman’s Association, who has for 34 years hauled in lobster, scallops, crab, mackerel and herring. “We’re Canadian citizens, too; we have a right to live in the eastern part of Canada just like anybody else.”

The new requirements are needed to lower unemployment and bridge regional disparities, said Peter Jarrett, head of the Canada division for the Paris-based Organization for Economic Cooperation and Development.

“The incentives just weren’t there for many people to do something about their situation because they could survive on pogey,” he said in an interview in Ottawa, using slang for jobless payouts.

13 percent

Unemployment in Newfoundland was 13 percent in June, above the 4.6 percent rate for Alberta and 7.7 percent for Ontario, Canada’s most populous province. Alberta also paid the highest weekly wage of any province in May at C$1,057, compared with C$919 in Newfoundland and C$745 on Prince Edward Island, the country’s lowest.

Even with this lopsided performance, Canada has recovered lost output ahead of other Group of Seven nations after the 2008 global financial squeeze, according to Finance Minister Jim Flaherty’s latest annual budget presented in March.

Companies such as Enbridge Inc. (ENB) and Cenovus Energy Inc. (CVE), both based in Calgary, are pulling workers west as production of Canadian crude oil will more than double to 6.2 million barrels a day by 2030, according to the Canadian Association of Petroleum Producers. That suggests the demand for workers will increase, threatening to boost the cost of new pipelines and oil wells.

Labor Costs

“My concern really more is down the road,” Enbridge President Al Monaco said after a June 18 speech in Toronto. Liquefied natural-gas export projects in British Columbia, along with the company’s plans to pipe Alberta oil-sands crude oil to the Pacific Coast, “will certainly put a lot more pressure on labor costs going forward.”

Canada’s forestry employment has fallen by 4.2 percent this year to 38,700 while at mining and energy companies, the number of positions has risen 2.7 percent to 218,000, according to Statistics Canada, the nation’s economic-data agency. In 2007, forestry employment was 53,700, and mining and energy was 186,200.

A Newfoundland government study found that as many as 10,600 of its citizens had worked in Alberta in 2009 and 2010. That exceeded the roughly 6,200 employed on fishing boats in 2010 in a province whose beginnings were rooted in catching cod. Fishing and hunting jobs fell 35 percent in 2010 from 2000, the study showed.

Fishing Decline

The population in Red Harbour has dropped to about 200 from a peak of 350 on the fishing industry’s decline and “the enticement” of high-paying Alberta jobs, including ones with monthly commutes, according to the town’s website.

“Their wives are staying here raising the family, and the men are just coming home for like a week a month,” Deputy Mayor Michelle Rowe said in a telephone interview.

She says her fisherman husband won’t benefit from the new employment-insurance rules that require a one-hour drive to a minimum-wage job.

“That’s eighty dollars he’s going to make, minus the money to pay for a babysitter and extra drive; he’s not going to make much money anyway.”

The rules merely give some clear definition to the existing system, which already requires people to seek out appropriate work while drawing government benefits, said Diane Finley, the federal human-resources minister. The measures are geared to reflect local labor-market conditions and the availability of public transit or child-care costs, she said.

‘Reasonable Distance’

“If there are jobs available for which they are qualified within a reasonable distance, then yes, they should be able to take them because they are still better off” with most positions than they are on government assistance, she said.

Long-distance commuters such as Dave Adams don’t begrudge their countrymen the benefits and say the government is wrong to make changes.

“I don’t agree with what they are doing,” said Adams, a 48-year-old from Newfoundland who does scaffolding work for Canadian Natural Resources Ltd. (CNQ) and has made the Alberta trips since 2007. “I don’t think they should be allowed to touch unemployment.”

At the Toronto layover on a July 19 flight from Fort McMurray to St. John’s, Newfoundland, dozens of men fill the lounge, dressed in jeans, baseball caps from companies such as Suncor and Horizon North Logistics Inc. (HNL), and summer jackets from Newfoundland sports teams. Few bother to get coffee to keep awake.

Delayed Flight

There is grumbling on the ground as the flight is delayed. Finally onboard, one man falls asleep the moment his row fills up. Over Quebec, Air Canada staff announce that connecting flights to Newfoundland communities such as Deer Lake and Gander probably will be held for 14 of the passengers.

Once at St. John’s, everyone leaves the airport within 30 minutes of landing, several parting with “See you in a week.”

The following morning, Tony Martin waits for a flight to Fort McMurray to a warehouse job in his second rotation out west. The 47-year-old was lured by the chance to double his pay after working 23 years in the province’s public-health system.

“It’s a sacrifice but I’m in an ideal place; I am single and my daughter is 18 years old,” Martin said, adding that other people shouldn’t have to choose between losing jobless benefits and working away from their families.

“What the government has done is very black and white, cut and dry to a problem that isn’t,” he said. “You can’t buy their childhood back.”

On Penney’s flight to see his wife and two kids, he manages to get some sleep, helped by his practice of staying up for 24 hours before he leaves. After he lands, he still faces a two- and-a-half hour drive.

The length of the commute “really gives you five days home” instead of seven, Penney said. “You really can’t get ready for it.”

To contact the editors responsible for this story: David Scanlan at dscanlan@bloomberg.net; Christopher Wellisz at cwellisz@bloomberg.net


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