Employees drive new levels of flexibility and innovation among employers as growth in the West outpaces the labour force.
The energy and natural resources sectors fuelling Western Canada’s non-stop economic engine show few signs of slowing. In fact, the powerhouse of crude, commodities and related infrastructure projects is driving Canada’s national GDP growth and employment rates. But exponential growth has its risks, and the boom—which has been going strong since 2002—is now threatened by a labour shortage that has employers grappling with creative recruitment and retention strategies.
While Alberta’s economy continues to grab the headlines, British Columbia, Saskatchewan and Manitoba are all gaining momentum. B.C., with natural gas in the north and more than $600 million in Olympic construction projects in the south, is experiencing strong economic growth. Olympic organizers are struggling to build venues for 2010 at a time when B.C.’s labour market has never been tighter, especially in construction and trades. Saskatchewan is enjoying a new era of prosperity and population growth driven by exports of energy, uranium, potash and agricultural products. The province’s GDP has surged upward, posting an 11.4% increase in 2007—ahead of Alberta’s 8.3% and in sharp contrast to the nation’s GDP growth, which is expected to be 2.9% in 2008.
Draining the Labour Pool
However, a shortage of skilled workers casts a shadow over Western Canada’s growth. Canada’s unemployment rate is at a 33-year low of 6%, with Alberta at 3.5%, B.C. and Saskatchewan each at 4.2% and Manitoba at 4.4%. And this shortage is predicted to worsen as the manpower needed to build multiple mega projects in the West peaks in the next few years.
More than $165 billion worth of Alberta oil sands projects are either underway or in the planning stages. And the B.C. government predicts that there will be a shortfall of 350,000 workers in the province by 2015, affecting every sector of its economy.
It’s no wonder that Alberta is posting the highest salary ranges across Canada. Salaries in Manitoba and Atlantic Canada are 6% to 7% below the national average, while salaries in Calgary exceed the average by more than 7%. Fort McMurray, Alta., tops the charts, surpassing the national average by nearly 14%, according to Mercer’s Canadian Geographic Salary Differentials Report.
2008 Western Canada Report |
Per Mercer’s 2009 Canadian Compensation Planning Survey for Non-union Employees, the oil and gas sector continues to lead the pack, with projected salary increases nearly 60% higher, on average, than those in the durable manufacturing sector as the industrial heartland in Ontario continues to suffer job losses.
All of this unprecedented growth leaves a host of employers chasing a limited pool of skilled workers. Maintaining a competitive advantage requires a holistic approach to building the attractiveness of the employment brand by emphasizing what employees—and prospective employees—value the most. More than ever, employers in Western Canada need to communicate the entire value proposition (or total rewards) offered to the employee, including pay, bonuses, benefits, career development and work/life balance.
What’s an Employer to Do?
Start with the basics. In a hot job market, it’s essential for employers to align pay levels to the marketplace in which they compete for talent. It’s also important to recognize that pay and benefits plans differ across regions. A national or international organization may not be in a high-growth industry, but it could still be competing for talent in a high-growth region with a tight labour pool. Beware of compensation and benefits policies that fail to recognize regional differences and allow for exceptions where needed.
Many employers offer temporary premiums to attract and retain critical talent, especially for skills that are in high demand. These premiums typically range from 5% to 15% of base pay. Cash awards are used to incent and retain key employees. Spot awards can pay off in employee loyalty. And signing bonuses, usually in the range of 7% to 15% of salary, can help seal the deal with a new hire. Mid- and later-career hires in the West can often negotiate five weeks of vacation or more. Cash retention bonuses for 18 to 24 months of employment are also popular.