The Northwest Territories economy will rebound from the Covid-19 pandemic this year thanks to widespread vaccinations and a booming construction industry, according to the Business Development Bank of Canada’s (BDC) chief economist.
“There are actually more jobs today than before the pandemic,” said Pierre Cléroux, during a webinar session hosted by the Yellowknife Chamber of Commerce for Small Business Week. “The rebound of the territorial economy has been stronger than in other parts of the country.”
There were over 23,000 jobs in the territory in September, “a higher level than before the pandemic in February 2020,” he said.
“As a result, the unemployment rate is very low,” he said. “At 4.5 per cent, it’s the lowest in the country, much lower than the Canadian average (of 6.9 per cent).”
The construction industry is leading the charge. Last year in Yellowknife, 54 housing units began construction, a boost of about 60 per cent compared to the 35 houses that were started in 2019.
In addition, “new mines are on the way,” said Cléroux and their initial development will create many jobs in the construction sector.
“These construction projects that we are seeing will stimulate the economy for at least the next two or three years,” he said.
In addition, the high number of vaccinated Canadians has also been good for the economy.
“Seventy-two per cent of all Canadians has been fully vaccinated so far,” he said. “This is actually the best level of all the G7 countries. Much better than the United States (which sits at 56 per cent).”
The territory, buoyed by several high-profile construction projects related to the proposed Prairie Creek Mine, the Pine Point mine project and Fortune Minerals’ cobalt-gold-bismuth-copper NICO project, will bounce back somewhat faster than the rest of the country, he concluded, though tourism-dependent leisure and hospitality businesses will take much longer to recuperate.
“Some sectors were really impacted (by the pandemic) and the most was accommodation and food services, everything related to tourism,” said Cléroux. “It’s improving now as restrictions are getting lower…As we move away from the pandemic, we should be able to open our borders to the rest of the world and that should really help tourism.”
“But tourism is the last sector that is going to go back to normal compared to other sectors in our economy,” he added.
More bad news is the territory’s diamond exports have been slowing down, totalling $1.1 billion in 2020 compared to $1.7 billion in 2019, he said, due to declining global demand, especially in India.
“If we look over time, 2020 was the lowest level of export over the last 10 years,” he said. “The good news is in 2021, the level of exports is actually increasing. We’re not back to the pre-crisis level but we are improving.”
During his presentation, Cléroux said Canada’s gross domestic product dropped 5.4 per cent in 2020 but predicted the country’s GDP would grow 5.2 per cent in 2021 and 4 per cent in 2022.
He also noted ongoing Covid-19 restrictions, supply chain issues, price volatility and labour shortages would continue to dampen the national and territorial recovery.
When asked how the scarcity of workers is limiting the growth of most Canadian businesses, as a new BDC report notes 64 per cent of entrepreneurs say labour shortage is limiting their growth, Cléroux said this is an ongoing problem across the country with “no magic bullet to solve this issue.”
“The main reason is the fact that we have an aging population in Canada,” he said.
“Eighteen per cent of Canadians are over 65 years old and it used to be only 10 per cent about 20 years ago, so a lot of Canadians are retiring.”
Cléroux said the pandemic made things worse by sending many workers into early retirement and limiting immigration, noting “the level of immigration declined by half.”
“We calculated that in Canada, we’re missing about 400,000 workers because of the pandemic,” he said.
Technology – in the form of robots, machinery and software – is key to resolving labour shortages as they reduce the need for workers, he said.
He also said adopting a more active hiring process could be another solution for business owners.
“You have to market yourself as a good employer,” he said. “The level of effort has to be much greater today than it used to be before we had this shortage of labor. It’s important to have a competitive total compensation package, which is much greater than just salary. People are looking for benefits. They’re looking for flexible hours. They’re looking sometimes to work from home. This is what you have to offer today in this market to attract people.”