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鈥檚 (BDC) chief economist.
鈥淭here are actually more jobs today than before the pandemic,鈥� said Pierre Cl茅roux, during a webinar session hosted by the Yellowknife Chamber of Commerce for Small Business Week. 鈥淭he rebound of the territorial economy has been stronger than in other parts of the country.鈥�
There were over 23,000 jobs in the territory in September, 鈥渁 higher level than before the pandemic in February 2020,鈥� he said.
鈥淎s a result, the unemployment rate is very low,鈥� he said. 鈥淎t 4.5 per cent, it鈥檚 the lowest in the country, much lower than the Canadian average (of 6.9 per cent).鈥�
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, 鈥渘ew mines are on the way,鈥� said Cl茅roux and their initial development will create many jobs in the construction sector.
鈥淭hese construction projects that we are seeing will stimulate the economy for at least the next two or three years,鈥� he said.
In addition, the high number of vaccinated Canadians has also been good for the economy.
鈥淪eventy-two per cent of all Canadians has been fully vaccinated so far,鈥� he said. 鈥淭his is actually the best level of all the G7 countries. Much better than the United States (which sits at 56 per cent).鈥�
The territory, buoyed by several high-profile construction projects related to the proposed Prairie Creek Mine, the Pine Point mine project and Fortune Minerals鈥� 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.
鈥淪ome sectors were really impacted (by the pandemic) and the most was accommodation and food services, everything related to tourism,鈥� said Cl茅roux. 鈥淚t鈥檚 improving now as restrictions are getting lower鈥s 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.鈥�
鈥淏ut tourism is the last sector that is going to go back to normal compared to other sectors in our economy,鈥� he added.
More bad news is the territory鈥檚 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.
鈥淚f we look over time, 2020 was the lowest level of export over the last 10 years,鈥� he said. 鈥淭he good news is in 2021, the level of exports is actually increasing. We鈥檙e not back to the pre-crisis level but we are improving.鈥�
During his presentation, Cl茅roux said Canada鈥檚 gross domestic product dropped 5.4 per cent in 2020 but predicted the country鈥檚 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, Cl茅roux said this is an ongoing problem across the country with 鈥渘o magic bullet to solve this issue.鈥�
鈥淭he main reason is the fact that we have an aging population in Canada,鈥� he said.
鈥淓ighteen 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.鈥�
Cl茅roux said the pandemic made things worse by sending many workers into early retirement and limiting immigration, noting 鈥渢he level of immigration declined by half.鈥�
鈥淲e calculated that in Canada, we鈥檙e missing about 400,000 workers because of the pandemic,鈥� he said.
Technology 鈥� in the form of robots, machinery and software 鈥� 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.
鈥淵ou have to market yourself as a good employer,鈥� he said. 鈥淭he level of effort has to be much greater today than it used to be before we had this shortage of labor. It鈥檚 important to have a competitive total compensation package, which is much greater than just salary. People are looking for benefits. They鈥檙e looking for flexible hours. They鈥檙e looking sometimes to work from home. This is what you have to offer today in this market to attract people.鈥�
