The recent shelving of the Joslyn mine oilsands project in Alberta is a reminder of the fragile economics of the oilsands. No economic formula could be found to make the $11 billion project work and it has been put on hold indefinitely.           

Oil major Total E&P, the biggest partner in the project, said the Joslyn mine project “cannot be (financially) sustainable in the long term.” Interestingly, Total did not blame lack of new pipelines for squeezing profit margins either.

“You run the risk in developing fossil fuels that one day will either become fully depleted or too expensive to extract,” Philip Gass, a policy analyst at the International Institute of Sustainable Development, said from Winnipeg.

It would be difficult to deny Canada has economically benefited from developing the oilsands, a particularly difficult and expensive fossil fuel to mine and refine into light fuels — but failing to diversify the Canadian economy beyond an oil and gas ‘energy superpower’ makes for a very uncertain economic future for Canada.

“Canada could find itself an energy superpower overspecialized in the ‘old economy’ (resource extraction) in a world rapidly trying to cut carbon emissions and avoid catastrophic climate change,” Andrew Jackson, a senior policy advisor with the Broadbent Institute, told DeSmog Canada.

“Putting all your eggs in one basket is never a good economic strategy,” Jackson said.

Benefits of Energy Development Remain Largely Locked in the Sector

The idea that all Canadians benefit from a surging oil and gas industry is slowly turning into a farce. An International Monetary Fund (IMF) report earlier this year finds every dollar invested in the energy sector in Alberta grows Canadian gross domestic product — an economic vitality indicator — by 90 cents. Of this growth, 82 cents remains in Alberta, mostly in the energy sector (67 cents).

IMF‘s breakdown of $1 investment in the energy sector scenario.

“There appears to be an important scope to increase inter-industry linkages across Canada that would lead to wider sharing of benefits from the energy sector,” concludes the IMF report released in January.

Increasing inter-industry linkages or value-added jobs does not appear to be priority of the federal government. New oil pipeline projects are almost all geared to shipping Canadian oil and oilsands bitumen to refineries in the U.S. or overseas, not in Canada. Most of the heavy equipment for oilsands extraction comes from the U.S.

“The spin-off effects of the energy boom are not being felt in Ontario and Quebec, where most Canadians are,” Jackson says.

The federal government’s low corporate tax rate and the exemption of provincial resource royalties from the Canadian system of wealth redistribution (which ensures all Canadians receive the same public services) further locks the economic benefits of the energy sector within the sector and resource-rich provinces.

Energy Sector Is Not A Big Jobs Creator

“The oil and gas sector is capital intensive, not labour intensive. Manufacturing could employ more people,” David Macdonald, a senior economist with the Canadian Centre for Policy Alternatives, says.

The same IMF report on the Canadian energy sector indicates that of the 752,000 jobs created in Canada between 2007 and 2012, the oil and gas sector can only take credit for less than 13,000, or 1.7 per cent, of them.

Job creation is not exactly Canada’s strong suit at the moment.

“The employment rate in Canada, that is the percentage of Canadians over fifteen years of age who are working, is sixty one per cent. This is the same level the employment rate was at during the worst of the recent financial crisis,” Macdonald told DeSmog Canada.

Employment rate (blue) and unemployment rate (black) from 2003 to 2013. SOURCE: Canadian Centre for Policy Alternatives 

The official unemployment rate (seven per cent) in Canada has returned to pre-recession levels, but Macdonald points out that Statistics Canada does not count Canadians who are not actively searching for employment as unemployed.

“Eighty per cent of the so-called ‘recovered jobs’ since the recession are Canadians who have simply given up looking for work,” Macdonald says from Ottawa.

Part-time/Temporary Job Creation On The Rise

Ninety-five percent of all net jobs created in Canada in 2013 were part-time according to the Canadian Chamber of Commerce. Part-time workers and the self-employed, who earn on average 20 per cent less than their employed counterparts according to CIBC, now make up 30 per cent of the Canadian work force.

Canada has created more full-time than part-time jobs since the recession but the rate of part-time job creation has grown faster than full-time. Fifty-three per cent of Canadians between the ages of 25 and 44 who found work since the recession could only find temporary jobs. The rate of Canadian part-time workers who want full-time work but cannot find it has grown 37 per cent during the same period.

“Since 2011 the number of underemployed workers has exceeded the number of unemployed workers — in 2013 there were 1.35 million unemployed workers and 1.43 million additional underemployed workers. And that is before we even begin to take into account skills-related underemployment. This is an issue that needs to be taken seriously,” a Canadian Labour Congress report concludes.

SOURCE: Canadian Labour Congress

Fourteen per cent of working Canadians are underemployed or unable to get enough work to meet their financial needs, a 28 per cent increase since 2008.

Canada Needs to Create Well-Paying, Long-Lasting Jobs

“Whether you are talking about green jobs or brown jobs (fossil fuels extraction) you want to create jobs that are fair, well-paying and long lasting,” Gass of the International Institute of Sustainable Development told DeSmog Canada.

“We would like to see federal policy facilitate the creation of more specialized manufacturing jobs and encourage unionization in the work place. Unions tend to create better paying full time jobs,” Macdonald says.

A report released last month by the Parkland Institute examining unions in Alberta (the province most hostile to unions) found in terms of economic performance, wage growth is lower in Alberta compared to other provinces with higher unionization rates, despite Alberta’s oilsands boom.

“There is $600 billion sitting on companies shelves in Canada that is not being reinvested in the economy. Companies only invest where there is an expectation for growth. At the moment it appears the expectations are low,” Jackson says from Ottawa.

Corporations operating in Canada are not the only ones with low expectations for growth. When polled earlier this year by the Broadbent Institute, Canadians between 20 and 30 believed they will face a future of precarious employment and the income gap will grow during their lifetimes despite Canada’s energy boom. Baby boomers (50 to 60 years of age) in the same poll stated they think their children are more likely to slip down an economic class than move up.

“With interest rates at all time lows I would like to see public investment into mass transit, passenger rail, etcetera ramped up. Public investment can pave the way for private investment,” Jackson said.

Unfortunately the current priorities of the federal government — tax cuts, tax breaks, battling unions and cuts to public spending — are taking Canada in just the opposite direction.

Image Credit: Cheryl via Flickr

The Narwhal’s reporters are telling environment stories you won’t read about anywhere else. Stay in the loop by signing up for our free weekly dose of independent journalism.

Today (May 1st) marks the one-hundred-and-twenty-third International Workers’ Day, also referred to as May Day. Many countries around the world observe the annual event celebrating the working class and labour movement with street festivals, community gatherings and demonstrations. But May Day passes largely unnoticed in Canada. This may be because very few Canadians actually believe in a working class anymore.

“Canadians for the most part believe the working class belongs to an era that no longer exists. Whether they are the working poor or the wealthy, Canadians tend to think of themselves as middle class,” says Jacqueline Kennelly, an associate professor of sociology at Carlton University in Ottawa.

Canadians celebrate Labour Day (the first Monday of every September), but the public holiday is better known as the last long weekend of the summer than a day to celebrate the eight-hour work day, a major achievement of the labour movement. For many Canadians the term “working class” conjures up a bygone era of poorly paid male workers slaving away in unsafe factories, steel mills or mines.

“Today’s working class in Canada are the low-wage earners in the services sector," Kennelly told DeSmog Canada. "They wait tables at restaurants, bartend or work in retail. A lot of them are women and recent immigrants to Canada. They are engaged in precarious labour with little to no job security and are worse off than the Canadian working class of thirty years ago."

Seventy-eight percent of working Canadians are employed in the services sector. Health care and social assistance, food and accommodation and retail are the biggest employers. 

The power of unions and support services for Canadian workers have largely been dismantled by companies and corporate-friendly governments – provincially and federally – since the 1980’s through ‘back-to-work’ and other forms of anti-union of legislation. And companies frustrated with the cost of doing business in Canada have either already left or currently threaten to leave.

The Canadian working class of today would seem to have an advantage over the working class of old: jobs in retail, food and accommodation services are not easily outsourced to other countries. A barista in India can't froth a cappuccino for someone in Toronto.

But service-sector employees are facing their own form of job insecurity these days. If the recent abuses of Canada’s Temporary Foreign Workers program are any indication, service-sector companies have no problem bringing in cheap foreign labour to flip burgers at McDonalds or man a till a local RBC branch. 

Images of May Day demonstrations from around the world:

Protesters take cover as riot police fire tear gas to disperse a #MayDay rally near #TaksimSquare in Istanbul pic.twitter.com/oiXKYFez5U

— AFP Photo Department (@AFPphoto) May 1, 2014

#Turkey: Turkish police tear gas at #MayDay protesters in Istanbul, by @Kilicbil #AFP pic.twitter.com/LdiDG2QSGG

— AFP Photo Department (@AFPphoto) May 1, 2014

Sri Lankan Kandyan dancers ride on the back of a truck during a May Day rally in Colombo #AFP pic.twitter.com/oKZqkqR4QH

— AFP Photo Department (@AFPphoto) May 1, 2014

Pakistani worker at a steel factory in Lahore on the eve of International Labour Day pic.twitter.com/jZIdWpMW2x #AFP

— AFP Photo Department (@AFPphoto) May 1, 2014

#Turkey: Protestors try to take shelter as police uses water cannons during #MayDay rally in Ankara by @AdemAltan3 pic.twitter.com/SE6SbUM5kv

— AFP Photo Department (@AFPphoto) May 1, 2014

Cuban workers take part in the May Day parade at Revolution Square in Havana by @AFPphoto ADALBERTO ROQUE pic.twitter.com/6U3amHmEUJ

— AFP Photo Department (@AFPphoto) May 1, 2014

Russian Communist Party supporters carry red flags during the 1 May rally in Moscow by @AFPphoto KIRILL KUDRYAVTSEV pic.twitter.com/DvVxRZLFic

— AFP Photo Department (@AFPphoto) May 1, 2014

A Turkish protester stands amid a fog of tear gas during the #MayDay rally in #Istanbul by @Kilicbil pic.twitter.com/vjKgSDqjSE

— AFP Photo Department (@AFPphoto) May 1, 2014

Underemployment and Precarious Work Is on the Rise in Canada

Low-wage earners in the services industry are part of the growing number of Canadians who are underemployed or precariously employed, meaning their basic need for paid income is not being met. They are more likely to hold down more than one part-time job to get by, work irregular hours that can take a toll on their health and families and not be part of a union to protect their employment rights.

Underemployment in Canada is on the rise according to the Canadian Labour Congress. The current underemployment rate is 14.2 per cent, which is a 28.6 per cent increase since 2008. This is double the national unemployment rate. This trend is most likely to continue since part-time jobs are growing twice as fast as full time jobs. Nearly 95 per cent of the jobs created in 2013 were part-time jobs according the Canadian Chamber of Commerce.  

Not Talking About Class Ignores the Challenges of Being Working Class

“Canadians have lost the language to talk about class and have difficulty conceptualizing what the working class today looks like,” says Professor Kennelly.

Canadians could be forgiven for thinking the working class no longer exists in this country. The main political parties – Liberals, Conservatives, and NDP – claim to be the defenders of the middle class way of life and the plight of the middle class is a reoccurring theme in the media.

And discussion about class more generally is now often articulated in terms of percentages – the wealthy 1 per cent against the remaining 99 per cent. The idea of a relevant working class has more or less fallen off the public radar.

Such 'class blindness' can lead to social ignorance of the challenges certain social groups face in the 'pursuit of happiness.' 

Professor Kennelly argues it is difficult to tackle problems like inequality between the classes if the existence of class isn't recognized.

“There is the attitude in Canada as well as the U.S. that if you are working poor it is up to you to get yourself out of the situation. The onus is on the self. But class gets reproduced. Someone born to parents who did not go to university are less likely to attend university themselves because their parents by and large do not know how to navigate the system,” Kennelly told DeSmog Canada.  

Image Credit: ShutterStock

The Narwhal’s reporters are telling environment stories you won’t read about anywhere else. Stay in the loop by signing up for our free weekly dose of independent journalism.