Alberta will fare better than other provinces if recession comes, report says

An economic forecast from the Alberta Business Council says a tight labour market coupled with high commodity prices — especially oil and gas — will give the province a smoother road ahead compared to the rest of Canada.

Even with consumers feeling the pinch of inflation, report co-author and council economist Alicia Planincic says any potential recession will feel milder in Alberta as those higher commodity prices will fuel demand for labour.

That will, in turn, help the province catch up to other provinces in wage growth.

"I think we've got a white-hot labour market and lukewarm wage growth. My hope is that that is also white hot in the in the next couple of months," she said.

She says employee salary increases have lagged behind the rest of Canada in the last year or so, and that has led to a decrease purchasing power for Alberta workers when inflation is factored in.

However, given that Alberta already has higher wages than other provinces on average, employee salaries have been moving up more slowly.

Still, she says, that should change in the coming months.

Another Alberta economist agrees with this assessment.

"What we're seeing is actually a convergence where because wages are higher in Alberta, there's less of an increase while Canada's wages are increasing faster. You're actually seeing what's often named the 'Alberta wage advantage,'" said Charles St-Arnaud, chief economist with Alberta Central, who was not involved with the report.

"It's just that now with inflation, it seems like it's actually showing the trend a bit more strongly."

With the unemployment rate sitting at 5.8 per cent and the job vacancy rate at 5.1, that means there are 1.1 job seekers for every job opening in Alberta — a huge change from recent years.

Planincic says 2023 could be the year for employees to take advantage of the labour market and ask for more money.

"If businesses want to hire — and they do, most of our businesses are reporting they do want to increase staffing — they're going to have to entice workers who already have a job. And usually you do that with a higher offer," she said.

Overall, she says the economy will be buoyed by higher commodity prices as production volumes continue to stay high.