ALF V1

Labour shortage backgrounder

Government documents show claims of an acute “labour shortage” based on mathematical fiction

The claim that Alberta will be short “114,000” workers has appeared so many times in industry and media as to

appear an unassailable truth.

Nexen could be just the beginning...

In June, the Alberta government launched a website publicly outing employers who haven't paid their workers—an online hall of shame. Among these "deadbeat bosses," as the media quickly dubbed them, the worst offender was a subsidiary of China Petrochemical Corp. (Sinopec), a Chinese state-owned oil giant. That same subsidiary, along with others, is facing charges after the deaths of two Chinese workers flown in to work on a site near Fort McMurray, Alta., in 2007. After much delay, the trial begins this fall.

It's the kind of bad press Chinese firms can't afford as they seek to buy up swaths of Alberta's oil patch and attempt to win over Canadian regulators and a wary populace. Last week, Chinese state interests went after two Calgary-based companies. China National Offshore Oil Corporation (CNOOC) Ltd.'s $15.1-billion bid for Nexen Inc. got the most attention by far: it's the biggest-ever takeover of a Canadian company by a state-owned entity. On the same day, Talisman Energy Inc. said it would sell a 49 per cent stake in its U.K. North Sea outfit to Sinopec for $1.5 billion. "Virtually overnight, Chinese investment in the energy sector has doubled to over $30 billion," says Wenran Jiang, director of the Canada-China Energy & Environment Forum. Although the deals have yet to be approved, it's a sign of things to come.

The proposed Nexen deal would be the latest—and by far the largest—in a string of acquisitions. Last fall, Sinopec bought Calgary-based Daylight Energy Ltd. for $2.1 billion, the first time a Chinese state-run company made a successful bid for a North American energy firm. Earlier this year, PetroChina bought Athabasca Oil Sands Corp., giving China its first full ownership of an oil sands project. The Nexen deal takes things to another level. It's worth more than all of China's direct investment in Africa in 2011 ($14.7 billion), according to Gordon Houlden, director of the University of Alberta's China Institute. Jiang says China's interest in Canada is ramping up partly because we've become more welcoming. Prime Minister Stephen Harper once vowed not to sell Canadian values to the highest bidder and bestowed honorary Canadian citizenship on the Dalai Lama, to China's chagrin; lately he's softened his stance. In January, after the U.S. rejected the Keystone XL crude oil pipeline from the oil sands to the U.S. Gulf, Harper courted the Chinese more aggressively, visiting Beijing to discuss oil sales as part of a trade mission. (With the vast majority of Canada's crude oil going to the U.S., he's said he's keen to diversify.) The controversial Northern Gateway pipeline, if approved, will tap into the surging demand in Asia.

If last week is any indication, China could quickly become a dominant—if not the dominant—player in Canada's oil sands. Many critics question the motives of state-run firms, which operate like other Western companies but ultimately answer to the Chinese government. Beyond that, China's markets remain largely closed to foreigners. On July 27, U.S. Democratic Sen. Charles Schumer wrote a letter asking Treasury Secretary Timothy Geithner to block the deal until China opens its markets. (Nexen has offshore holdings in the Gulf of Mexico, so the deal also requires U.S. approval.) "I urge you not to miss this opportunity—the largest foreign acquisition ever by a Chinese company—to hold China to the commitments it has made to provide a level playing field for U.S. companies seeking to access Chinese markets," Schumer wrote, calling the current investment relationship between the U.S. and China a "one-way street."

Other critics worry about whether Chinese companies will respect Canadian regulations on the environment and labour standards, where Beijing's track record remains notoriously poor. "Does it matter who owns the oil sands? You bet it does!" said Gil McGowan, president of the Alberta Federation of Labour, in a statement about Nexen. He argues that foreign governments would "develop the oil sands in their own best interests," keeping the best jobs for themselves, and ignoring Canada's energy needs and environmental priorities. McGowan has previously expressed concern about overreliance on temporary foreign workers in the oil sands, driving down wages for Albertans. The NDP, too, criticized the Nexen deal for lacking "hard commitments on the environment."

So far, at least, it seems that China's interest in our energy sector has been of benefit to both sides. Here, China has found a stable place to invest. Resource-rich and democratic, this country is undeniably attractive, and China has been burned in the past; in Libya, it had to evacuate more than 35,000 workers after civil war broke out, Jiang notes, losing $18 billion in the process. Nexen made an ideal target. It has considerable assets abroad, where the Chinese are also interested in expanding (just 28 per cent of Nexen production is in Canada). Nexen's stellar corporate image and brand reputation also make it appealing—Nexen was featured in Maclean's in May as one of Canada's top 30 green employers, its third year on the list.

Still, it's not hard to see why Nexen felt pressure to sell. The firm has been plagued by operational difficulties at its Long Lake oil sands project. "It wasn't creating value for shareholders, and its stock price wasn't performing well [relative to its peers]," says Lysle R. Brinker, director of equity research on integrated oils and national oil companies at I.H.S. Herold in Colorado. In January, Nexen removed CEO Marvin Romanow, and CNOOC swooped in. It offered an all-cash price of $27.50 per common share in its bid, a 61 per cent premium to Nexen's closing price on July 20.

This takeover is undoubtedly the best possible outcome for Nexen shareholders, but whether it's best for Canada is still up to regulators to decide. The deal now faces review by Industry Canada and the federal Competition Bureau. Even though Harper has insisted that "nothing should be assumed," experts agree this takeover will almost certainly go ahead.

First, though, it must be shown to have a "net benefit" to Canada, a condition that CNOOC has clearly considered. The company said it will put its North and Central American headquarters in Calgary, list its shares on the Toronto Stock Exchange, and hold onto Nexen's management and employees. "CNOOC looked at why Potash didn't go through, and made some adjustments," says Robert Schulz, professor in the University of Calgary's Haskayne School of Business, referring to BHP Billiton Ltd.'s $40-billion hostile bid for the Saskatchewan fertilizer company, which was withdrawn after regulators indicated there was no net benefit.

Foreign investment has long been a reality in the oil sands, but if the U.S. is the "devil that we know," China is the devil we don't, Jiang says. State-run companies still have to obey Canadian laws, pay royalties and taxes, just like any other company here. Jiang points to a poll from the Asia Pacific Foundation noting that a majority of Canadians feel uncomfortable with Chinese foreign direct investment. This anxiety stems "from concerns about human rights and democratic development, to product safety and Chinese defence buildup," notes Paul Evans, director of the Institute of Asian Research at the University of British Columbia. "There's not a deep knowledge about these Chinese state-owned enterprises and how they're conducting themselves."

China is the largest energy consumer in the world, and will use as much as 70 per cent more energy than the U.S. by 2030, says Jiang. What if Canada, in the face of deep economic troubles, decided that oil resources would be better used to benefit Canadian interests? It's not inconceivable. The country flirted with nationalization under Prime Minister Pierre Trudeau when he introduced the National Energy Program in 1980 to boost Canadian ownership and government revenues. Canadians rejected it in favour of a market-based system. "We need to make a choice: will Canada maintain its market-economy status, or convert our natural resources into a state-owned enterprise?" Jiang says. If we really are "open for business," China will continue buying from us.

The Nexen deal is "a tough first test," Evans says. If it gets the go-ahead, we'll see other state-owned companies—from China and elsewhere—wading in. How this will reshape Canada's energy sector is an open question. Among the opposing camps who either welcome the Nexen sale or view it with trepidation, one point is agreed upon: this is only the beginning. "If China now has the second-largest economy on earth, and is en route to number one, there may not be much choice but to deal, trade with and work with China," Houlden says.

Macleans Magazine, Wedn Aug 8 2012
Byline: Kate Lunau

A labour shortage occurs when the demand for labour exceeds the supply of labour, right? Well, apparently not in Alberta.

The Alberta Federation of Labour took a long, hard look at the Government of Alberta's projections showing an astronomical labour shortage of 114,000 workers by 2021 and found them to be based on misleading methods.

Instead of a straightforward calculation of demand for labour minus supply of labour, with a shortage occurring when total demand exceeds total supply, Alberta used a strange formula that subtracts the annual change in demand from the annual change in supply.

The result: even though the Alberta government's projections show the supply of labour exceeding demand (a labour surplus, one would think) for every year through 2021, their strange method shows a labour shortage.

What's more, the government accumulated these phoney yearly labour shortages up to 2021 to show a "cumulative shortage" of 114,000 workers even though this supposed shortfall would be captured in the following year's demand. Put another way: one vacant job over 10 years is still one vacant job, not 10 as the Alberta government would have us believe.

The same day the AFL released its report, the Certified General Accountants Association of Canada released its own report with similar findings. Their findings include "Labour shortages are difficult to observe and measure directly" and "Where sufficient data exists, an assessment shows that labour shortages occurred rather sporadically and did not persist for more than one year at a time over the past ten years."

These bad numbers lead to bad public-policy decisions.

On July 16, Citizenship, Immigration and Multiculturalism Minister Jason Kenney used Alberta's "acute labour shortages" to justify an expansion of a Temporary Foreign Worker pilot program whereby employers won't have to consider hiring Canadians in certain occupations first before turning to offshore labour.

Originally, the pilot program allowed some Alberta employers to bring in Temporary Foreign Workers for steamfitter/pipefitter jobs without going through the Labour Market Opinion (LMO) process. The LMO process forces employers to show efforts to "recruit and/or train willing and available Canadian citizens/permanent residents." The expanded pilot process to include six more occupations, including welders, heavy duty equipment mechanics, ironworkers, millwrights and industrial mechanics, carpenters, and estimators.

Of course, the AFL acknowledges that there is a "tight labour market situations in select trades and skills" in the province, but those specific shortages in certain occupations are related to the provincial government's ineptitude for planning and pacing development in the oil sands.

Nevertheless, that fact hasn't stopped anti-union interests in the province from using the government's faulty labour shortage figures to call for radical changes to labour markets with the end goal of depressing wages in the oil sands.

This article was a guest post by the Alberta Federation of Labour's Tony Clark. It was first posted on the Progressive Economics Forum.

Rabble.ca, Tues Aug 7 2012
Byline: Tony Clark

One of the downsides with having one of the hottest -- if not the hottest -- economies in the world is that there comes a time when you might not have enough labour to meet the demand.

Alberta experienced that just a few short years ago. And if you accept the Alberta government's most recent projections, Alberta may be in for the most pronounced labour shortage of its history -- a shortage of as many as 114,000 workers by 2021.

Unless, of course, you ask the Alberta Federation of Labour. They, apparently, have a very short memory, and insist that everything is going to be a-OK.

Apparently, their complaint is that the Alberta government used a formula to compute these numbers that they don't like.

At the core of their complaint is that the government used a formula that subtracted annual change in labour demand from the annual change in labour supply. Apparently, the AFL prefers a method that simply subtracts labour demand from labour supply.

"These projections are built on a lie, they're designed to manufacture a crisis where there is none. So, what do we do about it?" demanded AFL President Gil McGowan. ""I've written a letter to (Employment and Immigration Minister Dave Hancock), asking him to justify his decision, and the government's decision, to use such a discredited approach (to formulating labour projections)."

But whose approach to projecting labour availability is actually discredited? It turns out it's the AFL's.

The weakness in the AFL's favoured approach is obvious: it treats both labour demand and labour supply as static. It fails to take into account growth of labour demand on a year-by-year basis, and overlooks the number of workers that can be brought in on the same basis.

The AFL describes the government's method of calculating labour supply as "discredited," but the truth is that based on the labour shortages Alberta experienced very recently -- labour shortages the province turned out to be largely unprepared for -- and by the looming labour shortage the province is already on the very verge of. Placement agencies have already turned to recruiting US Army veterans to fill jobs in Alberta.

This is something that many left-wing Canadians took to their Twitter accounts to protest, but the AFL has a very unique interest in this matter. After all, should a minimum of 114,000 new workers stream into Alberta over the next nine years, there's no guarantee that they'll agree to join union shops. In a seller's labour market, absolutely no one will be able to coerce them to. They could just as easily decide to ply their trades with a MERIT contractor, and would probably be much better off for it That might result in an awful lot of new competition that the flagging AFL just might not be able to stand up to.

That the only "academic forum" the AFL can find willing to air their grievances is the Progressive Economics Forum is also very telling.

It seems worth noting that the Progressive Economics Forum has also given Robyn Allen an outlet for her own junk economics. As reluctant as I am to simply attack the source, it seems that anything originating from the PEF needs to be taken with multiple grains of salt. Judging from history alone, their projections that Alberta's labour market will remain hunky dory is definitely one of those things.

Examiner.com, Sat Aug 4 2012
Dave Hancock, Patrick Ross

Ottawa - The expansion of the Temporary Foreign Worker pilot in Alberta is creating an outcry from the Alberta Federation of Labour (AFL).

"Canadians should get first crack at these jobs. But the (Stephen) Harper government is more interested in the bottom line of their friends in the non-union construction sector," said Nancy Furlong, secretary-treasurer of the AFL, which represents 150,000 Alberta workers.

Originally launched June 1, 2011, under the Temporary Foreign Worker Annex to the Agreement for Canada-Alberta Cooperation on Immigration, this pilot project allows eligible foreign nationals to come to Alberta to work temporarily in a specific occupation.

Through this program, a foreign worker can be issued a work permit that allows them to move freely between Alberta employers without requiring a Labour Market Opinion.

The Alberta pilot is expanding beyond the steamfitter/pipefitter occupation to include: welder, heavy duty equipment mechanic, ironworker, millwright and industrial mechanic, carpenter and estimator

"Our consultations with Alberta employers and our own labour forecasts show there is a need to expand the pilot to include these high-demand occupations," said Alberta's minister of enterprise and advanced education Stephen Khan in a news release.

The AFL says the pilot project will allow employers to recruit foreign workers without trying to fill the position with Canadians first. The AFL also says there will be fewer safeguards against abuse.

"Foreign workers are supposed to receive comparable wages and working conditions as Canadians, but there are no real mechanisms in place to ensure this happens. Once the foreign workers are in the province, they work at the whim of their employer," said Furlong, noting that a 2010 Government of Alberta report found that 74 per cent of employers who hired workers under the Temporary Foreign Worker Program (TFWP) had violated the Employment Standards Act regarding pay rates and record keeping.

The AFL is repeating the call to expand permanent immigration to address shortages that may exist in Alberta in select trades.

The organization has long held the position that the TFW program should be scrapped in favour of an immigration policy that brings in new Canadians in order to build the economy in a sustainable way.

"This is not about a labour shortage, it's a low-wage strategy. This is mostly designed to give companies access to a big pool of non-union construction labour that is desperate for work," said Furlong.

Daily Commercial News, July 25 2012

Growing up in Duncan, as I did, meant growing up in the airshed of the Crofton pulp mill. No one liked the smell but they liked what it represented — paycheques coming home to families.

The smell of the pulp mill in Duncan and other small towns in B.C. was the smell of jobs.

But Crofton is now Catalyst, and Catalyst is in a rocky situation. Crofton employees from the Cowichan Valley are going north to the oil and gas industry. In fact, half of all flights from Vancouver Island and the Lower Mainland to Edmonton and Calgary are oil and gas workers.

Not much wonder then that some of the greatest supporters of the oil-fields and pipelines are found in the labour movement.

So while so many others are having a grand time dumping on Enbridge's proposed Northern Gateway pipeline, the Building and Construction Trades Department (AFL-CIO), representing Canada's building trades unions, has an entirely different position.

"Pipelines connect jobs," says spokesman Chris Smillie.

The building trades, Smillie says, support projects that bring jobs to their members, and the pipeline does just that. A billion dollars of investment supports 4,000 jobs, and the Enbridge pipeline is a $5.5-billion investment. It's not jobs at all costs, and the building trades website is clear: "Economic prosperity does not have to come at the expense of environmental care for future generations. . . . The men and women of the Canadian building trades live, work and play in Alberta and British Columbia and have a vested interest in protecting the land."

The building trades also support streamlining the regulatory process. Working people are helped by certainty. Projects get killed by a process that drags on for years.

Smillie had some words of caution regarding the shortage of skilled labour in Canada. All governments, he says, need to support apprenticeship programs and ensure that apprentices complete their qualifications. Companies need to make a point of hiring apprentices.

Canadian immigration policies need to focus more on skilled trades. Current provisions only provide for entry of about 10,000 skilled workers each year, but the country could use 50,000. The United States is our best source of skilled labour, and Canada should encourage American immigration. And, locally, schools must support their shop programs.

The politics of the building trades taking the position they do on the Enbridge pipeline must lead to some interesting conversations.

The B.C. NDP, B.C.'s labour party, is strongly opposed to the pipeline. Yet the Canadian building trades are an influential group, and their support is joined by that of the B.C. and Yukon Territory Building and Construction Trades Council, and locals of the Construction and Specialized Workers' Union, the Teamsters, the International Union of Operating Engineers, and the United Association of Plumbers, Pipefitters and Welders. Other unions remain opposed, including the Alberta Federation of Labour, the Communications, Energy and Paperworkers and the United Fishermen and Allied Workers.

Environmental groups are keeping the province on high alarm about the Northern Gateway pipeline. But working people, those who toil in our resource industries outside of the cosy streets of downtown Vancouver, understand that our province is built on oil and gas, just as in the past it was forests and fish.

It is those workers who keep our province and country ticking. They're hoping that the rest of us are listening.

The Province, July 24 2012
Guest columnist: Suzanne Anton (former Vancouver city councillor)

Faced with a looming labour shortage in a perpetually expanding economy, the door is opening wider for temporary foreign workers specializing in six in-demand trades, announced federal immigration minister Jason Kenney, Monday.

The changes to the Temporary Foreign Workers program will reduce the amount of paperwork needed to hire trained foreign workers who can work as welders, heavy-duty mechanics, ironworkers, millwrights, carpenters and estimators - jobs that are in short supply in Alberta.

The new program - which is part of a one-year pilot project - will also allow skilled workers to move freely between Alberta employers without requiring authorization from Ottawa.

"It sounds like a good deal. We need those skills here in Alberta and if one employer can't use them anymore or goes through some internal changes, they can stay here and find other employment," said Ken Chapman, executive director of the Oil Sands Developers Group.

The changes have scrapped what used to be a bureaucratic, six-month application process, in favour of a one-step, streamlined process.

Companies can now begin recruiting in visa exempt countries, such as the United States, and invite those workers to Canada. As long as the workers make an application to work in Canada as a trades person, they can now be issued a work permit at major Canadian airports in as little as 30 minutes.

Under the current program, Chapman says foreign workers coming to Canada are issued a visa that only allows them to work under one employer. If a worker with skilled labour was laid off or fired, they were often forced to return home if they could not alter their visa conditions.

"We need to treat the foreign workers who come here with in-demand skills and trades in a fair way that meets the needs of industry and the region," he said. "It's a good move."

Ottawa hopes the move will fill a growing void in skilled labour. However, the Alberta Federation of Labour says the pilot program will leave fewer safeguards for foreign workers.

"Foreign workers are supposed to receive comparable wages and working conditions as Canadians, but there are no real mechanisms in place to ensure this happens. Once the foreign workers are in the province, they work at the whim of their employer," says Nancy Furlong, secretary-treasurer of the AFL, which represents 150,000 Alberta workers.

Furlong points to a 2010 provincial report that found 74% of employers who used the Temporary Foreign Worker program had violated the Employment Standards Act regarding pay rates and record keeping.

"Canadians should get first crack at these jobs. But the Harper government is more interested in the bottom line of their friends in the non-union construction sector," she said.

"The result is employers can use these workers in ways that Canadians might not tolerate," says Furlong. "Once a foreign worker is brought in under this program, they can be moved around willy-nilly at the behest of the employer or employers who brought them in."

Fort McMurray Today, Wedn July 18 2012
Byline: Vincent McDermott

OTTAWA — A collection of more than 700 stakeholders from the business world, non-government groups, the academic sector and faith-based leaders are calling on provincial and territorial premiers to adopt a new clean-energy accord as a pathway to new jobs and trillions of dollars in ongoing and anticipated global investments in an emerging market.

Andrew Heintzman, president and chief executive officer of Investeco, an environmental investment firm, said the supporters in the plan want governments to "look beyond fossil fuels" such as oil, gas and coal. Instead, he said they should consider larger opportunities to build smart electricity grids, promote energy efficiency and clean up Canada's energy sector through specific government policies.

He explained Alberta's oilsands industry, which launched its first commercial operations in the middle of the 20th century, only became a "beacon of private-sector investment," after getting financial support from governments.

"As we all know, it (the oilsands sector) was a very long product of significant government investment over many years that brought it to where it is today," said Heintzman, who heads a firm that manages about $45 million in assets for about 120 investors. "I think that energy policy is usually fairly tied up with government policy. It's just the nature of it."

The stakeholders were brought together by Tides Canada, a charitable foundation that has been fending off direct and indirect attacks from the Harper government and Alberta-based energy company, Enbridge. They have suggested Tides Canada is involved in a conspiracy to shutdown the oilsands sector through campaigns funded by American billionnaires.

But the foundation is urging premiers gathered for the upcoming Council of the Federation meeting to endorse their strategy so Canada can take advantage of an anticipated $3 trillion dollars worth of anticipated investments around the world in clean energy technologies and jobs over the next decade.

In a recent report released last spring - entitled "Towards a Clean Energy Accord" - Tides Canada noted the country contributes to about two per cent of the global economy, but only accounts for about one per cent of the global clean technology market.

"Indeed, we will not likely make the needed changes to compete as a nation unless each government sees itself as part of a larger effort to do so," said the report. "We can and must capture a greater share of the jobs and opportunities presented by the energy transition. We can also follow through on our international commitments to reduce our carbon emissions."

The Tides Canada recommendations have also been accepted by unions such as the Alberta Federation of Labour, industry lobby groups such as the Canadian Wind Energy Association, environmental groups such as the David Suzuki Foundation as well as academics such as climate change scientist Andrew Weaver.

Alberta Premier Alison Redford has also asked other premiers and the federal government to support her own calls for a national energy strategy that would pull together different regional economic sectors with complimentary policies.

She has suggested Canada could then lead the world on issues such as energy supply, innovation and efficiency as well as climate change through such a strategy that would also support growth in the oilsands.

The Tides Canada report also noted the International Energy Agency, a partnership of governments from around the world that offers advice on energy policy, suggested last April that dramatic changes were needed to prevent consumption of fossil fuels and the resulting greenhouse gas emissions from driving global temperatures more than six degrees Celsius above pre-industrial levels and causing irreversible changes to the Earth's climate and ecosystems.

The Province, Tues July 17 2012
Byline: Mike De Souza

Easing restrictions makes foreign workers employers' first choice not last resort, says AFL

An Alberta labour group is slamming an agreement making it easier for Alberta companies to hire skilled foreign tradespeople.

Federal Immigration Minister Jason Kenney is easing foreign-worker restrictions.Federal Immigration Minister Jason Kenney is easing foreign-worker restrictions. (CBC)

"Under this program, employers don't have to show that they've made any attempts to fill these jobs with Canadians first," said Nancy Furlong, with the Alberta Federation of Labour.

"Kenney's latest move makes the Temporary Foreign Workers program an employer's first choice, not last resort," she said.

Federal Immigration Minister Jason Kenney announced Monday a one-year pilot project that will reduce the paperwork needed to hire skilled workers under the Temporary Foreign Workers Program.

Instead of waiting months to get to work, it will now take only 30 minutes, said Kenney

"They can immediately begin recruiting in visa exempt countries like the US, invite those folks to come up and as long as they make an application for their certification to get their ticket to work as a trades person they'll get a work permit at the airport," he said.

The province is short welders, heavy-duty mechanics, ironworkers, millwrights, carpenter and estimators.

But the AFL said the project will leave even fewer safeguards against abuses such as poor working conditions and unscrupulous recruiters charging illegal fees.

"Foreign workers are supposed to receive comparable wages and working conditions as Canadians, but there are no real mechanisms in place to ensure this happens," said Furlong. "Once the foreign workers are in the province, they work at the whim of their employer."

The AFL believes the Temporary Foreign Workers Program should be scrapped in favour of an immigration policy that brings in new Canadians to address labour shortages.

"This is not about a labour shortage, it's a low-wage strategy," said Furlong. "This is mostly designed to give companies access to a big pool of non-union construction labour that is desperate for work."

Kenney said he will protect Canadian workers by ending the pilot project early if the job market changes and unemployment rises.

CBC News, July 17 2012