The new normal?

My column today looks at the tepid employment performance of the NB economy.   While the media coverage has been sparse – New Brunswick’s three years of no new job creation should start to worry someone.   According to Statistics Canada, in 2007 there were 357,100 employed persons.  By 2010, there were 356,100.    It’s one thing to underperform the national average.  It’s quite another to be dead last.   As I point out in the column, if there was a foreseeable jobs boom on the horizon this might be considered a blip but I can’t see one.

The implications of this are also hard to know for sure but are not likely to be good.

Five Ps to help to change this:

1. Performance: Get Invest NB rolling with a fresh mandate and a highly dynamic and engaged team of sales guys/gals.  While many are skeptical, I think this organization should be able to stimulate considerable new investment by getting focused and building a high calibre team.  The feedback loop into building a stronger value proposition for investing will also be strengthened.

2. Partnerships: Build strong industry association/cluster groups around key growth sectors.  I hesitate to even use the word association because I am not talking directories and golf tournaments.  I am talking about key stakeholders in growth sectors taking a more direct lead on the direction of the sector rather than leaving it to government.   That is even strange to say but it is true.    In my ideal world, businesses, government, R&D organizations and education stakeholders would be in a room charting a path for the sectors with high growth potential and then building a joint plan to make it happen.

3. Positive role for Government: Have a far more clear and value added role for government.  We have talked here about my theory that economic development in New Brunswick has become a euphemism for providing financial support to SMEs so no need to go further on that.  Just to say that government should have a more holistic understanding of how it (as over 1/3 of the economy) can positively and negatively impact economic development.

4. People: We have got to figure this out.

5 Productivity:  New Brunswick’s economy, its SMEs and its big companies need to be far more focused on innovation and productivity.  A lot of people hold their noses when the Feds gave AV $19 million this week for a major innovation at their NB facilities that will drive down their cost of production and make them more competitive.  Without getting too far into this discussion, it seems this is a far better investment compared to a loan guarantee or grant to keep a company afloat until the next election.  Innovation is about shifting the cost curve downward – and this helps AV do that.

% Change in Total Employment (2007-2010)

Source: Statistics Canada. Table 282-0002 – Labour force survey estimates (LFS), by sex and detailed age group, annual.

2 thoughts on “The new normal?

  1. Without disputing the bulk of your comments, I raise this:

    “The Aditya Birla Group is a US $28 billion corporation, the Aditya Birla Group is in the League of Fortune 500.”

    And I guess when people raise questions, they wonder why a $28 billion corporation needed a $19 million bailout just to do what they would have done anyway. Especially after another $67 million just a few years ago, when the plant was acquired. And an additional $10 million three years ago. Another $20 million in 2009. And even $2.37 million last year.

    There’s a logic here that needs explaining. Because to someone like me, it really appears that we are paying the owners of the plant to take our pulpwood and remove it from the province. The plant employees roughly 300 people. In the last 6 years that’s $300K per employee. Looking at the salaries being offered that’s more than the employees actually made.

  2. From looking at the provincial data in your chart, it appears that there is no correlation between tax rates and job creation.

    Are there any common factors among the provinces with higher levels of job creation? It would also be interesting to see a breakdown of the jobs created in terms of wage class. I wonder if that would produce quite a different picture. If we are going to invest in job creation / job retention, then we should be focussed on the high-quality high-wage jobs.

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