Immigrants and the workforce: Moncton CMA impressive results

One of the mantras I have been preaching for years now is the need to attract immigrants into actual employment opportunities.  I realize this is not as simple as it seems given the sometimes strange world of immigration where prospective immigrants with lots of points can get in and ones that have the skills for certain jobs cannot.

The good news is that despite the fairly significant increase in immigration to the Moncton CMA, a high level of these immigrants are participating in the labour market.  The table shows the labour market participation rate for urban centres with at least an immigrant population of 5,000.  Among all urban centres east of Winnipeg, Moncton ranks 2nd for immigrant labour market participation.  Obviously we have to be careful with this data as we have no way of knowing how many of the Syrian refugees are showing up in these numbers (not likely many given the timing of the Census).   Also, in certain areas, the immigrant population might be older and there are more retirees in the mix.

But for the most part this is a good news story for Moncton.  The more alignment between the inward migrants and actual labour market participation the better.

immlfs

 

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Net worth-less? What’s going on?

Well the new data on household net worth is likely to cause a kerfuffle. Statistics Canada is reporting that median household net worth in New Brunswick dropped by 11% between 2012 and 2016.  If you look at the average household net worth the story is different but the issue remains, what gives?   Normally, when one province tanks in the data Statistics Canada will have a little more insight in their narrative but nothing here.

Maybe we will see more in the newspaper reports on this but my quick analysis shows something strange.  On the household asset side, we have seen steep declines in the value of RRSP holdings, deposits – a collapse in mutual fund/income trust assets and TFSA savings – substantial variations from Canada since 2012.

What happened?  Did all of a sudden NB financial planners become horrible at their jobs?  A 37% decline in RRSP assets in five years?  a 68% decline in mutual funds/income trust assets in five years?  Sure, they could be moving around some of the income – we saw a big increase in EPP value (for the group of people lucky enough to have one).  I would be curious to have an investment professional weigh in here.  We do have the data by income quintile but the figures for the higher income quintiles are not published for New Brunswick.  We heard after the government raised the tax rate on high income earners that high net worth folks were trying to shift income to avoid the tax – maybe leave more of it in the business, etc. (leading to the Morneau crusade?). Something’s fishy.  It’s hard to believe that in just five years you would see such big variances to the rest of Canada.

On the debt side I can’t quite figure out Statistics Canada’s data.  Only a 5% increase on the median value of mortgages on principle residence, a modest increase in credit card debt (from a low base), a decline in median line of credit debt, a decline in student loan debt, a modest increase in vehicle loan debt and declines in other debt – and still Statistics Canada is reporting an overall 26% increase in total debt. I guess my math skills are a bit sketchy these days.

The following chart shows the top line numbers.  Remember these figures are for those that actually hold the asset or debt – not everyone.

networth

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SJ largest IT sector, Freddy largest IT labour pool, Moncton doing fine

Okay,  I posted earlier this evening that Saint John has the largest IT sector measured by the number of people working in the IT sector as a share of total employment.  It was pointed out to me that lots of IT folks work in non-IT sectors, which is true and I have written about this in the past.  When you look at people working in IT occupations (regardless of sector), Fredericton has the highest concentration of IT workers in Atlantic Canada and the urban centre ranks 5th in Canada by this measure.  There are lots of IT folks working in government, for example.  Moncton improves in its ranking because it has fairly large IT shops within its big employers such as Medavie Blue Cross.  Saint John has some of this IT employment within non-IT sectors but not as much as Moncton or Freddy.

So, we can say with certainty that in New Brunswick Saint John has the largest IT sector by employment, Fredericton has the largest IT workforce and Moncton has a strong IT workforce with over 1,700 employed in IT occupations giving it a higher concentration of IT workers than most other urban centres in Canada ahead of places such as Guelph, London and Kingston.

it2

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Have fun with numbers! Everyone can play along!

What do Riverview, New Brunswick and Niagara Falls, Ontario have in common (besides being named after a body of water)?  Saint John, NB has the #1 employment concentration among hundreds of municipalities across in Canada for what industry?

First the ground rules.  This is specific to municipalities not urban centres (CMAs, CAs).  It is based on municipalities with at least 10,000 in the employed workforce (you have to have some reasonable denominator) and it is based on Location Quotient (LQ) values which calculate employment concentration relative to the national economy.  For example, Halifax has a Retail Trade LQ of 1.04 meaning it has four percent more employment in retail trade compared to Canada as a whole and adjusted for the size of the labour market.

What to Riverview and Niagara Falls have in common?  They are the only two municipalities in Canada to top the employment concentration chart in two separate two-digit NAICS industries.  Riverview is tops in retail trade and administrative and support services (tied with Saint John) and Niagara Falls is tops for both arts/entertainment and accommodation/food.  Just to be clear – of the hundreds of municipalities in this list Riverview and Niagara Fall are on top of two each out of 17 industries.

At this point it is important to point out that employment by industry figures from the Census are based on where you live not where you work.  Riverview is home to a ton workers in  retail trade and administrative and support services – two large sectors of the Greater Moncton economy.  If you want proof that the Moncton-Riverview-Dieppe economy is highly interdependent – giddy up.

Saint John, as already stated, is tied for the highest concentration of administrative and support services employment in the country.  Where is Moncton, you might ask?   It seems that many contact centre workers (administrative workers) are showing up in Finance and Insurance which makes sense.  All three municipalities Moncton-Riverview-Dieppe have a much higher Finance and Insurance LQ than Saint John – and all well above the national average but not as much as Markham!

The full list is below.  A few other surprises on this list and some obvious choices (e.g. Brampton).

If you want this kind of analysis at a deeper level, 4 digit NAICS – it is available at the urban centre level.  I just don’t have the time today to look.

The #1 municipalities in Canada for employment concentration (minimum 10,000 employed workforce and LQ value in brackets).

NAICS 11 Agriculture, forestry, fishing and hunting –  Leamington (6.96)
NAICS 21 Mining, quarrying, and oil and gas extraction  –  Wood Buffalo (20.27)
NAICS 22 Utilities  –  Rouyn-Noranda (3.68)
NAICS 23 Construction –   Saint-Lin–Laurentides (1.98)
NAICS 31-33 Manufacturing  –  Le Granit (3.32)
NAICS 41 Wholesale trade  –  Dollard-Des Ormeaux (2.44)
NAICS 44-45 Retail trade  –  Riverview (1.43)
NAICS 48-49 Transportation and warehousing  –  Brampton (2.74)
NAICS 51 Information and cultural industries  –  Saint-Lambert (2.56)
NAICS 52 Finance and insurance  –  Markham (2.42)
NAICS 54 Professional, scientific and technical services  –  West Vancouver (3.86)
NAICS 56 Administrative and support services and waste management –  a tie Saint John (2.08) and Riverview (2.08)
NAICS 61 Educational services  –  Waterloo (2.00)
NAICS 62 Health care and social assistance  –  Thunder Bay (1.55)
NAICS 71 Arts, entertainment and recreation –   Niagara Falls (3.98)
NAICS 72 Accommodation and food services  – Niagara Falls (2.85) 
NAICS 91 Public administration  –  Yellowknife (4.28)

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Encouraging scale – towards global competitiveness

I have been thinking a lot lately about competitiveness – specifically how New Brunswick firms can compete in an increasingly globalized economy.  Traditionally this was mostly a concern related to exporters but now even firms 100% focused on local markets have to compete with firms from around the globe for local markets.  Twenty years ago if you wanted to buy business cards you went to the local printer.  Now you order online from a firm based in Prague.

One of the ways our firms could drive competitiveness is by getting bigger – specifically through mergers and acquisitions.  The old term – economies of scale – does apply up to a point.

Take the example of translation services.  New Brunswick is an officially bilingual province.  We pump out university graduates with translation degrees.  We have a domestic market for translation worth $10s of millions per year.  This should be a sector where we have a distinct competitive advantage, right?

There are 72 translation firms in New Brunswick showing up in Statistics Canada’s Canadian Business Patterns.  61 have no employees.  11 have employees but 10 of those have less than five employees.  Only one hast 50-99 and none have more than 100 employees (as of December 2016).

Manitoba, a province of roughly the same size and a much smaller Francophone community, has three translation firms with between 5-10 employees, 2 between 20 and 49 employees and 1 with 50+ employees.

How is this possible?  We could engage in a long conversation about the translation sector – about how it is comfortable serving the local market in New Brunswick and has no real interest in exporting – why would it when it is almost exclusively freelance translators with a full book of business?  Why don’t we see a ‘Cooke Aquaculture’ of translation?    Where is the Gerry Pond of translation?   Where are the ADIs of translation?

If we were to do a full review, we would see that we have dozens of industries where there could be far more potential for exports but the firms are comfortable serving local markets and have little interest in scale.

So, in the words of Nikolay Chernyshevsky and his devotee VI Lenin, what is to be done?

Ideally for all of our export potential sectors we would have champions emerging – through M&A and just brute force of business development.  The tiny firms remain and feed on the scraps but the sharks get out there and compete in the open water.

Of course, governments don’t particularly like sharks.  They prefer minnows.   We have much lower tax rates for minnows.   The minute you get a little scale – bang – we double your tax rate.  If you need $100,000 – ACOA, CBDC, ONB, NRC – all lined up with bags of cash.  If you need $5 million – you had better be headquartered in Ontario.

What if we actually lowered corporate tax rate on firms as they grow?   Sure, when the rise to the level of global, evil empire behemoth we can tax them to death but to help firms get in the $50 million – $100 million sales range why not lower their tax rate?

Is there something we can do with capital markets policy to encourage tie-ups?  How about by bringing in more immigrant investment?

How about just ringing the fire alarm a bit?  Our PR/GR marketing industry has essentially collapsed in the past 15 years.  In some alternate universe we could have had a bunch of mid-sized creative shops doing cost competitive marketing out of New Brunswick.  In, I stress, an alternate universe.

The other thing is basic math.  A lot of NB business owners seem to think 100% of $100k profit is more than 25% of $2 million in profit.  They aren’t giving away even a portion of control even if it leads to scale, competitiveness and growth.

I’ll leave you with this.  There are lots of industries in New Brunswick that are quietly consolidating.   National and international firms are coming in and scooping up insurance brokerages, funeral homes and optometrist firms, among others.  These firms will benefit from scale but the ultimate decision making and control will be well beyond the borders of New Brunswick.  It might be nice if a few New Brunswick firms build global scale – from here – headquartered here.

 

 

 

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New Brunswick: Don’t be distracted by Trump

I had hoped the mania over Donald Trump would die down over time.  For more than a year after his election my Twitter and Facebook feeds (not so much LinkedIn) were so cluttered with fairly trivial Trump stories that I was forced for the first time to unfollow multiple people.

We need to understand how the U.S. president and his policies will impact Canada and New Brunswick, no question, but endless discussion and incredulity about his tweets and demeanor as well as White House intrigues are just distractions from the real issues we need to put in the window these days.

The Chief Economist at the EDC this week claims that New Brunswick is most ‘exposed!’ to Trump and NAFTA negotiations (his proxy is share of international merchandise exports) among the 10 provinces.  I take issue with this on a number of fronts.  Most of our merchandise exports to the U.S. are commodities such as motor vehicle gasoline, lobster and forest products.  These are certainly part of the NAFTA conversation but a thoughtful analysis, I think , would find that provinces with manufactured exports – and complex interconnected supply chains are far more at risk – such as the auto manufacturing sector in southern Ontario.  We certainly should be concerned about softwood lumber tariffs but the current high prices for wood mitigates this somewhat.

I am more worried about inter-provincial exports – and specifically services exports.  EDC doesn’t really care about this because they focus on international exports and the other complication is the lag in inter-provincial export statistics.

For export-intensive sectors we can look at real GDP trends to get a sense of performance.  New Brunswick’s ICT sector more than doubled its real GDP contribution between 1997 and 2011 – and has flatlined since (although the last two years have ticked up).  Our architectural and engineering services GDP more than doubled between 1997 and 2009 and has dropped since.  Our administrative services GDP increased by 174% between 1997 and 2009 and has dropped by 13% since.

The biggest threat to the New Brunswick economy may actually be helped by Trump.  We need to see a substantial increase in the number of young people moving here to bulk up the labour market, fill current gaps and provide the horsepower (people power?) for future economic growth.

I’m not suggesting Trump and Trumpism doesn’t matter.  I am suggesting we relegate most of it to the same part of our brain that likes dancing cats on YouTube or the latest Hollywood scandal – hopefully 2% of your time and Twitter feed.

Let’s spend most of our time – at least when it comes to economy matters – thinking about attracting talent, where the next round of ambitious entrepreneurs will come from, how we can boost our productivity as a province and other matters of importance.

 

 

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Inching towards the bilingualism 2.0 conversation

 

I have historically be reluctant to weigh in on the issue of ‘bilingualism’ in New Brunswick.  It can be a polarizing subject with some believing we haven’t done enough and others suggesting it has gone too far.  But it’s an important issue so what the heck – I’ll throw out a few ideas.

I think it is time to have a public conversation about bilingualism.  It’s been 50 years since New Brunswick started to take this issue seriously and there hasn’t been much public discussion about it for 20 years – since the CoR came and went.

The vision of bilingualism has several components:

1) To ensure there are ample French language places and spaces across the province.  This point was lost on many English speaking New Brunswickers who thought bilingualism meant that everything should be bilingual – schools, hospitals, cultural spaces, etc.  I had a long debate with a guy one time who said newspapers, radio and TV should be ‘bilingual’. While that, in abstract theory, has some salience, in reality that vision of bilingualism tends to revert to English.  I have Francophone parents complaining their kids are tweeting in English, watching English TV and that English is spoken by many in the halls of high school.   It’s important to have French language places and spaces.   I think we have done a fairly good job at this but I think we should open up the conversation.

2) To ensure that people have access to public services (and hopefully even private sector services) in the language of their choice.  This doesn’t mean everyone speaks French and English but as much as possible we should strive to make this a reality.  There is no question we have made massive strides in this area.

3) To ensure as many as non-Francophones as possible have the opportunity to learn French – at least at a conversational level.   On this point I think we have essentially failed. Decades of official bilingualism.  Decades of putting upwards of 40% and more English kids through French Immersion and decades of government offering French language training to its workforce and the share of the population that indicates on the Census they speak both English and French has actually declined slightly over the last 15 years.

bilingualis,

 

I’m not going to turn this into a long, winding discourse but the number of English only speakers in New Brunswick rose from 407,000 in 2011 to 421,000 in 2016 (this excludes all immigrants except those with a mother tongue English).  Decades of promoting bilingualism and there are fewer English people who claim to have at least a working knowledge of French today than 15 years ago.

What’s going on?  I have theories.  I think our French Immersion graduates are more likely to leave New Brunswick for good after graduation than unilingual graduates.  I know that sounds counter-intuitive because bilingualism is a real asset in New Brunswick.  But, remember, it’s also an asset in Ontario – and, in fact, across the country.

But my biggest concern is that we have not promoted the use of French among English speakers – even those that speak French.

Why can’t UNB offer French language courses so that French Immersion graduates can keep up their French?  If a UNB student took one or two courses a semester in French it would do wonders to keep up their bilingual skills. If it’s a question of French speaking profs – then do a deal with UdeM.  I would say the same for NBCC/CCNB – Immersion graduates should be able to carry on developing their bilingualism beyond Grade 12.

Why not offer some kind of incentives to encourage English people to learn and use the French language?  Even many new immigrants are given the choice – free English or free French lessons but not both.

Anyway, for this is the start of a conversation.  What does bilingualism 2.0 look like?  What does bilingualism 2.0 look like as we look to attract thousands of immigrants?   What does it look like when the number of born-in-NB Francophones is in decline?  Why are the great TV shows and documentaries published in French in New Brunswick not subtitled and promoted to Anglophone New Brunswick?  We need to have separate French language spaces and places – I get that.  But we need places and spaces where Anglophones can use their French language skills.

For me the bottom line is that bilingualism has been a success.  The rise and success of Acadie should be celebrated.  It’s a great story of a minority culture/language thriving.  But we now have to think about the next level.  We must get more Anglophones using their French.  We should start to see French Immersion graduates rising to the heights in government and the private sector.   We should be more creative in the promotion of French among Anglophones and immigrants (how about free and widely promoted French language training for all?).  And even in the school system where I know that a number of kids drop out of French Immersion – there should be a ‘lite’ version such that every child going through the English language education system should come out speaking at least a conversational French.

And for Francophones, don’t automatically shift to English. My wife and kids all speak French.  At restaurants and other venues they can respond to you in French.

 

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Building out a cyber-security cluster

New Brunswick is trying to create a cybersecurity cluster.  It has UNB researchers involved.  It has several corporations involved – anchored by IBM/Q1 Labs.  The government has set up CyberNB with a full team out there hustling to attract firm cybersecurity operations, IT firms, training, certification, etc.

I think there is another round of cybersecurity activity that would complement our existing strengths in business services/back office activity.

I talked recently about Facebook and its need to hire thousands of new staff to ensure its platform isn’t being used for nefarious activities.  This same issue would apply to many online social media and news platforms.

The Economist had an excellent article this week about financial crimes/money laundering and the massive expansion in software that prowls the Internet seeking signs of illicit activity.  This is complemented by a whole industry of firms such as Berlin Risk that make calls and use the old fashioned telephone to support the online activity.  Sound familiar?

If NB is going to do cybersecurity – let’s go whole hog.  Aligning IT, training, back office and customer interaction activity to become a world leader.  We need to attract more immigrants.  We could attract multilingual workers into the cluster bolstering our population with attractive jobs.

In the early 1990s NB was early into the contact centre game and turned it into one of the province’s largest export industries before the larger provinces even noticed.  It is likely too late to do this with cyber as everyone is rushing in.  While Ontario, etc. focuses on AI and algorithms we could focus on downstream content monitoring, interviewing, intel gathering, etc.  I don’t know about you but I’d take 5,000 jobs paying $60k per year over the next 5-7 years.

 

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A little good news, today (tip of the hat to Anne Murray)

Statistics Canada recently released its latest GDP and related figures for 2016 and New Brunswick has performed surprisingly well.  Business capital spending is still very weak but household expenditures are up and overall GDP is up modestly over 2015.  If you combine the GDP growth rates over the past two years – the provincial economy grew by 3.5% – above average among the 10 provinces.  anne

Statistics Canada provides GDP growth by industry – and that shows some important trends.  Again, combining the last two years of growth, transportation engineering construction saw a substantial boost in its GDP contribution (if you think there has been a lot of road construction recently – you are not wrong).  The GDP growth rate from aquaculture and agriculture has been impressive and, give me a high five, the forestry sector seems to be strong again with sawmill and other wood product manufacturing GDP growth strong and even paper manufacturing GDP up 10% over two years.  Let’s hope the U.S. duties don’t derail this success.  But my favourite growth sector has been ICT which witnessed a 7% GDP growth over two years but the most important component computer systems design and related services is up 44%.  Telecommunications GDP is down again by 1.5% following a long term trend downward.

 

anne1

 

 

There are some worrying sectors.  R&D GDP growth has been modest.  Accommodation services GDP – the proxy for tourism – is only up 0.5% over two years.  The feds keep whittling away their defence spending in New Brunswick – the GDP contribution is down 15% since its high in 2010.  The contact centre industry (admin services) GDP continues its slow burn but it is only down 10% over the last decade.  This is better than many other provinces.

Our advertising and PR sector continues to collapse.  There’s not much to say about this except it is disappointing.

The biggest concern is architectural, engineering and related services.  The GDP contribution has dropped 13% in two years.  The national and international firms that bought out NB firms – may be retrenching out of NB.

anne2

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Putting the old fogies to work?

For some reason there has been an increase in media reporting on the plight of older Canadians/New Brunswickers in recent weeks.  There are stories where the journalist (probably in his/her 20s) decries the fact that a 72 year old has to ‘work’ to survive.  As I get closer to my dotage I think this narrative needs a rethink.

Back in the mid-1990s I had a colleague who was likely in her early 50s and she had one of those multi-year calendars on her wall with her retirement date red circles 4+ years hence.  And she wasn’t shy to talk about how she was looking forward to retirement and the life of leisure it would afford.

My view then – and now – if you want a vacation take a vacation.  Take a long vacation.  But to be eager to retire and drop out of the workforce permanently – in your early 50s – is strange to me.  The concept of retirement at 65 started to take serious root when people were living, to around 70 years old (actually earlier but some of that mortality was due to war).  Now, people routinely live into their 80s and even 90s.

I know a couple who both were public servants and both retired in their mid 50s on one of those early retirement schemes to cut the short term deficit by ballooning long term taxpayer costs.  They are both in their mid-70s now and going strong.  It is highly likely they will have been drawing a pension longer than they worked (30ish years).

My father retired on the dot when he turned 65 because he wanted to make the job available for a young person.

We need to change the narrative here folks.

New Brunswick has the second lowest labour market participation rate among the 10 provinces among those 55+.  This is not a trivial difference.  If New Brunswick had PEI’s labour market participation rate there would be over 17,000 more people in the workforce across the province.

oldies

I hear many reasons for this:”it’s easier to live in NB just on your retirement income”, “EI props up older workers too”, “older New Brunswickers don’t want to work the jobs on offer”, “older New Brunswickers aren’t mobile – they can’t move out of their town because they can’t sell their house or because they have a spouse working or maybe they just prefer not to move” ,etc.

It’s no coincidence the provinces with the highest labour market participation rates among those 55+ are the provinces with large farming communities.  For most farmers 65 is just another year.

I want to be clear that I don’t think we should force seniors to work through aggressive public policy.   We live in a free society and people should be able to make choices about how much they want to work based on how much they want to earn as income.

The nub of the argument is simple.  If we make public pensions lucrative enough that everyone can ‘retire’ in their late 50s or early 60s I think it would be a mistake.  I hope to be working as long as I can.  Hopefully as we age we can expand the definition of work – it doesn’t have to be an 8 hour day – every day.  It can be part time, part year, gig-based, etc.

I’ll end this on one final point.  We often times co-mingle the debate about poverty and older workers – I think to our detriment.

When I read about the 73 year old lady providing in-home care to a 90+ year old person I didn’t read that as a negative. My first thought was good for her.  She’s earning extra money and helping out a truly older New Brunswicker who needs it.

If we (or the 20ish journalist) cast that story as a tragedy – I think it’s a mistake.

I say good for you.

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