The four western provinces play a major role in Canada’s success as they account for close to 40 per cent of the Canadian economy. Although the western economy has led the country in growth over the last decade, it faces significant challenges and many Westerners are feeling the anxiety of economic uncertainty.
One of the West’s economic strengths lies in natural resources. Not only does it have world-leading reserves of oil, potash, and uranium, but Western Canada also has over 107,000 farming operations, representing 85 per cent of Canada’s farmland.
Western Canada’s economic potential extends well beyond its natural resources. Entrepreneurs, businesses, and researchers are working together to pioneer innovations that tackle common goals. Innovative clusters are important for both emerging industries and transforming traditional areas of the economy. These clusters are creating western expertise in emerging sectors, such as clean technology, digital industries, and health analytics.
Getting western products to market is vital. Ports along Canada’s West Coast handle the coming and going of products in the fast-growing Pacific markets. In 2018, western merchandise exports to Asia totalled nearly $40 billion, making up 63 per cent of Canada’s total exports to the region.
People come to the West for new opportunities. The western provinces are home to a third of the national population, more than half of all Indigenous Peoples in Canada, and over 40 per cent of its recent immigrants. Western Canada is also home to more than 400,000 small and medium-sized businesses, which account for 92 per cent of western private sector employment.
Boom and bust cycles are taking their toll on the West. Much of the western Canadian economy is struggling and there are fundamental challenges to economic growth. Lower commodity prices, reliance on trade with the United States, and trade actions by other countries are affecting western exporters. Also limiting western Canada’s export market diversification are transportation bottlenecks in areas such as pipelines, railways, and ocean shipping.
Even though the West has a growing, young, entrepreneurial, and skilled workforce, there is a need to improve the participation of key demographic groups, including Indigenous Peoples, women, and youth. For example, Indigenous youth are the fastest growing population in the West, but continue to face higher unemployment rates (18 per cent) compared to non-Indigenous youth (10 per cent).
In another example, businesses that are majority-owned by women account for just 15 per cent of SMEs and tend to have fewer employees. There are also less women in higher-earning occupations leading to a higher gender wage gap in the West than nationally.
Over half of the West’s population is under 40 and young western Canadians entering the labour market are least likely to maintain job security during economic downturns. Youth unemployment rates have also increased in traditional sectors such as oil and gas, and construction, because of localized economic slowdowns.
As a result of these challenges, investment in Western Canada has dropped significantly. Over the last 5 years, capital expenditures in the West have fallen by nearly $40 billion.
By January 2020, western Canada’s overall unemployment was only slightly higher than the national average, but regional rates remain high in many parts of Alberta and Saskatchewan, along with northern Manitoba. Recovery has been slow and some are still feeling the effects of a lagging economy. As of January 2020, 386,900 people across the western provinces who were looking for work are unemployed. The West’s share of regular EI beneficiaries across Canada remains above 25 percent, higher than any point in the 20 years prior to 2015. Finally, earnings growth for western Canadians is also falling behind other areas of Canada.
Now is the time to diversify and build a more resilient economy. One where innovative businesses grow and western Canadian families and their communities thrive. Exciting opportunities are being explored across the West to spur growth in new sectors, while also transforming traditional ones. For example, with growing international demand for safe and nutritious food, western agri-businesses have the potential to fuel Canada’s GDP growth over the coming years. Western Canada must also find ways to unlock the potential of Indigenous Peoples, women, youth, and skilled immigrants. Success in an increasingly competitive global economy depends upon capitalizing on all of the West’s assets.
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