On October 24th, the Alberta Government presented its first budget since the election in April. The Government expects real GDP growth to improve from 0.6 percent in 2019 to 2.7 percent in 2020. Provincial revenues are budgeted to be $50 billion in 2019-20, increasing to $57.5 billion by 2022-23. However, expenditures will continue to exceed revenue until the fiscal year 2022-23, resulting in a total debt of $93.3 billion. To achieve this balanced budget in the fiscal year 2022-23, the Government will cut spending by 2.8 percent over the four years.
The Government’s Budget documents contain a detailed economic outlook that underpins the assumptions made in the fiscal plan. Of note for HR Professionals, the Government projects that the Labour market will strengthen over the next four years. Here are the highlights:
Growth from 0.9 percent in 2019 to 1.6 percent in 2020 and then 2 percent each year after that
The average weekly earnings are anticipated to grow by 1.8 percent this year and 2.8 percent in 2020.
The unemployment rate is also forecasted to be slightly higher this year due to modest employment growth coupled with an increase in the labour participation rate.
In their campaign platform, the UCP pledged to bring a strategic lens to skills gaps within the Alberta labour market. In keeping with this commitment, Budget 2019 includes funding for several investments in skills development and training:
Over $11 million for schools to work with CAREERS: The Next Generation – an organization connecting students with apprenticeships and skills that will lead to high-paying jobs and rewarding careers
It provides $10 million for Women Building Futures to encourage women to enter the trades
Two million dollars over four years for Skills Canada Alberta to help young Albertans build their technology skills and make connections on the national and world stage
These funding priorities demonstrate that the Government acknowledges the need to invest in training and teaching Albertans the skills needed to fill current and future job vacancies.
Budget 2019 provides $10.7 billion for grants to support post-secondary institutions, which represents a 5% reduction compared to the previous fiscal year. The Government is explicitly challenging advanced education institutions to be more responsive in their program offerings to future market needs and skills shortages in the province. We expect that post-secondary institutions will increase their focus on engaging with employers.
The Government has also created a Skills for Jobs Taskforce that will provide recommendations on how to:
Increase awareness of the value of skilled trades careers and strengthen enrolment in apprenticeship programs
Change student and public perception, so apprenticeship education is seen to be as valuable as a university degree
Expand the apprenticeship model to other careers and occupations
The budget allocates $2.5 million in 2019-20 to support the foreign qualification recognition activities of the Alberta Advantage Immigration Strategy. This focus on international qualification recognition should have a positive impact for employers looking for skilled workers to fill vacancies.
Employers that have relied on the Summer Temporary Employment Program (STEP) to support summer jobs for students will need to seek out alternative funds as this program will not continue into 2020. The Ministry of Labour and Immigration also intends to reduce various grant programs to save over $45 million over four years. These reductions will allow the Ministry to achieve a one percent decrease in spending in 2022-2023 compared to actual 2018-19 operating expenditures. The Ministry of Labour and Immigration plans to review the Workers’ Compensation Act. This review is expected to include all the related entities of the Board.
HR Professionals in the public service will be relied on to maintain employee engagement at a time where the public sector workforce will experience reductions, primarily through attrition. Over the next four years, the size of the public sector workforce will be reduced by 7.7 percent, with the Government explicitly stating that the management-to-staff ratio will decrease. In the 2019-20 fiscal year, the Government plans for a net reduction of 824 Full-Time Equivalents (FTEs) across Government Departments and further reductions of 724 FTEs across agencies, boards, commissions and other provincial government entities, such as Alberta Health Services. These workforce reductions are estimated to result in saving $552 million in compensation costs by 2022-23.
In summary, the Government sought to maintain funding for the core ministries of Health, K-12 Education, Children Services, and Community and Social Services through Budget 2019. As a result, cuts were made to Post-Secondary funding and across other government departments. These ministries will need to make tough decisions to achieve the 2.8 percent reduction in spending by 2022-23.