December 2019 - January 2020 Best Cities for Work in B.C.

With a mission to inform, empower, celebrate and advocate for British Columbia's current and aspiring business leaders, BCBusiness go behind the headlines and bring readers face to face with the key issues and people driving business in B.C.

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Page 49 of 71

50 BCBUSINESS DECEMBER/JANUARY 2020 Low interest rates coupled with a strong B.C. job market—unemployment stood at 4.8 percent in September—should mean high consumer con- fidence. But Central 1 hasn't seen much action on the retail front lately, Yu says. It forecasts retail sales to end 2019 up just 0.5 per- cent, a flat performance compared to the previous year—but to rebound by 4 percent in 2020. Housing starts could finish 2019 up some 7 percent, at 44,000, then plunge 16 percent in the coming year, according to the credit union. That 37,000 total would still be an elevated number, notes Yu. The bottom line: Central 1 expects provincial real gross domestic product to grow about 2 percent in 2020, with help from LNG Canada and other liquefied natural gas projects. That continues a downward trend from its forecast of 2.2-percent GDP expansion for 2019, ver- sus a 2.4-percent gain the previous year. "Overall, it's actually not a bad story for the B.C. economy," Yu says. "Services, technology, tourism—all of those sectors are still, in our view, quite strong." Jock Finlayson of the BCBC, who mostly agrees with Yu's assessment, points out that Morgan Stanley recently became the first big U.S. investment bank to call for a 2020 recession in that country. He believes an American downturn is overdue, citing "an incompetent and erratic leadership, which I think is chipping away at business confi- dence, on top of the trade war." With the global economy slowing, Canada and the U.S. are headed for choppy waters, Finlayson warns. "We've got to get ready for what's going to be a pretty unforgiving external environ- ment in 2020." For B.C., Finlayson identifies two main bright spots. The first is an often- overlooked strength: at 1.5 percent annu- ally, population growth far exceeds that of most provinces and U.S. states. The second is non- residential construction, both private and public. But in 2020, the BCBC expects housing starts to drop almost 14 percent, to 34,500. With Canada struggling for 1.6-percent real GDP expansion in the year ahead, the group forecasts, B.C. will grow 2.2 percent. The CCPA's Iglika Ivanova points to provincial government investment in infrastructure, from the Site C dam to housing to transportation. She's also waiting to see if Victoria will deliver on its pledge to add 22,000 licensed child-care spaces by 2021. "That will have an impact on labour supply as well, enabling more parents to work and to return to work faster," Ivanova says. "That's positive in terms of the environment that some businesses are facing in recruiting workers." Help wanted, forever There was widespread agreement that B.C.'s tight labour market is only getting worse. Erica McGuinness, whose Vancouver-based Sequeira Partners is a mergers and acquisitions adviser to small and medium-sized businesses, says much of her clients' growth challenges revolve around finding employees. "This past year, it's become much more prevalent." Businesses should brace for more of the same. Between 2018 and 2028, the province will have roughly 903,000 job openings, according to the provincial Labour Market Outlook. Although young people starting work, immigrants and migrants from other provinces will fill 85 percent, that still leaves about 130,000 jobs. Yu sees a chance to recruit highly skilled people who have visited B.C. on work visas. For the BC Chamber's Val Litwin, the Provincial Nominee Pro- gram and more temporary foreign workers are two ways to help fill the gap. But employers will have to get used to relative labour scarcity, Finlayson says. "The demographic shift we're going through is going to constrain labour supply for as far as the eye can see, even with high levels of immigration and some other things that are putting us in a better position than a lot of other jurisdictions." One reason B.C. lacks even mid- tier managers is that so many of its companies are startups, leaving nowhere to gain such experience, Iva- nova says. Proximity to the U.S. is another recruitment obstacle: "Even in fairly entry- level tech jobs, a lot of people can go across the border and make much higher wages and have slightly lower housing costs." Rather than turn to the government for help, companies should try leveraging talent and technology to ease their staffing woes, Finlayson suggests. But in this new labour environment, he says, even finding warm bodies will be tough. For example, although hundreds of thousands of North American truck drivers could eventually lose their jobs to automation, today there are 75,000 vacancies for long-haul opera- tors. "Technology's going to change the way business is done and the way work is performed, but we've got a big challenge around this basic labour supply, which I don't see as getting better." Advantage: Metro Vancouver Asked which regions of the province will enjoy the most economic growth in 2020, Yu says the Northwest is already seeing some ben- efits from LNG projects. In the Northeast, which is reeling from the forestry slump and low natural gas prices, a rebound largely hinges on whether that construction sparks more drilling activity. In the Cariboo, the southern Interior and elsewhere, mill clo- sures will keep taking their toll. But in Central 1's view, the forestry industry's troubles aren't cyclical, thanks to a pest that destroyed half of the province's merchantable timber. "It's largely structural problems that they'll be dealing with for the next 20, 30 years," Yu says. "Because as much as it is about low prices and high log inputs 50 BCBUSINESS DECEMBER/JANUARY 2020 "THE DEMOGRAPHIC SHIFT WE'RE GOING THROUGH IS GOING TO CONSTRAIN LABOUR SUPPLY AS FAR AS THE EYE CAN SEE, EVEN WITH HIGH LEVELS OF IMMIGRA- TION AND SOME OTHER THINGS THAT ARE PUTTING US IN A BETTER POSITION THAN A LOT OF OTHER JURISDICTIONS" –Jock Finlayson, Business Council of British Columbia

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