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.
Issue link: http://digital.canadawide.com/i/1490198
JANUARY/FEBRUARY 2023 BCBUSINESS.CA 47 ISTOCK Jill Tipping, president and CEO of the BC Tech Association, notes that tech companies both large and small still name talent sup- ply as the biggest constraint on their growth. While some notable local firms have seen layoffs, Tipping says that 80 percent of her organization's 11,000-plus members are reporting revenue growth of at least 10 per- cent. Another 78 percent have hired outside of B.C. due to a lack of available local talent. Right now, says Peacock, "we have more job vacancies than unemployed persons." According to Statistics Canada, he notes, there are roughly 160,000 job vacancies in B.C., and only 145,000 unemployed persons to fill them. "That's sort of unprecedented— we haven't seen that before in B.C." In Peacock's estimation, there will be a softening in the job market as the economy slows. Unemployment levels may spike up, but only to a number like 6 or 7 percent. That would still register below the figures typically seen in a recession. "Some of the tightness in the labour market will ease," he predicts. I M M I G R AT I O N I S A L S O G O I N G T O B E A FA C T O R A big reason for that easing—and a potential brake on a bigger downturn—is the sheer number of people the province has been taking on lately. "B.C. welcomed more than 100,000 newcomers in 2021, more than any year since 1961," says Bridgitte Anderson, president and CEO of the Greater Vancouver Board of Trade. Of those, Anderson estimates that some 33,000 were from other Canadian prov- inces. "The influx of newcomers is expected to continue at a record pace in 2023 and beyond," she says. "This will mitigate our labour force crunch and help minimize the impact of a poten- tial downturn in the wider economy." Peacock agrees. "You have to get a lot of weakness in other sectors to get an outright contraction when you have this many people flowing into the country and province," he says. Statistics Canada reports that the province has seen more than 14 percent growth in population over the last 10 years. "In per-person terms, growth and GDP will be negative. It will feel recession-like," says Peacock. "But overall, the population lift and commodity, energy and mineral prices will provide a cushion for B.C." T H E H O U S I N G M A R K E T L O O M S L A R G E , A S A LWAY S Of course, where those people will be housed is a question in itself—another in a growing list of concerns that have racked up over the B.C. housing market, which has long surpassed the weather in terms of its efficacy as a conversation generator in the province. Interest rates have been rising at a his- toric pace, and while individuals have certainly been feeling that pinch, Peacock argues that the economy itself hasn't fully absorbed those unprecedented rises yet. "It can take as long as 18 months for the impacts of these interest rate hikes to trickle through the economy," he says. "Some of that is already being felt with slowing housing sales, but I think the full force shows up in 2023." Alex Hemingway, senior econo- mist and public finance policy analyst with the B.C. office of the Canadian Centre for Policy Alternatives, says that the impact of rising rates is hurting the real estate industry when it comes to hous- ing construction and developer financing: "This is alarming, given that we already face a severe housing shortage and were not building enough housing even prior to the rate hikes." He argues that a failure to keep building would result in higher rents, something households can't afford and a factor that may further hinder businesses struggling to recruit workers. "The provincial and federal govern- ments need to step up their game and mas- sively increase investment in dedicated affordable housing," Hemingway says. "They can afford to do so, even in the cur- rent uncertain economic environment." The Board of Trade's Anderson agrees that the government needs to take a more active role in the housing crisis. "Rising interest rates curtailed record-high home prices, but affordability metrics have only gotten worse," she says, emphasizing the need to increase housing starts. "Look for Premier David Eby to follow Ontario and some U.S. states in taking a more active role in land use policy." Anderson notes that campaign prom- ises from new Vancouver mayor Ken Sim included expedited permitting for a vari- ety of housing, but, like Hemingway, she worries that rising costs will impact the construction sector's ability to bring more housing units online. T H E F O R E S T R Y S E C T O R C O U L D TA K E A C U T; O T H E R S H AV E R E A S O N T O B E O P T I M I S T I C After providing a massive boost for the economy over the last few years, the forestry sector might be in for some leaner times. Pea- cock notes that changes to regulatory policies will likely result in a reduction in fibre supply and the number of trees for harvest, espe- cially in Northern B.C. On top of that, lumber prices, which had soared to record levels, are ECONOMIC OUTLOOK 2023