Whose jobs face transition risk in Alberta? Understanding sectoral employment precarity in an oil-rich Canadian province

Abstract

ABSTRACT Labour markets of oil-exporting regions will be impacted by a global transition to low-carbon energy as oil demand reduces to meet the aims of the Paris Agreement. Together with direct job losses in the oil and gas industry, indirect employment effects on other sectors should also be considered to ensure a just transition. We explore these direct and indirect employment impacts that could result from the low-carbon transition by analysing the effect of oil price fluctuations on the labour market of Alberta, a Canadian province economically reliant on oil sands extraction. We employ a mixed methods approach, contextualizing our quantitative analysis with first-hand experiences of career transitions using interviews with oil sands workers. We estimate a vector autoregression for province-wide insights and explore sector-specific dynamics using time series regressions. We find that the price discount on Canadian oil sands, which is determined by local factors like crude oil quality and pipeline capacity, does not significantly affect employment, while the global oil price does. This finding puts in doubt claims of long-term employment benefits from new pipelines. We find that at a provincial scale, oil price fluctuations lead to employment levels also fluctuating. Our analysis at the sectoral level shows that these job fluctuations extend beyond oil and gas to other sectors, such as construction and some service sectors. These findings suggest that the province’s current economic dependence on oil creates job precarity because employment in various sectors is sensitive to a volatile oil market. Furthermore, due to this sectoral sensitivity to oil price changes, workers in these sectors may be especially at risk in a low-carbon transition and warrant special attention in the development of provincial and national just transition policies. Transitional assistance can support workers directly, while economic diversification in Alberta can reduce reliance on international oil markets and thereby ensure stable opportunities in existing and new sectors. Key policy insights Decreased global oil demand is likely to create employment risks for workers in Alberta and other fossil fuel producing regions of the world. Current economic dependence on oil sands extraction in Alberta leads to job precarity across sectors, including in those seemingly unrelated to extraction. Proactive economic diversification in anticipation of the low-carbon transition could reduce precarity by mitigating the effects of oil price fluctuations on employment levels in the long term. Workers in sectors with higher oil price sensitivity (i.e. oil and gas, construction, professional services, manufacturing, accommodations, and food services sectors) could be prioritized in coordinated just transition policies at the local, provincial, and national scales. The details of career transitions gleaned from our interviews suggest that tripartite social dialogue would contribute meaningfully to just transition policy development.