Potash firings will affect workers more than province
announcement of 440 layoffs in Saskatchewan is a big blow for the families and
communities affected yet the impact won’t be felt as strongly by the province.
“While the employment loss is an impact, the 440 jobs that are lost in Saskatchewan are not a large part of our total employment. Our total employment is over half a million so those 440 jobs represent less than one tenth of one per cent of our Saskatchewan labour force,” Rose Olfert, professor at the Johnson-Shoyama Graduate School of Public Policy at the University of Saskatchewan, said.
“That is not to minimize the negative impact on the individuals in the communities but for the provincial economy the employment alone probably isn’t a really large impact.””
While potash resource revenue only accounts for about 3.5 per cent of the provincial budget, that’s a significant sum of money, Olfert said.
“When we lose some of that revenue—and it is not entirely clear what the impact of this particular price drop is going to be because it is always a price and quantity calculation. It could be as much as one half of one per cent of provincial government revenues. In percentage terms it doesn’t sound like a lot but in dollar terms, it could be something like 45 million dollars.”
“It’s still only 3.5 per cent,” she said, adding the revenue side of the provincial budget is more diversified than just potash. Resource revenues include oil and gas, potash and uranium. Employees and corporations in those industries pay income taxes.
Saskatchewan has become fond and attached to resource revenues, sometimes forgetting it can be volatile. Olfert said long-term planning cannot be based on resource revenues seeing continuously higher prices.
“That’s the nature of resource-based economy. That’s why it is called a boom and bust economy. Just as there is a boom, there is almost inevitably followed by a bust,” she said.
The multiplier effect would suggest that for every job lost, there would at least one other job lay off someplace else.
“We may see some of that as well,” she said. Those jobs would likely relate to where those 440 employees were spending their income, she said.
Olfert said she believes Wall when he said the potash industry is healthy.
“I don’t think there is any reason to suspect that it is not… There is no reason to think that Saskatchewan is not as competitive as other producers would be. It is just that the dependence on these natural resources and these natural resource revenues has these risks associated with it. That’s just the nature of commodity prices,” Olfert said, adding she doesn’t know if Saskatchewan has a choice to be so dependent on resource revenues.
Follow on Twitter: @karinyeske