Saskatoon economic forecast strong, but labour shortages present growing pains

Saskatoon’s economic growth forecast is sunny heading into next year, but that growth doesn’t come without pains.

The Conference Board of Canada is predicting that Saskatoon’s economy will lead the nation, outpacing every other major city in Canada in 2023. The forecast calls for a growth of 7.2 per cent in 2022 and 3.9 per cent next year.

Alex Fallon, the CEO of Saskatoon Regional Economic Development Authority (SREDA), is encouraged by that news. He called the Conference Board of Canada one of the country’s leading think-tanks on the economy.

Fallon said traditional industries like agriculture, mining, and oil and gas are helping drive that growth, fuelled by significant demand around the world for Saskatchewan exports.

That growth is positive, but Fallon said it does “create challenges” within the economy, too.

“In a growing economy, it’s never perfect,” he said.

For one, a shortage of workers is making it harder for businesses to hire and retain staff. Fallon said that means employers, in some cases, will have to pay employees more to stay in their roles — a cost companies put back on the consumer through increasing prices, contributing to inflation.

With so many jobs and opportunities right now, it can also be harder for companies to keep their staff.

In the long term, Fallon said we’ll see that impact on inflation balancing out and more skilled workers making their way to the province.

“In a tight labour market and when there’s low unemployment — (it’s) hard to recruit (and) hard to hire people — often more people then move to Saskatchewan (and) move to Saskatoon because there’s a good opportunity to get jobs,” he explained.

Despite those concerns, Fallon sees the long-term result as positive with the growing economy in Saskatoon.

SREDA focuses on business attraction — trying to attract more companies to Saskatoon to bring jobs here, as well as talented workers for a variety of industries — and a program that encourages entrepreneurship in Saskatchewan to continue to grow the economy.

Seeing a forecast for growth over the next year — rather than a sharp, short-term spike — is something that positively impacts businesses.

“That helps companies with planning. They can make longer-term decisions to keep staff and have some confidence in the future,” Fallon said.

It’s a psychological safety net for consumers, as well.

“They feel more confident about their job (and) they feel more confident about the economy. Maybe then they’ll look to buy that vehicle for their son (or) daughter. Maybe they’ll look to move house (or) do some renovations,” the CEO explained.

Fallon said forecasts like these are important, but also highlighted the importance of remembering it is only a prediction right now, and the true outcome might not be exact.