NUNAVUT
Nunavut ranks high across most economic indicators in the 2014 Conference Board of Canada survey and ranking of provinces and territories, with one distinct exception.

Nathaniel Mapsalak, a general labourer, hammers away at the construction site of a new apartment building being built in Repulse Bay by Naujat Co-operative Ltd. for the Nunavut Housing Corporation. Training the local workforce and encouraging entrepreneurship in Nunavut may be the best way for the government to connect the local labour force to the territory's strong economic opportunities. - NNSL file photo

According to the conference board, the territory leads the North in terms of real GDP growth (GDP adjusted for inflation) at 10.5 per cent in 2013. Nunavut also shows strong employment growth (6.9 per cent in 2013) and labour productivity (where labour productivity is understood as relationship between hours worked and the value of output from those hours).

An anomaly does jump out when Nunavut’s unemployment rate is brought into the picture. With a 2013 unemployment rate of 13.5 per cent, Nunavut gets a “D-” from the conference board.

At 13.5 per cent unemployment, Nunavut finds itself in the company of the worst performers in the world. Of all countries the conference board compared Canada and its provinces and territories to, only Ireland ranked lower.

Normally, a high unemployment rate has a negative effect on GDP performance. In Nunavut, strong GDP growth is coupled with high unemployment.

The conference board explains this in terms of challenges the territory faces with non-resident employment, largely in the resource sector.

“Much of (Nunavut’s) economic growth is not produced by workers who live in the territory,” said Marie-Christine Bernard, Conference Board of Canada associate director for provincial and territorial forecast services.

“Many workers come from the south, from Quebec and from Ontario. That’s why you still have a high unemployment rate,” said Bernard.

Essentially, Nunavut has strong GDP output without a corresponding bump in resident employment.

“That’s one of the challenges,” said Bernard. “You have a lot of economic opportunities, but you also have challenges in terms of labour not having the right skill sets (for those opportunities).”

Further research by Richard Dixon, executive director at the Centre for Natural Resources, Energy and Environment at the University of Alberta School of Business, largely confirms conference board findings, but adds more detail to the labour situation in Nunavut.

According to Dixon, addressing the discrepancy between strong GDP growth and high unemployment is the conversion of non-resident jobs to resident jobs.

The labour market in Nunavut, Dixon says, is concentrated in businesses that employ between 50 and 100 people. These medium-sized companies account for 21 per cent of all employment in Nunavut. This is more than 2.5 times the percentage of workforce the same business category employs in the NWT and the rest of Canada.

“Nunavut is dominated, like no where else in Canada, by the medium-sized company,” said Dixon.

The implications of this are important, as medium-sized companies are the ones best positioned to handle the expense and logistics of a non-resident workforce.

“You’ve got medium-sized companies coming into Nunavut and providing employment,” said Dixon.

“They do have some impact as they do hire people up North (but) they’re going to be able to bring in employees from the south.”

While job training initiatives to better match worker skills to market demands are important, Dixon said the territory could also benefit from supporting small entrepreneurs in the territory.

For Dixon, Nunavut’s high GDP coupled with high unemployment “indicates an entrepreneurial strategy.”

It’s small employers who operate with between 5 and 20 employees who are most likely to hire from the local workforce, said Dixon.

These small companies, like Baker Lake’s Tapatai Expediting Ltd. which maintains 100 per cent local Inuit employment except during peak season, are the best bet for improving Nunavut’s resident employment rate, said Dixon.

Dixon said that Nunavut is in a good position to develop strategies to improve entrepreneurship in the territory, as Nunavut has a good small business base already, accounting for 12 per cent of total employment.

Small companies grow into larger companies. According to Dixon’s research at the University of Alberta, employees at small companies do more than learn trade skills – they learn entrepreneurial skills.

This makes those employees more resilient in shifting market environments.

“We’ve seen in Calgary that during an economic downturn, when the big companies lay off people, they go start their own companies,” said Dixon.

The question becomes, Dixon said, “How do you encourage the growth of smaller companies, and provide a social netting that allows them to thrive and grow?”

Dixon notes that if residents of Nunavut are unable to connect with work in the territory, either through training or entrepreneurship, Nunavummiut will continue to experience a disconnect between their territory’s growing economy and their ability to participate in it.

“Instead of having people live and work there, you’re going to have people working there who are flown in and then they’re gone,” Dixon said.

“You’re going to have people seeing these jobs but unable to get at them.”