NORTHWEST TERRITORIES
The NWT business community is being squeezed in the middle, according to the NWT Chamber of Commerce.

Hay River's Jameson's True Value Hardware is expected to close at the end of this summer. Hay River Chamber of Commerce president Janet-Marie Fizer points to mounting challenges to doing business in the NWT as contributing factor to the closure of approximately 16 Hay River businesses over the past few years. - Sarah Ladik/NNSL photo

According to a recent survey produced by the chamber, many NWT businesses face escalating expenses related to rising energy costs, municipal and territorial taxation, workers compensation premiums and skilled labour shortages.

Businesses also face an expanding territorial government that sets wage expectations the private sector cannot match without driving customers out of their businesses by raising prices.

This puts many NWT businesses in a downward spiral where the cost of doing business translates into higher retail prices, which of course impacts the general cost of living for local residents. Cost of living increases lead to the demand for higher employee wages, which in turn places more inflationary pressure on the cost of doing business.

“It’s a vicious circle,” said Hay River Chamber of Commerce president Janet-Marie Fizer.

“It makes it very difficult for retailers to be competitive.”

Fizer points to 16 businesses that have shut down in Hay River over the past few years, with more shuttered windows on the horizon, including Hay River’s Jameson’s True Value Hardware.

The store will close at the end of this summer, Fizer said, shedding another 12 jobs or so in the community.

For Fizer, closures like this are directly related to the squeeze small business feels with shrinking profit margins on the one hand, and reduced sales volumes on the other hand as consumers turn to online retail.

“It’s one thing if your margins are being squeezed,” said Fizer. “If you can keep your volumes up, then you have a way to recover. But if you’re losing volume as well because people are shopping online rather than locally, those are tough things to beat.”

Among businesses surveyed, hiring intentions are flat. About the same number of employers intend to hire more employees in the next year as intend to let employees go, while most anticipate their employment levels will remain the same over the next year.

“People are in a holding pattern,” said Allen Stanzell, NWT Chamber of Commerce president. “What you’d like to see is a growth pattern ... which we’re not seeing here.”

One area of growth the chamber is concerned about is in the GNWT payroll.

According to numbers provided by Jackie Bell, manager of policy and communications with the GNWT Department of Human Resources, the most recent stats on GNWT job openings is 525 vacancies. Approximately half those vacancies are for positions outside Yellowknife.

“As an employer, the GNWT is working to recruit talent that includes NWT residents as well as those from outside the NWT,” Bell said in an email to News North.

Print and social media GNWT career advertising focuses on directing prospective candidates to the GNWT career website.

“When individuals apply to the GNWT, they are asked how they heard about the position, and a majority of applicants report they found the job opportunity online,” said Bell.

“Hiring managers, employees, former employees and employees’ family members may also network and directly spread the word about GNWT employment opportunities to potential applicants,” Bell added.

According to Stanzell, government hiring for those open positions can make it difficult for small and medium-sized business to hire and retain employees.

“It’s tough to be able to pay employees enough to work in retail when there are more and more government jobs available and they are the best paying jobs available,” said Stanzell.

Federal, territorial, regional and aboriginal government public sector spending increased to $542 million last year, from $501 million in 2008, according to statistics from the NWT Chamber of Commerce.

“It’s kind of a double-edged sword,” Fizer noted.

“While we’d like to attract some GNWT jobs to Hay River – if you can bolster the population then business will grow – but by the same token, you then have to compete with those (GNWT) wages.”

Pressure on wages isn’t the only aspect of government growth that can have a negative impact on small and medium business. As government grows, so does its demand for workers.

“Sometimes they (the GNWT) resort to active recruitment of people from the private sector up here,” Stanzell added.

“All’s fair, but in the end it’s not effective. We (NWT businesses) do all the work to find people and they get them in the end.”

Without a concerted effort between government and small business, Stanzell fears the small-to-medium-sized business sectors could be squeezed out.

“We don’t want government to grow at the expense of the private sector,” said Stanzell.

Anecdotally speaking, that may be happening.

“There are businesses that are questioning the value of maintaining the size of their operation in the territory,” said Stanzell.

“They’re looking at maintaining storefront operations to maintain a customer base, (while) investigating ways of cutting their costs. A lot are concluding they could put some of their operations in the south.”