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Opinion: To address affordability, policymakers must first fix B.C.’s painful payroll picture

Stakeholders should be concerned by a decline in private sector jobs, because we can’t fix cost-of-living challenges without them
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B.C stands out with flatlining private sector job growth

The private sector drives innovation and economic progress. It is the source of most capital investment and productivity growth. When companies are successful and optimistic, they expand operations and hire more employees. There are three times more employees in the private sector than in the public sector. When B.C.’s economy is healthy, the private sector generally underpins job creation.

So, when we observe that the number of payroll employees in B.C.’s private sector has fallen since the beginning of the year, is no higher than two years ago and is unchanged since the start of 2019 (a period of nearly six years), we should be concerned. All other provinces have seen respectable to strong gains in private sector employment over the same time periods. B.C stands out, and not in a positive way.  

It is not possible to address the cost-of-living challenges confronting British Columbians without bolstering household incomes, which in turn requires rekindling private sector job creation. When one of the most important indicators of economic vibrancy flatlines and is markedly out-of-step with other provinces, something is clearly amiss in B.C. Policymakers first need to understand the reasons for the unprecedented malaise. We have three thoughts on this.   

We expect most people believe the provincial government is a credible source for modelling impacts of its own policies. If anything, governments cast new polices and programs in the most favourable manner possible. So, when the BC NDP is in the fourth year of implementing a suite of policies designed to slow economic growth and reduce income by $13.7 billion in 2025, it is probably safe to conclude that CleanBC policies are working as intended.

The evolution of the government’s modelling showed that for B.C. to meet its 2030 greenhouse gas emission targets, it would be necessary to curtail economic growth and thus job creation. Capital investment has been waning for several years, and companies are increasingly deferring projects and/or shifting investment to other jurisdictions. This reallocation generally happens quietly and takes many years to become fully evident. But FortisBC’s recent application to provide natural gas service to a new residential development in the Okanagan is a publicized example. The company’s proposal to invest several hundred million dollars in energy infrastructure was declined by the BC Utilities Commission because it was deemed inconsistent with CleanBC.

While certainly part of the explanation, CleanBC policies alone do not explain the absence of net gains in private sector employment. Even with the CleanBC roadmap in place, the government’s analysis shows B.C.’s economy still growing through 2025, just at a much slower pace.  

A second policy sphere weighing on job creation is the escalating overall tax and regulatory environment across all levels of government. The BC NDP has contributed to this via higher corporate, payroll, carbon and housing taxes. The province has also made a succession of changes to the labour code, employment standards, WorkSafeBC, added to payroll costs with the Employer Health Tax, and expanded paid sick day entitlements. More onerous environmental assessment processes and public sector procurement rules have piled on costs and added complexity.

We are not suggesting all these actions were unnecessary or wrong-headed. But as early as mid-2019, it was evident that job growth in B.C. was slowing. We indicated back then the government should pay attention to the cumulative impacts of its activist agenda, because the succession of changes it had implemented was already affecting business decisions around job creation/retention prior to the pandemic. The cumulative costs and administrative complexities of hiring and retaining employees have continued to mount under the Eby administration.

The third policy domain that is now undermining job creation is the set of legal frameworks influencing land use and access to natural resources in B.C. Over the past year, the Eby government unveiled a host of initiatives affecting all land operations and the management of natural resources that have further destabilized the investment climate.

Some of the most far-reaching proposals were hammered out at secretive “government-to-government” tables involving provincial officials and First Nations representatives. In this setting, there is little scope for the voices of other stakeholders, such as industry and the public, to be heard. In the government’s rush to advance its reconciliation agenda, it has not been evident who is looking after the interests of the 96 per cent of British Columbians who aren’t Indigenous.

B.C.’s economy is visibly sputtering. To revive investment and private sector job creation and put the economy on a stronger footing, a recalibration of all CleanBC roadmap measures is required. On policies affecting the land-base, the government should slow the pace of change and commit to greater openness along with more deliberative decision-making that brings all stakeholders together. Finally, in the post-election context, the B.C. government needs to turn its attention to policy adjustments that reduce business operating costs and help to foster a more hospitable investment climate in the province.

Jock Finlayson is chief economist of the Independent Contractors and Businesses Association. Ken Peacock is the Business Council of British Columbia’s senior vice-president and chief economist.