Saturday, May 15, 2010

Unemployed are Unemployed for longer in Alberta

by Dan Sumner
Economist, ATB Financial

May 13, 2010
Job searchers in Alberta have had a tough go of it during
the past two years, and with the provincial unemployment
rate remaining stubbornly high at 7.4%, recovery in the
labour market has been slow. But even more troubling is
that the average length of unemployment continues to
increase, despite the economic recovery gaining traction in
the province.

The average duration of unemployment in Alberta
skyrocketed during the recession from a low of 6.6 weeks
in November 2008 to 18.0 weeks in April 2009 (see graph).
From 2006 to the end of 2008, the average length of
unemployment hovered around 8 weeks, its lowest
sustained level since the last oil boom in the late 1970s and
early 1980s.

Although the duration of unemployment has seen a
spectacular rise during the past 18 months, it is rising
from an unsustainably low level which makes the
increase look worse than it is. Even after the large
increase, the average length of unemployment in
Alberta is below the Canadian average of 19.3 weeks.

The length of unemployment is a very important
statistic in evaluating the health of the labour market.
When people become unemployed for longer periods,
they can suffer ‘skills atrophy,’ which makes finding a
job even harder – unemployment often begets
unemployment. The ultimate solution frequently lies
in obtaining new training or switching careers, which
means bringing the duration of unemployment down
following a recession can take a lot longer than it did
for it to increase.

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