How have oil price fluctuations impacted the Canadian labour market?
As one of the world’s top ten oil producing countries, Canada is one of many markets across the globe directly affected by the dramatic fluctuations in oil prices over the past few years. In 2014, an oversupply of oil led prices to fall from around $100 to about half that in just six months and ultimately plunge below $30 for the first time in over a decade. Since showing signs of life in early 2016, oil has stabilized around $50. This has left an entire industry—and in some cases entire national economies—scrambling to adjust to a new paradigm in which oil is not nearly as profitable as it once was.
Indeed data show clearly that the oil industry’s price collapse and tentative recovery have strongly affected the labour market. We can track the industry’s demand for labour with oil-related job postings and the supply of labour through oil-related job searches. Both have responded sharply to swings in oil prices over the past few years.
To focus on the oil industry’s labour market, we utilize keywords that allow us to zoom in on job postings and searches for job titles common to the industry, such as petroleum engineer, concrete pump operator and derrickhand. Overall, after showing promising growth in the second half of 2016, oil-related job postings have flatlined in 2017. Moreover, our data show that industry employers and job seekers have responded to oil price fluctuations to different degrees and that trends vary among key oil-producing regions.
Canadian oil labour market trends
This figure shows the relationship between oil prices and oil-related job postings as a share of all job postings on Indeed. At first glance, prices and postings seem to track each other relatively closely. But, on further inspection, some interesting differences emerge.
The Canadian oil industry’s reaction to falling oil prices lagged. Oil prices started declining in June 2014 and began tumbling outright in the fourth quarter of that year. However, oil job postings did not begin to dip until October 2014, several months later. Then, at the start of 2015, they fell off the cliff. Thus, by the time employers really started to pull back, much of the fall in oil prices had already occurred and prices had temporarily leveled off.
This delay seems counterintuitive. You might think employers would rein in hiring the moment prices dipped in order to cut costs. It’s possible though that employers were looking for some clear indicator or the crossing of a threshold to signal that the market turn was durable. Judging by the figure above, a $50 oil price could very well have been that threshold.
Furthermore, what makes this lagged employer reaction especially interesting is its contrast with the industry response in Canada’s closest neighbour. Previous Indeed Hiring Lab research found US oil-related job postings dropped nearly in lockstep with oil prices during the same time period.
In early 2016, oil prices bottomed out and began to show signs of life. Nonetheless, Canadian oil job postings fell several more months as employers continued to cut back. The share of…