Alberta’s unemployment rate is expected to rise and stay high over the next two years.
With Alberta adding nearly 63,000 new jobs in the closing months of 2024, the province’s unemployment rate fell to 6.7 per cent in January. But the economic forecast contained in Alberta’s 2025 Budget anticipates unemployment will peak at 7.4 per cent this year and remain elevated above 7 per cent in the near term.
The Budget 2025 Fiscal Plan released Thursday notes that while the labour market came into the year strong, “fewer job vacancies, heightened uncertainty, and weaker business activity are anticipated to hold back hiring among businesses this year.”
Employment growth is forecast to drop to 1.9 per cent in 2025, down from 3.1 per cent in 2024. Next year, employment growth will slow to 1.6 per cent, “its slowest pace post-COVID.”
The fiscal plan says the boom in working-age population has overshot what job gains the province has seen, such as in the housing, construction, and service sectors.
A combination of high unemployment discouraging people from entering the workforce and an aging population leaving it will keep the workforce participation rate “muted at around 69 per cent in 2025 and 2026,” the fiscal plan document says.
Finance Minister Nate Horner said U.S. tariffs will impact employment in the province, but the effects won’t be evenly distributed.
“The energy sector is in a good position to weather the storm, but other sectors are expected to be hit hard by tariffs, including manufacturing and agriculture,” Horner said at a press conference on Thursday.
Alberta’s budget assumes U.S. tariffs will be set at 15 per cent rather than the 25 per cent U.S. President Donald Trump has said will be imposed on most Canadian goods.
Horner said the budget team considered the impacts of 25 per cent tariffs but felt this wasn’t reasonable to create a budget around.
"It could be 25 per cent for a few months and come back to zero. This has to be an average of the entire fiscal year. So we think [15 per cent] is a prudent place to budget from," he said.
If the U.S. tariffs currently being threatened are implemented, Alberta’s labour forecast is even darker.
With 25 per cent tariffs on most goods, and 10 per cent tariffs on energy products, it is anticipated 15,000 fewer jobs will be created in 2025. By 2027, U.S. tariffs could cost Alberta more than 41,000 jobs.
In the 25 per cent scenario, unemployment is forecast to reach 7.8 per cent in 2025, and 8.1 per cent in 2026.
