Study: Job displacement in Coal Mining and in the Oil and Gas Industry, 1995 to 2016

Released: 2020-09-22

In recent years, governments in numerous countries have faced growing pressures to make a transition to a low carbon economy by reducing their economies' reliance on traditional energy-producing sectors such as fossil fuel electric power generation, coal mining as well as oil and gas extraction. As these sectors progressively get replaced by clean technology industries, some Canadian workers employed in these sectors are likely to be displaced and to seek employment in other industries. This transition raises the following question: how do workers displaced from traditional energy-producing sectors fare after job loss?

The question of worker displacement is of increasing importance in the context of COVID-19, where thousands of workers temporarily laid-off are at risk of experiencing permanent layoffs—i.e. job losses—in the near future. It is also highly relevant given the recently announced cuts in both production and investment in the oil and gas industry.

Today, Statistics Canada releases two studies that investigate this issue for two groups of workers: those displaced from coal mining from 1995 to 2015 and those displaced from the oil and gas industry from 1995 to 2016.

Both studies show that most of the workers displaced from these sectors found a new job in the year following job loss. For example, 75% of workers permanently laid-off from coal mining from 1995 to 2015 found paid employment in the year following job loss. The corresponding percentage for workers displaced from oil and gas extraction from 1995 to 2016 amounted to 73%.

From 2008 to 2014, re-employment rates of workers displaced from the oil and gas industry were somewhat higher than nationwide re-employment rates. Part of the difference can be accounted for by the fact that oil-producing provinces displayed higher re-employment rates than other provinces during that period.

The ability of displaced workers to find a new job in the year following job loss varied with economic conditions. As oil prices declined in 2015 and layoff rates in the oil and gas industry rose, less than two-thirds of the workers permanently laid-off from oil and gas extraction in 2015 or 2016 had paid employment in the following year.

The majority of re-employed displaced workers found a new job outside their initial sector of employment. For example, roughly 80% of all workers displaced from the oil and gas industry from 2005 to 2015 and re-employed in the year following job loss found new jobs outside the oil and gas industry. Close to 29% found a new job in construction, while about 18% and 7% found a new position in highly skilled services and manufacturing, respectively.

Partly because of occupational differences in the composition of employment, proportionately fewer coal mining displaced workers found a new job in construction in the year following job loss.

Nevertheless, many displaced workers saw their earnings drop in the year following job loss. Half of the workers displaced from the oil and gas industry in the late 2000s saw their real annual earnings decline by at least 17% from the year preceding job loss to the year following job loss. Similar qualitative patterns were observed in coal mining.

For some displaced workers, real earnings declines were persistent. For example, one-quarter of workers displaced from the oil and gas industry in the late 2000s saw their real annual earnings fall by at least 55% from the year prior to job loss to five years after job loss. However, half of workers displaced from the oil and gas industry in the late 2000s ended up having higher earnings five years after job loss than they had in the year prior to job loss.

The oil and gas industry displaced workers most likely to experience substantial earnings declines five years after job loss were relatively older, had high job tenure, and were in the upper quintiles of the earnings distribution.

Taken together, these findings paint a nuanced picture of the effects of job displacement in traditional energy-producing sectors. These findings do not support the view that all workers displaced from energy-producing sectors experience substantial earnings declines after job loss. Nor do they support the view that all workers displaced from these sectors make a smooth transition to new employment after job loss.

Products

The research articles titled "How Do Workers Displaced from Energy-producing Sectors Fare after Job Loss? Evidence from the Oil and Gas Industry" and "How Do Workers Displaced from Traditional Energy-producing Sectors Fare after Job Loss? Evidence from Coal Mining," part of the Economic Insights Series (Catalogue number11-626-X), are now available.

Contact information

For more information, contact us (toll-free 1-800-263-1136; 514-283-8300; STATCAN.infostats-infostats.STATCAN@canada.ca).

To enquire about the concepts, methods or data quality of this release, contact René Morissette (rene.morissette@canada.ca), Social Analysis and Modelling Division.