Fill that Dempster fibre

Announcement of new line means a chance to lure more tech workers

Better late than never. After more than a decade of proposals, counter-proposals and deep policy analysis, June 22’s Yukon News finally reported that our backup fibre optic cable will go into operation by 2021.

Now the question is how to fill that fibre with bits and bytes streaming to and from high-paying tech jobs in the Yukon, now that companies don’t have to worry about getting cut off from their customers by the backhoe villains of Fort Nelson.

One example people talk about is New Brunswick’s “economic miracle” in the early 1990s. The province actively lured thousands of call centre jobs with a combination of a well-educated and bilingual labour force, robust telecommunications infrastructure and financial incentives.

ContactNB, an industry association, says that call centres contribute more than 18,000 jobs and a billion dollars to the New Brunswick economy. That’s not bad for a province with 750,000 people, even if the jobs number is down a few thousand from its peak a decade ago.

Economists continue to debate the effectiveness of such financial incentives. It’s often hard to tell whether a business investment would have happened even without a government cheque, or if the resulting tax revenue ever pays back the government’s investment. If not, the funding comes at the expense of other taxpayers or government programs eventually.

Nonetheless, New Brunswick’s call centre initiative is held up as one of the more successful programs among many less inspiring economic development schemes tried across Canada over the years.

So what lessons does it hold for Yukoners as we try to build a sustainable private-sector economy?

The good news is that the Yukon also has a well-educated workforce, with multilingual skills that would surprise a vice president of human resources from Toronto.

Strangely, our near total reliance on federal transfers is also a plus. New Brunswick gets only a third of its revenue from Ottawa, so the cost of providing financial incentives for the call centres of multinational companies falls more obviously on local taxpayers and companies.

The backup fibre will also reassure businesses that their Yukon operations won’t go dark for hours at a time. In the decade that we’ve been debating the backup fibre, however, industry standards have risen. Customers are looking for triple redundancy, higher protection for cables, and proximity to population centres. Even a few milliseconds matters to today’s spoiled internet users.

Furthermore, server farms and data storage is now relatively more important. We have cold temperatures which can help cool computers for free, but we also have very expensive electricity.

Perhaps the biggest difference between the Yukon today and New Brunswick in 1987 is that we have extremely low unemployment. Public sector jobs continue to grow in number, now representing 45 percent of employment. In May, our unemployment rate was just 2.7 percent, less than half the national average.

Back in 1987 when the call-centre campaign kicked off, New Brunswick’s unemployment rate was a shocking 13.5 per cent.

The current labour shortage in the Yukon is good for workers. Average weekly earnings here are 12 per cent higher than the national average, and grew faster than inflation in 2017. Average weekly earnings in the Yukon’s public administration sector are more than 40 percent the figure for the average Canadian worker.

But this means companies thinking of taking advantage of our backup fibre face a labour shortage and competition from government for people.

Since the phone company will run the new backup fibre as well as the existing link, it’s unlikely internet prices will go down much.

Costly and scarce labour plus high energy and internet costs mean that the Yukon will seem relatively unattractive for larger, cost-sensitive businesses. I wouldn’t expect many server farms or customer-service operations unless the Yukon starts handing out some very generous corporate incentives.

So the focus should be on smaller, high-value kinds of jobs. The Yukon boasts low personal tax rates and no sales tax, which is good news for well-paid techies.

However, if our unemployment rate is low overall, you can bet that unemployment among Yukon techies is even lower. How will incoming companies find the talent they need to staff up in the Yukon?

A look at the degree offerings at UBC or the Southern Alberta Institute of Technology’s diplomas gives a hint of the kind of jobs we are talking about: programmers, web developers, cyber security specialists, network engineers, digital marketers, social media analysts, and so on.

The quest to fill our fibre capacity will be more difficult than New Brunswick’s call centre strategy. But there is one lesson from New Brunswick that definitely applies: the Yukon government needs to have a thoughtful, sustained and well-resourced campaign to lure telecommuters and small tech companies. It won’t happen overnight, but if we can attract a few hundred jobs a year from techies escaping the traffic and real estate prices of Vancouver, then over a decade that will add up to a sizeable Yukon tech sector.

Keith Halliday is a Yukon economist and author of the MacBride Museum’s Aurore of the Yukon series of historical children’s adventure novels. He is a Ma Murray award-winner for best columnist.

Yukonomist

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