Calgary could lose between 44,000 and 69,000 jobs if Alberta separates and trade costs rise, according to a new report commissioned by the Calgary Chamber of Commerce.
The analysis, prepared by University of Calgary economist Trevor Tombe, examines how leaving Canada could affect trade, investment, workers and public finances.
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The Calgary employment estimates assume trade costs rise by five to eight per cent and the city experiences a proportional share of the province’s employment decline.
They are scenarios, rather than predictions of a specific outcome.
“This report puts real data to the concerns we’ve been hearing in the business community for months,” Deborah Yedlin, the chamber’s president and CEO, said in a news release.
Yedlin added that businesses are already factoring uncertainty over Alberta’s future into their decisions.
“Over the last several months, we’ve heard directly from businesses, investors and economic partners that the uncertainty surrounding Alberta’s future has influenced decision making.”
Companies are pausing hiring and expansion plans, delaying investment decisions and reallocating capital to jurisdictions viewed as more stable and predictable.”
Calgary’s exposure to trade
The report estimates more than 360,000 Calgary jobs, over 36 per cent of employment, depend on exports to other provinces or countries.
Those connections extend beyond oil and gas into professional services, manufacturing, transportation, wholesale and retail trade, and tourism.
Across Alberta, nearly one in three workers — roughly 900,000 people — works in a sector with significant exposure to trade.
The report estimates exports to the rest of Canada support approximately 334,000 Alberta jobs, while international exports support more than 450,000.
Separation would turn Alberta’s provincial boundary into an international border, potentially introducing additional customs procedures, regulatory differences and other costs.
Continued access to Canada’s existing trade agreements could not be assumed.
Yedlin said that change would create uncertainty for Alberta businesses.
“Turning a provincial boundary into an international border would introduce new costs, customs procedures, new regulations and standards, and there would be no guarantee that Canada’s existing trade agreements would simply carry over.”
Drawing on research into the United Kingdom’s experience with Brexit, Tombe models higher costs of trading with both the rest of Canada and international partners.
A five per cent increase would translate into roughly 44,000 fewer Calgary jobs if the city’s employment decline matched the provincial rate.
Under the eight per cent scenario, that figure rises to about 69,000.
The report also estimates that nearly 150,000 Calgary jobs are connected to interprovincial exports, while almost 215,000 are connected to international exports.
The chamber warns that greater uncertainty could affect where businesses invest and whether workers choose Alberta.
In an interview Tuesday, Yedlin said that mobility applies not only to investment but also to corporate headquarters and future expansion.
“People are mobile and I think that’s the one thing we learned, during COVID, is that labour is mobile and there could be consequences to that. But there are other businesses that we’ve heard and said to us, we have offices across the country, in other provinces, and we will instead of expanding here, go somewhere else.”
The report estimates foreign multinationals invested $152 billion in Alberta over the past decade, while Canadian multinationals invested another $314 billion.
Together, those firms accounted for roughly 650,000 jobs per year on average.
Tombe estimates uncertainty comparable to the experience following Brexit could result in between $10 billion and $15 billion in foregone investment in Alberta in a single year.
“So, uncertainty lowering investment, lowering hiring and then investment in Alberta falls by a similar, 12 to 18 per cent which might be optimistic,” Tombe said.
“That’s $10 to $15 billion a year in foregone investment in the province. That means lower productivity, because a lot of our productivity comes from having machinery, equipment, technology that our workers can use. That’s going to drop wages, GDP growth, and labour demand.”
The report notes that 49 per cent of Albertans were born outside the province, highlighting its reliance on attracting people from elsewhere in Canada and abroad.
About 1.1 million Albertans were born elsewhere in Canada, and roughly 80 per cent of people moving to Alberta from another province are under 40.
The report estimates Alberta has gained nearly $120 billion in taxpayer-funded education embodied in workers educated elsewhere — equivalent to roughly one-quarter of provincial GDP.
Yedlin said Alberta has benefited from that movement of workers.
Pressure on taxes and services
The report finds Alberta’s financial position after separation would depend on the economic fallout and the cost of taking over federal responsibilities.
Its main illustrative scenario produces an annual shortfall of approximately $9 billion.
Under a combination of more favourable assumptions, however, an independent Alberta could have a $1.6-billion surplus.
That surplus scenario assumes the economy shrinks by five per cent, borrowing costs do not increase and non-defence federal operations can be replaced at Canada’s current national per-capita spending level.
“Different assumptions would produce different numbers,” Tombe writes in the report.
Both outcomes would leave Alberta with substantially less than the roughly $19-billion difference between federal revenue collected in the province and federal spending here in 2024.
That year, Ottawa collected approximately $73 billion in Alberta and spent about $54 billion, according to the report.
Tombe said the $19-billion difference should not be viewed as money that would simply become available to an independent Alberta.
“But what the analysis in the report shows, I think quite clearly, is when you account for the fact that the economy would be smaller, so revenues from income taxes would be smaller and costs would be higher, because we’d have to increase spending in order just to execute the core functions of a now separate country.”
“You more than eat up all of the available fiscal room, switching from a $19 billion surplus to a $9 billion deficit gives you the right sense of scale.”
An independent Alberta would have to take on responsibilities currently handled federally, including defence, border services and other national institutions.
A smaller economy would also generate less tax revenue.
The report estimates that meeting the NATO defence standard would cost a separate Alberta nearly $10 billion a year, while replacing federal operations would cost approximately another $8 billion.
To demonstrate the scale of the $9-billion shortfall scenario, Tombe estimates that closing the gap entirely through a sales tax could require an additional eight percentage points on top of the five per cent currently collected federally.
Another option would be to increase the corporate income tax rate by roughly 10 percentage points.
The report also estimates that spending equivalent to about 40 per cent of current federal transfers to people and businesses would have to be eliminated to close the gap through spending reductions.
Those federal transfers include the Canada Child Benefit, received by roughly 400,000 Alberta families, and Old Age Security, received by about 630,000 Albertans.
Tombe said the economic effects would eventually show up in household incomes and employment.
“When you hear something like GDP contracting, it seems like an abstract statistical notion, but this translates directly into real incomes and wages.”
How much goods and services can you afford to purchase with an hour of work? And if you have lower productivity, then living standards fall directly as a result.”
Tombe added that the short-term employment impact could also extend beyond the Calgary job estimates.
The eventual economic impact would depend on negotiations, future trade arrangements and the policies adopted by an independent Alberta.
Both the chamber and Tombe stress that the figures are scenarios rather than forecasts, and that the ultimate outcome would depend on future negotiations, trade arrangements, government policy and other factors that cannot be known today.
The report comes as the Calgary Chamber has also released an open letter arguing Alberta’s future is stronger within Canada.
It has been signed by business leaders including:
- AltaGas President and CEO Vern Yu;
- AltaLink President Paul Lee;
- ATCO Chair and CEO Nancy Southern;
- Calgary Economic Development President and CEO Brad Parry;
- Capital Power President and CEO Avik Dey;
- Keyera President and CEO Dean Setoguchi;
- Tourism Calgary President and CEO Alisha Reynolds; and
- Former Trans Mountain CEO Ian Anderson.
Separatist group challenges economic forecast
Keith Wilson, a constitutional lawyer and co-lead of the pro-independence group Let Alberta Decide, rejected the report’s projections, arguing they rely on assumptions he considers unrealistic.
“Well, it’s not an accurate report. It’s a model,” Wilson said.
He argued the modelling assumes businesses in the rest of Canada would stop buying goods and services from Alberta following separation.
“Why would these businesses in Ontario and Quebec stop purchasing from us, these businesses who are very vulnerable right now because they’re closing, they’re relocating to the U.S. because of the problems with the trade dispute and the Americans wanting to shift the manufacturing jobs back to the U.S. — Alberta is their third largest customer,” Wilson said.
“Ontario alone buys $39 billion of goods and services from Alberta.”
Wilson said Alberta would still have economic relationships with the rest of Canada and would have to renegotiate agreements if it became independent.
His response comes as the Calgary Chamber warns that increased trade costs following separation could put as many as 175,000 Alberta jobs at risk and reduce the province’s economy by as much as $62 billion annually under an eight-per-cent increase in trade costs.
Those figures are based on economic modelling and are not a prediction of exactly what would happen following separation.
Wilson also disputed estimates of the potential fiscal costs of creating a new country, arguing that some federal infrastructure and services already exist and would not necessarily have to be rebuilt from scratch.
“They make these spectacular assumptions and ignore hard facts,” he said.
He pointed to federal buildings, border services and other infrastructure as examples, noting that Alberta could instead negotiate arrangements to continue using existing facilities.
Wilson also argued that separation would give Alberta greater control over policies affecting the provincial economy.
“There will be no more pipeline laws. There will be no more net zero. No more carbon taxes,” he said.
“The politicians who make the decisions affecting all aspects of Albertans’ lives would be elected here in Alberta and accountable to Alberta.”
On concerns about businesses delaying investment or leaving the province, Wilson again refuted those claims noting that Alberta’s resource base and existing infrastructure would continue to make the province attractive to major employers.
“The resources are here. Their infrastructure is here. Their relationships are here. Their physical plants are here. They’re not going anywhere,” he said.
Wilson also rejected the argument that the October referendum would immediately make Alberta an independent country.
“The vote on the 19th of October isn’t for separation. It isn’t for independence. It’s not on the ballot,” he said.
“It’s whether or not you want to stay in Canada, whether Canada still works for Alberta, the status quo, or whether you want to give the Alberta government some leverage so that they can negotiate a better deal for Alberta.”
