Sept/Oct 2009

HR Outlook

Coal mining employment: A socioeconomic and geographical position

By J.P. Chabot

The current recession may increase the average age of workers in the coal mining industry, since those with less seniority are often the first to be laid off. In the near future, coal mining companies will need to pay particular attention to their efforts to attract youth. There are numerous socio-economic and geographic factors that affect the efficiency of the Canadian coal industry and its human resources situation.

Challenges faced include the aging workforce and the fact that the western provinces are also major oil sands producers — a big source of competition for labour. According to Statistics Canada, in 2006 half of the coal mining workforce was over the age of 45, while about one-quarter was less than 34 years of age.

Geography has the potential to contribute not only the natural endowment of coal but also a solution to future pressures on the human resources of the industry. The top coal producing provinces in Canada are Alberta, British Columbia and Saskatchewan. Most coal mines are located in the southern parts of these provinces and, in many cases, straddle the mountain range that borders British Columbia and Alberta. This geographic setting, its proximity to urban centres and the subsequent lifestyles that it permits could be used by companies in the coal industry to position themselves as employers of choice.

According to Statistics Canada, the average annual salary in coal mining is more than $10,000 higher than that of non-metallic mining and quarrying, but nearly $8,500 less than the average annual salary in metal ore mining. Salaries of oil sands workers are higher, on average, than those in mineral extraction. The existence of such salary differentials for similar skill sets could make it difficult for the coal industry to attract and retain sufficient skilled labour.

Coal mining accounts for 11 per cent of employment in mineral extraction in Canada. Women comprise 12.3 per cent of the coal mining workforce, while Aboriginal and immigrant identity groups comprise five and eight per cent, respectively. Notably, levels of education in the coal mining workforce are on par with non-metallic mineral mining and quarrying — 47 per cent of the workforce has some form of post-secondary education or training. However, this lags behind metal ore mining, which has a post-secondary achievement rate of 66 per cent.

The World Coal Institute states on its website that the prices of thermal coal have historically been more stable than those of oil and gas prices. The institute claims that coal is likely to remain the cheapest fuel source for power generation in the coming decades.

The relative stability of coal prices in comparison with oil and gas is primarily due to the fact that thermal coal is generally sold through multi-year contracts, typically to public utilities. However, the coal mining industry has not been immune to the negative impacts of the current recession.

The demand for metallurgical coal is highly correlated with the global production of iron and steel, which fluctuates according to worldwide economic output. Therefore, prices for coal overall can exhibit fairly large and abrupt changes compared to other minerals and metals.

The current recession clearly presents serious challenges to the domestic coal industry. According to the Centre for the Study of Living Standards, a non-profit research organization based in Ottawa, the industry experienced phenomenal productivity growth during the 1980s and 1990s. Growth in output per hour between 1989 and 2000 was 7.4 per cent per year in coal mining as compared to 1.0 per cent and 0.1 per cent in electricity generation and logging. This substantial growth in productivity was largely due to the significant shift from underground to surface coal mines, which allowed the industry to increase its level of capital intensity by way of larger equipment and subsequent economies of scale in extraction.

Consequently, the human resources needs of the coal and oil sands industries have begun to converge. For this reason, the coal mining industry will need to find new ways of marketing its employment opportunities. One of the ways the industry can do this is to use the natural endowments that come with the geographic location of their mines to attract younger workers looking for a balanced lifestyle.

Jean Pierre Chabot is manager of research and policy analysis at MiHR. Formerly the project coordinator for a number of Latin American projects, he brings an international perspective to issues facing the Canadian mining industry.

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