Yahoo Finance Quebec could soon be poorest province
The income gap is widening between Quebec and wealthier parts of Canada – a trend that bodes ill for Quebec.
A study from l'Université de Montréal's business school HEC Montréal has concluded that the income gap is widening between Quebec and wealthier parts of Canada – and that Quebec could be the poorest province in the country within a decade.
The research conducted by HEC's Centre for Productivity and Prosperity found that between 1978 and 2009 net average household income gains in all other provinces outstripped Quebec's gains.
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In 2009, the last year the study looked at, the average resident of Newfoundland and Labrador – traditionally Canada's poorest province – earned just $3,127 less than the average Quebecer, while an Albertan averaged $17,947 more than someone living in Quebec.
"I'm not really surprised...Albertans are earning more than Quebecers. This is something we expected," said the study's author, HEC professor Martin Coiteux. "What is more worrisome is the trend."
If that trend continues, Coiteux said, "within ten years, Quebec would be the poorest province in Canada."
Quebecers already pay the highest provincial taxes in the country, but they have generally consoled themselves with the belief the cost-of-living is lower in the province.
Coiteux said that is still true, but costs for necessities such as food and housing are increasing faster in Quebec than elsewhere.
"This advantage is about to disappear," Coiteux said.
Even with the lower cost of living in Quebec, Quebecers had, on average, $2,891 less to spend than Albertans in 2005. By 2009, Coiteux found that gap had ballooned to $13,352.
Coiteux said fiscal arrangements to redistribute wealth cushion the impact of Quebecers' lower earnings. Because Quebecers take home less money, they pay less in federal taxes and receive more by way of transfer payments from Ottawa.
Quebec's relative poverty can be blamed fundamentally on its lagging labour productivity, Coiteux said.
Quebecers' rate of participation in the workforce is lower than in other provinces, and people in the province work fewer hours per week, earn less per hour worked – and retire earlier, too.
"It's not that people are not working hard," Coiteux noted. "We are occupying positions that are not paying a lot of money – on average – compared to the richest provinces. And that shows a problem with the qualifications of the labour force."
The challenge, Coiteux added, is "adapting our young people, especially, in terms of their skills, to the kinds of jobs that are paying a high income."
