Thompson-Okanagan Development Region€¦ · 2 BC Stats, Tourism Indicators, March 2010. 3 BC...

The Thompson-Okanagan Development Region (TODR) has a total land area of

94,308 km2, and stretches from the US border in the south to just north of Blue

River and Mica Creek, and from the Cascade mountains in the west to the Rocky

Mountains and Monashee mountains in the east. In 2009, the region had 528,416

residents,1 or 12% of BC’s total population. The TODR’s largest centres are Kelowna,

Kamloops, Vernon, and Penticton .

The TODR’s economy has diversified from a historic dependence on resources—

especially forestry and mining—to a mix of industries. The Development Region

is known for agriculture/viticulture, tourism and trade/services, and has recently

become a centre of post-secondary education and manufacturing. Its attractive

climate has also made the TODR a popular retirement destination, which has

fostered substantial investment in development and construction activity in recent

years.

In 2009, the TODR’s population increased by 1.6%, or 8,362 residents. This was the

third-highest rate of growth after the Mainland/Southwest (1.9%) and Northeast

(1.8%) Development Regions. Population growth was positive in all Regional

Districts in the TODR, with almost half of this growth occurring in the Central

Okanagan (3,492).

1. Statistics Canada, Estimates of Population, by Sex and Age Group: Census Divisions and Census Metropolitan Areas - 2001 Census boundaries, Annual, CANSIM, Table 051-0036.

2010 BC Check-Up – Published by the Institute of Chartered Accountants of British Columbia 1

Thompson-Okanagan Development Region

2 BC Stats, Tourism Indicators, March 2010.3 BC Stats, Quarterly Regional Statistics.4 BC Real Estate Association.5 Kelowna Chamber of Commerce, Advocacy Summary – 2009 Year in Review.


The TODR’s economy, like the rest of the province, was affected by the economic recession in 2009. Tourism

room revenues were down by 10.5% last year compared to 2008.2 Building permits and housing starts were

25.2% and 43.6% lower. 3 The forest industry, which was already struggling with the pine beetle infestation, was

hit by major fires and record low lumber sales to the US, its principal market. These factors resulted in job losses

in both the goods and service sectors that pushed unemployment to a six year high (8.7%). One of 2009’s few

bright spots was a recovery in house sales in the second half of the year, due to low mortgage rates, pent up

demand, and lower house prices,4 that resulted in a 1.3% sales increase by year end compared to 2008.

W O R K I n d i c a t o r s

Job Creation

After seven consecutive years of expansion, in 2009, the TODR’s economy lost 8,300 jobs. Last year’s 3.1%

decline exceeded the provincial average (-2.4%) and was the fourth-highest after the Cariboo (-9%), Nechako

(7.9%), and Vancouver Island/Coast (-3.8%) Development Regions.

The TODR’s service sector lost 1,400 jobs last year. Four out of eleven service industries reported job gains, but

not enough to offset losses in six others. The largest gains were in professional, scientific and technical services

(2,500 new jobs), and finance, insurance, real estate, and leasing (2,400 new jobs). These gains can most likely

be attributed to growth in house sales in the latter half of the year. Public administration (1,200) and other

services (1,000) also added jobs.

Service industries that reported fewer positions last year were accommodation and food services (-2,400),

trade (-1,500), business, building, and support services (-1,400), transportation and warehousing (-1,300), and

education (-1,200). Although lower tourism volumes, less construction, and fewer lumber exports explain some

of these job losses, local businesses, especially in tourism and trade, reported difficulties in finding experienced

staff to fill positions,5 and thus lower job numbers may also reflect unfilled vacancies.

The TODR’s goods-producing sector suffered the bulk of last year’s employment losses, declining by 6,900

positions, and representing 88% of the Region’s total employment decline. Agriculture was the only goods

sector industry to add jobs (2,400 new jobs) last year. The largest losses were in construction (-2,700) due to

the decline in housing starts, and manufacturing (-3,300) as a result of lower lumber demand.

Table 1-1: Employment, Thompson-Okanagan Development Region, 2004 to 20096

Job Creation (000)

2004 2005 2006 2007 2008 2009

5-Year

2004-09

1-Year

2008-09

TOTAL EMPLOYMENT (000) 229.7 244.0 253.7 256.7 265.0 256.7 27.0 -8.3

Goods-Producing Sector (000) 59.1 65.0 69.8 67.9 72.0 65.1 6.0 -6.9

Agriculture 7.6 7.0 7.8 7.7 7.0 9.4 1.8 2.4

Forestry, fishing, mining, oil and gas 5.5 5.5 8.0 6.7 7.8 5.6 0.1 -2.2

Utilities - - 1.5 - 1.9 1.7 - -0.2

Construction 18.8 24.1 27.3 26.4 32.4 28.7 9.9 -3.7

Manufacturing 26.3 27.1 25.2 25.8 23.0 19.7 -6.6 -3.3

Services-Producing Sector (000) 170.6 179.0 183.9 188.7 193.0 191.6 21.0 -1.4

Trade 37.4 39.7 42.2 44.4 41.6 40.1 2.7 -1.5

Transportation & warehousing 12.0 11.6 10.9 9.8 11.5 10.2 -1.8 -1.3

Finance, insurance, real estate & leasing 11.3 14.6 15.5 15.1 11.9 14.3 3.0 2.4

Professional, scientific & technical services 9.0 14.2 13.4 12.6 12.0 14.5 5.5 2.5

Business, building & other support services 10.9 7.2 9.1 10.3 11.1 9.7 -1.2 -1.4

Educational services 13.8 12.1 14.1 15.4 16.6 15.4 1.6 -1.2

Health care & social assistance 26.2 29.4 32.1 30.6 35.1 35.1 8.9 0.0

Information, culture & recreation 13.2 10.5 10.6 9.5 12.1 11.2 -2.0 -0.9

Accommodation & food services 19.5 23.0 19.0 21.3 22.1 19.9 0.4 -2.2

Other services 10.6 8.2 8.4 10.8 10.0 11.0 0.4 1.0

Public administration 6.7 8.4 8.6 8.9 9.0 10.2 3.5 1.2

Source: Statistics Canada, Labour Force Survey Historical Review

Unemployment

In 2009, the unemployment rate in the Thompson-Okanagan Development Region rose by 3.2 percentage points

(ppt), to 8.7%. This was the third highest unemployment rate among the Development Regions last year after

the Cariboo (12%) and Northwest BC (10.4%). It was also the third-highest percentage point increase, after the

Cariboo (5.5 ppt) and Kootenay (3.9 ppt).

6 Industries with 0.0 are estimated to have fewer than 1,500 employed at that particular point in time, thus the numbers presented in the table may not add up to total sector figures, and job creation statistics can not be calculated.


Table 1-2: Unemployment Rate (%), Thompson-Okanagan Development Region, 2004 to 2009

Percentage Point

(ppt) Change

Development Region 2004 2005 2006 2007 2008 2009

5-Year

2004-09

1-Year

2008-09

Thompson-Okanagan 6.6 5.3 5.1 4.4 5.5 8.7 +2.1 ppt +3.2 ppt

British Columbia 7.2 5.9 4.8 4.2 4.6 7.6 +0.4 ppt +3.0 ppt

Source: Statistics Canada

Last year’s increase in the TODR’s unemployment rate was almost entirely due to job losses. The labour force

grew slightly (700 people), but the number of people who were unemployed increased by far more (8,900). In

addition, the participation rate declined slightly (-0.9 ppt), as the number of people opting out of the labour

force grew by 6,900.

Young workers were more affected by the economy’s job losses, and unemployment for youth aged 19 to 24,

rose 4.1 ppt to 13.2%. Although this increase ranked well among the other development regions, the TODR’s

youth unemployment rate was the second-highest in the province, after the Cariboo (19.2%).

Table 1-3: Youth (19 to 24 years) Unemployment Rate, Thompson-Okanagan Development Region,

2004 to 2009

Percentage Point

(ppt) Change

Region 2004 2005 2006 2007 2008 2009

5-Year

2004-09

1-Year

2008-09



Source: Statistics Canada, Labour Force Survey Custom Table


I N V E S T I n d i c a t o r s

Business and Investment Activity

Capital investment and development in the TODR slowed last year as a result of market uncertainty and

financing constraints. According to the BC Major Projects Inventory, the total value of new project proposals

in the fourth quarter of 2009 was $2.8 billion—down almost 50% when compared to the same time period

in 2008 ($5 billion). The value of projects starting construction was also down significantly, from $3 billion in

2008, to $1.7 billion in 2009.7 The number of projects put on hold also rose from six (valued at $675 million) in

December 2008, to ten (valued at $975 million) one year later. These lower numbers reflect the substantial drop

in residential building permits last year, which has made up 72% of the Region’s total building permit value over

the last seven years.8

Still, the TODR’s backlog of projects proposed, under construction, or on hold increased from $29 billion in

December 2008 to $33.9 billion in December 2009. Approximately 67%, or $19.6 billion, of this investment

is residential, resort/residential, or commercial development, including a number of large multi-phase

developments that will be built over several years. The largest are the $2.1 billion Glenwood Highlands

development in Kelowna and the $1.5 billion Lakestone golf residential/resort development.

The remaining $11.6 billion of projects consists of various industrial, institutional, and government funded

development, including $5.5 billion in energy and transmission projects, $2.3 billion in mining projects, and $1.5

billion in highway and road improvements. The largest of these projects under construction are the Highway 1

Kicking Horse Canyon Improvements ($972 million), Kelowna Hospital expansion ($433 million), and Highland

Copper mine expansion ($400 million).

Looking ahead, the Region has over $290 million in committed infrastructure stimulus projects in process,9 in

addition to its substantial backlog of residential, resort, and commercial projects. Building permits and housing

starts appear to be on the rise, buoyed by strong house sales and dwindling supply.10 However, prices are also

increasing and tighter mortgage qualification standards and higher borrowing costs could temper demand.11 For

these reasons, a cautious return to a balanced, rather than the over-heated sellers market of the last five years is

anticipated.

Incorporations and Bankruptcies

In 2009, the TODR recorded 749 fewer business incorporations than in 2008. This is not surprising given tighter

credit and lower investor confidence last year. While business incorporations were down in all the Development

Regions in 2009, the TODR’s decrease (-24%) was the third-largest decline after the Nechako (-39%) and

Northeast (-26.4%).

7 Ministry of Small Business, Technology and Economic Development, Major Projects Inventory, Quarterly Reports, 2008 and 2009.8 Ministry of Small Business, Technology and Economic Development, Major Projects Inventory, Fourth Quarter 2009.9 Building Canada, BC Infrastructure Projects.10 City of Kamloops and City of Kelowna, Building Permit Statistics.11 BC Real Estate Association.


Table 1-4: Business Incorporations and Bankruptcies, Thompson-Okanagan Development Region,

2004 to 2009

Percentage Change

2004 2005 2006 2007 2008 2009

5-Year

2004-09

1-Year

2008-09

Business Incorporations 2,039 2,948 3,196 3,446 3,124 2,375 +16.5% -24.0%

Business Bankruptcies 148 151 116 90 86 66 -55.4% -23.3%

Source: BC Stats and Office of the Superintendent of Bankruptcy Canada

Despite last year’s financial difficulties, bankruptcies in the TODR also declined for the eighth consecutive year.

The TODR’s reduction in bankruptcies ranked fifth among the Development Regions—outranking the Cariboo,

which saw bankruptcies decline 16.7%, and the North Coast and Mainland/Southwest, where bankruptcies

increased 20% and 11.6% respectively. This finding suggests that most entrepreneurs in the TODR were

sufficiently resilient to withstand last year’s economic downturn.

Business Establishments

The number of business establishments in the TODR increased last year for the seventh consecutive year.

Last year’s increase, while modest (1.2%), was nevertheless second only to that of the Vancouver Island/

Coast Development Region (1.4%). This growth resulted from an increase in self-employment (443) and small

businesses with 1 to 19 employees (103), that offset a loss in businesses employing 20 or more employees (-34).

The Region’s growth in self-employment is not surprising given its high number of retirees and semi-retirees,

who tend to undertake consulting work or open a one person business to supplement their retirement income. In

fact, self-employment accounts for approximately half of all business establishments in the TODR.

Table 1-5: Number of Business Establishments – all sizes, Thompson-Okanagan Development Region,

2007 to 200912

Percentage Change

Region 2007 2008 2009

3-Year

2007-09

1-Year

2008-09

Thompson-Okanagan 43,045 43,684 44,196 +2.7% +1.2%

British Columbia 360,779 360,882 362,665 +0.5% +0.5%

Source: Statistics Canada

12 Statistics Canada has changed its methodology in measuring business counts, thus the data reported here are inconsistent with figures reported in earlier editions of this publication. Previously, the concept of a ‘statistical establishment’ was the measure that was used. In 2008, the concept of a ‘statistical location’ was introduced with data back to 2007 available. The change to business location counts was made because they provide a better measurement of actual business units. Due to this change, the reported number of businesses will be higher than would be the case if the earlier framework was still in use.


L I V E I n d i c a t o r s

Educational Achievement

Educational achievement has a significant effect on labour force productivity, and in the longer-term, purchasing

power. In 2009, the percentage of the TODR’s labour force with post-secondary education increased from 57.5%

to 61%. Last year’s improvement of 3.5 percentage points (ppt) ranked second among the Development Regions,

only marginally behind that of the Kootenays, which improved by 3.7 ppt.

Educational attainment in the TODR ranked third-highest among the Development Regions for the fifth

consecutive year, behind the Mainland/Southwest (65%) and Vancouver Island/Coast (61.9%), but has narrowed

its gap with the two leaders by 5.4 ppt and 4 ppt over the last five years.

Table 1-6: Percent of Labour Force, Age 25-54, with a Post-Secondary Certificate/Diploma or Higher,

Thompson-Okanagan Development Region, 2004 to 2009Percentage Point

Change

Region 2004 2005 2006 2007 2008 2009

5-Year

2004-09

1-Year

2008-09



Source: Statistics Canada, Labour Force Survey, Custom Table

Both the number of workers with post-secondary diplomas and university degrees increased last year in the

TODR. But the increase in university graduates was double (4,800) that of those with diploma accreditation

(2,400). Viewed over the past five years, the increase in educational attainment in the TODR reveals a clear

upward trend, increasing 7.3 ppt, which is the largest gain among the Development Regions. The opening of UBC

Okanagan and the upgrading of Thompson Rivers University13 into a full-degree granting institution in 2005, as

well as the relocation of BC’s open learning university to Thompson Rivers University in 2007 have undoubtedly

contributed to this increase.

Dependency on the Social Safety Net

Dependence on unemployment insurance or social assistance in the TODR doubled last year, from 2.9% to 5.8%.

Last year’s increase of 2.9 ppt tied that of the Northeast and was the highest among the Development Regions.

Nevertheless, the TODR’s 2009 dependency rate ranked fifth among the Development Regions, which ranged

from a low of 3.8% in the Mainland/Southwest to a high of 8.7% in the North Coast.

13 Formerly known as the University College of the Cariboo.


Table 1-7: Basic Income Assistance Recipients & EI Beneficiaries as a Percent of the Population, Age 19-64,

Thompson-Okanagan Development Region, 2007 to 200914, 15

Region 2007 2008 2009

Okanagan-Similkameen 2.4 3.0 5.9

Thompson-Nicola 2.7 3.0 6.2

Central Okanagan 2.0 2.5 5.4

North Okanagan 2.3 3.1 6.1

Columbia-Shuswap 2.5 3.3 5.6

Development Region Total 2.3 2.9 5.8

British Columbia 2.1 2.4 4.4Source: BC Stats

Pre-Tax Income

Real pre-tax income per taxfiler can be used to compare purchasing power between the Development Regions.16

Although the most recent regional income data is only available to 2008, by looking at economic conditions last

year, we can make an educated guess about how real income has subsequently changed.

Between 2004 and 2007, real pre-tax income in the TODR grew by 17%, but declined moderately in 2008 (-2.1%)

because of job losses and lower investment income in the fourth quarter of the year. While the TODR’s income

growth over the four-year period (14.6%) was higher than all Development Regions but the Northeast, which

grew by 19.7%, 2008’s contraction exceeded the provincial average (-1.9%), and was the third-largest after the

Nechako (-3.3%) and Mainland/Southwest (-2.4%).

Table 1-8: Real Pre-Tax Income per Taxfiler (2002$), Thompson/Okanagan Development Region,

2004 to 2008

Percentage Change

Region 2004 2005 2006 2007 2008

4-Year

2004-08

1-Year

2007-08

Thompson-Okanagan $29,714 $30,842 $32,966 $34,777 $34,045 +14.6% -2.1%

British Columbia $32,323 $33,430 $35,569 $37,110 $36,406 +12.6% -1.9%

Source: BC Stats, British Columbia Neighbourhood Income Demographics

Within the TODR, real income growth among the Regional Districts over the four-year period was fairly

consistent, ranging from 12.4% to 13.6%, except for the Central Okanagan Regional District, where it was

substantially higher (16.9%) due to population growth and development. 2008’s contraction was also fairly

consistent across the TODR, ranging from -2.1% to -2.8%, with the exception of the Thompson-Nicola Regional

District (-1.0%).

14 Rates are as of September for each year, and data is unavailable for years prior to 2007. These figures include those on temporary assistance, but exclude those on continuous assistance (disabled or with persistent multiple barriers to employment), children in the home of a relative, and OAS/seniors and aboriginal people living on reserve.

15 As of September 2009, BC Stats has revised these statistics to include only a subset of those receiving Employment Insurance to better align with Statistics Canada’s Employment Insurance Releases. These figures now include those receiving regular benefits, fishing benefits, work sharing, employment benefits, and support measures and excludes those receiving sickness benefits, maternity benefits, and parental benefits.

16 Pre-tax income is deflated by the Consumer Price Index, with a base year of 2002. In previous editions, we have used real income per capita an indicator; however, the recent release of census population figures has shown that, in some cases, population estimates made by statistical agencies between census years significantly diverge from census counts. Therefore, we have used the number of taxfilers as the denominator in this edition of the report, as it is more accurate. Data source: BC Stats, British Columbia Neighbourhood Income Demographics. See the glossary at the end of this report for definitions of “pre-tax income” and “taxfiler.”


While the fourth quarter of 2008 marked the start of the economic downturn, its full impact was felt in 2009.

Job losses, rising unemployment and lower investment income in the TODR last year will undoubtedly be

reflected in future income data.

C o n c l u s i o n s

Last year’s economic recession took its toll on the TODR, as it did on the entire province. Tourism was down.

Capital investment, construction and new housing starts in particular, which led economic growth and job

creation in the TODR over the last five years, were depressed throughout the year. As well, the already struggling

forest industry was hit by major fires and record low demand for lumber. All of this led to substantial job losses

and the highest unemployment and dependence on unemployment insurance and social assistance in over

five years. Not surprisingly, business incorporations were also down, but existing businesses held their own,

as bankruptcies fell to their lowest level in a decade and the number of establishments grew for the seventh

straight year.

At the same time, the TODR has shown some early signs of a turnaround. Housing sales have recovered since

last summer, buoyed by low mortgage rates, lower prices, and pent-up demand. Dwindling house supply appears

to be coaxing a rebound in building permits and construction. Predictions of a modest increase in US housing

starts17 and increased overseas demand, especially from China, also bode well for higher lumber demand in 2010.

Added to this is the increase in the TODR’s labour educational attainment, which furthers the region’s ability to

diversify its economy and support value-added enterprises. Most economists agree that recovery will be slow

and return the economy to a more moderate level of activity.

17 Conference Board of Canada.



G l o s s a r y o f D e f i n i t i o n s

Business establishments:• Production entity or group of entities that produces goods or services, does not

cross provincial boundaries, and provides data on value of output and input costs to the government.

Employment income:• Includes wages and salaries, commissions from employment, training allowances, tips

and gratuities, and all income from self-employment (business, professional, farming, fishing income, and

commissions).

Job creation: • Change in number of employed individuals between two given years.

Pre-tax income: • Comprised of labour force income (employment income, wages and salaries, income

from self-employment, and employment insurance benefits), pension income, old age security, CPP/QPP,

superannuation, family allowance income, interest and other investment income, limited partnership income,

rental income, other income (such as alimony and income for non-filing spouses), RRSP income, non-

taxable income, GST credit, child tax credit, workers’ compensation payments, social assistance payments,

and guaranteed income supplements. Monies not included in pre-tax income: veterans’ disability and

dependent pensioners’ payments, war veterans’ allowances, lottery winnings, and capital gains.

Social safety net: • Transfers to unemployed individuals and families from the federal and provincial

governments under the auspices of the Income Assistance and Employment Insurance programs.

Taxfilers: • Those individuals who have filed a tax return for the reference year, and were alive at the end of

the year. Non-filing spouses and non-filing children are not included.

Unemployment rate:• Share of employable labour force looking for work but unable to find it.

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