IV.

Economy

The economy of St. John’s is based largely on the administration of government services at the federal, provincial, and municipal levels (15 percent of the labor force); educational services (10 percent); and health and social services (12 percent). Other service jobs account for 14 percent, trade for 19 percent, and other industries for 16 percent. Manufacturing is relatively unimportant to the city’s economy, involving only 6 percent of the labor force. An additional 6 percent are employed in construction, and less than 2 percent are engaged in fishing and other primary activities. These figures are for the experienced labor force; the unemployed include young people looking for work who have not found it yet and thus cannot be classified.

Like the province of Newfoundland and Labrador as a whole, St. John’s is economically depressed. In the late 1990s, the official unemployment rate in the city was about 15 percent, well above the Canadian average. St. John’s has also suffered declines in inner-city population and retail trade. As people have left the city for newer suburban homes, merchants have followed them, setting up shop in suburban shopping malls. These migrations, combined with the arrival of large-scale retail chains providing lower-priced goods, have changed the face of the city’s downtown area.

One of the most serious problems facing the economy of St. John’s is the decline of the local shipping industry. When Newfoundland joined Canada in 1949, the introduction of cheaper Canadian manufactured goods caused local industries to decline and reduced the volume of commercial activity at the city’s port. The decline worsened after 1965, when a paved highway across Newfoundland Island was completed. The highway allowed mainland producers to bypass St. John’s and use cities such as Channel-Port aux Basques on the southeast coast to ship their goods to other island cities.

While the St. John’s port may be able to continue supplying the needs of the Avalon Peninsula for bulky items, many observers believe that the small size of the market that the port serves will limit the possibilities for future growth. St. John’s has long been referred to as “the service station of the Atlantic”; however, the closing of the city’s dry dock (dock in which ships are placed for repairs) in 1994 has threatened this function as well. Recent discoveries of large oil and natural gas reserves off the coast of Newfoundland and Labrador have brought some hope of potential economic upturn for the port.

St. John’s has an international airport, which connects the city to mainland Canada and points outside the country. The city is also the eastern terminus of the Trans-Canada Highway. Although traffic through the city’s harbor has diminished considerably, the port of St. John’s continues to serve as an important Canadian Coast Guard depot and port of call for container ships. Passenger service on the Newfoundland Railway was terminated in the 1960s due to a long history of financial losses. The railway was completely closed and the tracks torn up in the late 1980s.