'Health and social conditions in Nunavut have improved only slightly since 1999'

The rise of an affluent new Inuit middle class could trigger more social tension between Nunavut's haves and have-nots, a big new economic report says.

"While there have been improvements in personal income resulting in the emergence of a new Inuit middle class who have found success in the wage economy, a separation in the standard of living has emerged between this group and those that have not been as successful," the new report says.

That's just one of many findings listed in a recently-completed report called Our Future to Choose: 2008 Nunavut Economic Outlook, prepared for the Nunavut Economic Forum by economists Graeme Clinton and Stephen Vail.

The researchers found Nunavut's economy grew by leaps and bounds after 1999, but poor health and social conditions keep many Nunavummiut from sharing in the wealth.

"Almost three-quarters of Nunavut's working age population struggle with serious literacy and numeracy challenges or do not meet the minimum level required to participate in a modern knowledge-based economy," the report finds.

But if you're one of Nunavut's educated few, chances are you're feeling pretty prosperous today.

The researchers found Nunavut's economy boomed between 2004 and 2007, creating 1,700 new jobs for those who are capable of doing them.

The biggest year was 2007, when the territory's economy grew by a whopping 13 per cent, mostly because of a huge 63 per cent increase in capital spending by government and business.

In turn, the unemployment rate fell from 13 per cent to 8.9 per cent in just three years – but only in the 10 largest communities.

For the 15 smallest communities, unemployment remained stuck at a disturbing 22.7 per cent.

But the unemployment rate for Inuit in all communities fell to 12.3 per cent in 2007, down from 18.4 per cent in 2004.

Those who benefited from the boom went on a spending spree, buying new vehicles, furniture and clothing. In 2007 alone, this conspicuous consumption of durable goods increased by 8.8 per cent.

If this trend continues, social conflict among Inuit could intensify in the future, the report says.

"Those with the skills, abilities and aptitudes to participate will see dramatic increases in their income. However, those unable to participate, whether as a result of education, family responsibilities, or anything else, will see their standard of living fall in comparison, creating social tension at the community level."

And a big reason for this is that Nunavut made little progress on health and education.

"The latest available data show that for the most part, health and social conditions in Nunavut have improved only slightly since 1999 if at all," the report says.

Because of this, the development of Nunavut's people – human capital – remains the territory's biggest challenge.

To that end, the biggest task is to ensure that more Nunavummiut graduate from high school with the tools they need to create and participate in prosperity, the report says.

As for population health, the report's authors say it's obvious that it will take a long time to improve the poor health status of Nunavummiut.

But they say their report confirms that Nunavut needs a "steady and concerted effort" to deal with essential factors that affect health, such as diet, shelter, prevention of communicable diseases, improved mental health, suicide prevention, fewer addictions, and safe water.

For the immediate future, the researchers predict that growth in Nunavut's economy will shrivel down to zero over the next two years.

That's because the global financial crisis has hammered Nunavut's mineral exploration firms, depriving them of the cash they need to move ahead.

"It would be safe to assume at this point all large-scale mining projects in the territory are being re-evaluated by their respective owners."

But there's one good thing to look forward to next year amidst all the economic gloom: cheaper energy prices.

The current recession drove crude oil prices down to about $38 a barrel this week and many analysts expect the price of oil could drop even further before it hits bottom.

This means that refined products, such as gasoline, home heating oil and aircraft fuel could cost less next year.

"This will have a positive impact on the territorial government's balance sheet if it can secure a portion of this year's bulk fuel purchase at this reduced price and at the very least will mean a lower fuel bill next year," the report says.

The 2008 Economic Outlook is the fourth in a series of reports that began in 2001.

The first was issued by the Conference Board of Canada. After that, they were taken over by the Nunavut Economic Forum, which is made up of a large group of economic development organizations in Nunavut.

The report is issued in advance of the Sivummut III economic development conference, to be held early this year.

The report was actually completed by about August of last year.

But after the U.S. banking system seized up in September, triggering a global financial crisis, the NEF took the document back from the printer and wrote a new introduction for it.