How Canada can buck the trend of lagging business investment: Senator Bellemare


The future of Canada is not so bright.

Recent data, notably those published in 2023 by the Centre sur la productivité et prospérité (in French only), show that Canadians’ standard of living — as measured by gross domestic product (GDP) per capita — is falling behind other member countries of the Organisation for Economic Co-operation and Development (OECD).

In 1981, Canada was in sixth position out of 20 countries but dropped to a dismal 12th place in 2021, just below the OECD average. If this trend continues, Canada will be in 14th place by 2060.

This situation is due mainly to low productivity growth in Canada. Indeed, GDP per hour worked is among the lowest in OECD countries.

This does not mean that Canadians are lazier than other populations. It means that we produce less per hour of work because the tools we use — like computer programs, machinery and robots — are not up to date.

The 2023 report, which used OECD statistics, shows that private business investment per employment in Canada is also among the lowest in OECD countries.

It’s time the federal government tackle these challenges with innovative policies to stimulate private investment.

Some argue that the solution lies in the intangible sector — that Canada needs to address the issue of intellectual property and data as assets.

Canadians are strong innovators because we produce good research in our universities and research centres, but we fail in commercializing these innovations. We are a pipeline of innovation for other countries to exploit. Implementing a Canadian strategy on intangible assets would redress the situation, according to this viewpoint.

While this approach has merits, it is insufficient on its own to counteract the anticipated decline of our economy.

Skills development is a major blind spot.

Business investments in machinery, computers, robots and artificial intelligence still rely on humans for Canada to reap the benefits. Businesses won’t invest if there are no people with the necessary skills to operate and work with up-to-date tools.

Canada does not have the skilled workforce it needs to compete in the industries of the 21st century and has not yet embraced the skills revolution like most OECD countries.

We are a country with a low-density and aging population. We have natural resources and an important proportion of our youth have university degrees. However, too many Canadians lack technical and digital skills. 

Countries ahead of Canada have invested in skills development and have also built long-term strategies for updating and reskilling individuals. The European Union (EU) is working with its members to promote assessment, recognition and development in essential skills, such as digital, literacy, numeracy and green skills. EU countries have also developed active labour market measures to reskill and upskill dislocated workers to a much greater extent than we have.

Canadians are aware of the skills challenges. A survey produced by my office and conducted with pollster Nik Nanos in 2019 indicated that 56.4% of Canadians want to upgrade their skills to adapt to and take advantage of future technological changes.

To address our skills gap and low business investment, the federal government must urgently create an Economic and Social Council with members from federal, provincial and territorial governments, as well as from the private sector.

In 2021, the prime minister mandated the finance minister to establish a permanent Council of Economic Advisers to provide independent policy options on long-term and inclusive economic growth so Canadians can achieve a higher standard of living, a better quality of life and a more innovative and skillful economy.

This would be a first step.

Canada also needs to reform and modernize its employment insurance (EI) so that it can be part of the skilled workforce solution. As it stands now, EI collects around $27 billion every year, financed entirely by employers and employees.

These are the kinds of actions we need to take collectively — and urgently — to prevent the doomsday scenario projected by OECD data.

Senator Diane Bellemare represents the senatorial division of Alma in Quebec.

 

A version of this article was published in The Hill Times on June 12, 2023.



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