Human Capital's Role in the Canadian Economy: Investing in Canada's Future
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7 June, 2022 Human Capital's Role in the Canadian Economy: Investing in Canada's Future
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June 2022
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June 7, 2022
The Empire Club of Canada Presents

Human Capital’s Role in the Canadian Economy: Investing in Canada’s Future

Chairman: Kelly Jackson, President, The Empire Club of Canada; Vice-President, External Affairs & Professional Learning, Humber College

Moderator
Elena Cherney, Coverage Editor, Wall Street Journal

Panelists
The Hon. Ahmed Hussen, Minister of Housing and Diversity and Inclusion, Government of Canada
Kathleen Taylor, Chair of the Board, RBC
Mark Wiseman, Chairman, AIMCo
Senator Hassan Yussuff, Senate of Canada

Distinguished Guest Speaker
Graham Fox, Managing Principal, Navigator

Introduction
It is a great honour for me to be here at the Empire Club of Canada today, which is arguably the most famous and historically relevant speaker’s podium to have ever existed in Canada. It has offered its podium to such international luminaries as Winston Churchill, Ronald Reagan, Audrey Hepburn, the Dalai Lama, Indira Gandhi, and closer to home, from Pierre Trudeau to Justin Trudeau. Literally generations of our great nation's leaders, alongside with those of the world's top international diplomats, heads of state, and business and thought leaders.

It is a real honour and distinct privilege to be invited to speak to the Empire Club of Canada, which has been welcoming international diplomats, leaders in business, and in science, and in politics. When they stand at that podium, they speak not only to the entire country, but they can speak to the entire world.

Welcome Address by Kelly Jackson, President, The Empire Club of Canada
Good afternoon fellow directors, past presidents, members, and guests. Welcome to the 118th season of the Empire Club of Canada. My name is Kelly Jackson. I’m the President of the Board of Directors of the Empire Club of Canada, and Vice-President of External Affairs and Professional Learning at Humber College. I'm your host for today's event, “Human Capital’s Role in the Canadian Economy: Investing in Canada's Future.

I'd like to begin this afternoon with an acknowledgement that I'm hosting this event within the Traditional and Treaty Lands of the Mississaugas of the Credit, and the homelands of the Anishinaabe, the Haudenosaunee, and the Wyandot Peoples. In acknowledging Traditional Territories, I do so from a place of understanding the privilege my ancestors and I have had in this country, since they first arrived here in the 1830’s. As farmers in Southwestern Ontario, I imagine they felt a deep connection to the land, and yet likely did not recognize how that connection was built on the displacement of others. Delivering a land acknowledgement, for me, it's always an important opportunity to reflect on our human connection, and responsibility to care for the land; and to recognize that to do so, we must always respect each other, and acknowledge our histories. We encourage everyone tuning in today to learn more about the Traditional Territory on which you work and live.

The Empire Club of Canada's a non-profit organization. So, I now want to take a moment to recognize our sponsors, who generously support the Club, and make these events possible, and complimentary, for our supporters to attend. Thank you to our lead event sponsors, CIBC, Gallant MacDonald, and Navigator. Thank you to today's supporting sponsor, Torys LLP; and a big thank you to our season sponsors, Bruce Power, Canadian Bankers Association, LiUNA, and Waste Connections of Canada.

Before we get started, just a few housekeeping notes. I’d like to remind everybody who is participating today, that this is an interactive event. So, if you're attending live, I encourage you to engage by taking advantage of the question box you can see below your on-screen video player. We have reserved some time for audience questions at the end of the discussion. We also invite you to share your thoughts on social media, using the hashtags displayed on screen throughout the event. And if you require technical assistance at any point, please start a conversation with our team, using the chat button on the right-hand side of your screen. To those watching on-demand later, and to those tuning in on the podcast, welcome.

It is now my honour to welcome our guests today to the Empire Club of Canada's virtual stage for the first time. They include the Honourable Ahmed Hussen, Canada's Minister of Housing, and Diversity and Inclusion; Kathleen Taylor, Chair of the Board, RBC; Mark Wiseman, Chairman AIMCo; Senator Hassan Yussuff; and last but not least, today's moderator, Elena Cherny, Coverage Editor, Wall Street Journal; welcome. If you'd like to learn more about our speakers, you can find their full bios on the page below the video player on your screen. It is now my pleasure to hand it over to Elena to get us started. Welcome, over to you.

Opening Remarks by Elena Cherney, Coverage Editor, Wall Street Journal
Thank you Kelly, and the Empire Club, and welcome to our panelists. This is a fascinating moment to be looking at the role of human capital in the Canadian economy. Right now, unemployment in this country is at a record low. After hitting a high of over 13% during the pandemic, there are now not enough workers to fill open positions in many sectors, and many employers are having to hike wages to fill jobs, which of course, is stoking inflation, as we know. Those conditions may change, if, and as the economy cools, but for this panel, the question today is a longer term and more structural one, taking into account demographic trends, technology, changes in how we work, and what businesses will want and need. How can Canada build a better workforce? What kind of human capital investments are needed? And who should fund and deliver them? Let's talk first about the challenge, and frame it in terms of the moment. What lessons of the last two plus years of pandemic and recovery taught us about human capital and workforce, and the workforce this country needs? Can I ask Hassan for you to start, by helping us to better understand what is the human capital challenge facing Canada? And what kinds of investments should we be considering in human capital and the future workforce?

Senator Hassan Yussuff, Senate of Canada
Well, I think we've been doing a relatively good job, I think we can do a better job in regard to the people that we're bringing into the country, and how we integrate them into the economy. And there's a variety of things, obviously, that face jurisdiction. And across the country, I think there's been a broad base support, to large extent, for immigration across the country. Canadians see this as a positive thing, and I think, for the most part, we tend to as a country find a very good place of integrating our immigrants. But the success of our immigrants in regard to their skill level, and the talent they bring, have not been as successful in regard to how we have treated people. So, we got to look at how we can get better outcome for immigrants that are coming here with incredible skill, but at the same time, need to recognize that, of course, the labour market continue to change. And of course, the pandemic certainly has shown that our ability to try to ramp up the level of immigrants we want to settle in the country, certainly, there's a backlog in the country we need to clear up. And more importantly, we need to, of course, accelerate how we can better integrate those immigrants that are coming here, and more importantly, how we adapt them to the skills that they have. But also, how do we upgrade their skills to ensure they're going to continue to be successful in regard to how they perform over a longer period in the country?

Elena Cherney
You've moved us very quickly to what I suspect will be the crux of the conversation around immigration as one of the main levers. Let's back up just a little bit, though, and talk about the labour force, the workforce and human capital. What kinds of workers are needed? What is the problem? Is it a question of numbers? It is a question—Mark, I see you're itching to jump in here.

Mark Wiseman, Chairman, AIMCo
Thanks, Elena. I’ll remember to unmute myself. Go ahead Hassan, first.

Senator Hassan Yussuff
No, no, absolutely. I'll coming right after you. So, I'm sure we'll complement each other.

Mark Wiseman
Or you'll vehemently disagree with me, one of the two. Look, I think what's happened with the with the pandemic, Elena, is it's essentially accelerated a lot of the trends that we knew were already coming down the pipe. And the incredible thing about demographics—and I know this, from my time of running the Canada Pension Plan Investment Board—is that they're unbelievably predictable. We know, for example, if there were X number of people born in the year 2000, we know how many 22-year-olds we're going to have today. And so, we've known about these demographic trends, we've known about the ageing of the Canadian population, not just the number of people, but the shape of that population. What I mean by the shape of that population is something called the dependency ratio, which is really, really important, which is the number of people working in our society, relative to the number of retirees who depend on those workers to help support them in their old age, or, in fact, younger dependents as well. So, the thing that's important is, we've not just had a—we've had a growing population, but on a relative basis, that middle of that working age population has been shrinking. That we knew was coming down the pipe, and it's been accelerated. for a whole bunch of reasons, by the pandemic. So, it's kind of come about 10 years earlier than we expected it. And today, we are now in the middle, in my view, of a global war for talent. And Canada actually has a lot of advantages in terms of how it's going to fight that war, but we have to realize that we're in that war for talent, and be incredibly proactive about how we are going to support our society going forward. And it's not just about workers, but it's also about having an appropriate base to pay taxes, to support the types of things that we've come to rely on in this country, whether it's, you know, high-quality public healthcare, whether it's the type of more broad social services that we want to have in the country, and a robust economy. So all of those things come together, and the pandemic has accelerated what we knew was going to happen.

Elena Cherney
Okay, let's stick with that as the sort of challenge that has been laying out the challenge. Katie, how has the—can you talk a little bit more, from more of a private sector perspective, what have you seen in terms of the way that the pandemic has accelerated these demographic trends and changes in the workforce that were already underway?

Kathleen Taylor, Chair of the Board, RBC
Sure, thank you. There's lots of ways to think about human capital, but really simply stated, it's the aggregation of the knowledge, the skills, the experience of an entire population. And as we've heard from Mark, and the Senator, Canada is very blessed in this regard, right? We have a huge and deep Indigenous population, traditions, wisdom from those peoples; extraordinary rates of education, and high degrees of achievement, not only among our educated students, but also we think about our universities, our colleges, our institutions and faculties. And large immigration, which we've touched on, that is made Canada one of the most open and diverse societies in the world. But the mere fact of all of that, the mere fact of a great human capital base, isn't necessarily sufficient, as we've learned in the last two years. Just having great human capital, great people, with great with great potential, doesn't mean that everyone is thriving and finding a sense of belonging in the economy, as we've as we've organized. The last two years have heightened this, think about just the impacts of the pandemic, which we're still living with, the economic dislocation that was caused to so many through those years, the social justice issues that arose both separately and combined with the pandemic, really gave rise, to me, to a broader understanding of the intersectionality of so many issues coming together simultaneously, whether those are related to our Indigenous peoples, our peoples of colour, our economy, the challenges that women and working families faced during the pandemic, all of which made very clear that all of our policies, whether it be industrial policy, economic policy, housing policy, human capital policy, immigration policy; all of these things need to be think to thought about much more holistically, I think, going forward. Because what kind of human capital you need is dependent on what kind of economy you're planning for, what kind of your economy you're planning for, drives what kind of human capital needs you're going to have, and the infrastructure that needs to be built to support all of that. All of it is so interconnected, so interrelated, and I think, for me, that was the great lesson of the last little while, is that, while many of these trends were underway, and many of them were known, some of them have accelerated, but they have all become more interconnected.

Elena Cherney
I still want to do a little bit more work here—and maybe Ahmed, you can help us with this—just defining the problem. Mark is talking about the dependency ratio, and demographic factors that accelerated, Katie, you’re alluding to various other forces that have also kind of combined to highlight the problem. Ahmed, can you help us to better understand, what do you think is the bottom line problem here? Is it a number of workers? Are we missing the right workers in certain sectors? Is it a skills mismatch? Help us to understand what is the problem that we're trying to solve here.

The Hon. Ahmed Hussen, Minister of Housing and Diversity and Inclusion, Government of Canada
First of all, I thank you for the opportunity. I want to really highlight what Mark has said, the issue of the ratio between workers and retirees is extremely important; it should be a national conversation. I used to highlight that every time that I speak to employers, and to folks who didn't really realize the importance of immigration to labour market growth. But what I see as some of the major problems can be summarized as this: you can build a bridge, and unless cars and people use the bridge, then the bridge is useless. We have trade agreements that are very progressive, that really haven't been leveraged adequately, in my opinion, or aggressively by small- and medium-sized enterprises. We have emerging markets in the world that have really good return on investment, but our businesses are simply not aware of them, or are not taking enough advantage. Our immigration system is the same; we have a great immigration system. The OECD did an independent three-year review of our entire immigration system; they said it should be the gold standard for everyone else, but they suggested two areas of improvement: one was better connection between our immigration and labour market needs, and the second thing they called for, is spreading the benefits of immigration to rural Canada. By the time the report came out, we were already doing the second thing, which is we introduced the Rural Immigration Program. But the first one remains; how do we connect better our severe labour market shortages? And I believe we have 1 million unfilled jobs today in Canada. How do we fill those jobs with a really amazing tool, that the whole world understands is a really good tool, but unless you use the tool even more efficiently and more effectively, you lose out.

And the final thing is on the credentials; this comes up every time that I do a town hall across the country. Unfortunately, we can't do anything about it. It's a provincial issue; provinces have to take this on. We can kind of think around the edges, but the Constitution says it's an area of provincial responsibility. So, I would say, with Canada being an energy superpower, with Canada having a lot of the critical minerals that are needed for the for the green transition, with our population growth, with our skills, ability to attract the best and the brightest, we just need to continue to realize that we have all these bridges, but we need to maximize them. We need to maximize the progressive trade agreements we've signed; we need to really maximize the benefits of immigration. Why are we not doing more matchmaking? I met a trucking company owner in New Brunswick who had to go to 14 different countries to seek out truck drivers; he shouldn't have had to do that. Our embassies need to do a better job to do the matchmaking. And some of things that we can do, is better connect small- and medium-sized employers to highly skilled workers, and countries that have retooled their education and technical skills training systems to supply skilled labour to advanced countries. We're not leveraging that—and our immigration system is way better than Germany, and France, and others, who are taking advantage of those of those opportunities. I met the Tunisian ambassador who said, “if an employer calls us, we can turn around skilled labourers that meet the specifications within hours, or days, or weeks, depending on what the request is.” So, we have all these tools, but we need to really have national leadership, and provincial, and municipal, and private sector collaboration, to leverage all these different tools that we have.

The last thing I'll say is, reconciliation with Indigenous peoples. We see that as the process, we see that as something that we have to do, of course, but it is also it is also an economic development opportunity, for both Canada and Indigenous Nations. Many countries that I've spoken to, look at us as their counterpart that they need to learn from, in terms of unlocking natural resources in areas inhabited by their Indigenous peoples, and they look to Canada as an example of how to do that right. Now, are we leveraging that? They want to partner with us, as opposed to other countries, because they say Canadian companies are bringing that extra element. And so, how are we leveraging that? The answer, again, is no. So, so that would be my theme.

Mark Wiseman
Sorry, can just make one point, which is why I think this panel is so important, and why this discussion is so important. You know, I'm a businessperson, and as I think about it, you know, go back to, you know, your grade 9 economics class, your grade 10 economic class, there's two inputs to any firm, in any commercial enterprise, and that's capital and labour. And we talk a lot in this country about the capital part. So, the Minister was speaking about bridges, and I—a little bit metaphorically, and I think a little bit literally—and that's important. And having the right infrastructure, and the right capital spending, and R&D; that's critical. But we tend, in our discussions heretofore, not to talk about the labour component of a vibrant economy, and that's what's becoming very clear through the pandemic. And so, as a country, it’s not just to focus on capital, but we have to focus on labour, and that's number of people, and giving those people the right skills; bringing in people with the right skills, but as importantly, skilling them when they get here, and reskilling those who whose skills are no longer necessarily the ones that we need for a modern economy. And so, bridges, toll roads, ports, airports, pipelines, great; but there's a whole other part of the equation that's required for economic success.

Kathleen Taylor
I think that’s a great point, Mark. And one of the things I've been talking about a lot through the pandemic, is thinking about physical infrastructure—the kind that you've described there, but also pairing that with social infrastructure. So, the bridge analogy is a great one I use all the time, which is the bridges, roads, subways, and trains all of us use to get to work, to get home, to get to the places we need to go, but—and being very involved in the childcare policy space this last couple of years—that's infrastructure too, right? Because women, working families, as we learned during the pandemic, they can't even get out the door, to drive on the road, to take the time, unless that social infrastructure is there to take care of their children, while they're leaving and while they're away. And so, expanding, even beyond childcare, to the other elements of the economy that are needed to support the traditional thinking around infrastructure, and how do we do a better job of integrating all of those needs, so that human capital and investment capital works more seamlessly together.

Elena Cherney
Let's come back to some of these very important questions; reskilling, childcare, ways of supporting human capital that would, you know, further allow us to fill some of these needs. But I think the bottom line here that I'm hearing from all of you, is really around the gap between that's been created by demographics and sped up by forces unleashed by the pandemic. There simply aren't enough workers, and, particularly in some critical sectors, the main driver we have—I think all of you have touched on this—the main driver for growing, the only driver for expanding the labour force, is really immigration. And you talked about the need to find ways of better connecting immigration policy with labour market needs. How do we do that? People have been talking about it for a long time, there are clearly gaps and problems. Let's hear from all of you. What are the problems? And what are some possible solutions?

The Hon. Ahmed Hussen
Can I answer that, or—sorry, was that to me?

Elena Cherney
Yes, please.

The Hon. Ahmed Hussen
Yeah, I'm so glad you asked this. So, let me give you an example of a tool that we already have, that no other country has, but that we're not maximizing. We have a great program, that Mark knows very well, and Hassan as well, and others, called the Express Entry Program. It looks at your skills, your education, your work experience, your age, your language skills, and you put that into a portal, and it throws out a number. And based on that score, you compete against everyone else, and you get selected for permanent residency in Canada in six months. Now, great program, it doesn't directly connect with the current labour market shortages. In other words, the better way to really leverage that program, would be to take a look—so, we have about, I think, two, or three, or four draws of that program every year. What I would do, is I’d go to the Minister of Employment and Labour, and I would say, “give me a list of the top 10 most severe labour market shortages, by occupation, in Canada.” I would take those top 10, and then I would run a special draw, or two special draws, for the express entry. And I would say, “for this particular draw, only these 10 professions can apply, or these 10 occupations,” and then I would just match them. And I would keep doing that, until—and then we have a new list of 10 most severe when we've solved the first one, we’ll do another one, and we'll do another one. That's just one example of a problem that we have, but that we're not connecting directly to the actual labour market shortages that exists today.

Elena Cherney
Let me just push you a little bit on that, since you are a member of cabinet. Why are we not doing that? What is the—why is that not happening?

The Hon. Ahmed Hussen
I think some of our IT systems are much older than myself, there’s 56-year-old systems running some of our benefit programs and our processing. So, there's a digitization process that's ongoing in government that has to be completed. I think there has to be better alignment of technology, and policymaking, and political will, and everything has to kind of align to make that happen, but it’s something that I'm pushing for.

The second thing that I'll say is this; apart from immigration, you talked about labour market shortages. I think one of the things that the pandemic has laid bare, is how, at the same time as we're talking about labour market shortages, and severe sort of lack of ability to find people, we find in certain segments of the population, there's very high unemployment still. So, for young Black Canadian males, for example, in GTA, they have double the unemployment rate of their other peers; Indigenous peoples; women, for example. And whenever I talked about childcare when I was putting together the Canada Early Learning and Childcare Plan, depending on the audience, I would mainly focus on the economic benefits, and the labour market participation that this would unleash. Hundreds of thousands of women will now enter the job market, because they have access to affordable childcare. It is a real, you know, investment in human capital, and plugging those labour market shortages, but also increasing productivity, right? And so, I think, you know, a lot of this stuff that is the solution to labour market shortages and skill shortages, also has a social justice bent to it. If we really lean in on tackling the exclusion of Black Canadians, and Indigenous peoples, and other folks from our economy, we actually solve some of our economic challenges as well. And that was one of the ways that I would sell childcare to CEOs, I would say, “look, this is this is good for your bottom line, and for your productivity.”

Mark Wiseman
I'm gonna jump in a little bit, Elena. First of all, the point that the Minister makes around, you know, how social justice and this issue actually converge is a really, really important one, because, you know, if we have under underutilized people in this country, we should figure out how to utilize their skills as a priority, that's just that's just common sense. It's not just the right thing to do, it’s the right thing to do from an economic point of view as well. But I do want to push back a little bit because this, we've got to make this a priority, and we've got to create efficiency in the system. And you know, an old IT system, I'm sorry, if that was—I’m going to, because he's a friend, I'm going to pick on the Minister a little bit—if this was one of, you know, Katie's senior executives at the Royal Bank of Canada, they’d figure out how to get how to get the IT system fixed, and the shareholders—in this case, citizens of Canada—would hold the executives accountable. We have 1.3 million people, as I understand it, in backlog in the immigration system. The point system, that much vaunted point system in Canada that you also described, there are people lined up; it's over a year backlog in terms of people who are applying to have qualified points, that don't even hear back from the government in terms of getting in. And other countries are moving ahead of us; the UK has now announced a program that anybody who graduates, any foreign student who graduates from the top 50 post-secondary institutions in the UK, is automatically granted permanent residency in the UK, we should do the same.

The Hon. Ahmed Hussen
I'm actually in favour of that. I’ve called for that.

Mark Wiseman
We could do that almost immediately.

The Hon. Ahmed Hussen
We should do that.

Mark Wiseman
And, and we should generally just, you know, get ourselves efficiently moving, and be more competitive. The other thing that's happening today, we talk about where social justice and economic outcomes converge, always a great outcome, is with IT talent coming out of Ukraine, Russia and Belarus. Other countries are picking up incredibly skilled people who want to leave those countries, who don't agree, or they’re either trying to escape aggression, or don't agree with the aggression, and we're losing out incredibly talented people in the exact areas that we'd want—and frankly, those people would rather come to Canada than some of the other places they're going. But it's competitive, and we have to compete. And if we don't learn to compete in real-time, we're going to lose. Sorry, I had to say that.

Elena Cherney
What is the role of the private sector? We've isolated, or—Yes, Hassan?

Senator Hassan Yussuff
Well, I think that, you know, I mean, some of the points have been made, I mean, where are we having this conversation other than here? How do we really, I think, deal with this reality? Because it's not something that just popped up yesterday. This is an ongoing challenge for the country, and the conversations we're having, I think, are not being heard at many levels of government, sometimes at a national level, but also the provincial level, because it's one thing to say that we need to bring more immigrants in the country, and there is a commitment to do that, but ultimately, people who come here also have to succeed, if we're going to utilize their talents and their skills when they come to the country. But people's talent and skills don't remain stagnant, we also have to talk about how we upgrade him. And I think at the same time, there's a recognition that we haven't done such a good job in, of course, to give immigrants the opportunity to succeed. There is data that’s suggesting that people who have come here over a variety of periods, haven't succeeded way we would like them to succeed. And I think that should spell some worry for us, to think about how we can do a better job in ensuring they're going to do that going forward, at the end of the day. But the skill shortage is an issue. It's also, not has to do with immigrants coming into the country; what are we doing to train our own Canadians, or people who are here, to ensure they can connect, to readjust, to the changing labour market that they're faced with, because if we're not training people—they simply think there's a magic wand that's going to meet the skill shortage—we have to continue to train. Employers have to do that, the government's got to encourage that, but also have to support that, to ensure that employers are going to continue to do their part to ensure we're continuing to redevelop people to meet the changing labour market that is ongoing, because it's going to continue to be ongoing. And if we're not doing that, it's simply—okay, Charlie can do widgets anymore, so what do we do with Charlie? Well, if we don't reskill them, how is Charlie going to get a better job? So, I think it's critical in looking to the future. We have to do a better job in how we bring voices together, to figure out how we collaborate to solve, because government can't do it on their own. We've got to work in a multi-dimensional way in the country, employers and others, to figure out how we train people in a better way. And I think that that conversation has to be uniform, it hasn't been uniform, and needs to be uniform, if we're going to succeed at that. And it comes back to the point that Mark has been making, that if you want to attract people and keep putting out this message, Canada's a good place to come, we have to ensure that you're succeeding, because if they don't succeed, they're gonna go someplace else or not come here in the future.

Elena Cherney
I like the fact that we honed in on a specific element of government policy, the IT system that should be doing a better job of matching who comes in, and helping to make the make policy translate into results more effectively. Similarly, let's push a little bit further on the private sector side. What is the role of the private sector? What are some specific steps that companies should be taking this country on reskilling, and helping to ensure that those who come to this country find the success that they've come for. Katie, your thoughts on that?

Kathleen Taylor
Sure, I think it goes directly to the senator’s point around training, reskilling upskilling, onboarding. Clearly, there needs to be much more co-ordination between the private sector and the public sector, as it relates to the human capital agenda. I think of it sort of like government—perhaps, let’s think of in business terms—is in charge of setting the policy and the strategic direction for the industrial and economic outlook for the country, the implementation of that, the execution of that, the operationalization of that, is all in the private sector, or most of its in the private sector. And so, there's an inextricable link between these two streams of thought that needs to come much closer together, if we’re to have any hope of solving these really big problems that will ensure the prosperity of Canada. And to your point, specifically, about what the private sector should be doing, and I think in many ways is doing, is articulating labour. I think that's a very, very important part, how that translates through the point system and the immigration system, we need to talk about further. There are some industries in this country whose need for workers is very dire. I think tourism and hospitality represents about 11% of the Canadian economy. This sector was decimated, from a human capital perspective, when contactless work became much more attractive to people in that sector through the pandemic, and it’s been next to impossible to encourage most people to come back there. And we're just gearing up for our first, what I would call, semi-normal summer; restaurants, hotels, look at what's happening with airports, we're all seeing it. These are all jobs that are considered to be entry-level jobs, but they’re still jobs that are so critical to the economy. So, something we can be doing with our Commonwealth Youth Programs, to try to ease the burden there. We get a lot of young people coming here to try Canada out for the two years that they're allowed to, and then they have to return, or go to another Commonwealth country. From the private sector’s perspective, you know, helping all of those young people, whether they are new to Canada, or whether they are our own population as we've already commented on here, we've got a lot of untapped, wonderful, human opportunity for Canadians who were already here. That's training, that's education, that's a first start a first job. RBC Future Launch, and why that was put in place so many years ago, was to try to bridge this gap from moving from your last piece of education to your first piece of work, and giving all of our young people a chance to really get that great first start. But that training can't stop there. The economy is shifting, preferences for work are shifting, the digital landscape is continuing to expand, and so, all of the time, both private and public sector, I think, have to be thinking together about how do we facilitate an ongoing retraining, upskilling, continuous learning mindset in the country, so that people really get into the habit of continuing to learn and grow as part of their resume.

Elena Cherney
I want to remind folks that—I'm being asked to remind the audience that you can submit questions in the box below the video player. We will go over questions in a few minutes, so please do submit your questions in that box. I want to, before we go to questions, talk about a couple of other pieces.

Mark Wiseman
Elena, can I just jump in just quickly on that point? I'm gonna make a very simple point, which is, you know, we have a productivity gap in this country. We've been talking about that productivity gap, the gap between Canadian productivity and US productivity. And we talk about R&D, and the lack of R&D spending by the Canadian private sector has been a big part of that problem. I haven't seen the stats, but I've got to believe that skilling and reskilling is also part of that productivity gap. So, if we want to address the productivity issue, again, we have to address both capital and labour in closing that gap. So, it's all of these things linked together.

Senator Hassan Yussuff
The OECD number for training spending in this country and the private sector does not—it doesn't look very good, it looks very dismal. And I think that's one area we've got to figure out a way, how do you incentivize employers to say, “you’ve got to spend more on your training.” I mean, obviously, one jurisdiction in the country, Québec, where they incentivize employers to say, “you spend 1% of your payroll on training, or else we're going to tax you.” Now that's one way to get people to do things, but I think we need to do a better job across the country. And the data does not show that we're doing a great job in terms of spending. And if we don't improve that, I think, to Mark's point, we're not going to change the productivity gap in the country.

Elena Cherney
These are some excellent points beyond immigration that will help to amplify and find ways of investing in human capital. Let's talk about another one that's been controversial. What role would raising the retirement age play in managing these demographic changes, and dependency ratio? Are you in favour? Ahmed, are your favourite raising the retirement age?

The Hon. Ahmed Hussen
I think it would be an option that should be considered, at least in terms of allowing folks who want to work beyond their retirement age to do so. It would be a temporary fix; I don't think it would permanently solve the conundrum that Mark alluded to, when he talked about the shape of our population, not just the ratios. And so, it would be one of the tools, but again, it would only give us a little bit of a breathing space while we try to fix the long-term issue. The other piece I wanted to highlight is investments in IP, we lag behind our partner countries when it comes to investments in intellectual property. And then I'll go back to what I said in the beginning, really becoming a little bit less conservative in terms of taking advantage of emerging markets, and seeking out that prosperity, and commercialising the technology that we're developing here in Canada and research institutes.

Senator Hassan Yussuff
I want to make the point on retirement age. I mean, for some folks, obviously, it's an option; their body is in good shape, and their health is in good shape. But there's a lot of people, of course, who are doing very difficult job, that their body do wear out. And of course, you have to really take that into consideration. I think there were obviously changes to Canada Pension, and other programs, that allow people to get a better income if they delay their retirement for an age, and some people are doing that right now. But I think that that is not going to solve our problem in the long term. I think it will solve it for a short period, but I think that the larger challenge is, how do we deal with this demographic bulge that is coming, and is going to accelerate? And I think, to a large extent, how do we also tap into the talent that retirement age is providing? Because these people that are retiring has incredible amount of knowledge and experience that can benefit a lot of young people who need to learn for on them. And how do we bring them back in a way to play a role that can help mentor a lot of young people that want to get into some of the sectors in which actually they perform with?

Mark Wiseman
Now I—can I just jump in there just briefly? We don't really have a mandatory retirement age in Canada. We have that for senators, I think, and court justices, but not too many others. And I think that's good thing. You tend to have, in countries with mandatory retirement ages, where you have the opposite problem, where you just don't have enough jobs for people in the country. But here, there's a lot of flexibility. You can take your CPP early if that's what you decide to do, for example, or you can delay it, and it's prorated economically, appropriately. So, people should have the choice, when they believe that they can, you know, afford and wish to retire, they should be able to do that. So, I wouldn't advocate any change to retirement age in this country, with the exception of senators, which, maybe we could get them to retire a little bit earlier, Hassan.

Senator Hassan Yussuff
Yes, absolutely. Thank you very much.

QUESTION & ANSWER

Elena Cherney
We're getting a number of questions here that sort of centre around some of the questions that have been raised earlier, about how we help immigrants succeed in this country, how workplaces help to develop skills. One questioner asks, says, my concern with immigration is creating equitably inclusive workplaces, where the talent we bring can actually succeed and stay in their jobs. Are we looking at how we hold employers accountable? And this could also apply as we think about, you know, marginalised communities, and deepening hiring in those communities.

Senator Hassan Yussuff
I think is both employers, but it's also government, because we've got to see this as something we pride ourselves on. And if people fail because we're not doing a good job in integrating them, I think it speaks volumes too, that we didn't really think this through. And I think some data is showing this in a very serious way. People who have come here, for a variety of reasons, with skills and ability, of not able to see their same level of economic benefit that match their skills when they come to the country. And I think we've got to do a better job. It also speaks to the fact that there's still some systemic problems in the job market that we need to really start to dig deeper in, to say this can't continue. Because it's really affecting some communities disproportionately, to mothers in the country. And it's a real problem, it’s not, you know, something that we just talked about in an abstract way. And I think governments and employers need to figure out how we need to overcome this, because if we don't, I think it will continue to exacerbate the challenge that immigrants face coming to this country, especially those who come, of course, who were are people of colour, because they're facing and more so predominant than other immigrants in the country.

Kathleen Taylor
We talked a little bit earlier about the provincial licencing issues that prevent well-trained and highly accredited immigrants from breaking through in their professions of choice. And I think that we've got to think about a way for the federal government—which is bringing, helping to bring all these folks here—to the provincial government, to get closer in alignment on how that's going to be reworked. What kind of incentives will be in place to ensure, for example, that the nurses and the doctors that are immigrating here—just to take something that's on the front page of the news—have a fast track? Obviously, we have to be sure that their skillset is a match for our system, but what's the fast-track system? What are we going to do to facilitate those kinds of accreditations? Engineers would be no different—we can go on and on and on with the list, architects, etc.—where provincial associations are essentially the gatekeepers of admission. And so, all of the great work that's done on attracting, and getting these folks here, in a global competition for talent, as many of them have mentioned, when word gets out that it becomes a dead-end street, then all of a sudden maybe the best and the brightest aren't on our application lists. And so we really do, I think, have to find a way for business, for the federal government, for the provincial government, to come together, and really try to figure out how to streamline this path to prosperity for the for immigration population.

The Hon. Ahmed Hussen
If I can just add to that. There is a private sector role though, because I've noticed that, even in some of the professions where the professional bodies have moved in the right direction, and they've kind of streamlined the licencing process without diminishing any integrity issues, even there, the employers have a mental blockage in terms of giving a chance to people who have international credentials. They keep asking about Canadian work experience to someone who has 22 years of experience being a lawyer in the UK, like, so the employees have a role too. And I know one of the programs we had in the federal government, I think it's still there, is to pay employers, to pay the salary of newly licenced, you know, nurses, or electricians, and others, to kind of reassure employers that it's okay to give these folks a chance; they don't have to have 20 years of Canadian work experience. I really believe that when we're having this discussion, we’ve got to differentiate between all the other professions, and medicine. Because medicine, they just—unless the provinces exercise real political will in terms of moving the moving the medical colleges forward, and create more residency spaces, and so on, then we'll keep having this discussion. I believe the other bodies—not all of them, but a lot of them—have made progress, there is a huge difference in terms of the system that was in place for internationally trained lawyers when I first came to this country 25 years ago, and now. But for medicine, not much has moved. So, I think we need to kind of celebrate the successes, and keep encouraging reforms in the others.

Elena Cherney
It may speak to a couple of the questions that we're getting here around, how do we induce professional regulatory organizations to accept and rely on foreign credentials and education? I think this is a big concern of the audience. Another related question that I think is a good one to touch on, we have a question here, how can academic institutions like the University of Waterloo, largest co-op program in the world, and extensive talent pool, you know, how can these universities be part of the answer in figuring out how to fill the skills gap, especially in the competition abroad, when we're talking about talent? So, I think that's a great—I don’t know if anybody wants to jump in there, but we’re raising that audience point.

Senator Hassan Yussuff
Well, I think, one quick example, just going back to the, you know, that when there's a crisis, what tends to happen—Ontario, right now, is facing a huge nursing shortage. There's recognition by the provincial government, and, snap of a finger, the provincial government decided, you know, foreign-trained nurses, a thousand of them will be integrated in the system overnight. Now, why did it take a crisis for the provincial government to act, given that these jurisdictions know that these people were there in the job market and couldn't work in the sector to begin with? So, I think it's speaks a lot to, when there's a crisis, how governments and institutions can act. I think we just need to recognize that, as Minister said earlier, is that we've got the federation that, you know, we can bring people here, but then the province decides ultimately where they're going to get to work in their field. I think we've got to do a better job in saying that it's only fair, if you're going to bring somebody here, you're going to allow them to work in their field. And let's figure out what are the challenges in making that happen, and how quick can we make that happen? Because not only are they good for the job market, but also they're good for the economy, and to a large extent, I think the province can play a better role in how they respond to the challenge, because the licencing authorities are provincial-based to begin with.

Elena Cherney
I think that's an excellent point. I do want to raise—there are a couple of other really interesting areas that would be entirely other panels, I think, but are worth mentioning here—we have one audience member asking how the declining fertility rate plays into the human capital equation? I think we've been trying to talk about immigration and where labour comes from, and the role of childcare and family support, but I'm not sure if anybody wants to jump into that question?

Mark Wiseman
I'll wade into that one—as a male, it's a dangerous question to take on, but let me let me try. And that is, it is really important in the long run, right? There's only two ways you can increase population, one is immigration, and the other is birth rate. And the current birth rate in this country, replacement rate, is about 2.1. It's measured, traditionally, fertility rate is measured by the number of births per woman in a population. So, 2.1 is replacement rate in Canada. We're about 1.5 today, which means that, without immigration, our country is shrinking. By the way, we're not alone. It's similar statistics in Western Europe, and if you go to places like Korea, or China, or Japan, the numbers are even lower, and you're seeing the effect of depopulation in those countries that have lower immigration rates than our own. So, everything that we're talking about, to allow families, to make it easier for people who choose to have families, to make it easier for them. That's also good for the long-term prospects of the country, and it helps with that, back to the beginning of the conversation, with the shape of the population as well. So, that's why things like early childhood support, including a national childcare plan, is incredibly important. It's not just allowing more people to participate in the workforce, it's making it easier for those Canadians who wish to have families, to allow them to have families. It also speaks to the importance of the point that was made earlier about some communities. That we have to do a better job with, because those communities, for example, Indigenous communities, some parts of the new Canadian population, who tend to have higher birth rates, that's a great thing for the country. And we have to figure out how we're going to get those young, very young, very recently born, Canadians educated, integrated into the system. Because if we don't do that, and our fertility rate keeps falling, we're just going to be compounding the issue. And if you just look at it, the younger—if you want to know the best economic indicator of bringing a person to the country, the younger they are, the better, right? The younger the person is, that we either have immigrate or being born, obviously, the better it is, because they're gonna have a longer work life in due course, which will help support the system overall. So, bringing in an immigrant at age 19, is better, economically speaking—there's other benefits—than bringing in an immigrant who's 59. And having more young people born, is better than the alternative. So, it's not just the number of people, but that shape of that population is incredibly important to the economy. And so, watching things like fertility, and trying to make it easier for those who wish to have children to have children in this country, is really important.

Senator Hassan Yussuff
I think in the prairie regions—I just want to make this point about this younger demographic that Mark is touching on—we’ve got one of the youngest demographics, in Saskatchewan and Manitoba, of Indigenous young people. We need to think about how do we harness that talent, and give them the opportunity, so they can succeed to help grow this country and build this country? Because, when we think of the birth rate not meeting what we would consider normal to continue to grow the population, in that community, we're having an extremely robust birth rate. But the reality, they’re mostly young people, and more importantly, young Aboriginal people, who don’t get the same opportunity in our society, and we need to figure out how we do that. With all this discussion around reconciliation, how do we actually make this happen, so that generation doesn't have the same failure rate that we've seen from previous generation or community?

Elena Cherney
I think we've ticked through a number of possible ways of harnessing more talent of Canadians, new Canadians, people that might come to Canada, and creating opportunities, I want to give you each a chance—we should wrap up—we've talked about needing to think about how the immigration system connects with the labour market, the need for schooling and reskilling, and investment by the private sector, licencing requirements. Can I get a couple of wrapping up thoughts from each of you just briefly? And then we'll hand it back to Kelly. Mark, do you have a quick thought?

Mark Wiseman
Sure, I'll start very quickly, and just say we’re at a unique point in time here. We've talked about a lot about the challenges, but the one thing we have in this country—and it's unique, it really is unique in the world—there is a consensus around immigration in this country, across the country, rural, urban, right, left, across political parties, it's one of the few things we actually agree on almost unanimously as Canadians. And so, we need to take, I’d say there's a point in time now where we can take advantage of that.

Elena Cherney
Anyone else?

Senator Hassan Yussuff
One point I would make is that we need to have a place for national dialogue, because these are questions we're not going to solve by individual conversation. We're going to solve it by government, the private sector, social movement, sitting down together to think how we can do a better job in integrating, of course, new Canadians that are coming here, but equally, how do we continue this track with those who are already here, to give them better opportunities to succeed? Because in absence of that, I think that we're not going to get to where we need to get to. I think there's the moment for us to do this, because we recognize that, hey, if this country is going to succeed, we're going to succeed in all hands coming together, and working in tandem with each other. So, I think there's an opportunity for us to help the federal government, but also the provincial and municipal government to make sure this does happen

Elena Cherney
Katie?

Kathleen Taylor
I would say, you know, it's just to tap back to the human capital perspective, we've, I think Mark well established that the highest return on investment in human capital is investment in children and youth. And if Canada was a business, and we knew that was the highest ROI place, we’d take a really, really good look at how much of our resources, our attention, and our policies, are devoted to ensuring that we're getting great success from the young Canadians that are being born here, that already live here, as well as from the young Canadians that are coming to the country. Getting that right, it's going to do two things: it's going to maximize the value of our human capital capacity here in Canada, and it's also going to help to continue to increase Canada's reputation as a beacon for a place where young people can come, and succeed, and fulfil their life dream. So, with those two thoughts, I’ll leave it at that. Thank you.

Elena Cherney
Thank you. Ahmed?

The Hon. Ahmed Hussen
I go back to the theme that I highlighted earlier. A lot of the issues that we're talking about—we're very, very fortunate, as Mark said, to have a consensus around immigration in this country—and I'll go back to the theme that I spoke about in the beginning. A lot of the issues that we're facing, we already, luckily, have the frameworks, and the—not just the frameworks, but in some cases, even the programs to solve them. But I go back to something that the senator talked about, is, why did it take a pandemic for us to expedite nurses, internationally trained nurses, to help Canadians, and be integrated so quickly? Why did it take a pandemic to do that? I would argue that if it wasn't for the pandemic, my ability to get eight childcare agreements before the last election, would have been much harder. I was being told that, if it wasn't a pandemic, a lot of the provinces wouldn't have signed those agreements. But again, why did it take a pandemic for people to realize the critical role that childcare plays in labour market participation?

And then finally, you know, when we talk about skills shortages and labour market shortages, it's not an urban problem only. If you go to rural Canada, the problem is not only more severe, in some cases, but the very survival of a community also depends on the ability of the local major employer, or a number of major employers, being able to attract, in a sustainable way, people coming to fill those jobs. And if they're not able to succeed, they simply close down, and the small community disappears. And so, whether it is on credentials, recognition, integration of internationally trained professionals, better matching of the immigration system to the labour market, we really need to have a conversation around how to do that better, and be really more ambitious. Finally, I will say that, whether it is on housing affordability, or whether it is on labour market shortages, we tend to have some tools, but again, the provinces and the municipalities and the regional governments have other tools. In terms of the thread that connects a lot of these challenges is on inclusion. If we lean in...

Elena Cherney
I’m sorry, I’m afraid—I hate to do this, but we're gonna have to draw this to a close.

The Hon. Ahmed Hussen
Thank you.

Elena Cherney
And we have identified, you know, in all of this, thanks to your comment, that one of the elements here that's going to help is improving the IT systems, so that we can better match the immigration policy with labour market shortages. We're going to wrap this up. Thank you so much to all of you. I think we've come up with a number of really specific ideas that I hope will get taken up elsewhere. I want to hand this back to Kelly. And again, thank you all very much.

Mark Wiseman
Thanks, Elena.

Senator Hassan Yussuff
Thank you.

Kelly Jackson
Thanks to our panelists, and thanks, Elena, for moderating that critical discussion. I’d now let's take the opportunity to welcome Graham Fox, Managing Principal at Navigator, to deliver some appreciation remarks. Graham, welcome.

Note of Appreciation by Graham Fox, Managing Principal, Navigator
Thanks very much, Kelly, and good afternoon, everyone. On behalf of my Navigator colleagues, and indeed on behalf of everyone on this call, it's my pleasure to offer a word of thanks for what I thought was a rich discussion on an important topic that, due to the pandemic, was perhaps set aside for longer than it should have been. Right from the get-go, I thought the acknowledgement that Canada is in a global competition for talent was critically important. If we don't acknowledge that in our response, Canada will be left behind. I appreciated the linkages between immigration and labour market needs and that matching that needs to be done, but also the acknowledgement that lifelong learning, and reskilling, has to be part of this, and kills are not something that we cease to acquire when we leave full time education in our early 20s. But maybe more importantly, I thought the acknowledgement that labour market conditions do not affect all workers in the same way, was really critical to our policy response; a policy response that has to acknowledge and account for that complexity, a response that recognizes the critical role that governments have to play in this, but that they're not alone in this, and in fact, can't do it alone. And so, we started with a discussion on the private sector, and late in the game, we added the academic sector, and the not-for-profit sector. I think all have responsibilities here, to create a policy response that can be more nimble in reacting to emerging and changing needs of the labour market. So, on behalf of all of us, thank you to all the panelists for your insights, thank you to our moderator for facilitating such an engaging discussion, and thank you to the Empire Club for convening such a great group on such an important topic. So, on that, back to you, Kelly.

Concluding Remarks by Kelly Jackson
Thanks, Graham. Thank you, again, to Navigator, CIBC, Gallant MacDonald, our guest speakers, and everybody who joined us today, or who will be tuning in later on-demand. I'm delighted to announce that we have a new event planned for next week, and it will be the final in-person event of the season. Please join us on June 16th, as we host Canada's Deputy Prime Minister and Minister of Finance, the Honourable Chrystia Freeland. And Minister Freeland will be speaking about the state of the Canadian economy, the global challenge of inflation, and the steps the federal government is taking to make life more affordable for Canadians. More details, and tickets to join us in person, or virtually, for that event, can be found at empireclubofcanada.com. As a club of record, all Empire of Canada events are available to watch and listen to on-demand on our website. The recording of today's event will be available later today, and everybody who had registered will receive an email with a link. Please feel free to forward it on to colleagues, family, friends, keep the conversation going. Thank you again for joining us today. I wish you a great afternoon. Take care stay safe.

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Human Capital's Role in the Canadian Economy: Investing in Canada's Future


7 June, 2022 Human Capital's Role in the Canadian Economy: Investing in Canada's Future