In my first blog post on productivity, I tackled the critical issues hindering Canada’s economic growth: limited competition in key sectors, high tax rates, and complex regulations that stifle entrepreneurship. These barriers are not just challenges but urgent issues that demand our immediate attention. They prevent Canadians from developing small to mid-sized businesses, stalling a thriving entrepreneurial environment. In this blog post, I will delve into other essential areas Canada must focus on to enhance productivity.
Our nation is not just rich in resources; we boast a highly diverse and educated population brimming with untapped potential. It’s imperative that we harness this human capital to boost our productivity significantly and, in turn, our economy.
Canada’s population growth is now one of the fastest in the world, experiencing its most rapid increase since the 1960s. With 57.5 percent of our working-age population holding a college or university credential, we are among the world’s most educated nations. Yet, our productivity and economic performance are lagging. This disparity stems from several issues: inadequate investment in innovation, a mismatch between workforce skills and economic needs, and a culture that doesn’t foster innovation and business growth. Despite our highly diverse, educated, and skilled population, we are not fully utilizing our human capital.
Leveraging Canada’s diverse population is not just a strategy, it’s a potential game-changer. It can significantly enhance global trade and expand trade relationships. Despite the rise of economies in the Asia-Pacific region and the BRICS nations, Canada remains overly reliant on the U.S., directing 75 percent of our exports southward. In stark contrast, China, our second-largest trading partner, accounts for only 4.47 percent, BRICS nations do not even make up our top five trading partners. Historically, we’ve been the United States’ largest trading partner, but last year, Mexico surpassed us. This shift signals that Canada cannot afford to depend so heavily on the U.S. By harnessing our diverse population’s unique cultural and linguistic skills, we can forge stronger trade connections with other nations, especially emerging economies. This will not just secure a more balanced and resilient economic future but provide us with a significant competitive edge on the global stage.
The strength of Canada’s population lies not only within its borders but also in its global connections. Our demographic makeup offers us a unique advantage, yet our government and major corporations fail to leverage this effectively. We have an immigration system that attracts highly skilled and educated individuals. Yet, once they arrive, many are relegated to menial jobs like driving for Uber or working in the service industry. Compounding this issue is our low productivity rate which results in insufficient competition for higher wages. Consequently, menial jobs often pay comparably to skilled jobs, making them more appealing due to their flexibility and lower demands.
Canada must also do a better job of obtaining and placing skilled newcomers in areas with critical labour shortages by creating better trades, apprenticeships, and upskilling programs and also offering incentives for placements in rural parts of Canada, where we are experiencing the largest labour shortages. By doing so, we can implement productivity-enhancing measures, ensuring skilled newcomers find work aligned with their experience and career objectives while addressing labour gaps hindering our economy.
Additionally, we need to recognize the potential of our skilled immigrants to contribute to Canada’s innovation and economic diversity. Their diverse perspectives and connections can be a valuable asset in building a more innovative Canada. Canadian companies should stop being so insular and actively seek out and hire newcomers with international experience. Expanding globally through partnerships, trades, and investments will not just enhance our economic resilience and innovation, it will also enrich our cultural fabric and make us a more attractive destination for global talent.
Another significant issue is the Canadian government’s failure to create a supportive environment for innovation. Many skilled newcomers find the support for innovation and business development lacking, viewing Canadian citizenship as merely a stepping stone to U.S. opportunities via the TN Visa. This brain drain to the U.S. underscores the need for a more business-friendly and innovative environment in Canada.
Canada has all the resources required to be a highly innovative and productive country. With a robust education and research sector, institutions like the University of Toronto are pioneering fields like AI. However, rather than creating and having Canadian businesses capitalize on these innovations, U.S. companies often take the reign in capitalizing on many of the innovations we’ve helped to develop. The Canadian government and corporations must invest more in fostering and nurturing innovation and business opportunities within our borders. A more competitive business environment would drive greater efficiency, especially for small and medium-sized businesses that cannot leverage the economies of scale available to larger companies.
Canada’s major corporations must begin reinvesting in the country by supporting small to mid-sized businesses. Given the size and wealth of many of these corporations, investing in these businesses not only poses minimal risk but can offer immense potential benefits. These benefits include not just financial gains but also the opportunity to drive innovation and productivity and contribute to the growth of our economy.
As a nation, we have immense potential to boost our economy by harnessing the strengths of our globally educated population. To achieve this, we must diversify our trade relationships and leverage the unique skills of our immigrants to forge stronger global connections. This requires government and corporate investment in innovation, support for small and mid-sized businesses, and better integration of skilled newcomers into suitable roles. By addressing these areas, Canada has an immense opportunity to unlock its full potential and increase its productivity while creating a more dynamic, competitive, and prosperous economy.
