Author: Dani

1What is the idea?

Numeracy skills affect an individual’s economic and social well-being. Inadequate numeracy skills can negatively impact an individual’s ability get a job and feel engaged and valued in society. Inadequate numeracy skills when possessed by larger groups can “hurt the economy through missed opportunities for innovation and productivity.”⁵⁶

In 2012, the Conference Board of Canada found that 55 per cent of Canadian adults had inadequate numeracy skills. Also, inadequate numeracy skills are higher in marginalized groups, such as Aboriginal people in Canada and immigrants. A person with inadequate numeracy skills may be unable to function well in an innovative Canada as low numeracy skills are linked to “unemployment, low wages and poor health.”⁵⁷ Thus, poor numeracy is a massive challenge for Canada’s innovation agenda and our goal of encouraging economically inclusive innovations.

The goal for this big idea is to build on measures proposed and/or put in place by other countries struggling with the same numeracy issues in order to eradicate inadequate numeracy among adults and children, and to create more positive attitudes towards numeracy in Canadian society.

Part 1. Introduce numeracy skills in early childhood (before children are in formal education)

Numeracy skills must be introduced early in childhood for two reasons. First, it is important to promote the development of numeracy skills in early childhood to naturalize mathematical thinking and to identify students that are struggling as early as possible so that their acquisition of mathematical knowledge in school is not hampered. According to the Encyclopedia on Early Childhood Development, “1 in 10 children will be diagnosed with a learning disorder related to mathematics during their education.”⁵⁸

Just as language skills are stressed early in a child’s life and any struggles are quickly identified and interventions implemented, we must do the same for numeracy skills. This leads to a series of sub-recommendations:

Recommendation: Provincial governments should share best practices on effective early childhood numeracy curricula.

Recommendation: Where needed, provincial governments should create an effective early childhood numeracy curriculum.

To ensure a child has numeracy skills, early childhood professionals need to be provided with evidence- based effective numeracy strategies, curricula and assessment tools. While there are suitable numeracy techniques for teaching children of this age, early childhood educators do not universally use them.⁵⁹ By creating a curriculum, and ensuring it is used in early childhood education, we can ensure that all children benefit from these techniques and are not left behind their peers.

Recommendation: Provincial governments should work together to create numeracy tools for parents to encourage engagement.

National Numeracy, a not-for-profit organization in the U.K., created a parental tool kit and website to encourage parental engagement in numeracy.⁶⁰ These brought together best practices and current materials for parents to use. Additionally, they created a tool kit that would help parents and schools provide positive messages about numeracy, opportunities and activities related to numeracy, and school tools to help schools develop parental engagement.

We propose developing a similar Canada-wide set of tools that can help break down the barriers to numeracy.

Recommendation: Provincial governments should fund research into early screening measures and interventions and supports for problems in numeracy.

Dr. Daniel Ansari, the Canada Research Chair in Developmental Cognitive Neuroscience, reported that one of the main concerns in math education is that while we have reliable and valid early childhood screening measures for problems in language development and effective interventions and supports to deal with these problems, we have not developed the same screening measures and interventions and supports for problems in numeracy. Screening tools for identifying foundational numeracy competencies in preschool and kindergarten need to be developed and validated for use in schools, clinics and other educational settings. Interventions for children with, or who are at risk of, mathematics learning difficulties should be devised and evaluated through randomized controlled studies.⁶¹

Part 2. Create a system-wide numeracy culture within the education system⁶²

Every teacher from early childhood educators to university lecturers must become a teacher of numeracy. That does not mean that every teacher must hold a math degree and be a math teacher
but that numeracy — just like literacy — must be recognized as an intrinsic part of every subject. This goal will take ongoing work to ensure that education systems in Canada have a cross-curricular approach to numeracy.⁶³ Many schools already recognize this and strive to achieve it, but the approach must become universal in Canada.

This leads to a series of sub-recommendations:

Recommendation: Expand the teaching of numeracy in bachelor of education programs

Researchers into math education have identified the need for more time to be spent in bachelor of education programs on numeracy teaching approaches, identification of children struggling and
numeracy interventions. By including more work on numeracy, the programs will help new teachers incorporate numeracy into all subjects. This recommendation echoes a similar call for more teacher education in numeracy teaching approaches by the OECD in their 2004 report on the role of math education in innovative societies.⁶⁴

Recommendation: School boards should allocate more professional development time for practicing teachers to focus on numeracy teaching approaches, identification of children struggling and numeracy interventions.

Part 3. Create a new adult numeracy core curriculum

Recommendation: Provincial governments should create an adult numeracy curriculum that will be disseminated through local health units and other appropriate places such as public libraries and job placement offices.

The goal of this is to ensure that adults have opportunities to develop and refresh their numeracy skills.

It will include numeracy programs in: further and adult education; the workplace and programs for the unemployed; prisons; and community-based and family numeracy programs. It will assist teachers to meet the individual needs of adults through the selection and teaching of skills appropriate to those adults’ needs.

Good numeracy is essential for parents to help their children learn, to understand health information and to make informed decisions throughout our lives. Research in the U.K. has shown that improving adult numeracy directly contributes to an increase in the personal and social confidence of the people with improved numeracy.⁶⁵

Part 4. Data collection and evaluating numeracy approaches

Recommendation: Provincial governments should require the collection and sharing of depersonalized data to evaluate testing, intervention and instruction approaches for numeracy education throughout childhood.

Given the decentralized nature of our education system, there is no single agency or institution responsible for evaluating instruction approaches. In most Canadian provinces and territories, schools can set their own policies for student assessment and most principals use student assessment data for making decisions about students, monitoring their school’s progress or identifying aspects of instruction or the curriculum that could be improved. With some variation across the provinces and territories, students in Canada take provincial or territorial standardized summative examinations at key stages of their education, especially at the end of secondary education.⁶⁶ Different school boards and specialists use different measurement tools to identify children presenting numeracy problems and use different interventions based on these different tools.

Dr. Ansari noted in his interview that the schools are very good at collecting data, but the use of a large number of different instruments and a lack of access to the data means that researchers are unable to compare instruction and intervention approaches. This lack of standardization results in a lack of evidence-based interventions.

This lack of comprehensive and comparable data to evaluate instruction and intervention approaches can hinder policy development and analysis and is a barrier to improving Canadian students’ math skills. Using the data will help in three ways: to develop and identify appropriate measurement tools and interventions for numeracy problems, to measure the success rate of various interventions and to develop a consistent and evidence-driven program.

2What mechanisms for accountability or measurement can be put in place for the idea?

In 2012, Canadian students did reasonably well on the Programme for International Student Assessment (PISA) math test. Students’ math skills were assessed on a six-level scale, with level 6 being the strongest skills and level 1 the weakest. In 2012, 35 per cent of Canadian 15-year-olds scored at a level 2 or lower. Based on the results, the Canadian Conference Board assigned Canada a grade of B with only four countries (Japan, Switzerland, the Netherlands and Finland) receiving an A grade.

However, when this data was broken down, researchers highlighted some concerning trends. First, there is a growing number of Canadian students with “inadequate” math skills. In 2012, this number was 34 per cent, up more than four per cent from three years previous. Second, there is a growing achievement gap, with more students scoring in the lowest levels and fewer students scoring in the top levels. Third, when this data is examined at the provincial level, there are alarming provincial differences. Quebec earned an A+, British Columbia earned an A, Ontario, Alberta and Saskatchewan earned a B, New Brunswick, Nova Scotia and Newfoundland earned a C and Manitoba and Prince Edward Island earned a D.”

Canada will continue to participate in these tests, and implementing our recommendations will help reverse these concerning trends.

Also, part of the mandate for this idea will be to create robust measurement tools for both early childhood numeracy and adult numeracy.

3What failures is the idea trying to solve?

Thin Markets: By ensuring that Canadian adults have “the ability to access, use, interpret and communicate mathematical information and ideas to engage in and manage the mathematical demands of a range of situations in adult life,”⁶⁷  this big idea will ensure that there is more talent available to the cluster. The increased pool of talent will make each cluster both stronger and bigger.

Inequality of Opportunity: Large groups of Canadians are being denied opportunities because they do not have the math skills needed to compete in the 21st-century economy. Specifically, this idea will help to address the inequality of opportunity for marginalized groups, such as new immigrants and Aboriginal Canadians. Both groups have been identified specifically by the Conference Board of Canada as having inadequate numeracy skills, which may negatively impact their participation in innovation.⁶⁸

4What are the potential benefits of the idea and what are the costs?

Benefits: In its 2004 report on the role of math education in innovative societies, the OECD notes that one of the main goals of math education is to empower people with the ability to “pose, solve and interpret mathematical problems in a variety of situations,”⁶⁹ with the goal of applying these skills in innovation. Without citizens with strong math skills, the OECD argues that innovation will lag behind as people struggle to understand and incorporate numerical information. These strong math skills start with a strong numeracy foundation.⁷⁰

Transforming Canada’s numeracy skills will help to solve the labour shortage failure Canada is experiencing. At the moment there are jobs that need to be filled and people who need jobs, but the people don’t have the right skills. By transforming Canada’s numeracy skills, we can fill these jobs and have people ready to fill new jobs as they are created.

Costs and Risks: There is a risk that the provinces and school boards do not participate in the goal to transform numeracy. A lack of political support for this goal would make the goal much more challenging to achieve.

5Will the idea increase economic inclusion and/or enhance autonomy? If so, how?

Economic Inclusion: The Conference Board of Canada reports that “Inadequate numeracy skills hurt individuals’ potential for landing jobs and promotions and hurt the economy through missed opportunities for innovation and productivity.”⁷¹ By transforming Canada’s numeracy skills, individuals will be able to participate in the economy.

Autonomy: Low levels of numeracy are linked to unemployment, lower wages and poor health. By transforming Canada’s numeracy skills, individuals will be able to improve their quality of life and make well-informed personal choices.

56 Conference Board of Canada, “Adults with Inadequate Numeracy Skills,” Conference Board of Canada Website (2014).
57 National Numeracy, Manifesto for a numerate UK (2014).
58 Jeff Bisanz, “Numeracy: How important is it?” Encyclopedia on Early Childhood Development, (2011).
59 Jenni Connor, “Being Numerate,” The Early Years Learning Framework – Professional Learning Program (2011).
60 National Numeracy, Final Report: Parental Engagement Project (2015).
61 Nancy C. Jordan, “Early Predictors of Mathematics Achievement and Mathematics Learning Difficulties,” Encyclopedia on Early Childhood Development (2010).
62 Ontario Ministry of Education, Supporting Numeracy (2012).
63 Ontario Ministry of Education, Supporting Numeracy (2012).
64 Zemira Mevarech and Bracha Kramarski, Critical Maths for Innovative Societies, OECD (2014).
65 National Numeracy, Why is numeracy important? (2016).
66 OECD, Education Policy Outlook: Canada (2015).
67 OECD, OECD Skills Outlook 2013: First Results from the Survey of Adult Skills (2013).
68 Conference Board of Canada, Adults with Inadequate Numeracy Skills (2014).
69 Zemira Mevarech and Bracha Kramarski, Critical Maths for Innovative Societies, OECD (2014).
70 National Numeracy, Why is numeracy important? (2016).
71 Conference Board of Canada, Adults with Inadequate Numeracy Skills (2014).

About the Authors

Dr. Mike Moffatt is Senior Associate at Canada 2020. He is also an Assistant Professor in the Business, Economics and Public Policy group at Ivey Business School at Western University, where he teaches courses in international trade and firm-level strategy. Mike is Director of Ivey’s Lawrence National Centre for Policy and Management, a public policy centre that is taskedwith bridging the gap between business strategy and government policy.”

1What is the idea?

Clusters are beneficial because they allow for economies of scale, and access to skilled labour and innovation largely happens in geographic clusters of interrelated companies and institutions. In his 2014 report, Spencer⁷² identified 230 separate geographic clusters in 21 different industries in Canada. This included a higher education cluster in Charlottetown that employed 2,066 people in 2011, the aluminum cluster in Saguenay that employed 3,687 people and the food and beverage cluster in London that employed 6,972 people. Firms in these clusters benefit from being in the same geographic region with shared local knowledge and a shared pool of talented workers.

However, there are large information gaps at the local cluster level, as clusters have very different needs and are facing very different challenges regarding innovation. Through the creation of cluster research centres, gaps in the cluster’s ecosystem will be identified, idea sharing will be increased, data will be collected and shared and regulatory failures will be identified.

Recommendation: The federal government should fund the creation of a network of cluster research centres across the country at universities within the geographic area of the cluster that would be required to provide a yearly set of deliverables to maintain their funding.

The deliverables for each cluster research centre would include the following:

Recommendation: Each cluster research centre must convene a minimum of one meeting per year with local stakeholders, including industry, academia and government, to network and share information and aid in the creation of reports and white papers on the challenges the cluster is facing.

Recommendation: Each cluster research centre must ensure they collect data, both qualitative and quantitative, about the cluster.

Recommendation: Each cluster research centre must, once per year, update (or create) a publicly available map of their local cluster ecosystem.

Recommendation: Each cluster research centre must, once per year, release a white paper with policy recommendations for governments.

Recommendation: Each cluster research centre must, once per year, report on the state of the cluster and identify possible gaps in the local ecosystem.

Recommendation: Each cluster research centre must, once per year, report on the local cluster’s best practices and those from other clusters.

Recommendation: Each cluster research centre must, once per year, report on what initiatives, if any, companies in the cluster have undertaken to increase the hiring of underrepresented groups, including women, visible minorities and Aboriginal Canadians.

Recommendation: Each cluster research centre must, once per year, report on the labour needs of the cluster, identify any skills training gaps in the sector and provide curriculum and co-operative education recommendations to universities, colleges and other educational institutions.

Recommendation: Each cluster research centre must, once per year, award up-and-coming young innovators in the local ecosystem.

2Who will be responsible for administering the idea?

The development and ongoing administration of the cluster research centres will be the responsibility of the Minister of Innovation, Science and Economic Development and the universities and colleges where the centres are located. In his 2015 mandate letter to the Minister of Innovation, Science and Economic Development, the prime minister mandated the development of an Innovation Agenda that included expanding effective support for “the emerging national network for business innovation and cluster support.”⁷³

3What mechanisms for accountability or measurement can be put in place for the idea?

The requirement for a yearly set of deliverables to maintain funding provides accountability. Checks and balances must be put in place by the ministry to ensure the delivered materials are of acceptable quality. These deliverables will be made public to disseminate information and to ensure quality.

4What failures is the idea trying to solve?

The cluster research centres are designed to address, either directly or indirectly, a wide array of market and regulatory failures that can occur in a cluster.

Thin Markets: Cluster markets are thickened by more workers and more firms. The research centres help increase the supply of labour through their recommendations to address skills training gaps, as well as sharing of best practices to tap into historically excluded sources of labour. More firms can be created through the centres better matching start-ups with sources of capital to obtain funding. Both sides of the market can also be thickened through the advice the centers provide to governments on skills and funding gaps.

Externalities and Knowledge Spillovers: Knowledge spillovers will be created through the meetings assembled by the centre and by increasing “collisions” through the other activities of the centres. The centres will disseminate best practices and other forms of knowledge that can be adopted by other firms.

Network Externalities and Co-ordination Failures: The cluster research centres create a geographic space for people in the cluster to meet, share ideas and develop new approaches.⁷⁴

Evangelism Externalities: The cluster research centres act, in part, as a champion for the local cluster and should serve to promote the values of the cluster to other Canadians, enhancing the reputation of the cluster.

Regulatory Failure: One of the responsibilities of the centres is to address regulatory failures by providing regulators and lawmakers more local knowledge of and feedback about the cluster. A common complaint we heard from regulators in our roundtable was this: “We hear from 40 different cluster stakeholders about 40 different issues; we don’t know which problems are the most important.” Cluster research centres can provide “triage” guidance to regulators, so the most pressing priorities are addressed first.

Risk Aversion: One of the tasks of the centre is to provide awards to innovators and other successful risk takers, thereby creating role models and encouraging others to do the same.

Inequality of Opportunity: The cluster research centres will directly reduce inequality of opportunity by looking for bottlenecks that are excluding people from the local market. Additionally, these centres will look for ways promote companies that seek ways to diversify their hiring.

5What are the potential benefits of the idea and what are the costs?

Benefits: These centres will help address skills shortages, and gets universities and the private sector used to working with each other. If these centres create stronger clusters, it not only benefits the workers and companies within the cluster but creates spin-off employment and prosperity in other local industries.

Costs and Risks: There is a financial cost to setting up and running these centres will cost money. Industry Canada recently funded a similar research centre at Western University with $1 million a year for five years. We estimate that each cluster research centre would cost between $500,000 and $1 million a year to run.

Firms may resist participating in centres or may see them as a way to ensure the government enacts policies and approaches that benefit the industry but not the overall goal of the research centre. There is also the possibility of political interference with the work of the cluster research centres or in choosing which research centres get funded. The centres will need to have a level of independence to ensure this does not happen.

6Will the idea increase economic inclusion and/or enhance autonomy? If so, how?

Economic Inclusion: Economic inclusion is a primary goal of the research centres as they focus on increasing inclusion in the cluster. Many of the clusters face skills shortages, yet many people in excluded groups are unable to participate in the cluster.

Autonomy: These research centres will help entrepreneurs start new businesses within the cluster. By helping match people with good ideas to sources of funds, individuals are given more options in how to participate in the local economy.

72 Spencer, 2014
73 Office of the Prime Minister, Minister of Innovation, Science and Economic Development Mandate Letter (2015).
74 This is referred to in economics literature on coordination failures as a “Schelling point.”

About the Authors

Dr. Mike Moffatt is Senior Associate at Canada 2020. He is also an Assistant Professor in the Business, Economics and Public Policy group at Ivey Business School at Western University, where he teaches courses in international trade and firm-level strategy. Mike is Director of Ivey’s Lawrence National Centre for Policy and Management, a public policy centre that is taskedwith bridging the gap between business strategy and government policy.”

1What is the idea?

Canada’s immigration system is incredibly complex, with more than 60 different programs that admit non-Canadians to the country. A detailed description of each is well beyond the scope of this report, so our recommendations will be at a high level. Our immigration recommendations revolve around one core point: the system as a whole needs to make a larger distinction between tradable and non-tradable sectors of the economy, and focus on bringing in workers with skills valued in tradable sectors.

Recommendation: Canada’s economic immigrant programs, for both permanent and non-permanent immigrants, should have the expressed mandate of raising wages and economic opportunities for Canadians, which they can accomplish through a focus on tradable sectors.

To explain the idea, we first need to understand what tradable sectors are and, secondly, we need to understand why the distinction matters. To address the first issue, we will use the Australian Bureau of Statistics definition of tradable sectors.

Tradable sector: “A domestically produced good or service is defined as tradable if it is actually traded internationally, or it could be traded at some plausible variation in relative prices — this includes domestically produced goods and services which replace imports in the domestic market.”⁷⁵

Illustrating the importance of the distinction between tradable and non-tradable when examining employment dynamics in a local economy is best done through the use of examples from the services industry.

First, consider Saskatoon’s technology sector, specifically companies that program applications or design video games. Because their products are purchased by users all over the world, these companies are competing against companies from Bangalore to Helsinki; their competition is not other companies in Saskatoon. As such, the size of Saskatoon’s tech cluster can grow arbitrarily large because the market is worldwide and the success of one local company does not come at the expense of another. Because the industry can grow arbitrarily large, it can absorb additional workers without any downward pressure on wages, and may even raise wages in the sector as a thicker labour market attracts tech companies to Saskatoon. Furthermore, the success of a local tech company brings in outside capital and creates employment opportunities in other industries. In The New Geography of Jobs,⁷⁶ economist Enrico Moretti found that one additional job in the tech sector creates five additional jobs in the economy at a variety of different skill levels. Moretti defended the five-to-one ratio in an interview with Stanford’s Kathleen O’Toole:⁷⁷

The way to interpret the multiplier is to imagine dropping 1,000 innovation jobs in one city but not in another, and then going back 10 years later to measure how many additional local service jobs there are in the city that experienced that innovation-sector drop of jobs. So it’s a long-run effect, but it’s not impossible for three reasons.

One is that the average high-tech worker tends to do very, very well, and people who are wealthy tend to spend a large fraction of their salary on personal and local services. They tend to go to restaurants and movies, and to use taxis and therapists and doctors on average more than people who are paid less.

The second reason is high-tech companies themselves employ a lot of local services; everything from security guards to IP lawyers, from the janitor to the very specialized consultant. High-tech companies tend to use more services than manufacturing companies.

The third reason is the clustering effect. Once you attract one of those high-tech workers, then in the medium to long run, you’re going to be attracting even more of those high-tech workers and companies, which will further increase your multiplier. So it’s a long-run number, measured over a 10-year period.

Contrast this with the market for brick-and-mortar drugstore pharmacists in Saskatoon. Pharmacists at brick-and-mortar drugstores provide a non-tradable service, as their customers are local in nature.

While the number of pharmacists in Saskatoon is not fixed, it can only grow so large, as there is a limit to how many pharmacists the local market can reasonably absorb. As such, firms in the market grow and increase revenue more by seizing market share from their competitors than from growing the overall size of the local market. Due to these constraints, a sudden and significant influx of pharmacists to the Saskatoon market would drive down wages and increase unemployment as the local market would not be able to fully absorb the increase due to the non-tradable nature of brick-and-mortar pharmacy services.

Beyond Moretti’s findings, there is empirical evidence to support the wage effects of immigration on tradable and non-tradable sectors. While there is a substantial body of literature showing that, in many cases, higher levels of immigration do not lead to lower wages on average,⁷⁸ this does not necessarily mean that the effect of higher levels of immigration is identical across industries. A recent study by the Bank of England found that the impact of immigration differs across industries, and that “the biggest effect is in the semi/unskilled services sector, where a 10 percentage point rise in the proportion of immigrants is associated with a 2 percent reduction in pay.”⁷⁹ The fact that these people disproportionately work in non-tradable sectors supports the theory of the differing effect of immigration on employment and wages between the sectors.⁸⁰

Canada requires high levels of immigration to address demographic challenges and ensure that it has the skilled workers necessary to compete globally in tradable sectors. If it brings in too many workers from non-tradable sectors and drives down wages and opportunities in some industries, it risks a public backlash that puts Canada’s immigration goals in jeopardy. We need only look at Brexit and the backlash against “Polish plumbers” to see how antipathy towards immigration is often related to employment in non-tradable sectors.

There are Canadian examples of the immigration system being used to prevent wages from rising in non-tradable sectors. The Temporary Foreign Worker program is a prime example. Through an Access to Information request, the Alberta Federation of Labour found that “between April 25 and December 18, 2012, more than 2,400 ALMO [Accelerated Labour Market Opinion] guest-worker permits — which are supposed to be reserved for highly skilled employment — have been granted to fast-food restaurants, convenience stores and gas stations.”⁸¹ By bringing in these workers, Canada is holding down wage increases to low-income workers. While it is possible that some of these jobs could be uneconomical at higher wages, these are not the type of jobs that create spin-off jobs through increased flows of foreign capital.

In a 2014 Toronto Star editorial⁸², Liberal Leader Justin Trudeau suggested some reforms to the Temporary Foreign Worker Program to deal with the economic effects it has on Canadian workers as well as the possibility of exploitation of guest workers; two of those recommendations continue to have value today.

Recommendation: The auditor general should conduct a full review of the Temporary Foreign Worker Program.

Recommendation: Transparency of the Temporary Foreign Worker Program should be increased, with public disclosure of applications and approval data.

When implementing policy, one must worry about unintended consequences. One way firms could deal with restrictions on temporary foreign workers is to turn those positions into unpaid internships. These internships are problematic from an equality of opportunity perspective, as the opportunities created can only be obtained by those who can afford to work for free. Because of this, unpaid internships are illegal in Ontario unless a very restrictive set of conditions is met.⁸³ In some other provinces, regulations are vague about the legality of unpaid internships.⁸⁴ This leads us to the following recommendation:

Recommendation: Provincial governments should explicitly ban unpaid internships and increase their enforcement of existing regulations in the area. The federal government should do likewise for federally regulated industries.

Meanwhile, while fast-food companies and gas stations were able to bring in temporary foreign workers, export-oriented high-growth companies were unable to obtain and retain the workers they needed. Companies that have hired foreign graduates of Canadian schools under the Post Graduation Work Permit Program are seeing these workers deported as companies struggle to navigate a byzantine set of rules.⁸⁵ Tech companies in London, Ont., report they have opened offices in the United States since they have found regulatory barriers make it too difficult to bring talent north of the border.⁸⁶ Other companies at our tech roundtable have moved operations outside of Canada, and taken Canadian workers with them, to be able to access the talent they need. The tax revenue these companies generate and the spin-off jobs they create could be going to Ontario but are instead going to California, simply for regulatory reasons. This needs to stop.

Recommendation: Immigration, Refugees and Citizenship Canada should streamline the process for companies in export-oriented goods and service industries wishing to recruit or retain skilled workers.

By focusing our immigration system on tradable sectors and away from non-tradable sectors, we can attract and retain talent in Canada, increase the competitiveness of our export industries and increase wages and job opportunities for Canadians.

Although our focus to this point has been on wages, reforming our immigration system with a focus on tradable sectors creates an environment for innovation, as described by the Expert Panel on Business Innovation in 2009:

Canada’s domestic market is relatively small and geographically fragmented. Small markets are less conducive to innovation than large markets (like the United States) because

i. they offer lower potential reward for undertaking the risk of innovation, and
ii. they tend to attract fewer competitors and thus provide less incentive for a business to innovate in order to survive. (The Canadian domestic market is relatively “cushioned” and pre-tax business profitability, as a percentage of GDP, has exceeded that of the United States in most years since 1961.)

The innovation success of countries like Finland and Sweden shows, on the other hand, that the disadvantage of a small domestic market can be offset by a strong orientation toward innovation-intensive exports.⁸⁷

Canadians need higher wages and more opportunities and Canada needs to be more innovative. Through restructuring Canadian immigration programs, we can simultaneously accomplish both.

2WHO WILL BE RESPONSIBLE FOR ADMINISTERING THE IDEA?

Immigration is a federal responsibility, with the exception of Provincial Nominee Programs and the Canada-Quebec accord. Immigration falls under the jurisdiction of Immigration, Refugees and Citizenship Canada with some exceptions, such as the Temporary Foreign Worker Program, which is jointly administered by Immigration, Refugees and Citizenship Canada and Employment and Social Development Canada.

3WHAT MECHANISMS FOR ACCOUNTABILITY OR MEASUREMENT CAN BE PUT IN PLACE FOR THE IDEA?

Beyond the recommendations given earlier on accountability measures that should be put in place for the Temporary Foreign Worker Program, we recommend the following:

Recommendation: The federal government should conduct a study on the impact of immigration on Canadian occupational wages, similar to the Bank of England study.

Recommendation: The Office of the Parliamentary Coherence Officer, after it is created, should conduct a thorough review of the coherence of Canada’s immigration sector as it relates to the mandate of raising wages and economic opportunities for Canadians.

Recommendation: Statistics Canada should strengthen its collection of labour market data, with a focus on labour market outcomes by industry for immigrants and non-immigrants.

4WHAT FAILURES IS THE IDEA TRYING TO SOLVE?

Thin Markets: A shortage of skilled workers limits the growth of innovative companies in fast-growing clusters such as the Kitchener-Waterloo tech sector. The complexity of regulations along with processing times cause issues for companies, a point Immigration Minister John McCallum recognized in a Globe and Mail interview when he stated: “Tech firms’ idea of a quick immigration processing time is more like six days rather than six months … for us six days would be a stretch… but at the same time … we want to open our doors to the best and the brightest … so, obviously, I will be working very hard to try to accommodate their needs as best I can.”⁸⁸ These problems hit clusters in small and mid-sized cities particularly hard, as they do not have large local networks of immigration lawyers and experts from which to draw experience. One advantage that clusters in mid-sized Canadian cities should have is the significant number of international students that study in their colleges and universities. However, companies report that it is difficult to retain these individuals after the expiry of their Post-Graduation Work Permits.⁸⁹

Inequality of Opportunity: The poor design of some immigration programs, most notably the Temporary Foreign Worker Program, prevents wages from rising in non-tradable sectors and limits job opportunities for low-income Canadians. Well-designed immigration reforms will disproportionately benefit workers who are the most marginally attached to the labour force.

5WHAT ARE THE POTENTIAL BENEFITS OF THE IDEA AND WHAT ARE THE COSTS?

Benefits: A successful reform of Canada’s immigration systems to focus on tradable sectors has three big benefits:

1. Industry clusters that grow faster export more and create additional wealth.
2. Spin-off wealth and prosperity in non-tradable sectors that support those clusters.
3. Increased wages and job opportunities for Canadians in non-tradable sectors due to reduced competition for these positions.

Costs and Risks: If the plan works as intended, wages should increase in the non-tradable sector. Of course, this also likely means that the price of goods and services will rise accordingly. Furthermore, it could cause skills shortages in certain non-tradable sectors.

The largest issue is that this plan could fail or have unintended consequences for a variety of different reasons. Changes to immigration policies are tricky, and there is no guarantee that governments get it right. The biggest potential roadblock is that the plan requires governments to be able to distinguish between job types that are largely in the tradable sector and those that are not.

6WILL THE IDEA INCREASE ECONOMIC INCLUSION AND/OR ENHANCE AUTONOMY? IF SO, HOW?

Economic Inclusion: By refocusing our immigration policies to tradable sectors, we can ensure that government policies are not reducing wages and limiting economic opportunities for Canadians. Furthermore, due to the positive employment spillovers created by high-skilled immigrants in tradable sectors, wages and employment opportunities are increased for everyone from lawyers to barbers to construction workers. Our immigration system should have as an explicitly stated core goal of increasing wages and job opportunities for Canadians.

Autonomy: At first glance, there appears to be little relationship between the proposed immigration changes and the level of personal autonomy for Canadians. However, a booming tradables sector creates job opportunities and business opportunities for current Canadians in non-tradable sectors. These opportunities could be amplified with enhanced non-tradable sector skills training for individuals that are unemployed or out of the labour force.

75 Australian Bureau of Statistics, Australia’s Tradable Sector (1996).
76 Enrico Moretti, The New Geography of Jobs (Houghton Mifflin Harcourt, 2012).
77 Kathleen O’Toole, “Enrico Moretti: The Geography of Jobs,” Insights by Stanford Business, (2013).
78 A useful discussion of the literature appears in “Immigration, Wages and Compositional Amenities,” David Card, Christian Dustmann and Ian Preston, Journal of European Economic Association (2011).
79 Stephen Nickell and Jumana Saleheen, “The impact of immigration on occupational wages: evidence from Britain,” Bank of England: Staff Working Paper No. 574 (2015).
80 For the purposes of their paper, Nickell & Saleheen, (2015) define the semi/unskilled services sector as including child-minders, early childhood educators, animal care assistants, housekeepers, travel agents/assistants, caretakers, sales assistants, check-out staff, call centre staff, postmen, shelf fillers, car park attenders, cleaners, road sweepers, bar staff, porters and waiters. These jobs are largely non-tradable in nature, with some exceptions such as call centre staff.
81 Alberta Federation of Labour, List of ‘accelerated’ TFW approvals reveals widespread abuse of program (2013).
82 Justin Trudeau, “How to fix the broken temporary foreign worker program,” The Toronto Star, May 5, 2014.
83 Ontario Ministry of Labour, “Are Unpaid Internships Legal in Ontario?” Ontario Ministry of Labour website (2011).
84 Canadian Intern Association, What is the law? (2016).
85 Ronalee Carey, “Express Entry and International Students, Is there a Disadvantage?” Ronalee Carey Law (2015).
86 Michael P. Moffatt and Rachel Parker, “We asked a group of tech executives: ‘What does it take to grow in London, Ontario?’ ” Mowat Centre (2015).
87 Expert Panel on Business Innovation. Council of Canadian Academies, Innovation and Business Strategy: Why Canada Falls Short (2009).
88 Sean Silcoff and Michelle Zilio, “Ottawa vows to cut wait times for foreign workers joining tech firm,” Globe and Mail, Tuesday, June 14, 2016.
89 This is discussed in detail in “Canada’s hardest-hit economies need immigration to thrive again,” Mike Moffatt, Canadian Business, February 16, 2016.

About the Authors

Dr. Mike Moffatt is Senior Associate at Canada 2020. He is also an Assistant Professor in the Business, Economics and Public Policy group at Ivey Business School at Western University, where he teaches courses in international trade and firm-level strategy. Mike is Director of Ivey’s Lawrence National Centre for Policy and Management, a public policy centre that is taskedwith bridging the gap between business strategy and government policy.”

1What is the idea?

The goal for this big idea is to ensure each sector in Canada has a coherent strategy to support innovation and that the federal government supports and participates in this strategy.

Recommendation: An innovation accord for key sectors of the Canadian economy should be created. These accords would promote a new relationship with the federal government and the particular sector and would facilitate policy coherence between levels of government and across departments, convening diverse stakeholders and leveraging funding. Additionally, an innovation accord would provide priorities, goals and measurements to determine sector success in innovation that results in economic inclusion and an enhancement of autonomy.

These innovation accords will focus on outcomes and practical commitments and consider areas such as policy design, funding arrangements and strengthening innovation within the sector. The implementation of the innovation accords will be overseen by Innovation, Science and Economic Development Canada (ISED).

Each innovation accord will:

1. Identify common objectives in an innovation strategy.
2. Develop action-oriented plans for both parties to the accord.
3. Measure progress appropriately for both parties to the accord.
4. Leverage funding from all levels of government to maximize support.
5. Foster healthy competition among provinces while being flexible/asymmetrical to fit provincial innovation strengths and needs.
6. Accelerate the federal goal of driving inclusive innovation.

At a minimum, we would recommend that the following sectors work with the federal government
to create innovation accords:

• Life Sciences and Health Care
• Arts and Culture
• Manufacturing
• Agri-Food
• Finance
• Oil and Gas

Each accord represents a public commitment to be more open, transparent, consistent and collaborative in innovation. We believe that these accords will move the government and the sector towards greater mutual understanding and provide a framework within which innovation can be developed.

Recommendation: A working group should write each innovation accord with individuals from the Government of Canada and the sector. The members should be selected to reflect a cross-section of federal government departments and the sector. To ensure that a broad range of viewpoints within the sector are heard, consultations should be held.

These innovation accords will not compel the Government of Canada or the associated sector to work together; rather, they outline the values and principles that will govern the relationship when they choose to work together.

2WHO WILL BE RESPONSIBLE FOR ADMINISTERING THE IDEA?

The implementation of the innovation accords will be overseen by Innovation, Science and Economic Development Canada (ISED).

3WHAT MECHANISMS FOR ACCOUNTABILITY OR MEASUREMENT CAN BE PUT IN PLACE FOR THE IDEA?

These innovation accords will focus on measurable outcomes and practical commitments and consider areas such as policy design, funding arrangements and strengthening innovation within the sector. The development of measurements and accountability mechanisms will be a part of each accord.

4WHAT FAILURES IS THE IDEA TRYING TO SOLVE?

Regulatory Failure: From an innovation perspective, the overarching goal of the innovation accords is to ensure that policy objectives of both the government and the industry sectors avoid conflicting priorities as much as possible and encourage the design of policies that encourage positive consequences for innovation. These accords will allow stakeholders in each sector and the government to work through regulatory failures stemming from a lack of coherence.

5WHAT ARE THE POTENTIAL BENEFITS OF THE IDEA AND WHAT ARE THE COSTS?

Benefits: Coherence would be created in Canada’s overall approach to innovation within each sector. This increased coherence allows Canada to compete globally in innovation in key sectors by creating a sense of stability and attainable goals.

Costs and Risks: A risk with these innovation accords is that industries could see them as a way to ensure the government enacts policies and approaches that allow the industry to make more profits without actually creating innovations, or creating innovation that decreases economic inclusion and autonomy. These risks can be avoided if there is careful consideration in the creation of the responsibilities for both sides of the accord and that overall progress is measured. Another risk is that these accords are simply words on a piece of paper and never meaningfully put into practice.

6WILL THE IDEA INCREASE ECONOMIC INCLUSION AND/OR ENHANCE AUTONOMY? IF SO, HOW?

Economic Inclusion: Economic inclusion should be an expressed goal of each accord. The accords should contain a section on how both the government and the industry will create wealth and employment opportunities for marginalized Canadians.

Autonomy: Where possible, the accords should consider finding ways to increase the control individuals and communities have over their economic outcomes, though in most cases we anticipate there is little the accords can do to address the issue.

About the Authors

Dr. Mike Moffatt is Senior Associate at Canada 2020. He is also an Assistant Professor in the Business, Economics and Public Policy group at Ivey Business School at Western University, where he teaches courses in international trade and firm-level strategy. Mike is Director of Ivey’s Lawrence National Centre for Policy and Management, a public policy centre that is taskedwith bridging the gap between business strategy and government policy.”