Let’s hard-wire inclusion into Canada’s innovation economy

Ministers are on the road this fall, talking to Canadians about what the next federal budget should include. One of the key questions being asked is how to put Canada on a path to “inclusive growth.” By many economic indicators, Canada is excelling. Unemployment is low and Canada led the G7 in real GDP growth in 2017. But these indicators tell us about averages and aggregates, which obscure underlying inequities. The federal government, under its Innovation and Skills Plan, has prioritized inclusive growth. Many of the initiatives aimed at realizing this goal cite growing the middle class, with a focus on expanding participation in the most innovative parts of Canada’s economy through skills training, investments in coding education, the forthcoming Future Skills Centre, and support for entrepreneurs. These are vital investments and interventions. But what kind of economy are we asking people to participate in? Will it allow all Canadians to thrive, or widen existing divisions? The truth is, not everyone with a job—even in tech-intensive industries—is doing well. As our economy grows, the average worker is capturing less and less of the resulting wealth. And growth in the share of national income going to firms hasn’t translated into investments in workers, particularly in the form of training. New waves of automation promise to enhance productivity, but according to research from the Brookfield Institute for Innovation and Entrepreneurship, people with lower incomes, with lower levels of post-secondary education, and in certain communities, such as manufacturing or mining towns, will face the brunt of the resulting job disruption. Technology has also allowed the unbundling of jobs into tasks that can be completed anywhere in the world, increasing flexibility for some and precarious work for others. Data on the gig economy is scant, but estimates place about one-quarter to one-third of working-age Canadians in precarious or part-time work. Finally, while workers in tech jobs tend to command high wages, significant pay gaps exit. On average, women in tech jobs make $7,500 less than their male counterparts (according to forthcoming research from the Brookfield Institute). Increasing participation in Canada’s innovation economy is important, but we also need to examine the quality of the jobs that are available and, more broadly, how risks and benefits are distributed within this economy. This will require rethinking orthodoxies about how companies are expected to behave. Calls for fundamental change are becoming louder, in Canada and around the world. Earlier this month, the Institute for Public Policy Research (IPPR), a U.K.-based policy think tank, released the final report of its Commission on Economic Justice, which was struck in the wake of the Brexit vote to assess the challenges the United Kingdom’s economy faces. Among other proposals, it calls for changes that would give workers a stronger role in corporate governance relative to shareholders and a greater say in remuneration plans—a call that has been echoed in varying forms by others, including Senator Elizabeth Warren in the United States. In a similar vein, a recent report from the Toronto-based Mowat Centre points to compensation reporting requirements, shareholder activism, and B Corporation certification as tools for holding corporations to a higher standard in terms of decent work. At the Brookfield Institute, we have investigated sector-based partnership models that encourage employers to join forces with unions, colleges, other training organizations, and governments to make deliberate investments in worker training, helping both firms and workers navigate technological change. These are just a few of the ideas that we should be considering as the federal government prepares its next budget. Continuing to invest in driving growth through innovation is necessary, but without fundamental reforms, our economy will continue to fall short of the aspirations of many Canadians. As the IPPR states, “justice must be ‘hard-wired’ into the processes of production and consumption: in the labour market, in corporate governance and the ownership of assets, and in the rules of the market.” Inclusive growth needs to be about more than expanding participation in Canada’s economy. It’s about the nature of the economy itself. Sarah Doyle is the director of policy and research at the Brookfield Institute for Innovation and Entrepreneurship at Ryerson University in Toronto. The Hill Times