Avoiding a dire future in 2025

Will Canada undergo ‘lost decade’ or become ‘northern tiger’?
By Sarah Dobson
|Canadian HR Reporter|Last Updated: 04/24/2012

Canada could find itself in a less than ideal situation come 2025 without some major new strategies and policy changes, according to a study by the Human Resources Professionals Association (HRPA) and Deloitte.

It could face an era where the global recovery has dragged the country down, leaving it with high unemployment, low immigration, a skills imbalance and a heavy reliance on industrial materials. Or there could be a stark “have and have-not” society dividing knowledge workers and skilled trades from transactional-class employees.

“Despite (Canada’s) relatively enviable position, we must identify strategies that address the very real problems that continue to exist: the sustainability of our industries, the competitiveness of our firms, the quality of our employment, the inclusivity of our workplaces and our level of innovation,” said The Lost Decade, Unsustainable Prosperity or the Northern Tiger? CanadaWorks 2025.

The Canadian brand is well-respected around the world, said Bill Greenhalgh, CEO of HRPA in Toronto.

“It’s just that, under the surface… there’s some fractures,” he said.

The nation is at a crossroads, with so many different things going on including the loss of manufacturing jobs, growth in debt and the lack of available talent, he said.

“We want to try and get some consensus of what the problem is and what the solutions are.”

In looking at the future of the Canadian economy and society, the study examined four fundamental drivers of change: demographic shifts, economic prosperity, technological adoption and sustainability. Three alternative future scenarios were developed and discussed with 50 CEOs and chairs, ex-ministers, assistant deputy ministers, academics and economists.

And there was a lot of diversity in terms of the solution.

“There was also a lot of difference in what they thought the problem was,” said Greenhalgh. “That, in itself, is a challenge because if you can’t agree on what the problem is, you can’t fix it.”

While it’s difficult to extend the regression line past known data, and this study is not a scientific treatment of the topic, it’s a good idea to start thinking about the future, said Dave C. Thomas, professor of international management at Simon Fraser University (SFU) in Vancouver.

“That’s very important to do because very often policy-makers and businesspeople make very short-term decisions — they’re focusing on the immediate returns or how the electorate will respond to a decision at the next election.”

Lost decade, unsustainable prosperity

In the worst-case scenario — the lost decade — Canada is dragged down by a slow global recovery. There is no industrial diversity and a heavy reliance on exporting raw materials. Structural unemployment and skill imbalances force employers to outsource processes. Immigration slows and many strong performers leave the country. Disengagement, risk aversion and slow adoption of technology mean a mismatch of supply and demand, and unhappy workers.

“The lost decade is really almost a straight-line extension to where we are today — low growth, very high youth unemployment, challenges in funding health and pensions, a focus on cost-cutting,” said Greenhalgh.

But right now Canada is riding high — the economy is relatively strong, the financial system is relatively stable, resource prices are high and we are a very attractive place for new Canadians, said Jeff Moir, a partner at Deloitte Consulting in Toronto.

“That feels more like unsustainable prosperity,” he said.

In the unsustainable prosperity scenario, steady increases in the price of oil lead to gains in the gross domestic product (GDP). But there is a lack of growth in new tradable sectors and the development of a have and have-not society, leading to tensions and low productivity.

There’s a lot of wealth generated from natural resources, but it’s not shared, which can lead to a real us-versus-them situation, said Moir.

“In that kind of world, you start to develop things that feed upon themselves, a culture of poverty, declining labour force participation and we are seeing that in some of the European countries,” he said. “Part of unsustainable prosperity is a fear of that starting to develop.”

Northern tiger

But in implementing a variety of strategic recommendations, Canada can put into place a sustainable foundation for prosperity and earn a global reputation for excellence, said the study. The strategies involve five areas: modernizing education, reforming immigration, improving employment flexibility, investing in industry excellence and improving infrastructure for access to talent.

However, all of these elements interact so it’s not possible to pick one area, such as immigration reform, and say, “If you do this or don’t do this, this is what’s going to happen,” said Thomas, who is also director of the Centre for Global Workforce Strategy at SFU. That’s because immigration reform is going to interact with the educational system and other things in order to manifest itself in the future.

And the government does not have the ability to selectively choose the kinds of jobs that are going to be needed.

“Most of those jobs haven’t been invented yet, so this is training people for the current situation as opposed to the future,” he said. “This is a problem when we start looking at specific strategies.”

In the northern tiger scenario, the economy is strong and robust. New tradable sectors are created while immigrants are well-integrated into the economy and fueling growth. Employment standard acts have been updated to allow greater flexibility for employees and employers and productivity is maximized through educational choices that match market demand, aggressive technology adoption and progressive management styles.

Northern tiger is similar to the Asian tiger, said Greenhalgh.

“That’s where we’ve got a highly educated workforce, the skill sets are based upon the kind of industry and technologies that we are successful at, we use technologies in areas to supercharge our existing industries and we use those technologies and skill sets to create brand new industries as well.”

HR’s role

HR professionals will have a key role to play in inventing that workplace in the future, he said. It comes down to anticipating things such as workforce demographics, what kind of skill sets are needed, flexible employment practices and immigration, accreditation and diversity.

“There’s an opportunity to take more leadership in having opinions that shape social policies around immigration, around education,” said Moir. “I don’t know if HR has got a big a role to play in terms of industry diversification and market diversification, but certainly it’s a welcome voice in immigration and education.”

HR could do a lot of things right now it’s not doing well, said Thomas, citing as examples a need to better track internal talent or manage diversity.

“My perspective is to prepare, not to try to predict what the complexities in the future are going to be,” he said. “So you want a workforce that adjusts and adapts and you have an internal system that allows you to be flexible and agile, as opposed to trying to pinpoint and target, ‘Oh, I’m going to need this in 20 years or 50 years.’”

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