Don’t grow the economy on a hunch
Canada can’t expect to improve its economic growth without a better understanding of who is responsible for growth.
At a conference in Ottawa last fall, where speakers included Finance Minister Bill Morneau, Innovation Minister Navdeep Bains and growth council chair Dominic Barton, a challenge was laid on the table.
We live in a low-growth world and Canada is not immune. We’ve experienced sluggish growth for much of the past decade and our gross domestic product growth rate is not predicted to breach the coveted three per cent mark without bold action now. So what do we do? Big ideas were tossed around: an infrastructure bank, increasing the labour supply through immigration, and ramping up investments in research and development. These ideas all have merit, but if we really want to retool Canada’s economy and become the innovation nation that the Liberal government wants us to be, a key piece to the puzzle is elusive: data.
Weak growth necessitates that we use all of Canada’s assets to reignite our economy. Yet data are assets that have yet to be effectively leveraged.
While we fixate on the numbers of startups or unicorns (upstarts with growth), do we really have adequate data with which to build a resilient labour force or a cadre of innovative firms that will help Canadian productivity and competitiveness?
In an exchange with former Liberal MP and current Business Council of Canada president John Manley, Bains highlighted the leading role talent plays in the innovation process.
If innovation is going to be the means through which we achieve growth, and talent is the driving force behind innovation, let’s start by measuring this key input to growth correctly.
Where do Canada’s current talent gaps exist and, more pressing, where do these gaps exist for the firms that perform the innovation that leads to economic growth?
On talent, the data challenge rests almost entirely in the lack of evidence on demand: we don’t know in measurable terms what the market demand is for particular skill sets or credentials. For example, we don’t know for certain if we’re producing too many PhDs, engineers or lawyers, or enough mechatronic technologists, coders, marketing specialists or project managers.
The result is an overproduction of individuals in possession of credentials or skill sets the market can’t absorb, even as we clamour for international talent to spur innovation.
Using credentials as a signal for productivity has serious implications — it leaves individuals with high levels of academic achievement working jobs far below their skills sets. A recent Statistics Canada survey on over qualification states 40 percent of university graduates outside of management occupations are considered to be overqualified for their positions.
Further, innovation is a people-driven activity, so shouldn’t we know what type of talent is in demand by the companies performing innovation?
Our approach so far seems to indicate science, technology, engineering and math discipline (STEM) PhDs hold a monopoly on research and development and innovation, yet innovation is a team sport needing a full complement of technical and creative talent. We need the contributions of undergraduates and technologists, just as much as we need the doctoral student or researcher.
As the government sets about designing an innovation agenda, the case for evidence-based decision-making in innovation policy is urgent.
In Canada, we decry our underproduction of PhDs relative to global counterparts. Implicit is the assumption that this inhibits our ability to innovate — but what do the data suggest?
Data from the 2011 Review of Federal Support for R&D show that Canadian firms use individuals holding technologist designations, bachelor’s and master’s degrees more than they use PhDs for research and development. This is the type of demandside data we need to collect year over year.
Such evidence adds nuance to discussions around credentials. Depending on who you talk to, there’s an alphabet soup of credentials in demand: STEM+B (business), or STEAM+D (arts and design). Before we move ahead and say we need more STEM, business, design or engineering talent, our first step should be to collect the data about demand for this talent.
Productivity and growth don’t occur when our workers can’t effectively put to use the full extent of their publicly-subsidized education or training. Responsive higher education systems need these indicators of demand to improve the quantity and quality in the supply of innovation talent. As we seek to move Canada beyond two per cent growth, let’s remember that public policy can’t be built on hunch or anecdote. To attack Canada’s growth challenge, more data are needed to unlock the barriers to commercialization of research and labour productivity.