Numerous studies have shown the positive relationship between immigration and innovation. Immigrants bring with them specialized skills and experience, diverse perspectives, international relationships and networks, and an entrepreneurial spirit. With an aging population and low birth rates, Canada will increasingly rely on immigration to ensure our labour market needs are met in the future. CPA Canada’s own internal occupational demand analysis shows this to be true for our profession.
We face competition for the best and the brightest. If we are to be competitive as a destination of choice, we must do a better job of attracting talent, smoothing the integration of newcomers into the workforce and providing them with the best opportunity to succeed. We must also do a better job of processing applications with speed and certainty.
CPA Canada has provided more specific input to this matter in our submission to Immigration, Refugees and Citizenship Canada’s recent online consultation, a National Conversation on Immigration. Several key points are worth expanding upon in the context of Canada’s innovation agenda.
The Express Entry system of managing the economic class immigration streams would benefit from further refinement. Three reforms in particular are worth consideration: a re-examination of the emphasis on youth; replacing Labour Market Impact Assessments (LMIAs); and supporting the role of international students in meeting labour market needs.
Age is one of the criteria for awarding points in the comprehensive ranking system for Express Entry applications. Generally, it makes sense to award a greater number of points for youth – as the point structure does – because younger immigrants have more years to contribute to Canada’s labour market. However, some highly specialized skills or executive-level experience can only be acquired through experience over time. The point system as currently structured unintentionally penalizes senior business executives and specialists for their wealth of experience. It also penalizes Canadian employers who need to fill particular niche roles for which suitable candidates are scarce.
This is particularly important when it comes to one of Canada’s biggest innovation challenges: our struggles to grow firms to a larger scale. A 2016 study by the Lazaridis Institute examined the barriers faced by high-growth Canadian technology firms and concluded that the biggest challenge was a lack of experienced management and executive talent. In particular, respondents indicated a shortfall of executives with first-hand experience scaling up technology firms. Canadian firms need access to a deeper talent pool than the country’s labour supply is able to provide. Age should not preclude skilled managerial talent from consideration.
A central purpose behind Express Entry was to make Canada’s economic class immigration streams more responsive to labour market needs by enabling employer demand to directly impact the selection of immigrants. As such, the offer of employment from a Canadian employer is a significant component of the Express Entry point structure. But as a report by the Canadian Chamber of Commerce illustrated, by making that offer of employment contingent on a positive LMIA, the demand-driven thrust of Express Entry has been negated by what is essentially a protectionist labour market test.
The Chamber makes a well-reasoned argument to replace the LMIA, to which we will just add that the LMIA requirement adds further time, administrative compliance and uncertainty to the Express Entry application process. The resulting delays and uncertainty are felt by both Canadian employers and prospective immigrants. The most sought-after international talent has options, and delays and uncertainty in the application process make Canada less competitive.
International students enrich the learning environment in Canada’s education institutions and make a substantial contribution to our economy in the process. There are sound economic reasons why Canada should position itself as the destination of choice for international students. Similarly, there are good reasons why we should look to these international students as potential future Canadians. No immigrants are better poised for success in Canada’s labour market than those who already possess a Canadian education, a comfort with Canadian society, and perhaps Canadian work experience.
But once again, Express Entry has minimized the opportunities for this talent pool, or at least created more uncertainty than before the system was introduced. The Canadian Experience Class (CEC) had been a convenient and successful pathway for international students to pursue immigration to Canada. In fact, in recent years, the Canadian government had set ambitious targets for CEC in order to maximize the number of international students who chose to stay. Since CEC is one of the economic class immigration programs subject to Express Entry, international students must now be ranked based on the Express Entry point system and compete with other potential immigrants. Their Canadian education and experience does not necessarily have any additional value under the point system.
Express Entry’s impact on CEC may make Canada a less desirable destination for international students in the first place. There should not be any guarantees of permanent residency offered to international students who come to Canada. However, at the same time, students should be able to realistically assess their chances of staying should they want to do so. Express Entry’s point system presents a rather cloudy view, and if other international students are less successful in pursuing immigration (as early Express Entry results suggest), then Canada may appear a less attractive choice for their studies. Once again, it is a matter of competition. The best and brightest international students will choose to go to the countries that offer the best educational opportunities along with the best long-term career prospects.
- Re-evaluate the points awarded for age under Express Entry to ensure that Canadian employers are not denied access to international talent with highly valued skills and experience.
- Consider replacing the Labour Market Impact Assessment under Express Entry. If it is necessary to have a labour market test or validation of a legitimate job offer, ensure that the process is fast, efficient and clear.
- If the Canadian Experience Class must be subject to the Express Entry points system, ensure that a Canadian education and experience is valued as it is in the Canadian marketplace.
How do we work together to better equip our young people with the right skill sets for the economy of the future?
Much emphasis is placed on the need for Canada to graduate more students from the so-called STEM fields of study – science, technology, engineering and mathematics. Certainly these fields are critical for an innovation-driven economy. But just as important is the need for business graduates that have a sophisticated understanding of how to grow businesses through each stage of development, how to pursue opportunities in Canada and abroad, and how to anticipate and adapt to change.
An expert panel struck by the Council of Canadian Academies noted that STEM skills are not sufficient on their own to ensure improvements in innovation, productivity or growth. “Other skills such as leadership, creativity, adaptability, and entrepreneurial ability may be required to maximize the impact of STEM skills,” their report stated.
The Institute for Competitiveness & Prosperity measured the specific shortfall in business skills finding that, when compared to the United States, Canada has a significant gap in the number of business degree holders. “More alarming is the lower educational attainment of those in management occupations, irrespective of field of study. Just over a third of our managers have a university degree, compared to half in the United States,” the institute warned.
The OECD has also noted that Canada lags its peers in the development of business and entrepreneurial skills. In addition, it identified another reason to emphasize the importance of management talent – Canadians’ perceived aversion to risk and the contribution that makes to the country’s commercialization gap. It suggests that more management training and higher education in general would help to address that problem:
The best way to stimulate willingness to take risk may be to boost competitive pressures and openness … and to complement this by enhanced attention to management training and diversity at all educational levels. More tertiary education in general is also needed … Canada still lags in attainment of university degrees, whereas highly educated persons are much more likely to be owners of high-growth innovative firms.
In addition to developing managerial talent, we need to do a better job of instilling basic business skills in graduates of all fields. The STEM graduates who may create the products, processes and services of the future, would benefit greatly from a fundamental understanding of how to commercialize their ideas and take them successfully to market. Yet interdisciplinary studies are often discouraged or even prevented. In some cases, spaces in business classes are reserved for students in business programs, making them unavailable to students in science faculties. On the other hand, students in STEM fields may believe that focusing their studies as narrowly as possible gives them greater expertise and enhances their employability.
The OECD recommends that post-secondary education institutions include training in entrepreneurship and business skills in their science-based programs, a recommendation we endorse. Greater awareness also needs to be generated regarding the business training resources that exist beyond post-secondary institutions, such as those provided by the Forum for International Trade Training (FITT).
Business-oriented financial literacy programs can also improve basic awareness of business skills. In fact, CPA Canada and thousands of CPA volunteers deliver a range of financial literacy programs to Canadians each year. Some of those programs are targeted to entrepreneurs or operators of SMEs to provide some of the essential knowledge and skills for operating a business.
By promoting a general understanding of business and removing barriers to interdisciplinary studies, we would develop a more entrepreneurial, adaptable and innovative workforce. The possession of specialized knowledge or skills along with an understanding of how to apply them in a business environment is a combination that should be encouraged.
- Ensure that Canada’s business schools are producing the sophisticated business managers needed to start, lead and grow firms into successful global players.
- Encourage more interdisciplinary study in post-secondary education to enable innovators and inventors to also have a fundamental understanding of business, finance and entrepreneurialism.
 To be available on CPA Canada’s website at cpacanada.ca.
 Lazaridis Institute, Scaling Success: Tackling the Management Gap in Canada’s Technology Sector, Wilfred Laurier University, March 2016.
 Canadian Chamber of Commerce, Immigration for a Competitive Canada: Why Highly Skilled International Talent is at Risk, January 2016.
 Council of Canadian Academies, 2015, Some Assembly Required: STEM Skills and Canada’s Economic Productivity, Ottawa: The Expert Panel on STEM Skills for the Future, Council of Canadian Academies.
 Institute for Competitiveness & Prosperity, Canada’s Innovation Imperative: Report on Canada 2011.
 Organization for Economic Cooperation and Development (2012), OECD Economic Surveys: Canada 2012, OECD Publishing.