The Canadian Council of Chief Executives (CCCE) have published a major report undertaken by PwC Canada to assess the contribution to Canadian public finances of their members. The report is based on data provided by sixty three participating member companies representing 40% of Council members.
Not to put too fine a point on it, the report is clearly intended to leave the impression that corporate Canada is heavily taxed and a major funder of government programs and services. It has been released in the wider context of studies questioning the effectiveness of deep cuts to corporate tax rates which have resulted in mounting piles of “dead money” accumulating on corporate balance sheets.
As an idealistic young girl I always played the role of Ed Broadbent during our school yard political debates. Yes, that’s right, as a school girl I followed the 1984 campaign more closely than many of the double-dutch contests in my school yard. But that won’t surprise anyone who knows me well.
Flash forward over two decades and that same idealistic girl, who believed passionately in what Ed Broadbent represented, was honoured to become the first employee of the Broadbent Institute.
Former Finance Minister Jim Flaherty will be rightly remembered for the 2009 federal Budget which provided much-needed fiscal stimulus to boost a crisis-ridden Canadian economy and helped set the stage for recovery.
While the government was reluctant to act, domestic political as well as international pressure from the G20 forced even strict fiscal conservatives such as Prime Minister Harper and Minister Flaherty to find their inner Keynes.
The fact that income inequality in Canada today is significantly greater than it was 30 years ago is not in serious dispute. But there is much less agreement on the underlying causes.
It is important to look at trends in the “pre-distribution” of income by the market in the form of wages and salaries, and changes in the impact of government taxes and income transfer programs that redistribute market income from the more affluent to the less affluent.
When I first conceived of my year-long project on the working world for the Calgary Herald’s Michelle Lang Fellowship, I have to admit, most of my proposal was based on a hunch. Through straw polls, coffee banter with friends and colleagues, discussions with my own parents and, of course, my own experience in the job market, I was fairly certain I wasn’t the only one gazing at an uncertain economic future with some apprehension.
To back up my pitch, I assembled a smattering of news stories pointing out the dismal projections for younger workers, growing income inequality, boomers delaying retirement and the like.
But when it came to my thesis – namely that the working world is changing and we’re not feeling all that great about it – there was very little evidence out there to prove that I wasn’t just butting up against the walls of my own little bubble.
Turns out the folks at the Broadbent Institute, an Ottawa-based think tank, felt the same. In response to the same dinnertime conversation I was picking up on, they decided to commission a poll to determine just how widespread concern over job prospects and economic futures for younger workers is.
The results, published today, show anxiety over the changing face of work, and all the social challenges it implies, runs deep across the generations.
The poll surveyed 1,064 boomers aged 50-65 and 983 millennials aged 20-30 about their experiences in the work force and sheds some much-needed light on how Canadians are feeling about the economy. The figures were weighted to reflect census data on population age, gender, education and region.
So, what do the numbers say? Many boomers and millennials are anxious about the younger generation’s job prospects, homeownership potential and ability to fund social programs through taxes.
Interestingly, boomer parents seem to be more pessimistic about their children’s future than millennials are about their own prospects. Nearly half of boomers, 49 per cent, feel their kids are facing a poorer future than they had, while 34 per cent of millennials feel they are worse off than their parents.
But at the same time, millennials know they are facing a working life with fewer guarantees. More than half anticipated a career where contract work played a role, compared to 14 per cent of boomers who said they faced the same instability in their own careers. Meanwhile, only a third of millennials were confident they’d own their homes at retirement, compared to more than half of boomers, and one in five millennials say they don’t know anyone with an employer-funded pension.
Rick Smith, executive director of the Broadbent Institute, said he wasn’t surprised to find a high level of angst across age cohorts, but he didn’t anticipate seeing so much agreement between the generations on possible causes of economic instability. A significant majority of both generations expressed a high level of distrust for corporations, he noted, with both blaming irresponsible corporate behaviour for bringing on the 2008 financial crisis.
“Our starting point was very similar to yours: is this our imagination or not?” Smith said in an interview Monday.
“If you were to rank likely topics of dinner-time conversation in Canada these days, youth unemployment is high on that list. These numbers bear out that anecdotal experience.”
Smith said the results of the poll will be used to inform policy recommendations coming out of a summit the institute is holding later this month in Ottawa.
Here are some other highlights from the survey (which you can read here). I’m interested to know if you agree, send me an email or leave a comment below and let me know how you’re feeling about your work prospects.
Just over half, 52 per cent, of millennials expect contract work to make up a significant part of their working lives, either alone or in conjunction with permanent jobs. In contrast, 14 per cent of boomers said their work lives relied on contract work;
39 per cent of millennials anticipate a career comprised of permanent jobs, compared to 66 per cent of boomers who experienced permanent employment;
Millennials with university degrees were more likely to anticipate a career encompassing contract work than those with high school or college education;
70 per cent of millennials and 78 per cent of boomers cite irresponsible business behaviour as the cause of the 2008 recession;
60 per cent of millennials anticipate the gap between rich and poor to grow during their lifetime;
55 per cent of millennials and 59 per cent of boomers say declining enrolment in unions has made good jobs harder to find;
48 per cent of millennials and 60 per cent of boomers say reduced corporate tax rates have not resulted in more investment in creating jobs in Canada.
The poll does not provide a margin of error because it is not a random, probability-based sample.
The perception of a growing generational divide seems to be taking hold among millennials and their baby boomer parents, as both groups now tend to believe that the economic future looks bleak for the younger generation, a new survey shows.
The survey, which was commissioned by the Broadbent Institute, found that millennials fear their working lives will be governed by precarious, short-term arrangements and that the gulf between rich and poor will grow. Their parents, meanwhile, worry that the younger generation will not produce enough income to support the social programs they’re counting on in old age.
“Parents across this country are fretting about the economic prospects of their kids. They’re worried their kids aren’t going to have the same economic opportunities as they did,” said Rick Smith, executive director of the Broadbent Institute, a left-wing think tank. “What really leaps out at me here is there’s a very high degree of angst.”
A feeling of anxiety about the economic prospects of a younger generation is not uncommon historically. What’s not clear is whether today’s fears are justified. Youth unemployment is at 13.6 per cent, unchanged over the last year and down from the peak of a recession that continues to send ripples through the global economy. This is also a period of significant technological change and it’s unclear what impact that will have over the long term. What’s clear is that a sense of pessimism, justified or not, is gaining momentum.
Baby boomers are more likely to say that their children face worse economic times than they did as young people. Just less than 50 per cent of the boomers surveyed said their children’s economic opportunities are worse than their own at that age, compared with 40 per cent that said they were better and 12 per cent that said they were the same, according to the online survey by Abacus. More than 55 per cent of boomers said they worried the younger generation won’t support social programs through taxes.
Millennials are expecting a different kind of working world from the one their parents entered. They expect to work a mixture of permanent and temporary jobs, compared with the more stable arrangements their parents had. They say lower rates of unionization will make good jobs harder to find and are more likely to say they don’t know anyone with an employer-provided pension, the survey said. Sixty per cent say the gap between rich and poor will increase over their lifetime, and only 16 per cent believe it will shrink.
Frances Woolley, an economist at Carleton University, said there’s no question today’s labour market is more unequal. This is a “winner take all” society, as some call it, where the greatest income gains go to those at the top of the spectrum and some, particularly those without a university education, will face a difficult job market. But one thing to consider is that the baby boomers had the good fortune to be born at the right time, an era of peace and prosperity, Prof. Woolley said.
“The older generation has had such a blessed life,” Prof. Woolley said. “Some generations are born in better times than others. That’s just the way it is.”
Matthew Cuthbert is a 27-year-old graduate of the University of Toronto. He has experienced the millennial’s anxiety. He has nearly $50,000 in student and credit-card debt and works at a community centre in customer service, earning $31,000 a year. He and many of his friends are the precariat, he said, a new class of precarious worker. It’s not what he was expecting, but after seven months unemployed, he’s grateful for the work.
“It’s frustrating to watch this break down. When I started school there was so much more optimism around the economy,” he said. “It’s far from the ideal situation that any of us anticipated.“
Canadians in the millennial and boomer generations disagree about much, but hold one thing in common: they’re deeply anxious about the economic future of young Canadians.
That was the key finding of a survey of Canadians between 20 and 30–the “millennial” generation–who are in the work force, and boomers, or those aged between 50 and 65, by the left-leaning Broadbent Institute.
“It puts [some numbers], for the first time, to the fact there’s deep angst, among both millennials and their parents, about the reduced economic opportunities available to young people, today,”Rick Smith, executive direction of the institute, told Canada Real Time.
“The scale of the angst certainly took us by surprise,” he said. “The strength of feeling here is really quite astonishing.”
The online survey, conducted last month, found that 41% of the millennials expect their working lives to comprise a mix of contract work and permanent jobs, with 39% anticipating a succession of permanent jobs.
That contrasts markedly with the experience of the boomers, 66% of whom reported working lives consisting of a string of permanent jobs and only 10% of whom experienced the combination of contracts and permanent positions expected by the millennials.
A near majority of 49% of the boomers said things are worse for their children today, while 40% believe their kids’ economic opportunities are better than theirs were when they were the same age. More millennials—56%–said they expected their opportunities to be the same as or worse than their parents’.
On the housing front, more than half of boomers are certain they’ll own their home at retirement, but only a third of millennials are as confident.
Mr. Smith said the relative pessimism about the prospects of working Canadians, both among millennials and boomers, reflects their “lived experiences” in the last few years.
The survey found that 92% of boomers know someone with a workplace pension, with 51% of them knowing some or many. That compares with only 30% of millennials who know at least some people who have a workplace pension, and 20% knowing no one with such a benefit.
A big majority of both millennials and boomers agreed free-trade agreements have made Canadian businesses more profitable by making it cheaper to make things in other countries. But a majority of these same respondents also said trade agreements have cost Canadians jobs and opportunities.
Overall, the survey pointed to concern about the prospects of younger Canadians now, but also into the future, Mr. Smith said.
“This concern is not only for economic prospects of youth currently, it’s also a realization of economic prospects for youth in the future are likely to be dimmed,” he said.
“People don’t view this as a blip. They’re not anticipating that things are going to bounce back, any time soon,” Mr. Smith said.
The Conservative Party’s 2011 election platform titled “Stephen Harper’s Low-Tax Plan” promised a bountiful menu of tax goodies. The government has delivered appetizers such as the Children’s Art Tax Credit and the Family Caregiver Tax Credit as well as an amuse-bouche in the form of a Search and Rescue Volunteers Tax Credit.
Posted by Rick Smith and Ken Neumann · March 04, 2014 7:00 PM
It’s no secret that Ontario needs to create jobs. Our unemployment rate is too high. But it’s very strange to suggest that job creation can be accomplished by killing jobs that people actually have today. And yet, that is exactly what Ontario PC leader Tim Hudak proposed in his jobs plan, which he tabled in the legislature last week.
In addition to some drastic cuts to public sector jobs, Hudak’s pledge to end subsidies to wind and solar power would have the effect of killing thousands of jobs in Ontario’s newest manufacturing sector — green energy.
Posted by NationBuilder Support · February 27, 2014 6:01 AM
Three economists on how the manufacturing sector can bounce back This article originally appeared in the Toronto Star.
Know your advantages
Manufacturing absolutely has a future in Canada, and in particular southwestern Ontario. The key to understanding the future of the industry is in knowing where our competitive advantages lie.
Low labour costs will never be a comparative advantage for Canadian manufacturing, but given those “costs” are largely wages, this should not be seen as a problem. Less obvious is how proximity to markets is no longer a comparative advantage for traditional manufacturing regions. The world’s economic centre of gravity is heading toward Asia, which places goods from southwestern Ontario at a geographic disadvantage compared to most other parts of North America. Even markets within North America are changing. In 1900, neighbouring cities such as Cleveland (7th), Buffalo (8th) and Detroit (13th) were among the biggest cities in the U.S. Now those cities are 48th, 73rd and 18th in population.
This disadvantage may pose less of a problem than it to appears at first glance. With supply chains becoming increasingly global, a smartphone assembled in China may have an operating system designed in Kitchener-Waterloo and Brantford, applications programmed in London and Windsor and use precision-crafted parts from St. Thomas and Sarnia.
The region maintains a number of advantages, including a financial sector that is familiar with the industry. We have one of the most well-educated workforces in the world, which gives us an advantage when it comes to precision manufacturing and products where high-quality control is important, such as food. Although our labour costs are high, there are significant cost advantages in other areas, such as access to land and clean water. Manufacturers that use these advantages are well-positioned for future growth.
— Mike Moffatt, assistant professor, Ivey Business School
Three ways to act now
Ontario manufacturing has had a rough ride over the last decade. A number of factors have been at play, including the rise of the dollar, the deep U.S. recession, and the growth of competition from emerging economies. However, we should not conclude that Ontario manufacturing is down for the count. Far from it.
In some research looking at leading Canadian firms done at Ivey’s Lawrence Centre, we find reasons for optimism. Firms such as Linamar, Magna and Shawcor are competing and winning at home and in global markets. Focusing on high value-added manufacturing, they are making the most of Canada’s skilled workforce and capacity for innovation to win new business around the globe.
Business and public-sector leaders convened with Ivey researchers in November to translate our research findings into action. They agreed on three recommendations for immediate action.
Leaders agreed that the primary responsibility for manufacturing success lies with the private sector. Therefore they aimed their first two recommendations at firms. Their first was to find a mentor: Firms seeking to expand into international markets need the counsel and advice of seasoned executives.
Their second recommendation was to form partnerships with local educational institutions. To attract the next generation of skilled workers and managers to manufacturing, firms need to connect directly with students by visiting classrooms and hosting plant tours. Linamar is a good example of a firm that is putting these ideas into practice.
Finally, leaders are looking for governments to raise their game, particularly in the area of attracting investment. Despite Canada’s many advantages, jurisdictions such as Mexico are winning the investment attraction game, even when wages are a small part of the total business proposition. Ottawa, provinces and municipalities need to work together to put our best case forward.
Ontario can compete and win at manufacturing. The leading firms we studied prove it. We need to stop focusing on our problems and start taking action on solutions.
— Paul Boothe, director of the Lawrence Centre at Ivey
How to work together
The recent depreciation of the Canadian dollar combined with recovery in the United States opens up a temporary window for recovery of Ontario’s hard-hit manufacturing sector. Those companies that have survived a brutal decade have the opportunity to grow. However, recovery will not happen automatically, and will require a major effort on the part of many players.
Support for new corporate investment is critical, but lowering the overall corporate tax rate has had little impact. Ontario’s corporate tax system should use enhanced tax credits to reward companies that invest heavily in new machinery and equipment, research and development, and worker skills.
Governments must also ensure access to the “patient” equity capital needed to finance investment that has a long-term payoff. Given the small scale of venture capital funds in Ontario and the focus of banks on short-term loans, we should establish an Ontario public investment bank focused exclusively on manufacturing. Such a body should operate at arms’ length from government, on the model of the federal Export Development Corporation.
Ontario has had a patchy record of fostering collaboration between the key players in a successful modern economy: government, companies, the post-secondary educational system; local governments; and unions. Drawing on past successes, Ontario should establish province-wide and local sector councils, bringing key players together to promote and deliver skills training and collaborative research programs. Community colleges can play a major role in rebuilding local manufacturing.
A revival of Ontario manufacturing will require active government leadership, and a spirit of partnership. It will certainly not come about if public institutions and unions are seen as the enemy.
— Andrew Jackson, Senior Policy Advisor, Broadbent Institute