Thank you, Mr. Chair.
My name is Jason Kee. I'm the director of policy and legal affairs with the Entertainment Software Association of Canada. We're the industry association representing companies in Canada that develop, publish, and distribute video and computer games across all platforms, including consoles, hand-held and mobile devices, PCs, and the Internet.
Our industry employs approximately 16,000 people in high-paying knowledge economy jobs at about 350 companies across the country. It accounts for an estimated 11,000 more in terms of indirect employment and indirect induced activity. We contribute about $1.7 billion in direct economic activity and cultivate workers with a combination of creative, technological, and management skills, and in such a way we're actually supporting Canada's position in the global economy.
We thank the committee for the opportunity to present.
The global video game industry is an extensively competitive and highly innovative industry, and Canada is rapidly establishing itself as a world leader in game development. Canadian video game companies are behind some of the world's most successful titles and are regularly ranked among the best in the world. Due to the tremendous international success of the game industry, Canada is now the third-largest and most successful producer of video games in the world, second only to the U.S. and Japan. We're actually first on a per capita basis. Indeed, in terms of direct employment, our industry is only two-thirds the size of the U.S. industry, which is an impressive fact considering that they have 10 times our population.
The Canadian industry has expanded at a phenomenal rate and is projected to grow at a 17% growth rate over the next two years despite a challenging economic climate. Entry-level workers earn about twice as much as the average recent college graduate, and the average salary across all Canadian provinces is about $68,000, with higher salaries in major game development hubs such as Vancouver or Montreal.
Furthermore, game companies drive research and innovation, with about 55% of all companies developing proprietary technology and devoting at least one-quarter of all their production budgets to developing proprietary R and D. Moreover, most of this research is successfully commercialized, either by being implemented directly into products and services that are offered onto the marketplace or by being licensed to other companies, which use them to assist with their own game development.
Precisely because of our success and rapid expansion, the Canadian industry is experiencing increasing challenges recruiting highly qualified and experienced talent. Educational programs across the country produce well-trained workers for entry-level and junior positions, and hiring of new graduates is expected to increase over the next two years, with about 60% of all game companies currently hiring new graduates or intending to. This is expected to increase to 77% by 2013.
Similarly, the average number of graduates being hired per company is increasing, and typical mid- to lower-sized companies expect to hire 24 to 26 new graduates in 2013, as opposed to 10 to 16 right now. However, there is a critical shortage of available talent at the intermediate, senior, and expert levels across all disciplines, including programmers, game designers, digital artists, and animators.
Game development is a highly knowledge-intensive, fast-paced, and team-oriented industry. The hiring, training, and supporting of recent graduates and junior employees is entirely dependent on the presence of a solid and experienced core team of senior personnel. Consequently, ready access to experienced talent is absolutely crucial to our industry.
While the industry prefers to hire domestically, the dearth of available qualified talent often requires us to source talent from outside of Canada in order to find those highly skilled senior professionals with the specific skill set needed for a given project. Furthermore, highly skilled foreign workers facilitate knowledge transfer by providing valuable on-the-job training opportunities for recent graduates and junior employees.
In sum, access to the best and brightest in the international games industry is critical to long-term development of the industry in Canada; consequently, the ability to bring in temporary foreign workers is extremely important to our industry. However, recent changes by HRSDC and CIC have erected certain barriers that are causing significant challenges.
Specifically, about two years ago HRSDC eliminated the federal IT workers program that permitted companies to bypass obtaining labour market opinions for seven specified categories of IT workers. This program was widely used by the Canadian games industry to expedite work permits for many core industry positions, and its termination has significantly increased our processing times.
Furthermore, the departments have introduced other policy changes, including new minimum recruiting requirements, the elimination of LMO extension applications—thus requiring new recruitment even to extend an existing work permit—much shorter validity periods for existing LMOs, and a reduction in the length of time for work permits. At the same time, both departments have become much more stringent in their review processes.
While we appreciate that the purpose of this is to curb abuses, at the same time we see that overly rigorous processes are themselves delaying processing times further and causing rejections on seemingly arbitrary grounds. The departments also appear, at least in our experience, to be overemphasizing hiring Canadians while underemphasizing important factors related to temporary foreign workers, such as job creation, retention of skills, and knowledge transfer.
In combination, all of this is causing major delays, interfering with the timely completion of time-sensitive projects, and putting tremendous pressure on our existing domestic talent pool. Since the federal IT worker program was eliminated, total processing time for work permits has tripled or quadrupled in some regions, jumping from four or five weeks to more than 20 weeks, which is basically four to five months.
Processing time for work permit renewal applications has more than doubled—from two months to about four months—meaning that some work permits cannot be renewed before the worker has to leave the country, which causes significant workload and health insurance problems.
We've also increasingly experienced administrative challenges that are causing delays. For instance, LMO applications have not been input or accounted for properly. Applications still cannot be submitted electronically and must be faxed in. There are delays in receiving LMO letters, which are only faxed to the recipients if there's some kind of delay. Further, it appears that additional restructuring, staffing changes, and an increasing workload for Service Canada are aggravating delays.
Also, the existing pay scales HRSDC uses are ill-adapted for our sector. Salaries for TFWs must meet the standards set out in HRSDC pay scales for the relevant employment category, but unfortunately these categories are extremely broad and ill-adapted to the video game sector and do not correspond with existing industry practices.
While this is primarily a federal issue, individual provinces have been working to replace the now defunct federal IT workers program and to expedite LMO processes. Both B.C. and Quebec have exempted certain categories from the requirement to advertise, and we understand that Ontario has a similar project in the works. While this reduces some pressure, unfortunately it only reduces application processing by a few weeks, which is not that significant when you're considering delays on the order of four to five months. For time-sensitive projects like most games, massive delays are simply debilitating.
We must encourage the federal government to leverage its participation in the federal-provincial temporary foreign workers working group and other areas of federal-provincial cooperation to encourage the development and implementation of a cross-departmental strategy to reduce processing times for LMOs and work permits, particularly for high-demand, time-sensitive software and games industry positions. This includes implementing clear guidelines and timelines for HRSDC and Service Canada around deliverables for LMO applications and renewals of work permits that give due weight to skills, economic benefits, knowledge transfer, and consistent implementation.
We also recommend removal of the advertising and salary-scale requirements for LMOs where it can be demonstrated that the removal assists in fulfilling an existing labour shortage, job creation, or job retention.
Finally, we recommend the reintroduction of LMO renewal processes that improve the permit renewal process.
Thank you again for the opportunity to provide our views. We welcome any questions you may have.
