Good afternoon, Chair and members of the committee. Thank you for having us.
It's a pleasure for us to be here this afternoon. I am here in my capacity as chair of the Canadian Services Coalition. My day job is as a vice-president at Manulife Financial, and as such I think I'm well acquainted with the services, especially financial services.
Not only do services represent approximately 70% of Canadian GDP, but they employ three-quarters of our work force. According to Stats Can, in 2008 services were responsible for 90% of new jobs, and from 2002 to 2009 service labour productivity and its overall growth rate outpaced that of the total economy.
Furthermore, the majority of Canada's service exporters are small and medium-sized enterprises. More than 86% of services firms in Canada employ fewer than 50 people.
Canadian services industries are also prosperous. I can speak of my own sector, the life insurance industry in Canada, in which we have some 102 companies registered, with Canadian-owned firms controlling 87% of the domestic market. Canadian life insurers, with $900 billion in assets worldwide and roughly $400 billion of that here in Canada, are significant long-term investors in the Canadian economy. Furthermore, Canada's life insurance industry is a major component of the services sector, which has been recognized for its success in navigating through the financial crisis.
For my company, roughly two-thirds of our business, and it has been as high as three-quarters, is actually outside of Canada, but almost 50% of our jobs are inside Canada. That's because in addition to our Canadian operations, which are obviously here, our head office is here and some of our global businesses are here, such as our investment division. These contribute to that job count; it does not count the literally thousands of advisers we work with who are independent providers.
While this is positive news, we continuously lack a clear picture of the true status of Canadian services industries. We need to improve our understanding of the services sector in Canada and adapt our regulations and policies to reflect their importance. Canada has emerged from the global financial crisis in a stronger position than many of our competitors, but we need to better understand our strengths in order to capitalize on the things that we do best.
We must also take steps to address the areas in which we can improve. For example, while the global average of services exports in 2008 was 19%, Canadian services exports continued to underperform, representing only 12% of Canada's total exports.
If Canada wishes to remain competitive, particularly as we emerge from the global economic crisis, we need government leadership to address both our strengths and our weaknesses or challenges. Canada must make sure that services industries remain globally competitive to ensure continued economic growth for the entire economy.
The Canadian Services Coalition would like to applaud the industry committee for the release in June 2008 of the report entitled The Goods on Services. This paper stressed the vital importance of services to the Canadian economy and was a very important step in raising the profile of the services sector in Canada. Having participated in the initial hearings, the Canadian Services Coalition was pleased to see the inclusion of a number of our recommendations in the final report. These included first a call for improved service sector metrics; second, for more free trade agreements that include services obligations; and third, the need to develop a services sector innovation strategy.
The Goods on Services has already had a positive effect on policy development with respect to services in Canada. For the first time, Statistics Canada will be undertaking a survey on business innovation in Canada, which will include data on the services industry. Industry Canada has also increased its focus on the development of services sector metrics, while the Department of Foreign Affairs is increasingly developing FTAs that include services obligations.
Likewise, the Canadian Services Coalition has developed a report that breaks down the value of services by province, and we'd like to thank Stats Canada for their assistance in the development of this report.
One of the key conclusions of the industry committee report was the need for the Canadian government to develop a services sector innovation strategy. Other countries, such as South Africa, Japan, the United Kingdom, New Zealand, have already developed similar strategies, and we believe it's time for Canada to do the same.
To aid the government's efforts in this area, the Canadian Services Coalition is in the process of developing our own strategy, which seeks to drive innovation in the services sector and increase competitiveness and productivity across the economy. The Canadian Services Coalition's Canadian services innovation strategy has two primary goals: first, the development of services-based policy and regulations; and secondly, increased focus on services in our trading agreements.
We would also be happy to share our innovation strategy with you when it is completed in the new year, and we hope that you will give it serious consideration to a strong recommendation for the development of a services innovation strategy that is tailored to ensure a competitive sector.
We have a couple of recommendations here, Mr. Chair. To ensure a robust and meaningful services strategy, the Services Coalition recommends the following:
First, that the industry committee update and re-introduce The Goods on Services report, which recognized the need for action on important cross-cutting issues and highlighted the importance of services to the Canadian economy. This would allow the valuable work being done by various government departments to continue and would increase the awareness of the services sector as a whole.
Second, that Canada continues to boost our trade in services both internationally and domestically. At the international level we need to ensure a comprehensive services chapter in all our trade agreements, including in the context of Canada and EU comprehensive economic and trade agreement negotiations currently under way. Domestically, interprovincial trade barriers continue to inhibit economic activity in Canada and should be eliminated. For example, labour mobility remains a serious concern for many services industries in Canada, and the cost of complying with different regulatory systems is having a negative influence on the ability of companies to remain globally competitive and to expand into new markets.
Third, we need to increase the collection of services sector metrics. In order to capitalize on the available opportunities in the services sector, policy-makers need reliable data regarding the current state of services in Canada. Other countries, like Japan, the United States, Australia, South Africa, New Zealand, the U.K., and the EU, have already developed significant research into the performance of their services sector. To remain competitive Canada must do the same. The Canadian government needs to continue to promote and invest in the development of services sector data.
Fourth, and finally, we must do more to address labour market gaps. Canada is facing a nationwide shortage of skilled labour. The Canadian government should identify current and future labour market gaps and encourage the development of a nationwide strategy for identifying how these needs can be met within the framework of the current educational system.
As services employ three-quarters of the Canadian labour force, it is important to make sure that our colleges and universities are able to train competitive workers. Barriers to labour mobility should also be eliminated to ensure the flow of skilled workers into new markets.
This committee has demonstrated that your reports do have a valuable impact on government activity, and we look forward to your report, which will, we hope, result in further progress.
Thank you again for having us, and I would like to welcome any comments or questions that you may have.