Thank you so much for the initiation to be here today.
We had a technical difficulty early this week or late last week. I'm grateful for the opportunity to present today on the labour shortages and productivity of small and medium-sized enterprises across Canada.
My name is Dana O'Born. I am appearing on behalf of the Council of Canadian Innovators. We are a national business council that represents 150 of Canada's fastest growing companies. Our member companies are headquartered here in Canada and employ north of 52,000 employees across the country. They are market leaders in the sectors of health technology, clean technology, financial technologies, cybersecurity and more.
After two years of the pandemic, there has never been a greater need to support SMEs in their adaptation, growth and competition in the global economy. The priorities I'm going to speak to today address SMEs and their ability to access talent, capital, customers and marketplace frameworks—a few pieces that Yelena actually mentioned in her comments as well.
First, I’d like to brief you on the pressures facing domestic technology companies in Canada in their pursuit of attracting and retaining highly skilled talent.
A recent report from the ICTC estimated that by 2025, Canada’s digital economy will employ about 2.26 million Canadians. That’s 11% of all employment in the country, but it will require an additional 250,000 jobs to be created over the next three years.
CCI's members and Canada's scale-up companies are committed to creating many of the new jobs. However, they face a serious talent supply issue. Unfortunately, scale-up companies can't just maintain their workforce; they also need to grow rapidly and adding the best and brightest talent remains a constant priority.
A recent survey of CCI's members also found that most companies plan to increase their workforces by 20% this year alone. That’s an additional 10,000 workers added to our economy by this year’s end.
For years, the shortage of skilled talent has been a driving concern for CCI member companies, but the recent shift to remote work has only exacerbated the problem. Canada’s skilled workers are now part of a global labour market where geography is no longer as important. Our domestic innovators are finding themselves in fierce competition with global companies who can offer significantly higher wages for the same crop of skilled workers.
This is driving up wage inflation. Earlier this year, CCI surveyed our members on this topic specifically and found that wage expectations have increased by 20% to 25% over the past year alone. This is not sustainable. In response to this, CCI recently tabled and released a talent and skills strategy with 13 key recommendations to meet the talent needs of our country’s fastest growing companies. These recommendations speak to the need to increase generation, attraction and retention of skilled workers for Canadian firms.
Through our national membership, we have strong insight on how to address these challenges, including improvements to our immigration system and investments into upskilling and retraining programs across the country. I look forward to engaging with you a little bit more on some those ideas today.
In addition to skilled labour shortages, there are several challenges that scale-ups are facing while trying to sustain their growth. Canada’s outdated intellectual property regime and SR and ED framework must be improved to better support SMEs.
In the 21st century economy, intellectual property and other forms of intangible assets are the most critical sources of an economic advantage for firms and economies. Since 2020, we have continued to see a rise in the intangible assets base. Even as the pandemic winds down, the new wave of digitization, algorithms, patents, data and other intangible assets will only become more valuable.
To capture the maximum economic benefit from private sector R and D, it's essential that research and development be converted into commercial assets here in Canada. This means that changes to the SR and ED tax credit could potentially allow for costs associated with protecting, defending and prosecuting IP to be recognized as eligible expenses. This would send a powerful signal to businesses that generating IP through R and D is a fundamental component of the innovation process in Canada.
However, SR and ED will only deliver material, long-term value to Canada if the IP flowing from these investments continues to reside and be commercialized for the benefit of Canada. CCI has several recommendations to better support Canadian IP and the SMEs who develop it. I look forward to sharing some of them with you today.
To conclude, with smart changes to existing strategies and the development of new measures where required, we can ensure that Canadian SMEs become leaders in the digital economy. Without this strong base of homegrown, high-growth SMEs, we will not be able to generate the economic growth and public wealth necessary to pay for the public services that Canadians depend on.
Thank you and I look forward to your questions.