Canada’s East-West economic dichotomy
DAVID HERLE
From Monday’s Globe and Mail
September 17, 2007 at 6:07 AM EDT
Today’s edition of the C-Suite Survey exposes an important truth about us as a nation, which we ignore at our peril. Canada has two economies: in the East, a somewhat fragile economy that’s more susceptible to global competitive pressures, and in the West, a resource-based, boom times economy. The two demand very different kinds of assistance and support.
The attitudinal difference between executives in the two economies is rooted in structural differences in the nature of the economies. Compared with Ontario, Western-based companies tend to employ fewer people, are much more likely to be in the resource sector and much less likely to be in the service sector. C-Suite executives are younger in the West, as well – twice as likely as Ontario executives to be under 45 years old.
Economic expectations among Western executives are sharply more positive than those in Ontario. Executives of Western companies are more likely than their Ontario counterparts to think the Canadian economy will grow over the next year. There are a number of illustrations in this survey about the vulnerability being felt by the Ontario economy.
Despite this survey being conducted amidst the subprime mortgage-driven volatility in the markets, more than half of Ontario executives think the markets are still due for a significant correction.
And while Western executives were evenly divided as to whether they support or oppose the recent increase in interest rates by the Bank of Canada, Ontario executives decidedly opposed the increase. Ontario executives see the major issues faced by Canadian business as issues that threaten their current position – global competitiveness, the high value of the dollar, and the state of the economy. Western executives are much less concerned about those things and more focused on issues that they see constraining their growth.
As a consequence, Western and Ontario executives see the human resources issue very differently. It is a much bigger problem in Western Canada – Western companies are twice as likely to say that they are finding it very difficult to get qualified employees. The gaps between the two regions are very large in terms of the difficulty of finding licensed trades and journeymen, those with college or technical training, and those with university degrees. Western executives are also more likely than those in Ontario to say the labour shortage is hurting their company’s bottom line. There is also a stark difference in the perceived causes of the labour shortage. Forty per cent of Western executives say it is due to the booming economy. Less than 10 per cent of Ontario executives agree. However, one-quarter of Ontario executives attribute the shortage to the Alberta oil sands and to competition for a mobile work force. Executives in Quebec and Atlantic Canada share this concern around losing talent to other regions – a concern that Western executives aren’t reporting to the same extent. A major difference of opinion between Ontario and Western executives emerges on whether we have a skills gap or a shortage of people. Ontario members of the C-Suite think there are plenty of potential workers in Canada but they are not trained to fill the jobs that are needed. Most Western executives think there is, in addition to training gaps, a plain shortage of people in the work force.
David Herle is a principal partner of the Gandalf Group
http://www.theglobeandmail.com/servlet/story/RTGAM.20070917.wrcsuiteherle17/BNStory/Business
