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Canada must reorient its immigration system for the 21st-century economy – The Globe and Mail

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Chris Albinson is the Founder & Managing Director of BreakawayGrowth, a Venture capital firm with investments in Canada and the U.S.

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A mass exodus has commenced in Silicon Valley. Last month alone, Oracle Corporation, Tesla Inc., Charles Schwab Corporation, SpaceX and Hewlett-Packard Company announced relocation plans. Amid the pandemic, companies and their employees realized that remote work offered an opportunity to improve their competitiveness and quality of life elsewhere. But they are not coming to Canada. Instead, they are moving to jurisdictions that actively recruited their entrepreneurs and employees.

Attracting top talent is already posing a challenge for Canada’s most innovative companies. Canada produces high-quality graduates and attracts highly skilled immigrants. But the tech sector continues to have key positions go unfilled due to labour shortages in strategic roles. At present, there are more than 54,000 tech-sector job openings.

This, in part, has been a result of multinational tech companies having set up engineering outposts here over the past generation to take full advantage of our relatively low-cost talent. The pressure on Canada will continue to grow as foreign companies look for top-tier talent. The International Monetary Fund reports there will be a shortage of 85 million tech workers by 2030.

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Talented workers and the intellectual property (IP) they create and commercialize are the two most important ingredients of modern business globally. While IP permeates borders with relative ease, talent has been bound to traditional national structures.

The pandemic has begun to erode this construct, with companies looking for the best talent on the planet as the normalization of remote work continues. Under our current circumstances, Canada is more likely to be a victim than a beneficiary of this shift.

Canada’s productivity has already been lagging for a generation. Despite all the attention given to increasing investment in research and development and growing rates of entrepreneurship, our national innovation outcomes have continued to lag those of other advanced industrialized countries.

One bright spot has been Canada’s ambitious approach to economic immigration. Statistics Canada reported that six out of every 10 immigrants in 2019 were selected for their economic potential and that Canada’s immigration levels will rise to 350,000 in 2021.

However, our immigration system will be under immense pressure to deliver in a post-pandemic world. Canada’s demographic reality is almost as bleak as our innovation outputs. By 2035, another five million Canadians will retire, bringing our worker-to-retiree ratio down to 2:1. For reference, it was 7:1 in 1971.

The hope that the world’s top talent will simply come to the conclusion that they should call Canada home is wishful thinking. But hope and wishful thinking are not a viable macroeconomic strategy. If immigration is going to maintain and grow its positive impact on Canada’s economy, the government of Canada must reorient its immigration policy.

Today, Canada’s economic immigration is largely passive and convoluted. Would-be immigrants apply, and their paperwork is processed. In practice, potential employers and university admissions support quality candidates, but these are consecutive, time-consuming processes. Application processing took eight months on average in 2019.

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Worse yet, the points system used to assess potential immigrants is based on dated labour market statistics with generalized job categories. Convoluting the system more, provincial governments also have the ability to prioritize certain categories of economic immigrants under the provincial nominee program.

This system has, in part, contributed to Canada’s long history of immigrant credentials not being recognized. In other instances, highly coveted professionals or students have chosen other jurisdictions before receiving approval from Canadian authorities.

If Canadian companies and postsecondary institutions are going to get the talent required to expand the Canadian economy, the government must shift to an aggressive, co-recruitment model of top talent globally. Real-time labour demand informing the recruitment of would-be immigrants is the only way to be competitive in the global innovation economy.

The government does have a role in ensuring that employers are not simply trying to conduct salary arbitrage with domestic candidates and that postsecondary institutions are not simply looking to increase revenue through higher fees for foreign students. But in an increasingly competitive world, a job offer from a credible Canadian employer or admission note from an accredited Canadian postsecondary institution should be tantamount to approval of residency in Canada unless there are grave security concerns.

This is not to say immigrants should be bound to the institution that sponsors them. Canada benefits regardless, as long as the immigrant continues to be employed or educated in Canada. The newcomer’s challenging path to setting up a new life in a new country also becomes streamlined, as finding a quality job is often one of the greatest barriers to making the immigration journey.

The government of Canada has had some experience with an employer-driven approach to highly technical talent immigration. It created the Global Skills Strategy, a program that allowed employers to fast-track work-permit processing to two weeks for skilled immigrants. Over its first two years, 40,000 immigrants have come to Canada through this program. The government has also operated the Start-up Visa Program for entrepreneurs setting up business in Canada with accredited backers.

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The government has demonstrated it has the ability to shift its thinking on immigration. It now must take that experience, shed the passive approach and assert a culture of recruitment. Our immigration officials will have to be less application processors and more head-hunters for the entrepreneurs, engineers, researchers, finance professionals, marketers, salespeople and other strategic vocations required to fuel Canada’s economy and vibrant society for generations to come.

Neil Desai is an executive with Magnet Forensics, a Canadian technology company, and a senior fellow with the Munk School of Global Affairs and Public Policy at the University of Toronto and the Centre for International Governance Innovation.

Chris Albinson is the founder and managing director of BreakawayGrowth, a venture capital firm with investments in Canada and the U.S., and a co-founder of C100.

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Economy

Canadian retail sales slide in April, May as COVID-19 shutdown bites

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december retail sales

Canadian retail sales plunged in April and May, as shops and other businesses were shuttered amid a third wave of COVID-19 infections, Statistics Canada data showed on Wednesday.

Retail trade fell 5.7% in April, the sharpest decline in a year, missing analyst forecasts of a 5.0% drop. In a preliminary estimate, Statscan said May retail sales likely fell by 3.2% as store closures dragged on.

“April showers brought no May flowers for Canadian retailers this year,” Royce Mendes, senior economist at CIBC Capital Markets, said in a note.

Statscan said that 5.0% of retailers were closed at some point in April. The average length of the closure was one day, it said, citing respondent feedback.

Sales decreased in nine of the 11 subsectors, while core sales, which exclude gasoline stations and motor vehicles, were down 7.6% in April.

Clothing and accessory store sales fell 28.6%, with sales at building material and garden equipment stores falling for the first time in nine months, by 10.4%.

“These results continue to suggest that the Bank of Canada is too optimistic on the growth outlook for the second quarter, even if there is a solid rebound occurring now in June,” Mendes said.

The central bank said in April that it expects Canada’s economy to grow 6.5% in 2021 and signaled interest rates could begin to rise in the second half of 2022.

The Canadian dollar held on to earlier gains after the data, trading up 0.3% at 1.2271 to the greenback, or 81.49 U.S. cents.

(Reporting by Julie Gordon in Ottawa, additional reporting by Fergal Smith in Toronto, editing by Alexander Smith)

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Economy

Canadian dollar notches a 6-day high

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Canadian dollar

The Canadian dollar strengthened for a third day against its U.S. counterpart on Wednesday, as oil prices rose and Federal Reserve Chair Jerome Powell reassured markets that the central bank is not rushing to hike rates.

Markets were rattled last week when the Fed shifted to more hawkish guidance. But Powell on Tuesday said the economic recovery required more time before any tapering of stimulus and higher borrowing costs are appropriate, helping Wall Street recoup last week’s decline.

Canada is a major producer of commodities, including oil, so its economy is highly geared to the economic cycle.

Brent crude rose above $75 a barrel, reaching its highest since late 2018, after an industry report on U.S. crude inventories reinforced views of a tightening market as travel picks up in Europe and North America.

The Canadian dollar was trading 0.3% higher at 1.2271 to the greenback, or 81.49 U.S. cents, after touching its strongest level since last Thursday at 1.2265.

The currency also gained ground on Monday and Tuesday, clawing back some of its decline from last week.

Canadian retail sales fell by 5.7% in April from March as provincial governments put in place restrictions to tackle a third wave of the COVID-19 pandemic, Statistics Canada said. A flash estimate showed sales down 3.2% in May.

Still, the Bank of Canada expects consumer spending to lead a strong rebound in the domestic economy as vaccinations climb and containment measures ease.

Canadian government bond yields were mixed across a steeper curve, with the 10-year up nearly 1 basis point at 1.416%. Last Friday, it touched a 3-1/2-month low at 1.364%.

(Reporting by Fergal Smith; editing by Jonathan Oatis)

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Economy

Toronto Stock Exchange higher at open as energy stocks gain

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Toronto Stock Exchange edged higher at open on Wednesday as heavyweight energy stocks advanced, while data showing a plunge in domestic retail sales in April and May capped the gains.

* At 9:30 a.m. ET (13:30 GMT), the Toronto Stock Exchange’s S&P/TSX composite index was up 16.77 points, or 0.08%, at 20,217.42.

(Reporting by Amal S in Bengaluru; Editing by Sriraj Kalluvila)

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