In November 2007, the House of Commons Standing Committee on Industry, Science and Technology (hereinafter the “Committee”) began its hearings on the current state of the Canadian services sector. The Committee’s mandate was to review the strengths of this sector, the challenges facing this sector, this sector’s impact on Canada’s economy and employment levels, and average salaries across this sector. Finally, the Committee was to study the role of the Government of Canada in strengthening the services sector.
This final report provides the Government of Canada with an overview of Canada’s economy, highlighting recent structural changes arising from a worldwide “commodities boom” and, in turn, the consequent rapidly rising Canadian dollar. The worldwide “commodities boom”, with its attendant high energy and industrial commodity prices, and the integration of China and other “emerging economies” into the world trading system, with the resultant increased competition placing additional restraints on price increases of domestic industrial and consumer goods, has led to an improved terms of trade for Canada. Foreign investors have also taken a renewed interest in Canada as an investment destination. As a result, wealth has been on the rise in Canada, and the economy has been expanding at breakneck speed for the past five years. This economic growth has been widespread throughout the Canadian economy, services-producing and goods-producing sectors alike, except for Canadian-dollar-sensitive industries such as manufacturing and tourism. In turn, employment across Canada has been growing; job creation has been spectacular; and both Canada’s employment rate and unemployment rate have respectively set a 33-year high/low in the process.
Services in Canada span both the business and non-business (e.g., public and volunteer) sectors and, with annual growth in the services sector running about a half percentage point higher than the growth rate of the overall economy for the past five years, services have grown to account for almost 70% of economic activity in Canada. In 2007, the Canadian services sector provided employment for about 12.9 million people, accounting for more than 75% of employment and more than 90% of job creation since the “commodities boom” began in late 2002.
This study focused on the challenges that specific sub-sectors or industries are facing and the responses they have been taking to overcome these challenges. The industries included were:
By far the most common challenge cited by virtually all industry representatives was the current and future labour/skills shortage, but many other industry-specific challenges were identified.
Finally, the Committee assessed all of the recommendations suggested by witnesses and then decided on a number of fiscal and non-fiscal measures. These measures form a body of recommendations to the Government of Canada on how it can help the Canadian services sector adapt to the challenges it faces. The Committee is convinced that the adoption and implementation of these recommendations will assist the services sector in making its maximum contribution to the Canadian economy.