Lacking innovation support for Canadian manufacturers is also identified as major barrier.
OTTAWA – The Canadian Chamber of Commerce has unveiled its Top 10 Barriers to Competitiveness for 2014, identifying Canada’s growing skills gap as the greatest impediment to business success.
Launched in 2012, the initiative is meant to draw attention to barriers holding back Canada’s progress and to urge swift action by the government to improve the country’s ability to compete globally, the chamber says.
The federal government and several provincial and territorial governments have also named the skills gap as the country’s biggest challenge,” said Perrin Beatty, Canadian Chamber of Commerce president and CEO. “We have a choice. Either we act urgently to improve our competitiveness or we will pay a high price in lost jobs and prosperity. The challenge for 2014 is to build on any progress and start closing the gap between Canadian businesses and our international competitors.”
The Chamber of Commerce’s 2014 Top 10 Barriers to Competitiveness include:
Business, governments and academia must work together to address the current and future skills needs of the workplace, concentrating particularly on four key areas: upskilling; education and employment connections; immigration; and Aboriginal workforce development. Canada also needs improved data on the skills gap and the mobility of individuals, the chamber says.
Insufficient support for innovation in Canadian manufacturing
Manufacturing, the largest sector of the Canadian economy, has not yet fully recovered from the 2008 recession and remains significantly reduced from its pre-recession size. Companies can no longer rely on traditional manufacturing processes and must innovate to capitalize on new technology and processes that improve productivity in order to remain competitive. A policy framework that reflects the importance of the innovation ecosystem imperative will make this possible.
Barriers to success in global markets
Canada’s ability to compete depends on reliable access to foreign customers and production capabilities. But due to policy and regulatory barriers and operating challenges in foreign markets, Canadian businesses are not globalizing as quickly as their OECD peers. Canada must successfully negotiate trade agreements with key markets, renew its commitments to trade promotion and commercial diplomacy and update its tariff and customs policies.
Internal barriers to trade
The lack of a single domestic market in Canada is a serious and self-imposed weakness in the Canadian economy. Tariff barriers between provinces are banned by the Canadian constitution, yet the national economy is fractured by a host of non-tariff barriers, particularly in procurement, energy, agriculture and transportation, and in the mobility of labour. The federal government must promote more meaningful sanctions against jurisdictions that practice protectionism against other Canadians while supporting those that embrace free internal trade.
A complex and costly tax system
Canada over-relies on income and profit taxes rather than on taxes on consumption, which are relatively easy to collect and are least harmful to growth. Canada’s tax code is also overly complex and imposes significant compliance costs on businesses and consumers while governments spend billions of dollars each year administering and enforcing convoluted tax laws. Canada must undertake a comprehensive review of its tax system with the aim of reducing its complexity and improving the way it raises tax revenue.
Lack of clear sustainability policies
Public concerns over Canada’s ability to responsibly develop its natural resources has led to project delays, constrained investment and limited access to some markets. International concerns have also overshadowed Canada’s diplomatic and trade initiatives on occasion. Canada must establish a credible climate policy, clarify businesses’ duty to consult with Aboriginal peoples and aggressively contest unfounded allegations about its environmental stewardship, the chamber says.
Inconsistent regulatory policies between Canada and the US
Inconsistencies between regulatory standards in Canada and the US cost unnecessary time and money, resulting in additional verification, inspection or testing of goods once they cross the border. Given the integrated nature of the two countries’ economies, greater alignment and better mutual reliance in their regulatory approaches would lower costs for businesses and consumers, create more efficient supply chains, facilitate cross-border trade, reduce regulatory administrative costs for government and make Canada a more attractive location for foreign investment.