We believe that the following five interventions can help boost Canada’s innovation agenda: 1. Catalyze the formation of business-led “innovation marketplaces” in sectors and technologies where Canada has momentum and where market participants need new solutions. 2. Create additional pools of growth capital to ensure promising companies have sufficient capital to scale up and access to investors who can provide advice and other value-added support. 3. Modify our government procurement policy to incorporate strategic procurement and innovation as a key objective. A shift from a requirements-focused to a value-based procurement system will facilitate the government and other public-sector players becoming important first customers, to test and validate Canadian innovative solutions. 4. Review and rationalize government innovation programs, then scale up those that have proven impact. Review regulatory barriers and remove or re-tool those that would impede development of priority sectors and innovation marketplaces. 5. Expedite entry for top talent through immigration policy that helps reduce a talent shortfall for high growth companies, and invigorate the talent pool through a focused innovation talent strategy and the FutureSkills Canada program.

Since the 1950s, rapid growth has allowed a significant number of countries to reach middle-income status; yet, very few have made the additional leap needed to become high-income economies. Rather, many developing countries have become caught in what has been called a middle-income trap, characterized by a sharp deceleration in growth and in the pace of productivity increases. Drawing on the findings of a recently released working paper (Agenor and Canuto 2012), as well as a growing body of research on growth slowdowns, this note provides an analytical characterization of 'middle-income traps' as stable, low-growth economic equilibrium where talent is misallocated, and innovation stagnates. To counteract middle-income traps, there are a number of public policies that governments can pursue, such as improving access to advanced infrastructure, enhancing the protection of property rights, and reforming labor markets to reduce rigidities all implemented within a context where technological learning and research and development (R&D) are central to enhancing innovation. Such policies not only explain why some economies particularly in East Asia were able to avoid the middle-income trap but are also instructive for other developing countries seeking to move up the income ladder and reach high-income status.

This Council took as its key metric for success the goal of delivering an additional $15,000 in median household income above current projections by 2030. Realizing such an ambitious aspiration, amid rapid economic and societal change, will require focused, persistent, and concerted action. It will also require continued progress monitoring so that ineffective programs can be stopped. This Council believes that bold and mutually reinforcing initiatives like the ones released today and last October can help reset our country’s economic trajectory and help us achieve the inclusive growth that will provide the strongest foundation for our nation’s future prosperity.

Canada’s economic growth over the past 50 years was fuelled largely by growth in labour force participation rates. In 2015, Canada had one of the highest labour force participation rates among OECD countries. While it is true that our population is now aging and that the workforce will no longer grow at the pace, we have become accustomed to, Canada still has significant untapped labour force potential given the underrepresentation of a number of demographic groups. Finding ways to include more of these Canadians in the labour force would improve their quality of life and their chances of success in the economy. This would deliver on the promise of inclusive growth in a way that also improves the wider economy’s prospects and makes it less likely that Canada’s social safety net becomes overstretched. The Council has identified four demographic groups where an increase in participation to “best-in-class” levels could have a significant impact on the economy: Indigenous Peoples, lower-income Canadians, women with young children, and Canadians over the age of 55. We are keen to see action from the federal government to spur inclusive growth by increasing participation rates among these four over the coming years. The four groups addressed here are not meant to be an exhaustive list. Several other groups face barriers to participation, such as people with disabilities, recent immigrants, and youth who are not in education, employment, or training (NEET). Bringing more members of these groups into jobs is also very important, but we have focused attention on the groups for which increased participation in the workforce will have the greatest economic impact, since we believe that the better the economy performs, the greater the opportunity for all Canadians. This memorandum is not a specific recommendation of one policy approach over another; it is rather a collection of broad recommendations to aid policy makers to explore the existing policy landscape in depth, and to determine ways of removing barriers to employment. In some cases, the appropriate response might be new policy, while in others the government might simply need to “get out of the way”, for example by eliminating distortions created by existing policies that discourage employment. The potential approaches we outline here are only examples and do not constitute an exhaustive list of policy options. Further, it is important to note that policy makers are not the only actors in this space—employers, both private and public, have a role to play in establishing the conditions for more inclusive participation in the workforce.

The Advisory Council’s final wave of recommendations for Canada’s growth agenda for skills development. Canada’s skills development infrastructure is simply not equipped to meet the challenges that lie ahead. Our system today rests primarily on two pillars. The first one supports the development of skills before people enter the workforce, through K-12 and post-secondary education. The second pillar supports individuals when they leave the workforce, by providing assistance to the unemployed and the retired. That leaves a large gap in institutional support and training during Canadians’ most productive years—and it is in this phase that workers will be most affected by the labour market turmoil. While our system has served us well in a relatively stable environment to date, it is not set up to address the coming labour-market disruptions. Canada urgently needs a third pillar that focuses on supporting working adults

To accomplish such an ambitious mission, the FutureSkills Lab will have three core functions. 1. Support innovative approaches to skills development: Solicit, select, and co-finance innovative pilot programs in skills and competency development that address identified gaps among workers, post- secondary students, and youth 2. Identify and suggest new sources of skills information: Gather labour market signals of skill needs by amassing a portfolio of pilot proposals, support innovative labour market information initiatives focused on employer expectations, use web-based sources to extract and synthesize emerging labour market trends, and draw links between credentials and skills 3. Define skills objectives and inform governments on skills programming: Rigorously measure outcomes of forward-looking and targeted training programs and skills information initiatives, identify and disseminate best practices broadly to education and training stakeholders across Canada, and determine a set of skills objectives for the future. Should stakeholders choose to opt in, these objectives can then help inform the more than $17 billion in annual public spending on skills and training programs, the work of organizations that generate and analyze Canadian labour market information, and researchers and practitioners directly involved with training and education programs

The report analyses the ways in which unpaid care work is recognized and organized, the extent and quality of care jobs and their impact on the well-being of individuals and society. A key focus of this report is the persistent gender inequalities in households and the labour market, which are inextricably linked with care work. These gender inequalities must be overcome to make care work decent and to ensure a future of decent work for both women and men.

Canada’s immigration policy needs to be updated and improved to address these two challenges. Four specific actions should be taken by the Government of Canada to boost economic growth and increase prosperity for all Canadians. 1. Increase annual permanent economic immigration from 300,000 to 450,000 over 5 years (translating to an increase of about 75K principal applicants and about 75K of their family members) to expand workforce growth and counter the drag from slowing population growth and aging 2. Facilitate entry for senior and specialized talent by streamlining permanent and temporary entry programs to be faster and less burdensome on employers to help give high-growth and innovative companies the managerial capacity and skills they need to scale and be globally competitive 3. Rethink Express Entry points allocations to qualify more international students studying in Canada for permanent residency so that firms can tap into an already-integrated pool of young, educated talent 4. Improve national accreditation standards to create the conditions for all immigrants to Canada to reach their economic potential, to the benefit of all Canadians These recommendations will address current drags on growth from an aging population and specialized talent shortages, but they are only part of the answer. For immigration to fully offset the impact of Canada’s impending demographic squeeze, annual permanent economic immigration would need to nearly double from the current level of about 300,000 per year – a much more dramatic increase than the 50 percent increase recommended here.3 Further, not all talent gaps can or should be addressed through immigration. Fast-growing firms may face no alternative given the immediacy of their talent requirements, but over the longer term both governments and employers should ensure that domestic training and education programs are responsive to emerging labour market needs.

It was 1997-eons ago, in internet years and the Web was only beginning to take off. People used dial-up modems to get online, and Netscape Navigator was the browser of choice. Google was still a research project of two Stanford students, and Facebook-well, Mark Zuckerberg was a 13-year-old having his Star Wars-themed bar mitzvah. Flash forward to 2011. The Web has since reinvented itself time and again: when businesses embraced it in the late 1990s, when Google dominated search in the early 2000s, when user-generated content became prominent in the mid-2000s. Today the Web is going through another reinvention, morphing into a place where our social interactions are ever more important. And the main force behind this phenomenon is, of course, Facebook, led by Zuckerberg, now a 27-year-old billionaire.