The retention of women in the labour force has emerged as one of the most pressing concerns of the post-pandemic recovery. At the height of the pandemic in June 2020, Finance Minister Chrystia Freeland stated, “I think it would be fair, as some economists say, to describe the recession we are currently experiencing as a ‘she-cession.’” This rather awkward combination of words refers to the exit of many women from the workforce after COVID hit in March last year.
Semantics has always played an important role in the ways we understand and discuss gender. The construction of gendered phrases such as “she-cession” or “she-covery” are purposeful and political. Semantics can also influence the way gendered data is collected, interpreted and then used to embolden or challenge conventional wisdom. This is exemplified in recent data published by two different surveys that offer diverging interpretations of what motivates women’s entrepreneurship.
The Survey on Employment and Skills, conducted by the Environics Institute for Survey Research in partnership with the Future Skills Centre and the Diversity Institute at Ryerson University, explores the experience of self-employment in Canada. When participants were asked to identify reasons for self-employment, more women than men cited being one’s own boss. This finding challenges the traditional conflation of entrepreneurship with masculinity, which may prompt investors to re-evaluate the criteria used in determining the success of new ventures.
The survey found that 11.8 per cent of employed Canadians were self-employed, including 13.2 per cent of women and 10.7 per cent of men. When asked about the reasons for being self-employed, nearly half (49 per cent) of those in this situation identified the importance of being one’s own boss. The second most-common response was the flexibility that self-employment provides to balance work and family responsibilities, with 42 per cent of participants choosing this answer.
Interestingly, the gender differences for each response challenge stereotypical views about the priorities of working women and men. Among self-employed women, 57 per cent identified being one’s own boss as a reason for self-employment compared with 42 per cent of men. And men were more likely to choose work-family balance as a reason for being self-employed than surveyed women (45 and 39 per cent respectively).
Different findings have been reported by Statistics Canada. In 2019, the Labour Force Survey also collected data on the reasons for self-employment. The survey results show that in 2018 about one-third (or 33.5 per cent) selected independence, freedom and being one’s own boss as the reason, and fewer than one in 10 (8.6 per cent) chose work-family balance.
Being one’s own boss was the most common reason for self-employment for both men and women in this study. However, 38 per cent of men selected being one’s own boss compared with 26 per cent of women. Triple the proportion of women chose work-family balance than men (15 and five per cent respectively). Statistics Canada states this likely reflects women’s preference for work arrangements that account for family responsibility and child-care obligations in keeping with traditional gender roles.
The contrasting results of the Labour Force Survey and the Survey on Employment and Skills can be attributed to a difference in the phrasing of the survey questions. The Labour Force Survey allowed participants to select only one response regarding their reason for self-employment, which prompted participants to choose the “main reason.” The Survey on Employment and Skills, on the other hand, allowed participants to choose as many responses as applicable. Both approaches are valid, but by allowing for more than one answer the Survey on Employment and Skills produces a more holistic picture of why individuals choose self-employment.
Arguably, a more nuanced understanding of what motivates self-employed women is achieved when respondents can pick more than one reason. When asked to choose as many reasons for self-employment as applicable, women are much more likely to select being one’s own boss than when asked to choose only one reason. Being one’s own boss may lead women to achieve independence at work and can provide an escape from a traditional workforce that is often populated with masculine structures and stalled success for women workers. The proverbial glass ceiling, including persistent wage gaps and fewer opportunities for promotion, is mitigated when women choose to be their own boss.
The Labour Force Survey also suggests that men view achieving work-family balance as a less important reason for self-employment than women. But in the Survey on Employment and Skills, which allows more than one reason to be offered, more men (by six percentage points) selected work-family balance than women. This is not to say that women and men equally share the brunt of domestic labour within the family, as women statistically spend more hours performing care work at home. Instead, these findings challenge traditional gender roles and suggest that men may be adapting more egalitarian attitudes regarding family and career. It suggests men seek more flexible work arrangements outside of a rigid workforce that often lacks family-friendly policies, such as mandated parental leave programs.
Data published by the Women Entrepreneurship Knowledge Hub (WEKH) in 2020 indicates Canadian self-employed women are less likely than men to receive financing from venture capitalists and angel funders. This disparity may be the result of the outdated yet consistently reinforced notion that the ideal entrepreneur is a man. Women-led ventures are viewed as mere passion projects that fit neatly around familial responsibilities.
The masculine connotation of entrepreneurship also influences the way investors understand innovation, a term commonly attributed to advancement in the male-dominated tech industry. According to WEKH, women entrepreneurs are more likely to exist within the service and retail sectors, and innovations brought forth in these industries are undervalued by investors. These implicit biases favour funding male counterparts and delegitimize the claim women have to the title of entrepreneur.
The Survey on Employment and Skills has produced a necessary counter-narrative, one that should prompt venture capitalists to rethink the ways they assess and attach value to women’s entrepreneurship. When deciding which goals are important, both women and men will benefit from having the opportunity to select all that apply.
The Survey on Employment and Skills is conducted by the Environics Institute for Survey Research, in partnership with the Future Skills Centre and the Diversity Institute at Ryerson University. The second wave of the study consists of a survey of 5,351 Canadians aged 18 and over, conducted between Nov. 24 and Dec. 22, 2020, in all provinces and territories. It was conducted both online (in the provinces) and by telephone (in the territories).
Kathryn May is the Accenture Fellow on the Future of the Public Service, providing coverage and analysis of the complex issues facing Canada’s federal public service for Policy Options. This is her first article as fellow.
OTTAWA – The pandemic blew up the norms and structure of work behaviour in Canada’s public service and now bureaucrats want new rules and a say in how work fits into their lives as the federal government readies for a return to the office.
Everything about working in the public service is up for grabs.
After nearly two years, the pandemic proved public servants can work in many jobs from anywhere. That’s upended the conventional approach to work, including the 37.5-hour work week, endless in-person meetings, a soulless cubicle culture and how to climb the hierarchy. It’s an opportunity for change reformers have dreamed about for 25 years.
“Look, if I could press an undo button and make sure COVID never happened, I would… but it happened, and the silver lining is we have exponentially adopted telework,” said Dany Richard, a union president and co-chair of the National Joint Council, a joint union and management committee. “That allows us now to reassess how the future of work will be.”
With a global talent shortage and an economy favouring workers, public servants couldn’t be in a better position to make demands on their employer about their future work lives.
There are high hopes for a new telework policy being hashed out behind closed doors with unions and senior management. Advocates promise a new mobile workforce that would break the Ottawa-Gatineau monopoly on headquarter jobs. It would improve workforce diversity and work-life balance and reduce real estate and operational costs along with pollution from commuting.
The pandemic also picked up the pace of digital transformation of the public service by three to five years, said Ryan Androsoff, director of digital leadership at the Institute on Governance.
In a blink, public servants went en masse to work at home. After a mad scramble for enough laptops, bandwidth and network access, public servants learned to work in real time, mastering videoconferencing, text and chat software and editing documents collaboratively.
“It would have taken multiple years before departments would have reached the point where 100 per cent of their workforce could work in a distributed and remote way,” Androsoff said.
Public servants aren’t expected to return to offices until the pandemic is declared over, but everyone is braced for a hybrid workplace, a mix of working in office and at home.
Is government ready? Not quite. The Treasury Board’s Office of the Chief Human Resources Officer is putting together a short- and long-term plan for the future of work with a “spotlight on telework” that rolls out as COVID restrictions are lifted and public servants can return to in-office work.
Richard argued working remotely during an emergency like the pandemic worked because everyone is in the same boat. The challenge now is how to “optimize” remote work and make the most of it.
“I think the employer will generally be open to telework,” said Richard, who is president of the Association for Canadian Financial Officers. “I don’t think it’ll be 100 per cent of the time. But as long as an employee commits to, I’d guess, two days a week in the office, the employer will say, ‘Okay let’s try three days at home and two days in the office.’”
Not all federal jobs can be done from home. Ship crews, prison guards, border guards and meat inspectors can’t. Call centres, science laboratories and operations like the Canada Security Establishment need people at the workplace.
Most office workers, however, don’t want to return to the old ways. Surveys found most want to work from home full-time or several days a week. As one senior bureaucrat said, the “pinch point” is whether location of work is an employee’s right or preference. Or is it an “operational requirement” that managers should define?
“We just spent a year and half working from home on a mandatory basis. We had to work from home. Employees see the benefits and want the flexibility to choose where they work,” said Stéphane Aubry, vice-president of the Professional Institute of the Public Service of Canada (PIPSC).
As part of that flexibility, Aubry said the union wants jobs classified as remote or telework positions and no longer attached to a city or a building. It argues the government should pick up some of the cost employees bear working at home. It also wants all tasks and activities that have to be done at the office clearly laid out.
“We want a position to be officially classified as a telework job so when there’s a job opening it is put on paper as a telework job,” said Aubry. The government can then look for employees across Canada. It would change the way they do recruitment.”
At the moment, Treasury Board has left it up to departments to decide how their employees will work. The board sets guidelines but deputy ministers are responsible for how their departments run.
Some have already indicated they want workers back in the office some of the time; others are encouraging people to work from home full-time or to decide where they want to be based. Departments like Transport and Public Services and Procurement Canada have been singled out as among the most flexible. Meanwhile, unions are irked the RCMP have ordered some civilian employees back to the office before restrictions have been lifted.
That’s why some are looking for a more consistent policy. One senior bureaucrat said the approach is too “muddied” and sets the stage for expectations and conflicts between departments and unions.
“Instead of having a common approach they’ve left it scattered, which is a problem because deputy ministers are not willing to make a decision that might be precedent-setting and everybody gets stuck,” said the bureaucrat, who we are not identifying because he is not authorized to speak on the subject.
A big challenge with hybrid work is how to treat everyone equitably. The unions are worried about two tiers of employees: those who work in-office and those who don’t. It’s expected those who work in the office, where they are known by management, will have an edge for promotions and special projects.
What if deputy ministers and other senior executives return to the office? Won’t more employees follow suit and come to the office to be seen?
It could create a gender gap for women, who are disproportionately drawn to remote work to better manage parenting or other caregiving needs they juggle.
“I would love to see a situation where if government goes to a hybrid model that they actually say everybody in the organization has to work remotely two or three days a week, so that everybody’s having that same experience,” said Androsoff.
Nearly 42 per cent of public servants work in the National Capital Region. Stories abound of public servants who moved to the countryside or to the east or west coasts to work remotely during lockdown and have no plans to come back. Managers started filling Ottawa jobs with people outside the region and not requiring them to relocate.
There are far more ministers and MPs from outside Ottawa who have long tried to decentralize federal jobs to the regions. The argument for the capital’s disproportionate share of jobs was based on the location of Parliament, ministers and senior management. If the pandemic allowed MPs and Parliament to meet virtually, why wouldn’t they press for more jobs to be done remotely?
Former privy council clerk Michael Wernick says relocating Ottawa jobs is inevitable, adding it could happen in a “very conscious way” or “by stealth.” There are plenty of examples of departments operating outside the capital – Veterans Affairs in Charlottetown, Atlantic Canada Opportunities Agency in Moncton, National Energy Board in Calgary or the pay centre in Miramichi.
“The political pressure for geographic decentralization, plus work moving out to people’s homes, means a much less gravitational pull from Ottawa,” said Wernick.
“Maybe it won’t be the big departments and central agencies in the core public service, but there are 300 federal entities. And I think they may start maybe with some of those. Why does a tribunal, for example, have to hold hearings in Ottawa?”
Remote work would attract a more diverse pool of applicants who better represent Canada, including those who don’t live in urban centres, Indigenous people, visible minorities and people with disabilities.
A national recruitment strategy, however, will quickly collide with the public service’s bilingualism requirements.
“It opens doors for people from across the country to be part of the federal government in a way never possible before, but how to do that with existing bilingual policies is going to have to be explored,” said Androsoff.
A new telework policy assumes managers will shift to results-based management and hold people accountable for what they do and not just showing up for work.
But Wernick said the public service must sharpen its competitive edge to keep and attract employees in a global talent shortage. That shortage could worsen with an exodus of public servants, burned out and ready to leave after two years of going full tilt in the pandemic. Others put off retirement during lockdown and will leave rather than go back to the office.
Many argue departments will offer remote work to attract and retain people. That could also spark an internal war for talent as people flee to departments that offer the most flexibility and remote work.
The government’s technology is still years behind the private sector, but the pandemic brought all public servants to a basic level of digital literacy with new skills they want to use. Some argue home network and internet connections are now much better than what employees had at the office.
Canadians also have much bigger expectations of government. They are living more digitally now, banking and shopping online, and expect the same easy and rapid service from the government.
But Androsoff said there’s still a powerful pull from the traditionalists who would rather return to the old ways: nine to five, back to the office, in-person meetings and assigned desks.
“The federal government, by virtue of its size and history, has institutional inertia. In previous waves of reform, that inertia always pushes to go back to the way it was,” said Androsoff.
“I’m hoping for lasting change, but it remains to be seen whether this push is permanent or the pressure to go back to its institutional comfort zone wins the day.”
This article was produced with support from the Accenture Fellowship on the Future of the Public Service.
Political pundits deploy talking points about health care seemingly with frequency and ease. When we hear “medicare is unsustainable” or “public health care spending is out of control,” it is often accompanied by a call for increased private financing or two-tier health care. In reality, Canada spends fewer public dollars on health care than most peer nations, and, in fact, should spend more.
A closer look at health care spending from the Canadian Institute for Health Information (CIHI) and the Organization for Economic Co-operation and Development (OECD) shows Canada not only spends fewer dollars when compared to other countries, but has been doing so while cutting taxes for those most able to support badly needed public investments in health. Inherently, Canada has a health care investment problem. It’s time to change the narrative.
Too much public and not enough private spending?
Canada spends $265.5 billion per year on health care services. Of every dollar, 70 per cent is public while 30 per cent is private (out-of-pocket spending or private insurance). This has been remarkably consistent for decades.
How does this compare internationally? Looking at the OECD, from Brazil to Britain, the average share of public spending is 73 per cent. However, compared to countries with similar levels of economic development, Canada is a miserly stand-out on public spending. For example, the U.K., Germany, Sweden, France and New Zealand all, as a share of overall spending, spend more publicly than we do. At the top end, Sweden and Germany spend upward of 84 per cent, with only Australia coming close to Canada, at 69 per cent and the U.S. falling far below (figure 1).
In a nation where universal health care is a defining feature of our national character, how is this possible? While public coverage in Canada is deep, it is also narrow. The Canada Health Act, medicare’s legislative framework, defines comprehensive services as hospital and physician care only. In each of these areas, 90 per cent or more of spending is public. For areas outside medicare, it’s a different story.
It has become a common refrain that Canada is the only country with a universal health care system that does not include universal drug coverage. Prescription drugs, along with long-term care and mental health care are examples of areas with two-tiered funding. For other health services like dental, vision care and physiotherapy, private financing is far more dominant (figure 2).
Part of Canada’s relatively low share of public spending is explained by the two-tiered nature of services outside of medicare. Part is also explained by an underinvestment in hospital and physician services. Like Canada’s 70/30 split on overall health care spending, hospital spending per capita is not only lower than the OECD average, but dramatically more so versus peer countries (figure 3). On a per-capita basis, the same relative comparison exists for the number of doctors in the country.
Is public health care spending unsustainable?
One approach to answering this question is to examine how health care spending has changed over time and examine measures for what is considered “sustainable.”
Historically, Canada’s overall health spending has been slowly increasing, a challenge faced by many similar countries. However, our rate of growth has been slow and stable. Some periods over the past three decades have even seen decreases (figure 4).
Why then do we keep hearing that health care spending will soon entirely consume provincial budgets?
Since 1980, Canada’s corporate tax rate has been cut to 15 per cent from 36 per cent. During that same time, the income tax rate for the highest income earners has also dropped to 33 per cent from 43 per cent. Prior to 1990, 75 per cent of capital gains were taxed. Today, that stands at 50 per cent.
It doesn’t take a university math degree to understand that even with relatively constant or even slowly rising and predicable public health care spending, declining tax revenues will make it appear as though health care is gobbling up government budgets.
The challenge of public investment in health care thus is not an expense challenge – it is a revenue one.
What do we do about it?
Do we need to increase our investment in health care? Yes, absolutely. But spending more is not the only answer; new investments must be spent smarter. This is true for funding services already covered under medicare and for expanding its envelope to include new ones.
Wait times for elective care need to be shortened, but this can’t be done by doing more of the same. For example, when family physicians initiate a referral to specialists, it is typically to doctors with whom they have an established pattern of consulting. It is often done with no awareness of current wait times, and no comprehensive knowledge of other specialists in the same region with similar skills. Instead, new investments can be made to create “single-entry” referral programs to provide patients with the next available provider in their region based on the level of urgency of their medical condition and priority rather then relying on informal networks. It is one solution being actively proposed to clear the surgical backlog created by the pandemic.
For doctors, the solution isn’t necessarily paying for more doctors. It is in expanding team-based care, models which already exist but only in pockets. For example, when advanced-practice physiotherapists and spine surgeons work together, a physiotherapist first assesses the patient. If surgery isn’t warranted, the physiotherapist can start non-surgical therapy on the spot, allowing the surgeon to see patients only in need of surgery. Equally transformational would be a similar model expanding interdisciplinary primary-care teams to include pharmacists, social workers, psychologists, dieticians or others in addition to family doctors and nurses.
Many of these non-physician services, when delivered outside of hospital, fall outside of medicare. Psychologists, for example, are highly trained health care workers who deliver evidence-based treatments like cognitive behavioural therapy (CBT). Mental health care remains out of reach for too many Canadians, with many having to rely on private insurance (if available) or out-of-pocket payment in a two-tier system that includes underfunded public supports. This is despite reports from government agencies like Health Quality Ontario that recommend public funding of CBT for major depression and anxiety disorders, and post-traumatic stress disorder.
For prescription drug coverage, national pharmacare would bring substantial benefits for health outcomes, which alone would be sufficient to justify its implementation. But there would be economic benefits as well. Public, universal pharmacare holds the promise of reducing national spending on drugs by $4 billion to $7 billion annually. Through evidence-based decisions on drug coverage, bulk-purchasing and unified, national negotiations with drug companies, it could not only extend access to all and reduce overall spending on drugs, but also substantially reduce costs to employers for employee benefits.
These policy reforms are a few examples among many. Some of these ideas already have a clearly laid out plan for implementation, and lack only political will. Others also exist in areas of high need but may require additional planning before implementation.
And, of course, so much of what keeps us healthy lies also outside the health care system, in the social determinants of health. Here, investments must be made in affordable housing, climate change and decent work.
Changing the narrative
While Canadians are rightly proud of the principles our health care system is based on, there should be little doubt that those principles do not apply broadly enough or lack adequate resourcing. Fundamentally, our system is faced not with a problem of spending, but of investment. And, of course, not all investments are created equal. Canada should be smarter in how it spends its resources. Regardless of whether a “big-bang” or phased-in approach is used to expand and fund medicare, the policy rationale for action is clear. Just days after the September federal election, premiers called for an urgent increase to health care funding. The prime minister would do well to heed this call and tie it to national priorities.
The average cost of a data breach in Canada is $6.75 million per incident in 2021. That’s up almost half a million from 2020. With each new year, hackers become more sophisticated in their attack methods and who and what they target. Businesses across the country are losing higher amounts of money through data recovery, ransom payments and more.
The Canadian government has a realistic opportunity to support businesses big and small with strong cybersecurity leadership. The renewed mandate provided by the September federal election and leadership change at the Canadian Centre for Cyber Security (CCCS) offers the opportunity to outline new strategic cybersecurity priorities.
In August 2021, Sami Khoury took over as the head of the CCCS. The centre is a relatively new institution – it was created three years ago and only had a year or so of development before the start of the COVID-19 pandemic. As such, it has arguably not yet had the opportunity to make a true impact and establish itself amongst government institutions.
As the public face of the Communications Security Establishment (CSE), the CCCS provides cybersecurity advice and support for the government, critical infrastructure owners and operators, the private sector and the Canadian public.
Cybersecurity is crucial for all industries, from critical infrastructure sectors like oil and gas, water and energy to companies that affect Canadian’s daily lives like retail and financial services. The CCCS can bring cybersecurity to the forefront of Canadian policy discussions, working with the public, internal government agencies and private industry experts to provide direction to all Canadian businesses and organizations.
As an organization, the CCCS could take a page out of the playbooks of similarly allied institutions like the United States’ Cybersecurity and Infrastructure Security Agency (CISA) and the United Kingdom’s National Cyber Security Centre (NCSC). With Khoury as its new leader and a new year fast approaching, CCCS is in a position to be assertive, innovative in a way that will have the most transparent impact.
But, where to begin?
Start with protecting critical national infrastructure
The centre has the most significant opportunity to have a lasting impact on Canadian cybersecurity by engaging directly with critical national infrastructure organizations to improve their cybersecurity practices and foundations. These will support the overall well-being of everyone in sectors like energy, oil and gas and water treatment.
Under new leadership, the CCCS needs to expand outreach, training and public direction to these critical sectors. While nearly 85 per cent of Canada’s critical national infrastructure is owned and operated in the private sector, government-supported instruction and leadership will be the driving force behind improving cyber-resilience.
The CCCS should begin with educating critical national infrastructure organizations about the importance of updating systems. Critical national infrastructure tends to depend heavily on operational technology (OT) instead of the informational technology (IT) more commonly associated with cyberattacks.
Operational technology (OT) is defined as hardware and software that detects or causes a change by directly monitoring and controlling industrial equipment, assets, processes and events. In many ways, OT is more vulnerable to attack than IT because operational technology typically relies on older, legacy security systems. In addition, most OT systems were never designed with cybersecurity in mind. Attackers can leverage vulnerabilities in outdated OT environments to compromise critical infrastructure.
Developing incident response
Many organizations in the private sector – regardless of their level of cybersecurity maturity – may expect or even demand a government response when things go wrong. The CCCS should consider the approach developed by its U.K. equivalent, the NCSC, which guides the public and businesses in cybersecurity matters.
While the CCCS has guidelines for organizations to create incident response programs, the NCSC’s “Cyber Incident Response” program certifies private companies to help critical infrastructure organizations that have suffered a significant cyberattack. After an attack, organizations must take essential steps, also known as cyber incident response. They must determine the extent of the attack, manage its immediate impact, help rectify the compromised system, and work to increase security across the network. In the U.K., a certified company would support all the activities detailed above.
Critical national infrastructure companies often cannot conduct all these steps in the process. Relying on a government-certified private provider can help these organizations and prevent a devastating attack. While the government must continue to play a substantial and guiding role in protecting critical infrastructure from cyberattacks, a more co-operative position with the private sector in incident response will be vital in safeguarding infrastructure organizations.
By collectively unpacking cyberattacks, the private and public sectors can understand what areas and industries need further resources, budget, and people. Instilling a similar incident response program in Canada will promote collaboration and prepare organizations for dealing with future threats.
Further promoting innovation and collaboration
The CCCS has an immeasurable opportunity to partner with the private sector to improve education about the improved security tools available to critical national infrastructure organizations.
Cyberattacks are becoming increasingly sophisticated. Workforces are more distributed and internet-connected than ever, giving hackers new avenues to breach organizations. Cyberattacks now use methods like ransomware-as-a-service that allow them to download a hacking application and hold a company’s data for ransom without being an experienced hacker with technical prowess.
Critical national infrastructure organizations need to fight back against malicious actors and utilize advanced technologies to update their systems and better protect their OT and IT environments.
While public funding and research efforts – like the recent $407,000 in new funding given to the University of Waterloo from the Department of Natural Resources – can help identify threats, these initiatives cannot help contain them. Canadian organizations need to leverage innovative security tools for total visibility into their networks and increased understanding of their complicated digital infrastructure. Attacks are becoming increasingly automated, and hackers have tools at their disposal that they never had before. It’s apparent: Humans can no longer defend against advanced, machine-speed attacks alone.
Many organizations understand that cyberattacks are a threat yet still rely on firewalls to defend their entire digital infrastructure. COVID-19 has changed the cybergame forever for OT as well as IT. The boundaries of a traditional network have expanded far beyond a data centre and the office. With remote and hybrid work, employees are now everywhere and might be working from unsecured networks and devices. Outmoded defences are not enough especially given the increasing difficulty in clearly defining where the cyber perimeter is.
But solutions like self-learning artificial intelligence can monitor the entire spectrum of an organization’s activity. It can learn an organization’s entire digital ecosystem, determining what “normal” behaviour looks like for that enterprise, from who typically sends emails to who typically accesses applications and when. It can then use this evolving understanding to detect abnormal behaviour and disrupt a threat in its earliest stages before hackers can cause real harm.
However, many critical infrastructure organizations just do not know what tools are available to them. Although the CCCS provides resources, alerts and best cyber practices for businesses and consumers, it does not outline the types of cybersecurity technologies organizations can invest in to protect their digital estates.
The CCCS needs to elevate its role as a bridge between the public and private sectors. Establishing its presence as a support system will be especially crucial in the successful protection of critical national infrastructure. Being open and increasingly visible within the Canadian cybersecurity environment and co-operating with the private sector will be invaluable for Canada’s future cybersecurity.
The federal government’s recent auction of much-needed electromagnetic spectrum, the airwaves through which mobile communications flow, has once again resulted in very high prices for the three national carriers – Bell, Rogers and TELUS. These high prices translate into higher costs for the carriers and, therefore, elevated consumer prices for mobile service.
These high prices for consumers and carriers are the direct result of the government’s decision to allocate much less of the wireless spectrum for new mobile services than have most other countries, and to withhold a substantial amount from the three national carriers, setting it aside for less efficient use by smaller regional carriers.
Because of similar government policies in earlier auctions, Canada’s three national carriers have had to charge their subscribers an average of $74 per year – equal to 9.4 per cent of the average bill – just to cover the cost of acquiring these spectrum rights, which are long-term investments that must earn a return for their shareholders. The prices paid in July’s auction could add another 3.1 percentage points to the average bill, or $25 per subscriber per year, raising the total cost per subscriber to almost $100 per year.
The electromagnetic spectrum
An enormous variety of wireless communications is transmitted through the electromagnetic spectrum at different frequencies. Early wireless telegraphy, radio broadcasting, television broadcasting, and remote control of devices such as garage-door openers, Wi-Fi and satellite broadcasting are just a few examples. National governments co-ordinate the allocation of broad swaths of spectrum (“frequency bands”) through the International Telecommunications Union to minimize interference problems, and to allow the manufacture of equipment – television sets, mobile phones, Wi-Fi routers – that can operate around the world on the same frequencies.
Individual governments then decide how much of each frequency band to allocate for various uses and how to allocate it among competing users, such as mobile telecommunications carriers. The most common method for allocating the frequencies for mobile communications is a government-managed auction.
This year’s mobile spectrum auction once again used “set-asides” – the practice of reserving a set amount for smaller mobile carriers – with predictable results: the three national carriers paid an average price that was 3.5 times that paid by the smaller, regional carriers. This was exacerbated by the government’s decision to allocate too little spectrum for the auction. The auction provided only 50 to 62 per cent of the spectrum the GSMA, the international industry association, recommended countries allocate per national carrier for the new, advanced 5G services. (5G is the fifth generation of mobile technology that offers speeds up to 100 times faster than most current services and facilitates a vast new set of applications, particularly in vehicles, appliances and other devices.) Many countries, including China, Japan, Austria, Finland and Germany, have auctioned at least twice as much spectrum as Canada has for new mobile services.
The result of the Canadian government’s failure to provide enough spectrum for its national carriers is obvious: much higher prices. In the recent auction, the three national carriers paid an average of US$2.61 for one unit of capacity per capita (a MHz/pop in industry parlance). By contrast, carriers in most other developed countries have paid only a fraction of this amount (see figure 1). In many European countries, auctions of similar spectrum have resulted in prices of less than US$0.20 per capita for a unit of spectrum capacity, because they have freed more of it for mobile services and have not set aside large portions for smaller carriers. Thus, the national wireless carriers in Canada are forced to pay more than 15 times the prices paid by carriers in Germany, France or the United Kingdom.
(The countries shown in figure 1 have chosen a variety of specific frequencies, generally in the range of 3.5-3.7 GHz, and have allocated different amounts of it to mobile services.)
Mobile carriers’ investment in spectrum
The carriers’ expenditures for spectrum, acquired through government auctions, are no different from other capital outlays in that they must earn a return on invested capital to survive. In the recent Canadian auction, the three national mobile carriers spent $7.3 billion, a very large investment that adds to the $22 billion in spectrum purchases that were already on their balance sheets at the end of 2020. As a result, they now have almost $30 billion invested in spectrum, which can only be recouped from charges to their mobile customers. This investment is more than the $25 billion they have spent on physical equipment in the last decade, to build one of the highest-speed networks in the world over Canada’s vast and often difficult terrain. Indeed, because telecommunications equipment must be depreciated over time as it wears out or is overtaken by new technology, and because spectrum does not depreciate, the national carriers now have more net investment in spectrum than in their physical network plant.
The results of the recent spectrum auction are similar to those of earlier Canadian auctions. The three national carriers have spent much more on spectrum, which is recorded as an asset on their balance sheets, than have comparable carriers in Europe (see table 1). The average value of spectrum assets per subscriber reported on European carriers’ balance sheets at the end of 2020 was only 25.8 per cent of the average value reported by the three national Canadian carriers. Only U.S. carriers have spent more on spectrum, in part because of similar set-aside policies.
These large spectrum investments are largely a result of the Canadian government’s mobile competition policies. Canada has used set-asides in spectrum auctions purportedly to encourage the expansion of the smaller regional carriers into larger entities that can compete with Bell, Rogers and TELUS. This policy is based on an erroneous belief that one or more of the smaller carriers could become national in scope and, eventually, drive down mobile rates. But in spite of these implicit government subsidies, there is little prospect that any of the smaller carriers will blossom into a national mobile carrier. Canada’s modest population and vast geographical expanse will likely not support four national mobile services. Deploying telecommunications facilities – poles, wires, transmission towers and associated equipment – is much more expensive per subscriber in Canada than it is in more densely populated countries like the U.S. and most European nations.
Moreover, the three major national carriers provide an extremely high-quality service at such reasonable prices given Canada’s low population density and topography that further entry is likely to prove unprofitable. Despite the government’s attempt to subsidize the smaller carriers through spectrum set-asides, these carriers have shown little inclination to expand beyond the larger population centres. The spectrum set-aside policy simply drives up mobile rates by increasing carrier costs; it will not offset this upward pressure by increasing competition in the future.
High spectrum prices increase mobile rates
In 2020, the three national carriers realized $787 in revenues per subscriber. The average value of spectrum on their balance sheets per subscriber was $689. I estimate that these carriers must earn $74 per subscriber per year to cover the cost of their spectrum investments, an amount equal to 9.4 per cent of their 2020 revenues. Without this investment in spectrum, competition among the carriers would have driven down the price that subscribers pay by 9.4 per cent. The prices paid in the recent 5G auction could add as much as 3.1 percentage points to this premium.
If Canadian auctions were to offer more spectrum without set-asides, they would drive down the cost of mobile services. For instance, if the government had pursued a spectrum policy that generated spectrum costs as low as that paid by the average European carrier, the cost to the national Canadian carriers of carrying this spectrum investment in 2020 would have been 74 per cent lower, reducing the annual cost per subscriber by $55. With these lower costs, competition among the carriers would have reduced subscribers’ monthly bills by $4.56 per month. Put another way, the excess cost of spectrum to Canada’s national wireless carriers, relative to the cost to European carriers, was equivalent to a hidden tax on Canada’s mobile users of $1.76 billion in 2020. The 33 per cent increase in the cumulative cost of spectrum that resulted from this year’s auction will surely add to this implicit tax, perhaps by as much as $580 million annually, as the carriers deploy their faster 5G networks.
The goal of economic justice for Indigenous Peoples is central to the Truth and Reconciliation Commission’s 2015 Calls to Action. This is something that British Columbia, the first jurisdiction to enact a law to implement the United Nations Declaration on the Rights of Indigenous Peoples, has attempted to address in part through its 2018 provincial community benefits agreement (CBA). The agreement aims to provide economic opportunities for Indigenous Peoples and other equity-seeking groups by providing construction jobs and training for provincial transportation infrastructure projects.
The B.C. CBA is an agreement between the British Columbia Infrastructure Benefits (BCIB), a provincial Crown corporation, and the Allied Infrastructure and Related Construction Council (AIRCC), a group of 19 local divisions of labour unions, such as the British Columbia Regional Council of Carpenters, the International Brotherhood of Electrical Workers and other unions that are involved in the construction industry. According to the BCIB, 15 per cent of total trade hours were completed by Indigenous workers on CBA projects in 2020, up from just 5 per cent in 2017. This is good news, but there are some shortcomings.
Despite advocating for their involvement in the skilled trades, Indigenous groups are not a signatory to the CBA. “First Nation communities who own most of the land in Vancouver were never even approached to have input,” Michael Cameron, former director of Indigenous initiatives at Industry Training Authority B.C., told us. “That’s not how you negotiate CBAs.”
Though this agreement has helped continue important conversations and may show increases in hours worked by Indigenous workers, in many ways the agreement makes assumptions about how Indigenous groups may be able to – or even want to – participate in this kind of economic development. What are these assumptions? What do they mean for the goal of economic justice for Indigenous Peoples?
Assumption 1: Apprenticeships and training are all that are needed to support an Indigenous workforce.
While the B.C. CBA aims to create apprenticeship and training opportunities and provides compensation for housing and transportation, Indigenous communities have noted that the agreement fails to break down some of the existing barriers for their workers. One major barrier they experience when trying to access construction jobs is the lack of transportation to job sites because they may not have a driver’s licence or reliable vehicle.
A historic lack of investment in education for these communities means that there are often barriers to obtaining the skills needed for jobs. Indigenous groups have also said that the difficulty of being far from their communities and lack of days off for cultural practices and community events often makes participation in the construction trades impossible. It is also important to note that there is a significant history of racism within unions, which acts as a major barrier for Indigenous workers who are interested in the skilled trades. The CBA aims to address this barrier through cultural competency training, though some Indigenous stakeholders are skeptical about how effective this type of training actually is.
Assumption 2: Indigenous workers will have equal access to high quality jobs once they join AIRCC unions.
Skepticism has also been raised about the CBA’s ability to roll out benefits in a way that provides Indigenous workers with enough time to attain the certification needed to qualify for skilled jobs. Historically, this has proven to be a challenge when it comes to workforce development programs, meaning Indigenous workers fill manual, unskilled, entry-level jobs.
We spoke with Glenda Louis, a community member from Okanagan Indian Band, who argued that for workforce development programs like this, Indigenous workers are “either offered…a traffic-control [position] or maybe they’re just to use a shovel and dig post holes…They’re not quality jobs, sorry.”
Because of the requirement to join one of the AIRCC unions while working on CBA projects, the agreement also assumes involvement in unions will lead to upward mobility despite a history of marginalization within construction jobs.
Assumption 3: Affiliation with AIRCC unions is desired.
By assuming that access to construction jobs through unions is an ideal benefit, the CBA misses the opportunity to help First Nations develop their own tools for economic development. First Nations may prefer to focus on business development and building capacity within Indigenous communities rather than encouraging work outside the community. Instead of helping build or support their own businesses, the CBA encourages workers to take on roles that are economically dependent on the provincial government, unions and construction companies owned by non-Indigenous people. Though this approach has the potential to increase job opportunities, it does not necessarily create sustainable, long-term economic justice.
A better alternative?
Though the CBA has started an important discussion, there is still work to be done. The agreement has the potential to repeat past shortcomings in Indigenous workforce development, and in its current state it is likely that the CBA imposes the economic development goals of other stakeholders onto Indigenous communities, rather than reflecting the needs and desires of these communities.
Future policies should require collaboration with First Nations when determining economic development goals and the benefits that could help achieve them, rather than falling back on assumptions that construction work and union membership are universally available. This was a missed opportunity when the CBA was established because it did not strictly include Indigenous groups.
Though some Indigenous workers will find great opportunity in the construction trades, others may not find this path attainable or desirable. To remedy this, the CBA should offer Indigenous workers a wider array of jobs, such as administrative or engineering positions related to infrastructure projects. Additionally, the CBA should include benefits that support existing Indigenous-owned businesses or the development of new Indigenous-owned businesses to provide benefits for First Nations seeking economic independence.
Finally, it is vital for agreements of this nature to prepare workers for quality, skilled jobs rather than entry-level positions. Future initiatives must plan to create longer timelines for education and training opportunities to ensure workers have the certifications necessary for jobs with the proposed project. This could mean preempting projects and carrying out workforce development years in advance. This strategy may allow for upward mobility in the construction industry rather than assuming that union membership alone is enough for higher quality jobs.
Over the course of the pandemic, largely due to the increase in cases due to workplace transmission, there were calls to improve the current regime of sickness and caregiving leaves across Canada. Over a year later, almost all of those calls have been ignored. Federal, provincial and territorial governments had to enact emergency measures to address these serious gaps in the system.
Those programs will soon run out, and Canada will return to a mismatched system where the province you live in determines whether you have adequate access to paid sickness and caregiving leaves.
It is crucial that we re-evaluate this regime and create one that is beneficial for all workers, because when workers decide that they cannot take time off due to illness, the resulting costs are borne by both individuals and society.
In their new IRPP paper Eric Tucker and Leah Vosko examine international norms in comparable economies for sickness and caregiving leaves and what principles need to be included in a Canadian regime. They join the podcast to discuss the shortfalls in Canada’s current system and what the ideal system would look like for workers.
(This article has been translated from French.)
At first glance, the current health crisis is nothing like the global financial crisis of 2007-2008. One is caused by a new virus whose exact nature, location and timing could not be predicted. The other is a major economic disruption that originated with the large-scale resale of subprime mortgages by U.S. banks in a secondary market. However, these very different crises have evolved and grown because of a common factor that we want to highlight: the preponderant role of cognitive biases, i.e. the erroneous or irrational judgments that we form without even being aware of it.
Cognitive biases are default ways of thinking that come into play automatically, involuntarily, intuitively, and quickly with little effort. They are not a manifestation of ignorance or misunderstanding of the facts or scientific evidence. They are believed to be a result of a natural evolution that favoured human beings in their primitive environment to be able to recognize and react quickly to threats from predators and toxic substances or to detect the early signs of natural disasters. But these same patterns of thought do not serve us well when confronted with the political, sanitary or economic threats typical of today’s world, whose intricacies are far more complex. They may explain why crises tend to repeat after lengthy time intervals. The pandemic presents us with an opportunity to learn collective lessons that allow us to stop seeing the dramatic consequences of these crises as inevitable. To minimize the negative effects of these events, which are likely to happen again, we need to take a lucid look at our very human ways of dealing with risk.
Prior to the financial crisis of 2007-2008, the risks that led to the housing bubble were systematically overlooked. The rise in house prices was then driven by a rapid expansion in the volume of housing credit thanks to the development of a secondary market in which mortgage securities were resold. Alan Greenspan, then-chairman of the U.S. Federal Reserve, thought it best not to regulate these derivatives, which were fuelling housing speculation. Yet, in 2008, he told the U.S. Congress that he had greatly overestimated the ability of financial institutions to self-regulate.
Experts in behavioral economics have identified certain psychological drivers of this complacency. The complex nature of the situation created a fog of confusion that obscured the reality of what was unfolding for all players in the credit market. This opacity fostered availability bias, a mode of reasoning that favours the information immediately present in the memory rather than a comprehensive view of the situation. Since the credit market had functioned reasonably well for decades, it was difficult to conceive that the mere resale of mortgages on the secondary market would lead to bank insolvency. How does this situation compare to the COVID-19 pandemic?
A lack of readiness
Experts have recognized for a long time the very high probability of a major pandemic with dire health and economic impacts. It has also been clear that the foreseeable benefits of preventive measures far outweigh their costs. So why have countries not prepared themselves to a greater extent?
Many psychologists and economists have realized the irrational nature of many financial decisions. For example, the psychologist and economist Daniel Kahneman and his late colleague Amos Tversky demonstrated through numerous experiments the irrational nature of some purely economic decisions. They show, among other things, that a loss is felt with much greater emotional intensity than a gain of the same value. This explains the inadequate preparation of our societies for pandemic risks. Why spend a fortune on health protection equipment when there is a chance that it may never be needed? This loss aversion is also apparent in other situations of foreseeable risk. Just consider the enormous challenge of mobilizing both individuals and nations in the fight against climate change, even if most people do not identify themselves as climate skeptics.
A succession of amplifying biases
Other cognitive biases seem to play a significant role in pandemic situations. The avoidance behaviour, a defence mechanism that is activated to avoid coping with a frightening situation, leads some people to disregard health rules or to even deny the reality of the threat. This may be why a large proportion of the population did not follow public health rules regarding gatherings during the holiday season. Or why some people are reluctant to get vaccinated.
We should also be wary of our inclination to apply reasoning based on anecdotal evidence, such as refusing the COVID-19 vaccine because a loved one has reacted badly to some other type of vaccine in the past.
There has also been a great deal of evidence recently about the psychological phenomenon of behavioral fatigue, the waning of motivation that results from having to conform to a new norm over a long period of time. Policy-makers must deal with this phenomenon when considering the implementation of compulsory measures such as lockdowns, curfews, physical distancing and vaccine passports.
The lessons of the financial crisis
In a book published in 2013, Alan Greenspan explains how several of these biases prevented most players in the credit market from correctly understanding its true state before the financial crisis unfolded. Interestingly, even he, a free market believer, seems to have suffered from confirmation bias, in this case the propensity to favour information that confirms his belief that markets are capable of self-regulation and to reject that that negates it. This was in addition to the availability bias mentioned above.
This crisis has been disastrous because of our collective inability to put in place adequate measures to mitigate its magnitude despite warning signs that seem obvious in retrospect. Because of hindsight bias, it can indeed be easy to overstate in retrospect the ability we might have had to better anticipate events. We accepted the multiplication of financial transactions that allowed a disruption initially limited to the American credit market to spread rapidly to the entire planet.
Similar lessons can be drawn from the COVID-19 crisis.
The psychology of the masses… and of decision-makers
For both financial and health crises, some mitigating measures could be devised, taking into account the impact of our cognitive biases. It would be useful to bring an outside and disinterested look on the reflections, the conclusions and the actions recommended for the prevention and the handling of such crises in order to highlight the influence of these biases, which are by definition imperceptible to those who are subjected to them. In short, we need to better protect ourselves against our own failures and not only against emerging pathogens or economic mirages.
Given the difficulty for policy-makers to accept the costs of preventive measures, it is advisable to entrust such preparations to non-political organizations. This would follow the model of what was successfully implemented 30 years ago for controlling inflation, by making central banks independent of governments and of any economic or political interests. On a more positive note, we must recognize that major health crises are also a source of major innovations. One need only consider the amazing speed with which vaccines against COVID-19 have been developed. It is up to all of us to continue innovating positively in these uncertain circumstances while remembering that our cognitive biases can have a perverse influence on our perceptions and actions.