Focus on Canada

At a time when the economies of other G7 member countries are struggling, Canada is proving attractive to international business. Mark E Johnson explores the issues for companies sending staff on assignment to this up-and-coming relocation hotspot.

At a time when the economies of other G7 member countries are struggling, Canada is proving attractive to international business. Mark E Johnson explores the issues for companies sending staff on assignment to this up-and-coming relocation hotspot.

Canada may be viewed by many as simply a quiet annex to the louder, more prominent USA. However, with a renewed focus on immigration, and similar economic freedoms to those enjoyed south of the USA/Canada border, it's looking attractive to international business at a time when other G7 countries are struggling. Ranked sixth in the Organisation for Economic Co-operation and Developmentís (OECD) Better Life Index, and with positive steps being taken to encourage an influx of skilled immigrants, Canada is a strong contender, at the moment, for companies looking to penetrate North American and Pacific markets.

According to Invest in Canada, which is responsible for promoting, attracting and retaining foreign direct investment, the countryís economy has grown faster than that of any other G7 member over the last ten years. Looking forward, the OECD said in its May 2012 Economic Outlook that, in all, Canada's growth is projected to be around 2.25 per cent in 2012 and 2.5 per cent in 2013.Notably, Canada has avoided the double-dip recession that has hit countries like the UK. Tom O'Carroll, vice-president and membership committee chair of the British Canadian Chamber of Trade and Commerce, Toronto, attributes this to record sales in new markets, namely China and India. "Plus," he says, "our banking system stayed pretty true to its original values, which were based on British doctrines. We haven't had to take any loans, and it's stayed pretty robust. I think, from our point of view, things have slowed somewhat, but we're still doing quite well."

Canada's banks have traditionally followed conservative lending practices and strong capitalisation–behaviour that has helped to cushion them from problems faced elsewhere.

While remaining relatively economically stable, Canada has boosted its appeal to foreign companies. The World Bankís 2011 Doing Business report ranks it 12th overall for ease of doing business, placing it at number three for both starting a business and resolving insolvency. The report states, "Canada made paying taxes easier and less costly for companies by reducing profit tax rates, eliminating the Ontario capital tax and harmonizing sales taxes."

Key employment sectors

With a market-oriented economic system similar to that of the US, Canada is noted for its high levels of economic freedom. As with many first-world nations, a large portion of Canada's economy is dominated by the service sector, which employs around three quarters of working Canadians and accounts for 78 per cent of GDP.

Unlike many of its peers, however, Canada retains asignificant primary sector and is a net exporter of energy. Alberta, in particular, is currently benefiting from its oil sands, which stand as the second-largest proven reserve in the world. In the province of Saskatchewan, there are further oil sands, which some experts believe could be even larger than those in Alberta.

While development of many of the country's more northerly natural resources has been shelved because of the cost of creating infrastructure to extract them, there are signs of movement, with the Canadian government recently having opened the bidding process for exploration of 905,000 hectares in the Arctic Circle.

Some 75 per cent of Canadian exports go to the US, and Canada serves as its neighbourís top supplier of energy, including oil, gas, uranium, and electric power. This is facilitated by the North American Free Trade Agreementís (which also includes Mexico) precluding tariffs. This makes Canada vulnerable to problems faced by the US.

"They're a close partner. We feel their pain. They catch a cold, we sneeze," says Tom O'Carroll. This hasn't proved to be too significant a problem, though. "Our traditionally strong trade activity with partners on both sides of the Atlantic, particularly the US and the UK, has not let us down yet."

The importance of immigration

An ageing population makes immigration vitally important to Canada. "One of the biggest challenges ahead for Canada is population growth," says Stephen Cryne, president and CEO of the Canadian Employee Relocation Council. ìIt is predicted that all growth in our workforce will come from immigration for at least the next two decades."To put that in perspective, there are currently 4.6 workers supporting one retiree; that ratio drops to 2.3 workers to one retiree over the next 15 years. That is based on current immigration levels of 250,000 a year. Some commentators are calling for that number to be pushed as high as 400,000." The current spotlight on immigration has come with a shift in policy emphasis. "The employer will be given more and more latitude," says Julie Lessard, partner and immigration law specialist at Quebec-based business law firm BCF.

"Typically, before, Canada was one of the countries accepting a higher number of people without a job offer, without a link to an employer. Weíre changing the system and giving more latitude to employers, but, at the same time, the rules are very strict."

There's an emphasis among companies relocating staff on assignees with specific skill sets. "Skilled and professional workers are in short supply, particularly in the western provinces and in some of the Atlantic regions, where major oil and gas projects are underway," says Stephen Cryne.

Julie Lessard echoes this, placing further emphasis on skills with practical applications. "There are a lot of engineers in the aerospace and aeronautics sector who are being looked for as well, and a few positions in the pharmaceutical and medical industries, too. But more and more in the trades. We don't have enough young people who are interested in getting that level of training after high school.

"In the western provinces, itís the oil and gas that are in highest demand. Every province has its own niche." The digital sector is also still attracting immigration–particularly in Quebec–with the Canadian government having pursued videogames companies aggressively through, among other initiatives, highly-competitive tax breaks.

Canada by region

I asked Bob Johnson, the MI Group's vice president of client relations, Toronto, about recent relocation activity in Canadaís regions

Said Mr Johnson, "The Canadian economy, in general, has weathered recent economic turmoil better than most countries in the developed world. Relocation trends reflect this fact, as many Canadian firms, while characteristically prudent, continue to examine and pursue growth opportunities involving talent deployment.

"Strong energy and resource markets, such as Alberta, Saskatchewan, and parts of the Maritime provinces, continue to experience robust mobility activity, drawing in both offshore and extra-provincial talent.

"Quebec continues to focus on attracting investment and helping firms grow through federal, provincial, and municipal economic and immigration initiatives, resulting in a healthy mobility environment.

"Ontario activity appears to be steady, with some ups and downs within various market segments. The purchase of some formerly 'Canadian' firms headquartered in Ontario by offshore interests has impacted overall activity, as has a movement among foreign-owned firms to centralise mobility management within their global subsidiaries in their home country. This trend is likely to continue."

New rules, new hurdles

All the government attention currently being directed towards immigration presents complications of its own. "The government is changing all the rules. There are a lot of programmes that were cancelled or replaced. Some of them are under probation, some were closed. Itís a complete revamping of our system, and HR people are struggling with that. Itís going to be interesting," says Julie Lessard.

Regional variation can throw up bureaucratic problems. "We're definitely not like the UK, where itís the same law everywhere. There are different rules regarding education, regarding certain enforcement, regarding regulatory bodies, regarding watchdog committees," says Tom OíCarroll.

Another problem that arises from Canadaís regionalism is the language barrier. "There's a lot more French speaking in Canada than people realise. It's not just in Quebec, it's in every province," says Mr OíCarroll. However, on a business level, he adds, "I don't find it a problem at all; I find it an advantage."

Language does, however, raise issues. "If you're opening a subsidiary in Quebec, the main language will have to be French. The workplace can be bilingual, but it canít be only English," says Julie Lessard.

Issues largely come back round to the usual suspects: taxation, HR practices, and the application of labour laws. Ms Lessard quotes Canadaís low statutory holiday allowance– just ten days–as an example. "Let's say that you are sending a junior person here and they already have four or five weeksí vacation, and you have senior members having two or three weeks.

"In Canada, it's hard to balance all that. So you have to know these differences in terms of labour law as well, because, if you mix Canadian employees and UK-based employees, they don't have the same benefits, it doesn't work the same way."

By and large, though, Canada's relative cultural similarities to the UK, the basis of its legal system in British law, and its common language make relocation from Britain, at least, fairly smooth.

Don't miss the new Canada content in the International Destinations section of www.relocatemagazine.com

© 2012. This article first appeared in the summer 2012 edition of Re:locate magazine, published by Profile Locations, Spray Hill, Hastings Road, Lamberhurst, Kent TN3 8JB. All rights reserved. This publication (or any part thereof) may not be reproduced in any form without the prior written permission of Profile Locations. Profile Locations accepts no liability for the accuracy of the contents or any opinions expressed herein.

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