Month: November 2022

In late October 2022, the Bank of Canada announced the worst drop in business outlook since the start of the pandemic. Recent studies have found that most businesses and consumers believe Canada will soon fall into a perilous recession, with inflation continuing to plague our economy for years to come.

The Bank of Canada’s main tool to fight this outcome, namely its ability to raise interest rates, must be recognized for what it is: a Band-Aid on a broken leg. Our economy is facing systemic deficiencies: shortages of energy, commodities and, most importantly, people. In a recent interview with BNN Bloomberg, Mark Wiseman, chair of the Alberta Investment Management Corp. (AIMCo), put it trenchantly when he said rate increases don’t create more human beings ready to contribute to our workforce.

Businesses are facing two existential challenges. The first is the ongoing crisis of inflation and the corresponding threat of a major recession that will continue to drive up the cost of living for workers, increase dissatisfaction and devalue wages.

The second is the severe labour shortage that is expected to intensify rapidly. How should leaders prepare? And, crucially, what can leaders do to fortify their organizations during these challenging times?

It is prudent to examine what not to do.

As storm clouds gather, emerging data suggests many companies, both global and domestic, are contemplating or are already making layoffs to reduce costs and shore up their elasticity in a weakening business environment. Earlier this year, Shopify sent shockwaves across the sector by cutting 10 per cent of its workforce, following in the footsteps of other major technology companies like Netflix and Coinbase, which also announced significant layoffs in 2022. The day Shopify publicized this action in late July, the Canadian company’s shares closed down 14 per cent. That was partly a reflection of CEO Tobi Lutke’s admission, in a memo to staff that was made public, that the company had overestimated the degree to which e-commerce would grow. With a deepening human capital crisis and competition for skilled work escalating, one must wonder whether Shopify will come to regret this decision.

Beyond their individual defects, these examples from the technology sector reveal the cyclical nature of market trends. They make clear that the questions posed and solutions offered today cannot be designed solely to address the obstacles of this quarter or next. Widening the window means not only understanding the pace at which events are unfolding, but also promoting a clear picture of your long-term objectives and holding fast to the investments required to get there. This is particularly true for investments in human capital.

Historically, during economic downturns, businesses cut funding for employee compensation and training. As those same businesses contend with skills deficits, peers that have invested in high-growth areas emerge more competitive and prepared. While certain budget constraints are inevitable, businesses that can articulate long-term priorities are better positioned to secure investor and stakeholder support for workforce expansion. When measuring workforce demands versus budgetary constraints, it’s imperative to remember that turnover has a cost, estimated to be as high as 150 per cent of an employee’s salary. Building strong and committed teams isn’t cheap, but neither is the alternative.

A recession is likely to lead to a decrease in job creation, with some sectors experiencing a hairpin turn: today’s worker shortage will become tomorrow’s job shortage. However, well-resourced businesses should look beyond their immediate needs as they build and scale their workforce. With Canada’s technology sector facing widespread layoffs, banks, financial institutions and other traditional industries are scooping up available talent to build their artificial intelligence capabilities. These businesses can expect to reap the benefits as Canada requires an additional 250,000 technology jobs by 2025.

Not all businesses will be equally fortunate, and many sectors remain handcuffed by our current worker shortage. Corporate Canada cannot solve this issue alone. Urgent government action is needed on immigration, advanced education and infrastructure. But great leaders learn to never let a crisis go to waste. Businesses that respond to the talent war with strategic commitments to employee culture, long-term workforce investments and growth opportunities are best positioned to weather future labour shortages.

Nothing intersects culture, politics and business quite like sports. At their best, sports organizations serve as bastions of the community and espouse a purpose beyond victory at any price. At their worst, they function as vehicles for oppression and exploitation.

Regrettably, recent events demonstrate that professional sports are drifting toward a preoccupation with profit and power at the expense of social value. This was forcefully demonstrated last year when several elite soccer clubs banded together proposing to ring-fence competition at the highest level with a European Super League. The plan faltered after vicious backlash from fans who, with their unwavering loyalty, had built the clubs into powerhouses. Many people thought this saga might spark an industry-wide reckoning, a warning to franchise owners and league executives to curb greed and reward allegiance, but the trend toward enhancing profit at all costs seems only to be growing stronger.

Lately, professional sporting broadcasts have seen a dramatic increase in advertisements for gambling services. The deluge, brought on by developments in the United States and Canada making single-event betting legal, has exposed North American fans to the cutthroat and compulsive world of easily accessible wagering. The United Kingdom, one of the first countries to embrace the sports betting industry, is now contending with a gambling epidemic. In response, the government has banned the use of credit cards for wagering, commissioned studies into its long-term implications, and is expected to ban betting companies from sponsoring soccer jerseys. Conversely, in the U.S., with sports betting legalization steadily expanding state by state, some colleges are actively promoting gambling services to their own students, receiving compensation for every person they help sign up.

Whatever your opinion of gambling, the proliferation of ads selling services where users can place infinite bets with just a few clicks puts fans and vulnerable communities at risk. Sports organizations must do better at regulating and diversifying corporate partnerships. In Canada, government statistics show that disadvantaged people are more susceptible to gambling problems, and that the number of gambling activities available increases the risk of addiction and related issues.

Even more problematic than the rise of gambling seduction is the renaissance of an age-old phenomenon: sportswashing. Adolf Hitler did it in 1936; the Athenians perhaps created it when they splurged on chariots in the 416 BC Olympics to impress the ancient Greek world. Today, sports remain a vessel through which the powerful try to shape external perceptions.

Following the country’s invasion of Ukraine, Formula One decisively exited Russia. Ostensibly a principled decision, the same reasoning did not apply to the recently launched Grand Prix in Saudi Arabia, which continues despite the kingdom’s abhorrent human rights record.

The tacit support of the kingdom reached self-parody at this year’s Montreal Grand Prix when a driver donned a shirt protesting Canadian oilsands while simultaneously wearing a helmet adorned with sponsor Saudi Aramco’s logo, the world’s largest oil producer and most profitable company. Not only does sportswashing obfuscate the crimes of regimes like Saudi Arabia, it also puts meaningful activism at direct odds with corporate interests.

A recent poll by Discover, Navigator’s research arm, found that 64 per cent of respondents agreed that Canadian sports organizations and stakeholders could do much more to raise awareness of known human rights abuses by governments that host major sporting events. Canadian media, therefore, should approach this year’s FIFA World Cup in Qatar with revitalized scrutiny. The tournament will be set against the backdrop of thousands of dead migrant workers who built the stadiums under conditions akin to slave labour. As co-host of the next World Cup, Canada is well-positioned to take a stand.

As the Roman poet Juvenal famously said: “Give them bread and circuses and they will never revolt.” Modern sports have become circuses, tools for despots and a means for the rich to get richer at the expense of the community. Their soulless nature saddens fans who want the teams they love to stand, more than mere machines of profit, as tangible representations of communal identity and spirit. Maybe this year’s World Cup is the perfect venue for a long overdue revolt.

64% agree that Canadian sports organizations and stakeholders could do a lot more to raise awareness of known human rights abuses by governments that host major sporting events.

Not a day seems to go by in 2022 without a report of another catastrophic climate event. From monsoons that left a third of Pakistan underwater, to extreme drought and wildfires in Spain, to hurricanes Fiona and Ian that devastated coastal communities in Canada and the United States, few countries have been spared the effects of climate change. If scientific predictions are accurate, the situation will only worsen in coming years.

As the world works to reduce carbon dioxide emissions to mitigate this threat, one technological change looms large: electrification. All manner of vehicles, from cars to trucks to planes, are being designed to run on electricity. Apart from preserving the planet, this shift presents vast opportunities for business in the form of new technologies, energy savings and cost reductions.

This shift also demands something else: a large and reliable supply of critical minerals. Electric batteries require cobalt, lithium and nickel; the demand for these minerals is growing insatiably. McKinsey & Company projects that the global market for battery cells will grow about 20 per cent every year to $360 billion (U.S.) in 2030. Consequently, the World Bank estimates global demand for critical minerals could expand by 500 per cent within the next

30 years. For lithium and graphite, demand could increase by as much as 4,000 per cent.

Unless the demand for these minerals can be satisfied, the electrification boom will turn to bust. This is where Canada comes in.

With 200 active mines across the country, Canada is already a major producer of critical minerals, including nickel, potash, aluminum, indium, niobium, platinum group metals, titanium concentrate and uranium. Canada has the further potential to supply significant quantities of lithium, cobalt, graphite, copper and rare-earth elements to an energy-hungry world. Spread across multiple jurisdictions, including British Columbia, the Northwest Territories, Québec and Ontario’s so-called “Ring of Fire,” these mineral reserves also represent an important economic development tool, particularly for First Nations communities that stand to benefit from their extraction.

Canada also has another advantage to leverage: its relationship with the United States. In January 2020, Canada and the U.S. announced a joint action plan on critical minerals to advance bilateral interests. The U.S. had begun investing in critical mineral exploration under the Trump administration, but has now gone one step further under Biden, announcing it will fund overseas mining projects to obtain more critical minerals necessary to build renewable technology. Driving this new agenda is geopolitics — specifically, the dominance of political and economic rival China in the critical minerals market.

In June 2022, the U.S. established a Minerals Security Partnership with a host of countries, including Argentina, Brazil, the Congo, Tanzania and Canada. As part of its engagement, the U.S. is open to “providing a loan guarantee or debt financing” to countries with plentiful supplies. Other nations, including Australia, France and the United Kingdom, are also involved as strategic partners. Congress additionally linked half of a consumer electric vehicle tax credit to a requirement that cars be made with minerals that were mined or processed in the U.S., or any nation that signed a U.S. free-trade agreement, placing Canada at the front of the line.

This opportunity is not lost on the Canadian government, which published a critical minerals consultation paper this summer and will be releasing its full strategy this fall. The last federal budget committed up to $3.8 billion to launch this strategy, which includes up to $1.5 billion on supply chain infrastructure, $144 million for technology research and development, and a 30 per cent critical mineral exploration tax credit. These efforts also have the potential to advance Indigenous reconciliation in local communities.

In a world buffeted by the uncertainties of climate and geopolitics, Canada can provide a stable and secure source of the building blocks necessary for a net-zero world. Governments at home and abroad are willing to support industrial development that will benefit not only Canada, but all nations on earth. This represents tremendous opportunities for businesses on both ends and on all links of the supply chain. It’s now up to investors and industry to step up and make Canada into the energy superpower the world needs it to be.