The Diversity Advantage
President & CEO
RBC Financial Group
10th International Metropolis Conference
October 20, 2005
Thank you, Mayor Miller.
I'm sure that I'm not the first to say how appropriate it
is for Toronto to be hosting Metropolis, given we are one
of the world's most ethnically diverse cities. It's not by
chance that "Diversity: Our Strength" is Toronto's
I'm here to make a case for its importance to the future
strength and prosperity of the whole country.
It is interesting that when asked, in the Canadian Values
Poll, "what makes Canada unique" -- the number one
answer was "diversity and multiculturalism."
To put this in perspective, "hockey" ranked dead
Yet to find "diversity", above everything else
in the top spot, makes a strong statement about the way Canadians
"Diversity: Our Strength" is a great slogan.
But diversity is not just one city's strength. It can and
should be the country's competitive advantage.
Canada currently faces economic challenges. Our standard
of living lags behind the United States' and other countries.
Our real per capita GDP growth is slipping in world rankings.
Our productivity growth is sliding which reflects deteriorating
So while we are starting from a reasonable economic base,
a strong fiscal position and a high quality of life, we cannot
be complacent, because we are losing ground in an increasingly
If Canadians want vibrant, prosperous communities and an
excellent standard of living, then we need to become one of
the world's most competitive nations to foot the bill. The
bottom line is that you can't have a well-intentioned social
agenda without a sound economic agenda.
We have to address specific issues related to economic policy
if we are going to live up to our potential. One of those
issues, and the topic that I would like to comment on, is
immigration and diversity.
We believe that one of the ways to grow Canada's economy
is to better leverage both diversity in our workplaces and
In fact there are few countries that stands to gain as much
economic benefit from diversity and immigration as Canada.
If we succeed we will have an unrivalled advantage. If we
fail, we will pay a heavy cost in lost opportunity, and will
face an uphill battle in finding ways to grow our economy
and pay for an ambitious social agenda.
Earlier this year, I asked our Economics department to quantify
the cost to our economy of failing to realize the potential
of immigrants as well as other under-utilized human capital
We released that report, called "The Diversity Advantage,"
The report is 24 pages long, and makes 22 recommendations
ranging from tax to policy reform. It makes a hard-hitting
case for a national productivity agenda, an issue that is
now a current priority for our governments, but one that needs
concrete policy actions.
Today, I'd like to talk specifically about the sections of
the report that deal with immigration, and will review a handful
of our recommendations. I'll also give some practical examples
Immigration has historically been critical to Canada's growth,
yet it has seldom been as important as it is today. Competitive
advantage is no longer defined by one's resource base, and
is no longer measured by capital assets like plants, equipment
and machinery. Competitive advantage in today's dynamic world
will be driven by one's ability to tap human capital-to innovate
and adapt, develop new markets and foster new companies.
But Canada is a small nation. Our birth rate just hit an
historic low, and our workforce is aging. While Canada's 10
million baby boomers have accomplished much, they have not
delivered in the baby department. Ten million parents have
had only 8 million children. That's not enough to maintain
the status quo, let alone grow our labour force.
The reality is that we're already staring labour shortages
in the face. If we are going to succeed, we are going to have
to import talented people to make up the gap - in other words
invest in human capital.
Right now, new Canadians make up about 70 per cent of the
growth in the Canadian labour force. By 2011, they will account
for all of it.
This situation is not unique to Canada: in countries like
Italy, Spain and Germany, birthrates are falling and their
workforce is graying. We'll be going head-to-head with them
in a global war for talent, not to mention with powerhouses
like China and India, who are pouring investments into education,
and also working to retain and attract human capital.
Our labour force will stop growing without increased immigration.
A shrinking workforce, smaller business-economic base and
a declining tax base does not augur well for future economic
prosperity. How well we meet the challenges of diversity will
determine our future success in attracting talented immigrants
as global competition for that talent intensifies.
And without a talented workforce, Canadian business will
be unable to achieve strategies of innovation and growth,
or forced to implement these strategies in other parts of
Currently, Canada welcomes about 220,000 immigrants a year.
At that level, we calculate that our labour force will stop
growing in about 10 years.
Our report recommends that Canada consider raising its target
to as many as 400,000 immigrants a year. By our calculations,
this would stem the impact of our aging workforce and low
Further, we must make a concerted effort to attract skilled
workers into those industries that are currently suffering
labour shortages, and encourage the migration of new immigrants
to centres beyond Toronto, Vancouver and Montreal.
And, to succeed, we must also provide an environment where
new Canadians can maximize their potential. This can be Canada's
competitive advantage, but we have to work harder to make
We'll need to make some short-term investments on the ground
before we reap the long-term benefits of increased immigration.
For example, we must solve the real and pressing needs for
programs such as language training and foreign credential
Municipal governments also need to be a partner with their
federal and provincial counterparts in determining immigration
targets and migration strategies, because cities are truly
where the rubber will hit the road. That's where the pressure
will be felt for increased infrastructure, such as transportation
For cities like Toronto, already suffering from budget shortfalls,
this is already a challenge, but doubly so when you consider
that cities are dependent on the slow drip of property taxes
for revenue. Our report calls for an immediate and fundamental
reform of the revenue-raising authorities of municipal government.
All levels of government must raise the bar, coordinating
their policies on identifying, accepting and integrating immigrants.
But we can't assume that raising immigration targets will
solve all our problems. We must also work aggressively to
release the untapped potential in our current workforce.
It's no secret that we don't have the best track record in
this area and it has been slipping. Over the past decade immigrants
have arrived in Canada better educated and at similar stages
in their careers as those born in Canada, but evidence suggests
that they have been less successful than earlier waves of
immigrants. They have not found jobs that match their skill
levels, are earning less than those born in Canada or experiencing
higher unemployment rates.
This is a waste of human potential: it's like driving a high-performance
sports car at 20 kilometers an hour.
But it also represents a direct hit to our economy. If all
new Canadians were fully employed at his or her level of education,
earning equal pay to someone born in Canada, we calculate
that the contribution to Canada's economy would be an increase
to personal income in the neighbourhood of $13 billion a year.
That's equals a one-time gain of 400,000 more workers in
a year, just from leveraging what we already have in our backyard.
I would not be doing justice to our report without mentioning
that we see cultural diversity as just one of three high-impact
areas that can enhance Canadian prosperity.
If women, seniors and immigrants, collectively, were employed
at their level of education, earning equal pay to men born
in Canada, personal incomes would increase by $174 billion,
or an equivalent of 1.6 million more workers. To waste this
potential is like leaving that sports car idling in the driveway.
Clearly, when it comes to leveraging the potential of immigrants,
there is work to be done. The Canadian government's "Internationally
Trained Workers Initiative" is a step forward, especially
on the topic of foreign credentials. This is one of the most
significant barriers to employment for skilled immigrants.
All stakeholders must work towards raising the profile of
foreign education institutions in Canada.
RBC uses a specialist firm to evaluate the Canadian equivalents
of foreign credentials, so we can make sure prospective employees
aren't falling through the cracks. It would be very helpful
for all businesses, especially small and medium-sized ones,
if someone-government or NGO— were to publish a guide that
rated or reviewed these institutions on our behalf.
For Canada to maximize the value of immigration, I cannot
overstate the importance of a collective effort by all sectors:
government, community, labour and business.
Government cannot bear the burden alone. Governments can
establish policies that attract skilled immigrants to Canada,
but once they have arrived, businesses, both large and small,
have to pick up the ball. But we've been dropping it.
Last year, the Public Policy Forum interviewed over 2,000
Canadian employers about how they are integrating immigrants
into the workforce. Here's what they found:
- Employers routinely overlook immigrants in their human
- They don't hire immigrants at the level at which they
were trained; and
- And they face challenges integrating recent immigrants
into their workforce.
In my view, this failure is not because of intentional biases.
It's due to systemic challenges that exist in any organizations,
compounded by businesses that fail to recognize the business
opportunity from diversity and capitalize on it.
I believe that once businesses see the opportunity rather
than the risk, many of the systemic challenges of diversity
RBC sets a high premium on diversity. As a matter of interest,
I chair our Diversity Leadership Council, made up of senior
leaders from across our businesses, and it is the only committee
other than my executive committee that I sit on.
This Council sets RBC's employment equity strategy and goals.
We meet quarterly to make sure the talent pipeline is being
filled with qualified candidates from diverse groups, as well
as tracking the results of our recruitment efforts, promotions
Each of our businesses has goals with respect to gender,
people with disabilities, aboriginal people and visible minorities
so we can measure our performance and hold people accountable,
rather than just talking a good game.
We focus our approach to diversity not just from a social
justice perspective, but as a business opportunity which,
in my view, is the best way to overcome the systemic challenges.
Human capital really is our greatest asset, and it would
be irresponsible not to maximize it.
Currently, about 23 per cent of our workforce is comprised
of visible minorities, and about ten per cent of our executive
management team. We know we've got to do better but view it
as a long-term program that will be well worth the investment.
We are developing and adapting specific programs to help
build a diverse range of employees into our workforce.
For example, we used to ask prospective employees to provide
the name of the institution where they received their degrees
or accreditations on our job application. But our recruiters
were passing over qualified candidates because they weren't
familiar with foreign degrees and institutions. So we removed
that section from our application altogether-and follow up
on credentials and education later in the process. We hope
this will move us one step closer toward bias-free hiring.
From RBC's point of view, every new Canadian we hire helps
us build institutional knowledge about our key cultural markets
both here and abroad-and that's invaluable in the global marketplace.
Economic value is also created by newcomers to Canada because
they quickly become consumers of goods and services as well.
RBC, for example, has about 11 million clients in Canada.
Almost 15 per cent of them represent a "cultural market"-which
we define as new Canadians and visible minorities. And we
expect much of our future growth to come from cultural markets.
When immigrants first arrive in Canada, one of the most significant
barriers they face is related to access to financial services.
Imagine you are a newcomer, starting from scratch. You have
no Canadian identification. Without a Canadian credit history
or work experience, you have trouble getting a loan or mortgage
or even a credit card. You're probably not even sure how Canadian
banks work and may not be fluent in either English or French.
These are formidable challenges, and clearly, banks have
a unique role to play in helping ease the integration of newcomers.
RBC recently developed a "Welcome to Canada" program
for new Canadians. Our goal is to put the right products and
people in place so that we can serve diverse markets better.
- We created a secured VISA card so that new immigrants
can build their credit history.
- We simplified our mortgage process to ease up on an immigrant's
- We'll be providing easy-to-understand applications and
information in multiple languages.
- We're developing a way for immigrants to open bank accounts
online before they arrive in Canada.
- And this week, we're launching a website for newcomers.
My point here is not to do an RBC commercial-although I would
be happy to do so after lunch-- but to show how our business
is adapting to the realities of a new marketplace. And part
of our business strategy is to ensure that our employee base
reflects these realities.
Many of you are likely familiar with Richard Florida's "creative
class." It's hard to disagree that creative people tend
to cluster in centres of creativity that are multi-dimensional
The creative class is transforming our economy, and we, in
turn, must transform our cities into centres of creativity.
We must do more than open the door to immigrants-we must
make Canada the destination of choice for talented people
with skills, energy and drive. And most importantly, we must
also create a climate where they can successfully integrate
and realize their full potential. I can't state it strongly
enough: This is not just about social justice-it's about seizing
Canada faces many economic challenges in today's increasingly
competitive world and it is hard to argue that our relative
performance is not slipping. But I believe with the right
policies, we can maximize our potential and enhance our prosperity.
One of the things we have to get right is capitalizing on
diversity and immigration.
I hope that today, our report sets out a convincing case
for the entire business community, and the country at large.
If politicians, business leaders, labour leaders and academics
work together, we will capitalize on Canada's diversity advantage.