President & CEO
RBC Financial Group
The Vancouver Board of Trade
May 10, 2006
As I flew in the other day, I couldn't help thinking that the rest of Canada can't joke about Vancouver being laid-back anymore. This city is on overdrive, and the stars are aligning with a combination of excellent politics, growth of new and emerging industries, a robust commodities sector and of course: the Olympics. It's easy to predict an exciting future and strong economy for Vancouver and for all of British Columbia.
RBC is proud of our operation in British Columbia, which has led the country for us in terms of growth— even out-performing Alberta over the past two years. We are also proud to be the exclusive financial services sponsor of the 2010 Olympic and Paralympic Winter Games and are fully committed to helping VANOC set a new world standard.
Our legacy of support for Canada's Olympic team dates back to 1947, and you won't find anyone more excited about 2010 than our team here in Vancouver. Some of them are with us today, but most are back at the office, hopefully working but also preparing for the RBC 2010 Flag Tour. This is an exhibit that's traveled west from Halifax over the last few months to show the rest of Canada what Vancouver has to offer in 2010.
If you're looking for a fun time with the family, I invite you to head over to the Vancouver Art Gallery tomorrow, where you'll find 5,000 square feet of activities, and a chance to meet Olympic athletes.
It was a challenge to settle on a topic for my remarks today.
I was tempted to talk about the Canadian economy, which is the hottest in the developed world or about our sponsorship of the Games . or the business opportunities they will bring.
But I have chosen to talk about Canada's labour challenges and the importance of both attracting and maximizing human capital. The strength of the economy, demographic shifts and globalization only serve to increase the importance of dealing with our labour challenges and capitalizing on a labour opportunity.
People are the most important asset of any company, institution or province, and maximizing the return on our most important asset is critical to our competitive success.
Vancouver, as an example, is facing a perfect storm, if you will, heightened by the Games, the housing boom, and infrastructure projects like the Richmond Airport Vancouver transit line.
Some 40,000 new trade apprentices are needed just to complete all the construction projects planned around Vancouver for the next ten years. And with Alberta predicting a shortfall of as many as 100,000 workers over the next ten years, competition for labour will be fierce in the west.
This is a harbinger of what awaits the rest of Canada.
If Canada is to succeed in the global economy, we must ensure that the whole country has a capable workforce. And it's not just about skilled workers for the construction and oil industries— everyone understands that. But I would emphasize that this is about leveraging human resources in all areas of the economy.
I've been speaking about this issue for the last 18 months, because I believe it will define our country's future, now and beyond 2010. If we don't address our nation-wide workforce issues now, we'll be feeling the pain long after the Games have moved on.
That's why my remarks today are called "Canada's Diversity Imperative: 2010 and Beyond."
If we succeed at leveraging the diversity of our current and future workforce, we will have unrivalled advantage. But if we fail, we will pay a heavy opportunity cost for our citizens, and will face an uphill battle to maintain, let alone enhance, our quality of life. And make no mistake: there is a global war for talent and we must make sure we position ourselves to win it.
Diversity can and should be Canada's competitive advantage.
So with that end in mind, I will start at the beginning.
And in the beginning was economics.
I know this sounds like it's going to be the standard message from Bay Street. But no country can implement a strong social agenda without a sound economic one.
If Canadians want an excellent standard of living— and of course we all do— we must become one of the world's most competitive nations to pay for it.
Canada's economic advantage is not defined by our rich base of natural resources or by capital like plants, equipment and machinery. It includes our ability to tap human potential. And this is only going to increase in the future as our industrial base transforms.
But Canada is a small nation. Our birth rate recently hit an historic low and our workforce is aging. That's not enough to maintain the status quo, let alone grow our labour force.
And we're not alone: countries like Italy, Spain and Germany are in the same boat, and we're competing with them for talent.
The situation only gets more complicated when you add China and India to the mix. Both are economic powerhouses with growing populations, and both are investing heavily in training and education. They are our competition, too, and reverse migration from our talented Chinese and South Asian immigrants is a real threat.
Immigration will be critical for Canada, and attracting the right mix of skills and capabilities will be essential. Nowhere is that more clear than in BC, where about a quarter of the population is foreign-born. In Greater Vancouver alone, immigration counted for more than 90% of the growth in the labour force from 1991 to 2001. This trend will only continue.
Right now, Canada-wide, we welcome about 220,000 immigrants a year. At this level, with our aging workforce and low birth rate, our labour force will stop growing in about 10 years. Clearly, if we are going to compete, we must increase the number of immigrants we welcome to Canada each year.
Last year, RBC went on record saying that Canada should raise its immigration target to as many as 400,000 people a year.
We must attract the right people with the right skills. We must ensure Canada is a destination of choice for skilled immigrants. Our most pressing need is for skilled labourers; but we also have to attract the best and the brightest, who can invent, invest, and build new companies, who can grow our economy and enhance our prosperity.
But, raising targets alone won't give us maximum advantage.
If we truly want to turbo-charge our economy, we need look no further than our own backyard. Our first priority should be to tap the existing potential in our current workforce, for this is where our true advantage lies.
Last year, I asked our Economics department to quantify what it costs the Canadian economy when we fail to realize the potential of immigrants and other groups, such as women and seniors.
We found that if all new Canadians were fully employed at their level of education, earning equal pay to someone born in Canada, personal income would increase by $13 billion a year.
Thirteen billion dollars is the equivalent of gaining 400,000 more workers in a year, just from leveraging existing talent in our own backyard. That's an immense resource going to waste.
Most immigrants have arrived better educated than those born in Canada, but many have not found jobs that match their skill levels, or are earning less than people born in Canada. Even worse, they are unemployed.
But there is good news, relatively speaking.
Canada does have higher participation rates and lower unemployment rates for immigrants than many other countries, such as France, Luxembourg and the Netherlands. In fact, Canada is closer to being a model economy when it comes to integrating immigrants than any other country in the world.
But we do have challenges, and while our politicians love to brag about the success of our multicultural society, we would be better off acknowledging and addressing our challenges, or we will pay a price in the future.
These challenges cause disappointment and despair for our newcomers, not only killing the spirit, but taking a heavy toll on the country's bottom line as well.
Evidence suggests that today's immigrants are having a harder time adjusting than previous generations, and the lack of inclusion of minorities and second generation immigrants is causing both social and economic challenges. The sooner skilled immigrants are working in the occupation they've trained for, the better.
RBC is well-known for our human resource policies, but I'll be the first to tell you that we aren't perfect either.
Atefeh Kermanshahi is here with us today.
Atefeh is Iranian, and moved to Vancouver in 1996 with her daughter, after living in England for ten years. She had a degree in Economic and Business Management, and had worked for the Central Bank of Iran for over 11 years.
Like many immigrants, Atefeh didn't have a social network waiting for her here. She was optimistic that her education and work experience would give her a leg up. But she found out that neither her education nor her experience counted for anything.
I am not proud to tell you that the first company she applied to when she got here was RBC, and we didn't hire her.
She was caught in the Canadian Catch-22: no Canadian education or work experience meant no Canadian job.
We didn't even think about whether it made good business sense to hire someone with her skills to help us tap into the growing and wealthy Iranian community on Vancouver's North Shore.
So she found a sales job with one of our competitors in the insurance business.
Nothing about the job fit her, but it gave her Canadian experience. After a year of misery, she applied to RBC again. This was in 1998.
And this time, we got it right.
We hired her as a personal banker trainee, and it was like we unleashed a powerhouse. She is now a successful financial planner, an active member of our Iranian Strategy Committee and fully plugged into the community. She's even tapping into her own network to help us recruit Iranian employees. More than anyone, she knows that RBC can't afford to overlook qualified, prospective employees.
Atefeh's story had a happy ending, but many don't.
Statistics Canada recently reported that immigrants to Vancouver find it harder to get jobs than anywhere else in Canada. The employment rate for immigrants in Vancouver is 61 per cent and only 44 per cent are in jobs for which they've trained.
Demographically, you can see where this is going. There will be about one million job openings in BC the next dozen years, and we don't have enough young British Columbians in the pipeline to fill these jobs. Immigration will play a vital role in filling the gap, so we must do everything we can to help them integrate into the work force and reach their potential.
We have a critical need for language training programs. Employees don't just need conversational language skills, they also need business communications skills to be successful in the workplace. To its credit, the BC government boosted funding for language training by several million dollars in its 2006 budget.
Settlement and mentoring programs are also needed, as are internship programs that provide Canadian work experience.
In Toronto, RBC supports Career Bridge, an internship program for internationally-qualified professionals. This program eliminates some of the employment barriers faced by experienced professionals, while providing employers with access to prescreened candidates. I understand that Career Bridge is expanding to Vancouver in 2007, which is good news.
There is an urgent need for programs related to foreign credentials. The BC government has committed $16 million to the Skills Connect and the International Qualifications programs, which not only provide training and services to immigrants, but also help with quicker recognition of foreign credentials.
Both programs will attract matching funds from the federal government as well.
Immigration may not be at the top of the new government's list of priorities, but last week's budget did announce the creation of an agency related to Foreign Credentials, increased funding for immigration settlement and incentives for apprenticeship programs.
If they wanted to go further, Ottawa could also strengthen provincial initiatives that are already in place, and develop a national strategy to build local capacity among employers.
While governments have an important role to play, no level of government can bear the burden alone: business has to pick up the ball. But so far, we've been dropping it.
By their own admission, Canadian companies say that they:
I don't think companies are doing this intentionally: but because of systemic challenges that all organizations face. Once businesses start to realize the opportunity in diversity, systemic challenges seem to disappear.
RBC has almost 70,000 employees around the world, and we set a high premium on diversity. I chair our Diversity Leadership Council, made up of senior leaders from across our businesses. As a matter of interest, this is the only committee at RBC other than my executive committee that I sit on.
This Council sets our diversity 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 our results.
Each of our businesses has diversity goals for women and visible minorities so we can measure our performance and hold people accountable, rather than just talking a good game.
Currently, 23% of our workforce is comprised of visible minorities, with 38% in management, and about 9% in senior management. We know we've got to do better, but we view this as a long-term investment and are focused on building diversity into our workforce.
For example, we used to ask job-seekers to give the name of the institution where they got their degrees or accreditations on our job application. But if our recruiters weren't familiar with the institutions, they might overlook qualified candidates. So we removed that section from our application altogether. Now, we follow up on credentials and education later in the process.
We also have a referral program where employees can earn rewards when they help us find qualified external candidates, helping us source employees from cultural markets.
If I can emphasize one point more than any other today, it is that we approach diversity not just from a social justice perspective, but as a business opportunity. Every new Canadian we hire, helps us build knowledge about our cultural markets— an increasingly important source of business for us.
Our most important assets go in and out of our buildings every day: if we fail to capitalize on this important talent pool, it would be a missed opportunity.
RBC has about 11 million clients in Canada.
Almost 15 per cent are new Canadians and visible minorities— and we expect much of our future growth to come from these cultural markets. Vancouver is a good case in point. In recent years, BC has welcomed more than 30,000 international immigrants every year, primarily from China and India, cultural groups that are now part of the marketplace and landscape.
Many of the immediate challenges newcomers face are money-related, giving banks an important role to play.
If you were an immigrant, remember back to your first few months in Canada. You probably didn't have Canadian ID to open a bank account. You didn't have a credit history, so you probably couldn't get a loan, mortgage or credit card. You might have had trouble finding housing.
So RBC is developing products and services that newcomers urgently need in their first weeks and months.
People can now open an account with us over the internet before arriving in Canada. This way, they can start to arrange the financial side of their new lives from their home country, saving time and stress when they get here.
We have a new website that addresses the most pressing needs of newcomers, and it's now available in Chinese, since China is the number one source of newcomers to Canada. We opened a new branch in Beijing to help clients establish banking relationships with us even before they arrive, as well.
And last year, we created an International Client Group, based here in Vancouver, to serve non-resident clients. The team will provide services in Cantonese, Mandarin, Portuguese and Spanish and will accommodate clients in different time zones.
We're trying to put the right products and people in place so we can serve diverse markets better.
There is a lesson here for all of us.
We must do more than open the door to immigrants— we must make Canada a destination of choice where immigrants can realize their potential as employees, business owners, customers and neighbours.
Canada faces many economic challenges in today's competitive world. But when it comes to capitalizing on diversity and immigration, we already have a head start compared to other countries in the world. We must now leverage what we're already doing well, and add the right policies and programs to the mix. This will become even more important if Canada increases its immigration targets.
I have spoken frequently about the importance of diversity and immigration because I do believe it is vital to Canada's future growth, a great economic opportunity and an area of global competitive advantage.
But that is if and only if we change our policies and practices to attract the right skills and live up to our values of integration and inclusion. This will require a collective commitment from government as well as the business community and other constituents.
Maximizing the potential of our diverse workforce is not only a social imperative, but can be Canada's economic advantage, for 2010 and beyond.