As seen on vancouversun.com

Don Cayo: Tech sector leads BC in job growth, but trails others across the country

VANCOUVER, BC, October 22, 2013 — First the good news: Technology companies have surpassed all resource-harvesting sectors — forestry, mining, and oil and gas combined — as the top employer of British Columbians, according to a new report done by KPMG for the B.C. Technology Industry Association.

Better yet, the sector’s job growth in recent years is better than any other, except for construction.

Not so good news is that, despite this success, B.C. trails key Canadian competitors — namely Alberta, Ontario and Quebec — when it comes to cultivating its tech industry. The sector contributes a much lower percentage of our GDP than in other provinces; it employs a lower percentage of our workforce; our innovators are granted fewer patents; and our schools graduate, on a per-capita basis, substantially fewer tech specialists.

Technology contributes 5.9 per cent to B.C.’s GDP, well short of the Canadian average. If we were to perform as well as our peers, the contribution to GDP would increase by $2.5 billion a year, and we would have 23,000 more jobs.

Nor does the B.C. industry stack up very well in a global industry worth $8.8 trillion, or 14 per cent of the world’s economy. The sector is growing 5.7 per cent annually in B.C. — respectable compared to all other industries, especially resource-related ones that have been shrinking, but it is well short of the 7.4-per-cent rate recorded globally. And our share of the worldwide industry is a minuscule 0.22 per cent.

Still, this industry has done a lot in and for B.C., and our economy would be in trouble without it.

The sector employs 84,000, including more than 40,000 who work for more than 6,000 companies in information and communications technology — things like telecommunications, software development, computer services, manufacturing and wholesaling.

These numbers don’t include 14,000 employees involved in digital media, or 10,200 at 1,200 companies who work in all aspects of wireless. And life sciences — biopharmaceuticals, medical devices and all that — employ another 10,200, and “clean tech” employs 6,400.

And the wages are good — an average of about $63,000 a year, compared with just over $40,000 for the economy as a whole.

But if the report’s diagnosis is precise, its prescription is squishy. It speaks in vague terms about harnessing and nurturing creativity, elevating the importance of R&D, making technology a core element in driving competitiveness, working harder to break down barriers, and that sort of thing.

Yet the underlying analysis suggests some specifics the province could address if it wants to turn this under-performance around.

The priority for government should be to focus on the province’s alarmingly shallow talent pool. Business success in the technology sector is driven by innovation, and innovation is driven by bright, talented people. So it is a serious deficiency that B.C. produces 25 per cent fewer undergraduates per capita than Ontario or Quebec, that we produce only half the Canadian average of engineers, that we trail other provinces in science and technology degrees, and that we are way behind the entire developed world producing PhDs.

Fixing this might help turn around B.C.’s lacklustre performance in research and development. We are 29th out of 42 jurisdictions when it comes to putting our money where our economic future is, and a shortage of researchers is no doubt one reason for this, aside from too many businesses reluctant to invest.

The dearth of R&D is no doubt also tied to another deficiency — that B.C. companies are granted far fewer patents per capita than Alberta, Ontario, Quebec and most other developed countries.

To the extent these weak performances are tied to money, it is worth noting that B.C. isn’t that bad — but nor is it all that good — when it comes to venture capital. Our businesses get more of this kind of investment than Ontario, but less than Quebec, and we are 15th out of 30 jurisdictions surveyed.

So, while policies to facilitate venture capital investment would be welcome, policies to address the skills/education deficiency are seriously overdue. This means looking at how both post-secondary schools and students are supported and encouraged to focus on areas that produce workers with the expertise to fill the gaps.

To read the full story online, click here.