A not-so-new term has replaced the issue of labor shortages in conversations in Quebec’s tech sector these days. Quebec is currently experiencing this phenomenon that we thought was exclusive to Japan in the 1990s: full employment — in the techno sector, at least. Should economic policies adapt?
Again last week, the expansion of the Montreal office of the American bank Morgan Stanley was presented as yet another opportunity to create jobs in the techno sector in Quebec. The New York-based company, which reported a net profit of US$15 billion in 2021, is taking advantage of provincial aid equivalent to one-third of the wages paid to these newcomers, to add 300 new workers to its operations, which will total thus 3000 people.
This is excellent news for Quebec professionals — and perhaps even Canadians, given the possibilities of telecommuting — of computer technologies, who are thus offered the chance to work for a financial giant with an international footprint in exchange for conditions salaries that we suspect are excellent.
But that’s not for everyone.
Quebec entrepreneurs continue to ask that we rethink the rules giving access to tax credits when we create jobs. In a situation of full employment, fewer new jobs are “created” than are exchanged from one company to another.
When Morgan Stanley or Ubisoft hire dozens of workers in Quebec, these are dozens of workers who do not work for Quebec companies, argue these entrepreneurs.
“In a situation of full employment, they steal employees from us,” said Stingray President and CEO Éric Boyko bluntly.
It’s as if we were training more doctors in Quebec to improve health care and that they were going to operate on American patients instead, illustrates the Montreal businessman.
The leader of Stingray and those of some twenty other Quebec technology companies say that the current government aid for hiring penalizes them against their foreign rivals. The reason ? The context has changed. These policies were created almost 20 years ago, when economic conditions were completely different.
Specialists who had been anticipating the current labor shortage in technology since at least 2008 suggested encouraging the unemployed in other industries to change careers. With an unemployment rate of 4.1% in March, the entire job market is running at full speed. This solution also becomes less efficient.
Tax question
Stimulating IT job creation in 2002 — just after the stock market bubble burst — is not having the same effect as in 2022. Many companies these days say their growth is being held back by their inability to hire all the desired staff. The situation is the same in Quebec as elsewhere in Canada or even in North America. This becomes a global productivity issue.
This is quite a headache for the government of François Legault, which has set itself the mandate of increasing the economic value of each Quebec worker so that it equals, somewhere in the middle of the next decade, that of the worker average Ontario. The indicator on which to base this comparison is not unanimous. The average salary ? GDP per capita? The purchasing power ?
The question is also fiscal: companies here declare their profits and pay their tax to the Quebec tax authorities. Foreign companies present in the province also pay tax here, but proportionally much less. However, it is difficult to think about reducing public assistance to employers in a context where the other provinces and North American states are doing the same thing.
This is probably why none of the political parties that have governed the province over the years wanted to revisit this issue. This will probably not be an electoral issue next October, predicts Éric Boyko. He says he has approached each of the provincial parties, and no one wants to touch this economic policy which, it must be said, has worked very well since it has indeed created an enormous number of jobs.
Recruitment without borders
The situation is such that Montréal International, whose mandate is to attract foreign investment to the metropolis, has in a way reversed its role by launching the TalentMontreal.com site last year. This site offers Montreal (and Quebec) employers tools to recruit abroad without worrying about visas, immigration, etc.
You don’t change a recipe that works, the saying goes. Montreal International would probably say the same thing. “Of course, we shouldn’t just be an economy of branches, but we can’t rely solely on Quebec companies either,” argues its president and general manager, Stéphane Paquet. Morgan Stanley and Ubisoft do business with local suppliers. Professionals from these companies then go into business. This cements the Quebec entrepreneurial ecosystem.
Does the recipe still need to be improved? That’s the billion dollar question. It’s a nice problem to be caught with an economic policy victim of its own success, one could argue. A policy that was bold when it first saw the light of day. And who, now that we are talking about full employment, has certainly achieved his goal.
What some are wondering is if it hasn’t exceeded it…