Turning Inclusive Innovation into Programs: Four Recommendations for the Federal Government

5 minute read

In a recent article with the Canadian International Council, we made the argument that while political support for “inclusive innovation” has become widespread, this has not been effectively translated into programs. When the policies in support of inclusive innovation collide with rigid program design, there is a clear tendency to use old tools to address new problems. A linear paradigm infused with the impetus for immediate action risks unintended consequences – or perhaps no change at all.

What is ultimately necessary is a paradigm shift in programming, tantamount to the flurry of activity that occurred in the late 1940s and into the 1960s during the development of the modern welfare state in Canada. The task ahead is significantly large to merit a similar effort, and perhaps the prerequisites exist for an expert panel or national research program on the subject. In the meantime, government can take meaningful actions towards reorganizing work, education, and social security in Canada in order to make progress towards adopting inclusive innovation in practice. Here are four recommendations on how to reflect inclusive innovation in government programming:

1) Continue to support skills development and retooling while deflating the overexpansion of the higher education sector.

Current incentives for human capital development and workforce retooling encourage increasing enrolment in the state-backed higher education sector with little view to quality, competing educational goods and the very real potential for rent-seeking behaviour by public tertiary institutions. Increasing enrolment and ever-greater credential issuance (and inflation) are often equated with labour market resilience, while the real relationship between these issues is tenuous at best. Rather than continuing to bolster funding for the public tertiary sector writ-large, government should lend support to legitimate alternatives to traditional players and revise the design of existing supports to address the embedded incentives towards over-expansion.

This may include widening eligibility for state-backed student loans to cover the non-traditional retooling that is increasingly appropriate for the 21st century (would Steve Job’s educational regime have been eligible for Canada Student Loans?). It should also strive to limit the ability of post-secondary institutions to claw back scholarship funding in response to federally awarded grants, a common practice which converts rewards for excellence into subsidies for universities. Finally, federal recruitment and hiring practices should loosen existing requirements for higher educational credentials wherever possible. Skills and competencies should be valued first and foremost; credentials can often easily be redefined from a mandatory requirement to an asset criterion.

2) ALMPs should include qualitative considerations of job creation

Active labour market policies (ALMPs) are a useful policy tool for supporting training and retraining for workers in a changing economic environment – but a highly skilled workforce facing only insecure employment is not a desirable outcome. ALMPs could be used to combat the proliferation of short-term contracts that perpetuate precarious employment while offering only limited eligibility to social security. For instance, new eligibility requirements to the Canada Job Grant Program could encourage the creation of employment that is adequately paid, provides access to quality benefits, and offers a reasonable degree of job security.

ALMPs will also need to strike a balance between supporting the development of generalized and specific skills. Current projections of the impacts of technology highlight that automation will increase the need for social or non-cognitive skills alongside demand for digital skills. The FutureSkills Centre could be charged with evaluating ALMPs in terms of whether they assist with a growth in stable employment opportunities – rather than measuring workers’ skill increases and employability in the short term only.

3) End bifurcated social support eligibility.

Canada’s social security system effectively has a two-track system of income support with an increasing gap between those eligible for EI benefits and those who are not. These distinctions were designed for an era of employment that holds little relevance for many in the present-day. The growth of temporary, insecure, and low-wage work has moved workers away from the more generous provisions of Employment Insurance and towards provincial welfare. Second, the extent to which taxes and transfers are redistributive in Canada has been declining since the 1980s and Canada redistributes less than its OECD peers. Given that technological disruption may further erode access to secure work, the current setup looks likely to continue to increase disparities between those in secure versus insecure work.

In order to take job quality seriously and provide adequate support to workers facing disruption, Canada’s Federal Government should address the complex task of creating one universal system of support for unemployed workers. Doing so will constitute a major restructuring and simplification of federal funding and would require untangling some of the layers and divisions between federal and provincial programs. It would also ensure that those who participate in the gig economy do not go without support when they are unable to find adequately paying work. Possible models include the UK and New Zealand’s models of universal entitlement, though we caution against setting payments at a rate so low that they trap people in poverty rather than providing a pathway to stable, well-remunerated work.

4) Programs must meaningfully distinguish between high growth start-ups and the increasingly entrepreneurial character of regular work.

The post-2008 economy is witness to two often conflated trends that are occurring in parallel; increasing entrepreneurial employment (as much as 45% of Canadians by 2020) and the greater prevalence of high-growth, high-value startups. Although these are very different phenomena, much of government programming does not distinguish them sufficiently, manifesting in programs designed to chase unicorns but that often end up supporting and underwriting all manner of entrepreneurship. This can produce an over-expansion of entrepreneurial supports which, while well intentioned, can serve to underwrite zombie firms.

This system of ill-fitting entrepreneurship supports needs to be shaken up. For one, there is likely a significant oversupply in the number of state-supported incubators and accelerators- as many as 140 as of 2016, or 35 such institutions for every Canadian unicorn- is likely more distortionary than visionary. Rather than administering complicated financial supports for innovation that often require third-parties to navigate, the federal government should strive to lower the administrative burden of entrepreneurship and micro-entrepreneurship in all sectors, not just those that are R&D intensive by traditional measures. This provides a benefit that will be accrued evenly across all social strata and will accrue ever greater dividends as the number of SMEs continues to grow.

Conclusions

Canada is at a critical juncture. How the various levels of government choose to migrate inclusive innovation policies into programs will determine whether Canada enjoys a robust and inclusive prosperity in the 21^st century. This urgency demands both immediate action and a steady hand guiding long-term experimentation, such as the universal basic income pilots taking place in Ontario. There will be no quick fix for the steady decline of the current paradigm, but continuous program-level attention on the emergence of the new paradigm will help to ensure Canada’s continuing economic competitiveness as well as a society built firmly on fairness.

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A version of this material appeared as a panel presentation at the 2018 Canadian Political Science Association (CPSA) conference in Regina and as a commentary piece with the Canadian International Council. A full-length paper is forthcoming under the title “Innovation and Social Security in the Age of Populism: An Evaluation of Inclusivity”.