Canada’s innovation performance has been lacklustre for decades, but the country’s technology sector offers some cause for optimism. Despite persistent underinvestment in research and development by businesses and low levels of technology adoption across the economy generally, a plucky band of tech firms is carving out new paths to growth, employment and prosperity. A recent report from the commercial real estate firm, CBRE, ranks Toronto third among North America’s top technology markets, while Vancouver, Montreal and Ottawa make the top 20.
At the same time, the Canada’s technology sector workforce does not fully reflect the country’s diversity. Opportunities to participate in, benefit from and help manage the risks generated by the growing tech sector are unevenly distributed. Women, Indigenous peoples and some racialized minorities are less likely to be employed and empowered in the tech sector and face substantial wage gaps relative to men, non-Indigenous and non-visible minority workers. These exclusions are troubling because employment and wages are key mechanisms for sharing the benefits of growth and prosperity, and because diversity in firm-level decision making is essential both to innovation and to identifying and managing the broader social, psychological and physical risks posed by new and emerging technologies.
A Thriving Tech Economy
Canada’s technology sector is thriving. Canadian tech stars are often championed by politicians and profiled by media. Shopify has been recognized as a global e-commerce success story; artificial intelligence firms are securing talent and financing at unprecedented rates, positioning themselves for future success; and BlackBerry has managed to reinvent itself as a leader in security software and systems for the Internet of Things.
The tech sector as a whole is a major and growing source of employment and prosperity. The Brookfield Institute estimates that Canada’s tech sector is made up of 71,000 firms and employs 864,000 people — about 5.6 percent of total employment in Canada. In 2015, the sector generated over $117 billion in GDP, or about 7.1 percent of Canada’s total GDP. On average, tech workers are much more likely to hold a university degree (51 percent) than workers in Canada’s labour force as a whole (29 percent). And while the average annual wage for workers in the Canadian economy in 2015 was $47,970, for tech workers it was $66,950.
The Information and Communications Technology Council estimates that, in 2018, the information and communications technology (ICT) sector — a subset of the larger tech sector — grew by 3.6 percent (versus 2 percent for the Canadian economy as a whole). In fact, ICT sector growth has outpaced growth in the Canadian economy for the past five years. Moreover, both domestic and foreign investors are flocking to Canadian tech firms. Venture capital investment activity climbed from $2.1 billion in 2014 to $3.7 billion in 2018 — with ICT firms accounting for more than two-thirds of investment, life sciences for 17 percent and clean tech for seven percent. Canada’s technology sector will play a major role in future economic growth and prosperity.
Inclusion and Exclusion in Canada’s Tech Sector
Despite its size and steady growth, Canada’s technology sector has a disappointing track record on workforce inclusion. Research by the Brookfield Institute reveals substantial gaps in terms of who works in, who benefits from and who makes decisions in the tech sector.
Women are almost four times less likely to be employed in the sector than men, and earn on average $7,300 less than men in technology jobs, even though they are more likely to have a university education than men in tech. Moreover, a MaRS survey of Toronto’s tech workforce (reported by Brookfield) reveals that women are less likely than men to say that they are comfortable voicing an opinion, encouraged to be innovative and part of the decision-making process at work.
Canada’s tech sector is more diverse than other sectors. Overall, 7.6 percent of all visible minority workers are employed in tech occupations, versus 4.4 percent of non-visible minority workers; those who identify as Filipino or Black have slightly lower participation rates, at 3.4 and 4.27 percent, respectively. But minority tech workers face substantial wage gaps. On average, tech workers who identify as minorities earn $3,100 less than non-visible minority tech workers. Those who identify as Korean earn $11,300 less than non-visible minority tech workers. Those who identify as Black earn $16,400 less. Participation and pay gaps for minority women in the sector are even wider. And many minority tech workers — in particular, those who identify as Black — say that they are less comfortable voicing an opinion and less likely to be part of decision making.
Among Indigenous peoples, participation in tech occupations is 1.6 percent for First Nations, 1.3 percent for Inuit and 2.3 percent for Métis — versus 5.2 per cent for non-Indigenous workers. And while Indigenous tech workers earn more than Indigenous workers in non-tech occupations, they face substantial wage gaps relative to non-Indigenous tech workers — with gaps ranging from $3,400 for Métis tech workers to $30,100 for Inuit tech workers.
Why Inclusion Matters
Although Canada’s tech workers earn more than non-tech workers — and therefore enjoy some of the benefits of the sector’s prosperity — current levels of exclusion, disempowerment and inequality within the sector undermine both fairness and innovation performance.
The good news is that gender and ethnic diversity can improve firm performance by ensuring that there is a better mix of ideas and perspectives from which to draw. Diverse teams can enhance deliberation about the effects of technology on individuals, society and the economy by facilitating more open-mindedness, more deliberate consideration of possible outcomes and more effective problem solving. Indeed, economists are increasingly recognizing that equality may be “an important ingredient in promoting and sustaining growth” rather than a hindrance to efficiency and growth, as has long been thought to be the case. In short, diverse, empowered and respected teams can improve innovation, growth and technology governance.
If Canada aspires to be an inclusive innovation economy, enthusiasm for technology-based innovation and growth needs to be matched by a more equitable distribution of opportunities to participate in, benefit from and make decisions about technological innovation. Having people with diverse backgrounds and experiences in the tech sector can help firms recognize when the technologies they are developing might pose risks or inflict harm on different communities. This is especially true of firms building products and services on the basis of large, but not always representative or accurate, datasets. Biases that are hidden to some, are obvious to others, and firms improve their chances of spotting and addressing biases and discriminating systems when they employ and empower diverse teams.
Canada’s tech sector could be a strong engine for innovation and inclusive growth, but until it better reflects, respects and empowers a diverse workforce, it risks reinforcing inequality, hindering innovation and contributing to biased technology governance.