Inclusive Innovation in Canada: Turning Policy into Programs?

We are facing intense disruption to the political and economic organization of society. The rate of technological progress is increasing as each new innovation feeds the next, compounding the rate of discovery and invention. Existing institutions, policies, and programs have to adapt quickly or risk obsolescence. Even more concerning, all this progress exists against a backdrop of a jobless economic recovery, increasing income inequality, and a general unease that this new industrial revolution will be marked by exclusion. Enter the concept of “inclusive innovation” – the notion that the rules and practices of the innovation economy can be nudged to be more inclusive and that in some areas, the state can step in to make life more just and equitable.

“Inclusive innovation” is an idea whose time has come in Canada. The Trudeau government campaigned to victory in 2015 with a platform that would support the “middle class” with signature policies seeking to reduce the economic burden on those most at risk of losing out from 21st century economic restructuring. Subsequent budgets have funded initiatives with an inclusive innovation flavour. Active labour market policies and supports for entrepreneurship have been a particular focus within the social policy domain. The arrangement of Deputy Minister committees provides another clear signal that there is a real commitment to making inclusive innovation a priority.

And why would it not? Many of Canada’s peer countries are being rocked by populist backlashes against inequality and exclusion that increasingly characterize the post-2008 economic order. The stars are aligned for inclusive innovation to take centre stage in Canadian public affairs. And yet there seem to be a few kinks in the policy pipeline. While it is likely that honest intentions power the inclusive innovation agenda (with the budgetary allocations to prove it) the ultimate translation of these intentions down through the capillaries of state instruments and into results, is another matter entirely.

The current policy agenda focuses primarily on increasing the supply of skilled workers and does not address the decline in job quality (particularly for young people) that has characterised Canada’s labour market [i] for the last 20 years. It seeks to address the highly disruptive conditions of the early 21st century through a largely linear application of the policy toolkit of yesteryear. Ultimately, “inclusive innovation” has not trickled down into policy as it should and government programing operates in essentially the same fashion as before. Our study highlights this trend in four main policy areas: active labour market policies, entrepreneurship policies, tertiary education policy, and employment security.

Active labour market policies

Active labour market policies (ALMPs) have been a significant focus of welfare states in the 21st century, as the constitute a core pillar of the social investment approach and a logical site for making innovation more inclusive. There is an abundance of new active labour market policy measures being introduced and the potential for many more to result from the focus on inclusive growth. The last two budgets have contained significant funding increases for federally- and provincially-led programs and have used existing programs like the Canada Summer Jobs Program to try to stimulate growth in jobs for underrepresented groups. The Federal Government is also building a FutureSkills Lab, which is tasked with coordinating training and education with market demands for skills, along with identifying best practice training interventions for displaced workers. However, these policies primarily focus on the supply-side of the workforce and only indirectly stimulate demand, nor do they address the growing availability of low-quality, temporary work.

Entrepreneurship

Supports to entrepreneurial activities abound, with entrepreneurship serving the dual function of improving economic resilience in an innovation-centric economy and also being a job-creator that pulls people into self-employment. And yet, there is sparse attention given to whether government policy supports for entrepreneurship are a meaningful or effective response to present socio-economic conditions. Uncareful promotion of entrepreneurship writ-large could represent a dangerous case of trying to march ahead of the parade; rates of entrepreneurship and self-employment are steadily increasing regardless. And the white-hot entrepreneurship that drives the innovation economy presumably does not need to be underwritten by the public purse.

Tertiary education

Tertiary education enrollment rates continue to increase with little regard for demographic drivers. Bolstering higher education is ostensibly an appropriate response to disruptive conditions since greater access to skills development and retraining programs would allow for more effective re-entry to the labour force and ultimately, for greater economic vibrancy. Yet again, misplaced support could easily have adverse effects, with perverse incentives promoting a tendency to idleness through voluntary labour market exits without meaningfully increasing employment prospects upon degree completion. Tertiary education cannot be allowed to develop into a safe haven from disruption – it too must respond to changing skills demands.

Job security and social security

Recent budgets are notably silent on questions of improving job security and income support for people out of work. The number of people eligible for EI has been declining, as job growth increasingly occurs in temporary employment and companies contract out more roles. The different levels of income support provided and different programs of support for which people are eligible is bifurcated and can perpetuate existing employment inequalities. Workers in traditional industries with more consistent earnings and employment histories have access to decent levels of support, while workers in temporary or inconsistent employment – largely in the service industries – who tend to be women, either younger or older workers, and immigrants are often ineligible and unsupported.

Adjusting to the New Industrial Revolution

During the initial industrial revolution in England, there was little understanding of the magnitude of the changes that were underway and no universally accepted approach for how they should best be addressed. Then, as today, many were aware of being amidst unprecedented potential and change in the political system. Yet, when, how and in what manner these changes would occur were a mystery, as were the actions for how to address disruptive change and accommodate the changing world in the interim.

Aware that the 20th century would be marked by factories more than farms, but lacking a deep understanding of the steps in between or how to bring them about, governments effectively created factories themselves where displaced agricultural workers would find “busy-work” in exchange for reliable (but megre) income supports. While these were intended as temporary arrangements, they quickly became routine. Many found workhouses preferable to the uncertainty of disruption, and temporary workhouses filled up with those seeking to wait out the storm.

Without close attention and a desperately overdue paradigmatic shift in programing to match with the present conditions, well-intentioned policy-makers risk stumbling into a similar situation. The Inclusive Innovation Agenda makes some gestures towards remedying labour market exclusions but lacks the paradigm shift that might reverse the trends of widening inequality in Canada. The efforts of the inclusive innovation approach do not go far enough to consider how a timely social security system should provide variable types of support to workers with widely differing circumstances, needs and prospects of re-employment following disruption.

“Inclusive innovation” will not be a successful response to disruptive conditions if it only wields the programing and policy tools of an age past. Absent a change in paradigm, state programing will continue to evolve from the same playbook as before and with the tools of a political-economic age long-passed; a fool’s errand that will propagate unintended consequences.

[i] See chapter chapter 3, “Drivers of Increasing Market Income Inequality: Structural Change and Policy” by David A Green and James Townsend, and “chapter 16, “Labour Market Income Transfers and Redistribution: National Themes and Provincial Variations” by Rodney Haddow in particular.

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

Mark Robbins is senior researcher at the Ottawa-based Institute on Governance where his work principally addresses innovation policy, disruptive technologies and digital governance.

Alix Jansen is a PhD student at the University of Toronto where her research focuses on state social policy responses to the impacts of technological change.