Then, of course, COVID happened. The day we announced to our staff that I would be the new CEO of the Canadian Council for Aboriginal Business (CCAB) was also the last day we all worked in the office together. On March 16, 2020 we began working remotely to help stop the spread of a new virus that had begun to sweep across the globe. Since then, I have seen businesses and communities pull together in formidable ways, but there’s no denying that the pandemic has been particularly hard on Indigenous businesses.

In May, we launched a survey in partnership with the Indigenous Business COVID-19 Response Taskforce to understand the impact of the pandemic on Indigenous businesses. The results were deeply worrying. Just under half (44%) of Indigenous businesses indicated that, without support, they were likely to fail after three to six months, while 10% of businesses predicted operations could not last more than a month without support; 2% said their businesses had already closed.

There were also some stark differences between demographic groups:

• 61% of women-owned Indigenous businesses reported a “very negative” impact compared to 53% of men-owned businesses.

• 38% of Inuit-owned businesses experienced a revenue drop of 50% or more, compared to 27% of Métis and 31% of First Nations–owned businesses.

While the federal government was quick to announce support for Canadian businesses last spring, Indigenous businesses were initially ineligible for some programs because of their unique business or tax structures. There was also no initial support for the more than half of Indigenous businesses that don’t use traditional financial institutions to access financing, in particular those owners who live on-reserve and lack the collateral typically used to get a loan. The pandemic has only highlighted that Indigenous businesses face distinct barriers. Limited access to financing, unreliable internet access, lack of adequate infrastructure, and limited personal net worth are some of the key issues that have been exacerbated over the past year. Economic reconciliation means addressing these barriers.

Understanding the unique ways that Indigenous business, and as a result the Indigenous economy, operates – much of which has been out of necessity – is a key element to ensuring equitable access to resources. And if Indigenous-owned businesses are to thrive, they’ll need more than just better access to loans, financing and COVID-response programs. In 2019, the Government of Canada committed to having “at least 5% of federal contracts awarded to businesses managed and led by Indigenous Peoples.” Though that figure has been as low as 0.32% some years, CCAB research demonstrates that Indigenous businesses in Canada could meet up to 24% of the federal government’s current spend.

Despite the barriers that Indigenous people have faced since contact, they have persisted. That determination was demonstrated last spring, when many Indigenous businesses pivoted their operations to supply personal protective equipment to help meet increased demand. Our survey identified 84 businesses providing PPE and 57 that could quickly retool to do so. However, there was little evidence of the federal government meeting its 5% target on PPE contracts.

Through our Aboriginal Procurement Marketplace, we already connect 72 Procurement Champions – Canadian companies that have committed to Indigenous procurement – with hundreds of businesses certified to be 51% or more owned and controlled by Indigenous people, through the Certified Aboriginal Business program. By increasing Indigenous procurement, corporate Canada can be part of moving the dial on economic reconciliation – a mutually beneficial opportunity that supports the Indigenous economy without affecting a corporation’s bottom line.

Initial results of a second survey to see how Indigenous businesses are faring nearly a year into the pandemic demonstrate that although things are more optimistic for business owners, they still report negative impacts, particularly on revenues and staff. They continue to face challenges accessing government support. Despite the odds, Indigenous businesses like media company Kejic Productions, cosmetic start-up Cheekbone Beauty and skincare company Satya Organic have seen impressive growth this past year. As economies recover from the pandemic, we want to build on that growth.

As our 2020 COVID survey showed, recovery will be a particularly volatile time for Indigenous businesses as they navigate additional barriers, but Indigenous businesses have demonstrated capacity, determination and innovative thinking in the face of the pandemic. It’s more important than ever that as we reopen and rebuild, we ensure that we build an inclusive, more equitable economy that benefits us all.

Tabatha Bull is president & CEO of the Canadian Council for Aboriginal Business.

This article is part of our Indigenous Economy Rising cover series from Corporate Knights Spring Issue, out April 21, 2021.

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The financial crisis was only 12 years ago, but it seems almost everything has changed since.

At that time, policy was myopically concerned with two things. First, restoring liquidity in financial markets; central banks took unprecedented steps to do that. Second, bolstering aggregate demand through very large fiscal stimulus packages.

The crisis was devastating. But it and the policy responses did not seem all that complex. The fiscal stimulus was mostly of a conventional form. Lots of shovels-in-the-ground sort of thing. And it was almost all focused on the near-term. Indeed, Canada, like almost all other countries, dramatically swung to austerity just 24 months into the crisis aftermath, when the economy was still far from recovered.

Governments should, and appear to, have a lot more on their minds today.

Yes, there is some need to bolster aggregate demand for goods and services. But the pandemic has also hit aggregate supply hard, and that requires different approaches.

The focus is much longer-term now. There is a realization, at least in Canada, that we are slipping into a path of much lower potential growth, jeopardizing the well-being and the sustainability of the country’s finances as well as their ability to deliver needed public services.

There is also a realization that the historical sources of growth for Canada may not be there in the future. In 2008, Canada was years into a resource boom. It was dented by the crisis, but prices became strong again until 2014. Now we are in the sixth year of a depressed resource sector, and prospects for the future do not look so bright. Talk of peak oil supply has been replaced in this brief period by talk of peak oil demand. Canada’s powerful manufacturing sector had started to shrink by 2008, and it has continued on that downward trend, taking well-paying jobs with benefits with it.

Since the last recession, talk of peak oil supply has been replaced by talk of peak oil demand.

Even the environmental movement has become more sophisticated since 2008. An almost singular focus on greenhouse gas emissions has evolved into broader considerations of well-being, or the quality of life. And tangible evidence of the effects of climate change has heightened concern. There is less dogma around the idea that you can have growth or the environment but not both. Many now realize that with smart strategy both can be enjoyed.

These changes in context require a new perspective. We must find new sources of economic growth in Canada that promote or at least are compatible with environmental objectives. If this perspective can be put in the context of recovery from COVID-19, so much the better. But it goes much further than that. It is a perspective to deliver longer-term benefits to Canadians.

With our close economic relationship and physical proximity to the United States, a dark cloud of fatalism has hung over Canada the past four years, with many convinced that attempts at clean growth were futile given the apparent lack of interest in all things environment at the White House, even though actual developments were not as unfavourable as the rhetoric.

But now the clouds have been lifted, and our major trading partners in both the United States and Europe have adopted clean growth as their North Star.

Canada has all the ingredients to prosper in the clean economy, but it will take a lot more tangible action on the part of government and business if we are going to seize the opportunity.

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But as the COVID-19 pandemic brought the global economy to a grinding halt, locking down working parents and idling activity in many sectors, it became clear that if we don’t put caring back into the economy, we can’t achieve economic recovery. The pandemic has revealed economic fault lines that must be addressed. We can’t “get back to normal”; we need to create a better normal. And we certainly won’t be able to build back better without making the caring economy a critical component of federal recovery plans.

He-cessions and she-coveries

In past recessions, downturns would most deeply affect goods-producing industries, which have historically been dominated by men. Canadian economist Armine Yalnizyan named these “he-cessions” that were then followed by “she-coveries” as women increased their participation in paid work to support household incomes. This kind of “within-family insurance” meant women provided the stopgap in hard times.

The 2020 economic crisis has taken a different path. It’s become clear that the traditional “family insurance” model doesn’t work in a pandemic recession. Service sectors such as retail, personal services, childcare and hospitality were among the hardest hit – sectors staffed predominantly by women. In Canada, 56% of women workers are concentrated in these occupations, compared to 17% of men. This “she-cession” has meant that in March 2020, 63% of job losses fell to women, and as the economy reopens, women’s jobs are coming back at less than half the rate of men’s.

Those job losses have been exacerbated by closed schools and shuttered daycare centres. Because of gendered norms about who is responsible for children, many women have had to switch from full-time to part-time work or leave jobs entirely to care for or home-school children of all ages.

In August, UN chief António Guterres cautioned that the pandemic may undo three decades of progress toward gender equality in economic opportunity. “Without a [concerted] response,” he noted, “we risk losing a generation or more of gains.”

Writing caring out of the economy

Feminist economists have for years pointed out that production (in the market economy for goods and services) and reproduction (in starting and maintaining families) are intimately intertwined. Unpaid work caring for children, elders and households enables the economic activities that get counted by measurements such as gross domestic product (GDP). However, in traditional economic thought and practice, women’s work at home was seen as altruistic and having no “value” since it was not sold on the market the way male activities were. Though if we were to value women’s unpaid work at home, it would be something like US$10.8 trillion globally each year.

Separating care work done by women from the image of the economy has been so effective that today in implicit association tests – meant to measure our preconscious cognitive biases – more than 75% of people (of all genders) associate women with family and men with careers.

Even in Canada, which professes a commitment to gender equality, women still perform nearly two times more unpaid work for households than men. That gender gap has been exacerbated by the pandemic. Though many men took on more care work during the initial lockdowns, we are learning that – as the economy reopens – their contributions are returning to pre-COVID levels, but women’s remain elevated. (And, by the way, this analysis excludes non-binary and transgender people: another problematic aspect of traditional economic models is to reinforce the gender binary in our society.)

At the same time, women are putting their bodies on the line to make sure we get the food, medicine and care we need. Women – especially women of colour – make up the majority of workers in the nursing and personal-care sectors that have been essential for meeting the COVID-19 health crisis, as well as the majority of staff in grocery stores and other businesses deemed essential.

Further, a wave of bankruptcies has hit the childcare industry, with many daycare centres unable to weather the lockdowns or recoup the extra costs of social distancing, cleaning and disinfecting. Surviving centres will have reduced spots. These closures will have two impacts on women’s employment: since daycare centres employ predominantly women, there will be fewer jobs, and since there will be fewer spaces for children, more women will need to leave work to care for their own families. In the U.S., Bureau of Labor Statistics data show that in September alone, 865,000 women dropped out of the workforce – four times the number of men.

There will be no “she-covery” from this recession. Instead, building back will require aggressive investments in the care economy.

Investing in care pays dividends

Often in recessions, government spending has focused on major infrastructure projects to get the economy going again. After the Great Depression, Franklin D. Roosevelt’s New Deal saw the construction of dams, power stations, roads, bridges and power lines. The extraordinary success of that program has imprinted in our minds that investing in physical infrastructure is the way out. But in 2020, we need a different kind of infrastructure investment: investment in social infrastructure, primarily in the care economy.

In September’s throne speech, the Trudeau government said it recognized the urgency of the challenge, noting that “Canada cannot succeed if half of the population is held back.” The government pledged to make “a significant, long-term, sustained investment to create a Canada-wide early-learning and childcare system.” No specifics were shared, but if a federal investment is to be meaningful, it must bring public spending on childcare up to at least 1% of GDP, which is still below levels that countries like Sweden or France invest but substantially more than is invested today. It should also come with affordable prices for parents and a living wage and benefits for the workers.

One of the arguments against investing in childcare and eldercare is that it’s too expensive. But this frames the costs as an expense from today’s budget rather than an investment in tomorrow’s prosperity. The U.K. Women’s Budget Group recently analyzed the returns that come from investing 1% of GDP in childcare versus in construction (construction jobs being those typically targeted in infrastructure investing for economic recovery). They found that the childcare investment would create 2.7 times as many jobs as a similar investment in construction, more than a third of which would be in industries outside of childcare. That’s because the investment leads to direct employment in the sector as well as indirect employment in sectors that support childcare centres, including construction, in addition to jobs generated in the local economy as a result of employed workers buying more goods and services.

Of note is that the number of jobs created for men is almost the same whether you invest in childcare or construction, but the number of jobs created for women is almost four times higher in the childcare scenario (assuming the mix of women and men in the sectors doesn’t change).

Of course, investing in childcare is not just about creating jobs in the short-term but also about providing safe environments for effective early-childhood learning. All the evidence suggests that higher-quality learning in preschool leads to better learning throughout the school years, reduced needs for special education, fewer high school dropouts and juvenile arrests, and higher wealth and lower need for welfare assistance in adulthood.

All to say, spending on childcare is an investment in infrastructure, not a short-term expense: infrastructure because the benefits extend beyond direct uses to support the broader community and an investment because it creates benefits that extend well into the future, improving productivity and preventing greater need.

On top of that, research suggests that government investment in childcare pays for itself quickly. In Canada, the province of Quebec implemented a low-fee childcare program accessible to all residents. The investment led to a 1.8% increase in total employment (by creating jobs and also by freeing up women to work in paid employment). For every $100 spent by the government, the province experienced returns of $104 and the federal government, $143.

A caring economy is a green economy

Devaluing caring has also had devastating effects on the environment. Caring for our planet, much as caring for our children and elders, has been framed as an expense that we can’t afford when financial returns are at stake. Since caring has been relegated to the women’s realm, it makes sense that there is a gender gap in environmental views, with women being more concerned about climate change and other forms of environmental degradation.

It’s also true that climate change has a disproportionate impact on women around the world. Like COVID-19, climate change exacerbates existing social and economic inequalities. Climate shocks such as water shortages, heat waves and other extreme weather have increased the prevalence of gender-based violence. As families become more economically insecure, girls are also more likely to be pulled from school or forced to marry early. These impacts are taking place in the global South as well as in many marginalized communities in developing countries.

But many of the proposed green recovery plans still put construction work (such as installing solar panels or wind turbines) at the forefront. These initiatives are most assuredly needed, but it’s important to keep in mind that jobs in eldercare or childcare centres are some of the greenest out there. Care economy jobs – be they in healthcare, childcare, teaching or social services – are inherently low-carbon.

Just as with care work at home, caring for the planet has been framed as in conflict with “real” economic value as measured by our GDP. Ultimately, creating a caring economy redirects our attention, instead, to the value that comes from assuring equal opportunities for people of all genders, drinking clean water, providing good jobs with livable wages, avoiding devastating wildfires, investing in our children’s development, breathing clean air and saving our homes from flooding.

What is now clear is that a thriving economic recovery can be achieved only with a caring economy at its core.

Sarah Kaplan is distinguished professor and director of the Institute for Gender and the Economy at the University of Toronto’s Rotman School of Management. She is the author of The 360º Corporation: From Stakeholder Trade-offs to Transformation.

How to pay for the caring economy 

By CK STAFF 

In 2017, the International Monetary Fund estimated that Canada’s labour force could grow by more than half a million – boosting GDP by 4% in the medium-term – if women matched men in workforce participation, and much of that participation gap could be reduced through better childcare options. 

A national childcare program built on lessons from Quebec would require additional federal investment of $80 billion over the next 10 years, representing 0.35% of GDP (assuming 50-50 cost-sharing with provinces and territories) annually. The cost would be offset by economic growth (2.4% higher in the medium-term) created by reducing the gender gap in workforce participation. Federal revenues would increase by 0.36% of GDP (using the 15% federal revenue ratio to GDP), if we base figures on an IMF study extrapolating from the Quebec experience.

Securing dignified eldercare as an element of universal healthcare almost certainly requires a national long-term-care insurance program, with a strong community-based and homecare component, according to the National Institute on Ageing. Setting this up will likely require federal contributions in the order of an additional quarter of 1% of GDP, assuming a matching contribution from provinces and territories. This kind of money would help bring the provinces to the table to hammer out a long-term-care insurance program that could fit within the CPP/CDPQ structures. Together, this would raise Canada’s spending on publicly funded long-term care from 1.3% of GDP to 1.8%, in line with our OECD peers, which would improve and extend eldercare while taking some of the load off the 35% of Canadians who balance paid work with unpaid caregiving.

The federal contribution would be offset by higher levels of GDP (1% in the medium-term) and a reduction in health transfers based on cost savings (0.12% of GDP) resulting from hospital beds being freed up through increased long-term-care spaces and in-home-care support services, which tend to be 80% more cost-effective.

If we dovetail investments in the caring economy with an annual 1% of GDP federal investment into clean-growth areas that align with Canada’s assets, this country could have a thriving economic recovery that readies us for a resilient low-carbon future. This could be financed by low-cost, long-dated sovereign bonds (issued now and put into earmarked accounts to lock in low interest rates), similar to what the EU is doing to pay for its economic recovery plans. Corporate Knights economists estimate this green-recovery investment would raise Canada’s 2030 GDP levels between 5 and 10%. At the mid-range, doing so would increase federal tax revenues by 1.1% of GDP, enabling us to manage our sovereign debt loads and sustain a clean and caring economy over the coming decades. Investing in a caring and green recovery will expand, mobilize and redeploy Canada’s productive capacity, enabling us to pay off the sovereign debt and sustain a clean and caring economy over the coming decades.

 

Building Back Better with a Clean and Caring Economy (2021–2030 annualized)
Program	Federal Government Cost (% GDP)	GDP Boost %	Federal Government Revenue Boost %/GDP (5)	Fiscally Sustainable
Childcare	0.35%	2.4%	0.36%	✓
Eldercare	0.25%	1%	0.15%	✓
Hospital Beds	-0.12%*	–
Clean Economy	1.0%	7%	1.1%	✓

Sources: Corporate Knights estimate based on Building Back Better Synthesis Report, Canadian Institute for Health Information, Caregiving and Care Receiving by Statistics Canada, Conference Board, Finance Canada, IMF, National Institute on Ageing, RBC Economics, Scotiabank Economics

*Reduction in hospital beds used by elders who are better served in nursing homes or home care will enable trimming of future health transfers. 

 

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Given what the pandemic has revealed about our country’s capacity to respond to external shocks, concern for Canadians’ long-term well-being should be on everyone’s mind these days. We can’t be certain what the next shock will be, but we know it is just a matter of time before one arrives. Canada badly needs to increase its resilience so our governments are not again forced to shutter businesses and print money to see us through.

A blinkered focus on kick-starting GDP growth would be far from adequate for the recovery, even if getting people back to work and regular paycheques is an obvious imperative. GDP-centric thinking has dominated the minds of governments for far too long. Policies aimed at boosting economic growth in the short-term have left the economy more fragile to external shocks than many imagined. To name one, the low-interest rate policies adopted following the dot.com bust left too many households buried in debt they could barely manage before the pandemic. Many families now face the real threat of bankruptcy. Public debt has also ballooned to dangerously high levels due to the government’s efforts to keep consumer spending alive during the pandemic. Though some argue concern about this massive new debt load should be rejected, there’s no avoiding the fact that the bill will eventually have to be paid.

Whether a concern or not, it seems clear that Canada’s recovery plan will lead to more public spending and even higher levels of debt (assuming there is no fall election and potential change in government). The question is what this money should be spent on. Spending only to boost short-term GDP growth would exacerbate Canada’s economic, social and environmental fragility rather than building the resilience we need. Spending to invest in Canada’s social, human, natural, produced and financial assets, on the other hand, would help create the basis for sustainable well-being. A recovery plan focused on investments in Canada’s comprehensive wealth portfolio would do just this.

A plan focused on boosting comprehensive wealth would, as the name implies, lead to a comprehensive assessment of policies. Since all assets play key roles in well-being, none can be ignored. This would be a great advantage over a GDP focus, where growing market income is all that matters, even if it comes at the expense of environmental or social well-being.

A focus on comprehensive wealth would also lead naturally to a concern for the future, since assets are by their nature long-lived. We don’t invest in assets only because they benefit us in the here and now. We invest in them because we know they will be around for a long time, well beyond our lifetimes in many cases. This leads naturally to discussions about future needs – even distant ones – and how best to meet them. Again, the contrast with GDP – where what happens in the next quarter or two is the focus of decision makers’ attention – is striking.

There are, of course, many policies the government might pursue in the interest of expanding Canada’s comprehensive wealth.

Investing heavily in human capital – the skills and knowledge of the workforce and the largest component of comprehensive wealth in all industrialized countries – during the recovery is the quintessential “no-brainer.” Hiring new teachers, building new educational facilities and upgrading old ones, and experimenting with new forms of teaching are all highly desirable from a comprehensive wealth perspective.

Also desirable would be a significant expansion of immigration to double or even triple Canada’s population in the coming years. Former prime minister Brian Mulroney, among others, has recently advocated for just this. There is no faster way to increase human capital than a well-executed immigration policy attracting the “best and brightest.” A corollary to this is reform or elimination of barriers (racial, gender and administrative) that prevent too many Canadian workers from contributing to their fullest potential. Relaxing the rules around recognition of foreign academic credentials would be a good place to start.

From a comprehensive wealth perspective, urgent action to protect Canada’s natural capital would also be a clear priority. The need to limit the greenhouse gas emissions that drive climate change would simply not be a matter for debate. A stable and predictable climate is critical to well-being, and the world has badly depleted this asset. Investing massively in renewable energy (not just solar and wind, but also geothermal and hydro) makes great sense: not only would it address the urgent need to reduce emissions, but it could also quickly boost employment.

A comprehensive wealth perspective would also call for a rethink of the way we manage the revenues from natural resource extraction, with far more of them going into the kind of wealth fund former Alberta premier Peter Lougheed imagined for his province in the 1970s, but that never came close to matching his vision.

A comprehensive wealth perspective would support diversification of Canada’s produced capital portfolio, such as buildings and machinery. Far too much of our produced assets are tied up in just two sectors: oil and gas extraction and housing. Investment in other areas has lagged. To correct this, many are calling for major investments in clean technology – such as electric vehicles and improved electricity grids – as a focus for the recovery. The pandemic has shown the danger inherent in relying on global supply chains when international shocks hit. This has led to calls for to policies to repatriate manufacturing capacity, which would rebuild produced capital stocks.

Finally, there is the question of how to invest in social capital – the value of our civic engagement and community trust. The question is difficult because social capital itself is tricky to define and study. Good progress is being made in direction, however – not least by prominent Canadian researchers such as John Helliwell at the University of British Columbia and Christopher Barrington-Leigh at McGill.

Certainly, we cannot simply ignore social capital since it is the “glue” that binds society together through trust, cooperativeness, and willingness to engage. Without strong social capital we will not only make much poorer use of the remainder of our comprehensive wealth portfolio, we will see a breakdown in our society when the next shock hits.

Building trust, particularly in institutions, is one area where efforts would be welcome. Among others, policies to increase the transparency of government decision-making are essential to building trust. So, too, are policies to combat the spread of false information through social media and other online platforms.

All of the above policies would be uncontroversial from a comprehensive wealth perspective, but they would not necessarily be so from the perspective of maximizing short-term GDP growth. Hiring more teachers is simply a cost – rather than an investment – from a GDP perspective. Further damaging the climate is fine for GDP if it means more people are buying new gasoline-powered cars and trucks. Building more oil and gas pipelines certainly boosts short-term GDP even if it decreases the diversity of our produced capital portfolio. Low interest rates encouraging households to spend are a boon to economic growth today, but they do little to increase families’ resilience against hard times if they lead to mountains of private debt.

Canada cannot afford to consider its recovery plan with GDP as its primary lens. To do so would condemn our country to more short-termism when building long-term resilience is what we need. Our recovery plan must consider the investments needed to shore up the country’s comprehensive wealth portfolio. It is time to stop sacrificing our collective future on the altar of short-term growth.

This article first appeared on Policy Options and is republished here under a Creative Commons license.

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