May 2009

HR Outlook

Labour mobility and innovation clusters

By J.P. Chabot

The Canadian mining industry is facing significant challenges. As we sit tight to weather the storm, it’s worth considering if this cloud actually has a silver lining, albeit one that’s hard to see.  The industry has faced challenges in the past, for example the recessions of the 1990s and the early 2000s, and managed to resurface with renewed vigour. According to the Centre for the Study of Living Standards, the significant restructuring that took place, through the increased use of technology, resulted in increased productivity and a higher capital/labour ratio. During the 1989 to 2000 period, the gold mining sector increased its labour productivity by an average annual rate of 5.7 per cent and the coal mining sector, on average, by 7.4 per cent.

A second outcome of the restructuring and higher capital/labour ratio was a significant increase in the demand for highly skilled people capable of using and manipulating the new technologies and processes. According to a Statistics Canada report entitled The Changing Profile of Canada’s Workforce, high- skilled jobs led the growth in employment in the 1990s.

The mining industry will likely undergo a similar restructuring process as a result of the current recession. This may result in a greater need for a highly skilled and mobile workforce and for clusters of innovation. Innovation clusters focus on developing and researching the means to facilitate the implementation of technologies in these restructured workplaces. An example of an innovation cluster is the Ontario Mineral Industry Cluster Council, which gathers its strength from strong education and training networks, dynamic research and development supports, engaged and collaborative industry players, and its infrastructure of knowledge. If there are to be increased linkages between research centres and exploration sites and/or producing mines, then the mobility of highly skilled workers will require continued attention. The importance of labour mobility can be evidenced by the extent of fly-in/fly-out work arrangements used by the mining industry in Canada.

The exploitation of market efficiencies requires the free flow of business investment and access to the factors of production: resources, capital and labour. The sustainability of the Canadian mining industry has a significant impact on the global mobility of these factors. The TSX and TSX-Venture exchanges are arguably the most mining- friendly exchanges of open market economies. According to the Canadian Association of Mining Equipment and Services for Export, Canadian mining equipment and service companies are major global exporters and provide highly specialized services and technology to both the domestic and international markets. In Canada, there is usually a high degree of access to the second factor of production — capital. As a result, ensuring the free flow of labour will continue to be a significant challenge for industry, especially over the long run.

According to the Fraser Institute’s Survey of Mining Companies 2008/2009, seven of the top ten mining jurisdictions around the world are in Canada. Although the survey considers the policy attractiveness of mining jurisdictions in terms of their ability to attract and generate free flows of business investment, it does not address the issue of labour mobility. By August 2009, recent government efforts to develop a Labour Mobility Agreement will have borne fruit, and provinces and territories will be given until June 2010 to enact legislation that increases the mobility of workers in designated occupations. In turn, MiHR is facilitating efforts at increasing labour mobility for non-designated occupations through the work of the Canadian Mining Credentials Program. In a global and interconnected market economy, barriers to the mobility of human resources impede the development of clusters of innovation, which are necessary to sustain Canada’s leadership role in mining.

Furthermore, according to Human Resources and Skills Development Canada, international mobility will continue to play an important role in ensuring Canada’s economic competitiveness. As a major player in the global mining industry, Canada will need to attract and facilitate the free flow of highly skilled workers across its international and domestic borders to preserve this position. The current downturn is a time for industry to invest in human resources, research and innovation so that the technologies, processes and skills are available to the industry when the investment climate improves.

Jean Pierre Chabot is manager of research and policy analysis at MiHR, responsible for the analysis of HR policy options and constraints that impact the mining industry in Canada. Formerly the project coordinator for a number of Latin American projects, he brings an international perspective to issues facing the Canadian mining industry.

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