Canada & International Comparison
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Canada |
Other Countries |
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Ranks #1 as cost leader with overall index of 91.0 |
Australia ranks #2 with overall cost index of 91.5 |
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Canadian dollar would have to appreciate by slightly more than 20% against US dollar to place US in 'breakeven' position relative to Canada in terms of total business costs |
US experienced greatest cost improvement since 2002 due to depreciation of US dollar against all major world currencies over the last two years |
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Cost for Canadian cities generally 4-15% lower than for their regional US counterparts |
UK ranks third (97.6%), with overall costs lower than all other European countries and the US |
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Salary and wage costs in Canada rank second after Italy |
The UK and France rank third and fourth respectively for lowest salary and wage costs |
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Canada offers the lowest electricity costs among all countries |
The UK and Australia offer the lowest effective income tax rates for the widest range of operations |
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Cost for statutory holidays and other benefits (as a percentage of payroll) rank lowest in Canada
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Consistent with previous editions of this study, Japan maintains its position as most expensive country to do business in, with costs almost 24 percent greater than the US |
Chart courtesy of KPMG
Employment5
2003 ended with an unemployment rate of 7.6%, which economists predict will fall to 7.4% in 2004. It should also be noted that the average weekly salary was $699.19 in December 2003, representing an increase of 1.6% over the same period in 2002.
The expected world recovery and the sustained rate of Canadian household spending should help maintain Canada’s economic growth. The OECD predicts that the GDP will rise by 2.8% in 2004 and 3.2% in 2005.
OECD’s Forecasts and Variation in the GDP by country6
Country/Year showing percentage of variation of the GDP at market value (real and forecasted)
|
Country/
Year |
2000 |
2001 |
2002 |
2003 |
2004 |
2005 |
|
Canada |
4.5 |
1.9 |
3.3 |
1.8 |
2.8 |
3.2 |
|
United States |
3.8 |
0.3 |
2.4 |
2.9 |
4.2 |
3.8 |
|
Euro area |
N/A |
1.7 |
0.9 |
0.5 |
1.8 |
2.5 |
Human resources management still increasingly important for businesses
According to a Hewitt Associates study, 76% of HR managers in Canada will be subject to pressure to reduce labour costs.
7 Thus, if they want to position themselves strategically within an organisation, they will have to abandon the traditional cost-based human resources assessment approach. They will need to diversify their tools for analysing the HR function. Cost-effectiveness analysis and calculation of the HR function’s return on investment, for example, will allow them to more effectively evaluate the financial impact of the various strategies under consideration and provide more strategic and better adapted HR solutions.
The aging population also raises significant challenges for human resources managers, particularly as concerns pension planning. In 2001, about 8.5% of seniors in Canada were working, compared to 7.8% five years earlier.
8 And everything indicates that the number of older workers remaining in the job market will continue to grow. In fact, baby boomers want to remain active longer so that they can maintain their lifestyle after retirement. They plan more and more to take progressive retirement. Human resource professionals will therefore have to deal with this generation of older workers who will continue to work part-time before leaving the workforce for good.
B) Association activities
The Canadian Council of Human Resources Associations (CCHRA) is a collaborative endeavour of the eight certification-granting human resource associations across Canada. Membership has been growing steadily for the past 10 years. This past year alone saw a membership increase of over 10%. As of February 2004, CCHRA represents the interests of over 28,000 HR professionals of which over 14,000 have earned the CHRP designation (Certified Human Resources Professional). Interest has recently been expressed by groups in the two remaining provinces to form associations and become part of CCHRA.
The Council’s vision is to be the national voice for the profession. A strategic plan was recently adopted to operationalise its vision through the following initiatives:
1. A National Forum to represent the profession on national issues
2. A Federal Government Affairs committee to act as a national advocacy group.
3. A National Campaign to promote and support the CHRP designation
4. Promotion of HR best practices as a means of improving the effectiveness of Canadian organizations
5. Canadian presence and recognition at international forums
Implementation will be handled by the Board Executive committee members working in collaboration with staff and volunteers from the three largest member associations as well as interested members from other associations.
Goal #3 above will support the Professional Standards Organization (PSO), the arm of the CCHRA established to implement national standards of assessment.
In 2003, the PSO office opened and an Executive Director was hired. In the past year, the following structures have been put in place:
- A Professional Standards Committee responsible for overall communications, financial planning, and the ongoing review of assessment procedures and standards to ensure their relevancy in the Canadian context. This committee also developed a national code of ethics recently approved in principle by the CCHRA Board.
- An Independent Board of Examiners (IBE), comprised of Canadian academics and senior HR professionals to oversee the development and administration of the assessments
-PARC (Professional Assessment Resource Centre) – a bilingual web site that provides information and assistance on professional standards processes in English and French.
- CampusHR/CampusRHRI: on-line exam preparation courses in English and French to be launched in March
CHRP designation update
As part of the federally funded project to develop common standards and portability for certified HR professionals across Canada, professional capabilities were identified. Called RPCs—Required Professional Capabilities, they are the foundation of the national designation. This model was developed through research conducted by teams of experts comprised of HR professionals, business leaders and academics from across Canada, working in concert with the CCHRA and its member associations.
The capabilities are organized into functional dimensions closely aligned with HR job functions. They are: Organisational Effectiveness, Staffing, Employee and Labour Relations, Total Compensation, Occupational Health and Safety, Human Resources Information Management, and Professional Practices – a mix of basic business knowledge such as ethics, budgeting and project management.
The RPCs outline the subject matter from which two three-hour multiple-choice examinations were developed. The first examination, the National Knowledge Exam (NKE), tests knowledge of HR theories and practices. The second examination, the Professional Practice Assessment (PPA) tests the ability to apply that knowledge to situations typically encountered by HR professionals. It is comprised of 40 critical incidents based on actual experiences of HR professionals. The second examination (PPA) can only be taken upon successful completion of the first examination (NKE) and after three to five years of HR experience. During the period between the two assessments, the candidate is referred to as a ‘CHRP Candidate’.
The CHRP designation is awarded upon successful completion of the second assessment. The designation must be renewed every three years through a recertification process that demonstrates maintenance of currency in the profession – either through logged professional development activities or re-writing the PPA.
Both assessments are offered twice a year, spring and fall, in English and French, at different locations across Canada as determined by the member associations that handle exam enrolment and pre-requisites. A score of 70% is required to pass each assessment.
During the first National Knowledge Exam (NKE) offered in September of last year, more than 300 candidates participated. The Professional Practice Assessment will be offered for the first time in May 2004 and associations are currently in the process of accepting registrations. The NKE was generally considered to be a challenging examination by the candidates, with 52% scoring 70% or more. Since it was the first time the exam was given, those who received scores between 60%-69% were offered the opportunity to retake the examination in May 2004 at no additional cost. (This applies to approximately 40% of the writers.)
A demographic survey of exam writers revealed the following:
1. Those with at least some university education scored consistently higher than those with only college or high school; those with over 3 years of working experience were the most successful (59.6% passed) followed by those with no experience (47.8% passed). Least successful were those with 1-3 years of experience (41.5% passed). This finding has led to increased interest on the requirement of a university degree as a pre-requisite to obtaining the designation, and is under intense review by member associations.
2. Examinees came from a wide range of backgrounds and acquired their knowledge in different ways; however, almost all took at least some formal HR courses.
3. Some provincial associations require completion of 8-9 HR courses as pre-requisites to taking the National Knowledge Exam (NKE) while others do not. The first exam did not show that formal course requirements were a significant indicator of exam success, and this will be investigated further in succeeding exam result analyses.
We also learned that on their own, examinees had difficulty relating the Required Professional Capabilities (RPC) to HR subject areas. This is where collaboration with post secondary institutions to provide accurate and timely information is critical and has already been. In addition, textbook publishers are beginning to list the RPCs in their publications, the CCHRA is sponsoring an on-line course, and member associations have been working to develop or refine exam preparation workshops. We expect that these learning tools, along with refinement of the exam process, will lead to an improved pass rate and buoyed by their success, larger numbers of examinees.
Notes:
1. See: Presse canadienne “Les économistes prévoient une croissance de 3% en 2004 au Canada (Economists predict 3% growth in Canada in 2004),” published in the Journal de Montréal, February 6, 2004.
2. See: OECD Economic Outlook No. 74 – Country summaries- Canada.
3. See: KPMG, The 2004 Competitive Alternatives Study: The CEO's Guide to International Business Costs . This study measured 27 cost elements (e.g. labour costs, taxes and industrial facility costs) for businesses in the following 11 countries: Australia, Canada, France, Germany, Island, Italy, Japan, Luxembourg, The Netherlands, the United Kingdom and the United States. It analyses these costs for 98 cities around the world and compares after-tax costs of start-up and operation over a 10-year period for representative business operations in 12 industries.
4. Table from: www.kpmg.ca/english/about/press/pr20040218.html
5. The information in this section is taken from: Statistics Canada, The Daily, February 26, 2004, the Presse Canadienne article, “Les économistes prévoient une croissance de 3% en 2004 au Canada (Economists predict 3% growth in Canada in 2004),” published in the Journal de Montréal, February 6, 2004, and OECD Economic Outlook No. 4, December 2003.
6. See: OECD, Main economic indicators and forecasts, October 2003 and OECD Economic Outlook, No. 74 – Country summary, December 2003.
7. See: HR.BLR.com, “Pressures Continue for HR,” February 19, 2004.
8. See: Statistics Canada, “Study: Seniors at Work: An Update,” The Daily, February 25, 2004.
II. MEXICO report: AMEDIRH/COMARI
A) Economic/HR perspectives and issues
Given Mexico’s uncertain economic and political environment, the target of GDP was not reached (1.5% vs. a forecast of 3.0%). Expectation in economic growth for 2004 is of 3.1%. Nevertheless we estimated that Mexico competitiveness for the next years will not be enough to recover the productivity lost in the nearest past.
On the other hand the inability of the Fox administration to achieve the structural reforms combined with increasing global competition ( Brazil and China) have imposed serious restrictions on attracting new investment.. Economic recovery did not surface during 2003 and the expectation for 2004 is for a gradual recovery by the end of the year.
The 2003 annual inflation rate of 4% (closer to the USA inflation rate of 2.2%) was the lowest in 35 years, yet current price trends indicate that a further reduction for 2004 is unlikely due to the monetary and fiscal policies. The expectation is that President Fox’s target of 3% inflation will not be met, and have been slightly enhanced due to signs of recovery of US economy.
The Mexican Peso lost 10% vs. US dollar in 2002 and in 2003 we expected it to continue sliding while economic, political and social instability persist. 2004 expectation is an average exchange rate of: $10.96 Peso/Dollar
Main issues affecting human resources in 2004
Employment
Due to low economic growth, unemployment will stay at similar level to 2003, while GDP growth continues under 5% (4% of the economically active population was unemployed), expectation is a little improvement to 3.5 % during the second semester of the year. To reduce unemployment, Mexico will require substantial investment to contribute to reactivating the economy and generate around 1,000,000 jobs per year.
Compensation
These economic trends have put an additional burden in the HR executive. New competitive compensation packages have to be found at all levels. Increases, even if only minimal, have to be linked to productivity.
In 2003 salaries presented a nominal increase ranging from 4.5% to 5.5%; nevertheless, the real growth by region was between 1% and 2%. The expectations for the next few years is that salaries continue to grow at least 1% point above the inflation, supported by revenue growth and efficiencies to drive down operational expenditures.
B) Association activities
Asociacion Mexicana de Ejecutivos en Direccion de Recursos Humanos (AMEDIRH)
An improvement in its economic situation in the last three months allowed the association to become solvent again.
Membership has slightly and progressively increased since December 2003. There are positive perspectives for the next six months due to specific actions taken by the new administration, such as a better approach to membership needs. There has also been a positive improvement of membership participation in AMEDIRH-sponsored events.
Total Quality Certification obtained in all areas. Initial stages have been taken to cement important alliances with companies and consultants to generate new member services such as: Regional Compensation Data Information, Mexico Financial Reports, and special discount programmes to events offered by similar organisations.
The association will hold its Annual Exposition in May 18-19, 2004 with a complete and different image, addressing as a main issue: Change Management
An Editorial Committee was formed in January to assure the format and content of the association’s main publication Proyeccion Humana Magazine and its website, follow the Executive Council’s guidelines.
Confederation Mexicana de Asociaciones de Recursos Humanos (COMARI) 2004 projects.
COMARI continues offering e-learning seminars to stimulate HR updating efforts and continue spreading HR knowledge in Mexico, Central and South America. The Confederation plans to produce 20 videoconferences with different HR teams, and it has created a new project that consists of seven workshops developed by COMARI associates via satellite.
In 2004 COMARI will organise two national congresses on human capital: Human Capital Development in Veracruz Ver. May 2004; and Human Capital The Competitive Advantage in Monterrey N.L. October 2004.
COMARI will continue to support its 40 associated regional associations on addressing critical issues affecting the profession, ie Unemployment (first semester); Mexico Economic Recovery (second semester); Productiveness and Competitiveness Best Practices, Outplacement and Human Capital Technology Expo.
COMARI signed agreements of professional collaboration with prestigious universities in Mexico to develop an HR certification programme for the country, and conduct research in the HR field. In 2003 signed agreements with Universidad Regiomontana, ad UTE Universidad Tec Milenio. In 2004 it plans to sign new agreements with Universidad Autónoma de Nuevo León (UANL) , School of Phsicology, Escuela. Graduados en Psicología, Facultad de Administración y Contabilidad, Facultad de Leyes, Facultad de Trabajo Social and Universidad de Monterrey Graduate Studies in Physicology and Administration (UDEM).
III. US report: Society for Human Resource Management (SHRM)
A) Economic/HR perspectives and issues
The US economy continues a so-called ‘jobless recovery’, which lends itself well to political debate during the current election year. GDP growth was 4% in the fourth quarter 2003, according to advance numbers from the Bureau of Economic Analysis; this is a decrease from the 8.2% GDP growth registered in the 3rd quarter 2003; largely due to decelerated personal expenditures and increased imports.
In January 2004 the Bureau of Labour Statistics reported that 8.3 million individuals are unemployed, which is a 5.6% seasonally adjusted unemployment rate. However, in addition there were 1.7million individuals marginally attached to the labour force, meaning they are not currently employed. While they have looked for work in the last 12 months, they are not counted as unemployed because they have not looked in the four weeks preceding this survey. Of these, nearly _ million were ‘discouraged’ workers – meaning they gave up their search because they believed there are no jobs.
This trend in employment, combined with the tech market downturn, has made the practice of offshore outsourcing, which statistically affects a small number of jobs in relation to jobs overall, a political hot button. Alan Greenspan, Chairman, US Federal Reserve, is calling for a better system of retraining for workers to help those dislocated from offshoring, even while Congress is considering measures to legislate restrictively in this area. The debate has become so heated that the WTO leadership issued a statement encouraging US citizens to remember the benefits of free trade. It will be interesting to see how this unfolds in the coming months and what effect it will have on US multinationals.
B) Association activities
GPHR Certification
The first Global Professional in Human Resources (GPHR) certification exam is being held the morning of March 21, 2004 in Bal Harbor, FL, in conjunction with the Annual SHRM Global Conference and Exposition. This exam tests competency in six domains identified as necessary in cross border HR work during a thorough review process. The six domains include Strategic Global HR Management, Organisational Effectiveness and Employee Development, Global Staffing, International Assignment Management, Global Compensation and Benefits, International Employee Relations and Regulations. The Global Learning System, a self-paced study tool reviewing
these six domains, is now available to help individuals prepare for the exam and also for those who are just interested in refreshing their knowledge.
Organisational changes: membership/volunteer structure
Over the past two years, the Society conducted a strategic review to develop a clear path forward that will carry the Society well into the new millennium and is appropriate and beneficial to the profession, the member base, the volunteer structure and the staff. SHRM has begun implementing some organisational changes that were approved by the SHRM Board over the summer of 2003 as a result of this process. A summary of highlights follows:
- SHRM now has a total of seven regions instead of six areas in order to support the work of our 500+ chapters across the U.S. and overseas. Five regions are dedicated to continental US, and the other two regions cover SHRM chapters in the Asia Pacific and Caribbean Atlantic regions. Each region has three SHRM staff dedicated specifically to the work of the group; one director and one manager (both in the field for US regions) and one coordinator at SHRM headquarters.
- Additionally, there were changes to the affiliation requirements for groups of HR professionals who would like to be chapters of SHRM;
- Modifications to the volunteer leadership structure to eliminate the Area Boards as well as the Professional Emphasis Groups (PEGs) and SHRM Global Forum membership dues categories and open their resources to all SHRM members
- The creation of panels of special expertise in 2004 – including one for global content;
- A pilot programme to affiliate groups of HR professionals with special interests as SHRM special interest chapters.
10th WFPMA World Congress
In an effort to continue support of the bi-annual WFPMA World Congress, the SHRM Board voted to hold its August meeting in Rio de Janeiro in conjunction with the 10th WFPMA World Congress. SHRM will lead a U.S. delegation to the event, and it will host a special networking reception for the members of the delegations. In addition, marketing initiatives to the entire SHRM membership are being implemented.
Survey
The HR Profession survey The Maturation of the HR Profession has been distributed to the 23 countries that participated, including Argentina, Belgium, Brazil, Canada, Chile, China, Colombia, Dominican Republic, Egypt, France, Israel, Japan, Korea, Mexico, the Netherlands, New Zealand, South Africa, Spain, Thailand, Turkey, United Kingdom, and Venezuela. A comparative analysis is being prepared for release this summer. Individual country reports can be accessed online at this link:
