C-Suite Survey – links between child care and productivity and the corporate uptake on the child-care spaces tax credit

Globe and Mail Update

[The Report on Business C-Suite Survey asked executives about their expectations for the Canadian economy and how they see the federal government’s policies affecting productivity in Canada.]

EXCERPTS and a summary of selected key points

Canadian executives are deeply split on social issues such as child care and its impact on employees.

The most recent C-Suite Survey, a quarterly poll of 150 chief executive officers, presidents, chief financial officers and senior vice-presidents, published in the Report On Business section of The Globe and Mail and reflects a diverse set of views in corner offices across Canada.

  • Almost two-thirds of business leaders see a link between child care and productivity, and a resounding majority see quality child care as an important factor in hiring and retaining people, as well as making them productive at work.
  • 75 per cent say their companies are unlikely to take up the new federal budget’s corporate tax credit of up to $10,000 for new child care spaces.

What do you think? Does quality child care give women more time for other productive work, as Derek Evans, CEO of Focus Energy Trust believes? Or should federal policy encourage one parent to stay at home, as Dale Tremblay, president of Saxon Energy Services Inc., argues.

Jennifer Espey, a principal partner with The Gandalf Group, which conducted the survey, was on-line earlier today to answer your questions on the survey and those issues…

Jennifer Espey: Thank you for inviting me to participate in this discussion.

In the most recent survey, we were interested to find out what the corporate uptake would be on the child-care spaces tax credit. The new Conservative government has stated that they would like to create 25,000 spaces per year through this program. In fact, we found that just 3% of executives said they were “very likely” to create child-care spaces under this arrangement. An additional 14% said they were “somewhat likely” to create spaces. And as you note, 77% of executives said their companies were unlikely to create spaces under this tax credit.

When asked why their company was unlikely to create spaces, there were three dominant responses:

  • First, it is not a company priority (23%).
  • Second, our company is too small (21%).
  • Third, it’s not something our company wants to get into/not our problem (17%).

In fact, larger companies — those employing more than 1000 people — were slightly more likely than smaller companies to indicate that they’d create spaces. Nonetheless, just 4% of executives in Canada’s largest corporations said they were very likely to create spaces with an additional 18% somewhat likely to….

In fact, this latest C-Suite Survey in combination with the survey we conducted last March indicates that CEOs are looking for a variety of measures from government, not simply tax cuts. Our last quarterly survey found that CEOs preferred the Liberal income tax cuts to the Conservative GST cuts. This survey found that corporate taxes did not head the list of worries about challenges facing their company or impediments to productivity.

CEOs are worried about human resources/labour, especially in the West, and about the higher Canadian dollar, most particularly in the manufacturing sector.

Among a list of possible productivity-enhancing policies, CEOs favoured personal income tax cuts, efficient movement of goods and services across the U.S.-Canadian border, improving transportation infrastructure, more funding for post-secondary education and a better and quicker accreditation system for foreign credentials. And, almost two thirds (64%) believe that child-care policy has an impact on productivity. So I do think CEOs have a well-rounded view of what businesses and the Canadian economy need to prosper…

Jennifer Espey: …. Unfortunately, I can answer only some of the questions you asked based on our research…

Matthew Spears, Vancouver: I would think it’s common sense that child care makes a mother more productive. Stress adds up, and worrying about someone you love, wanting to check on them all the time, will definitely reduce productivity. But why is such a big deal made of corporate CEOs? They know high finance better than the average person, but not the best policy for Canada. They simply do what’s best for the bottom line, as they are legally required to do.

Jennifer Espey: It does make common sense, I think, Matthew that parents, whether moms or dads, need their children to be well-cared-for in order to be productive in the paid labour market (speaking as a mom).

I think the important thing about knowing how CEOs feel about it is that they set corporate policy that affects the lives of millions of Canadians.

Do they know that child care is crucial for productivity? In fact, when we asked if they thought childcare policy affected productivity, 64% said yes.

When we asked “why?” two responses dominated.

  • Forty five percent said because it allows more people to work. I think this is not only obvious but bears on the human resource problem companies are facing.
  • An additional 10% specifically said it allows more women to work. The second most popular reason was that a “workforce that doesnt have to worry about their kids is more productive.” I suppose the key question we wanted to understand was if recent policy proposals were going to be realized — i.e. the corporate tax credit for the creation of child care spaces. We found that there will little uptake.

Shawn Bull, Toronto: How would someone working the night shift, weekends or in rural Canada take advantage of a government-run national child-care system?

Jennifer Espey: Hi Shawn. Neither this government nor the previous Liberal government proposed a “government-run” child-care system. In fact, the previous government was directing funding to the provinces, which in turn directed funding either to parents or to child-care centres or to licensed family providers of child care. In some provinces, these funds were being used for rural childcare and off-hours child care.

This government is directing its resources to direct payment to parents or to corporations for the creation of spaces. I think it is important to note that neither the previous Liberal child-care plan nor this current Conservative plan has directed funding to “government-run” child care…

…I can tell you that when asked “open-ended” why they thought child-care policy was important to productivity, 45% of CEOs said it allowed more/both people/parents to work while just 10% of CEOs specified “it allows more women to remain/enter the workforce.” There remains a gendered division of labour in society, but the very existence of “parental leave” indicates that we are opening child care up to both genders.

Lorna Finlay, Toronto: I am a professional accountant, and the mother of two kids, ages 6 and 8. Reliable daycare is critical to my ability to be in the workforce. Since I bill for my time worked, if I have to worry about what is going on at home, then I cannot apply myself to my work. Isn’t that the ultimate definition of productivity? Daycare in Toronto is hard to find, and even now I pay nearly $700 a month for care for my kids. I cannot see companies stepping up to fill the gap in daycare access. And Mr. Harper’s new tax credit does not apply to my family, as the Conservatives must think that children over the age of six can just look after themselves while mom is at the office. As for one parent staying home, are these CEOs willing to make their companies more flexible to help pave the way for the re-entry of women into the workforce after they have stayed home with their kids?

Jennifer Espey: Lorna, thanks for your comment and your question.

In fact, there is much controversy and I expect it to continue over child-care policy in Canada. As I’ve noted, the research indicates that companies will not step in and fill the gap to create spaces. I am not comfortable extrapolating our numbers to arrive at how many spaces might be created, but clearly the numbers indicate that there will not be widespread uptake among corporate Canada.

Other than this policy tool — the $10,000 tax credit for corporations/communities/NGOs, the new Conservative child-care plan relies on the demand side — the $1,200 payment to families for each child under the age of 6. As you note, there is no compensation for children over the age of 6.

We did not ask companies whether or not they would have re-entry programs for parents who have stayed home with their children. We do know that many families cannot afford to do this….

I would like to thank everyone for their comments and questions. I am sorry I could not respond to all comments. Some comments were simply outside the scope of what we studied in this latest C-Suite. Although I would love to discuss many comments, I couldn’t use the research to speak to them!

Clearly child care policy in Canada and its effect on our ability to work in the paid labour market is salient.

I also think those comments that asked about how we will value care as a society, and how we will value those who provide care whether parents or child-care workers or educators is crucial. I thank you for that input and trust these discussions will continue.