Applied Research Bulletin - Volume 3, Number 1 (Winter-Spring 1997) - April 1997

Sector Councils: Tackling the Challenges of Human Resource Development in the Private Sector

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Considerable attention has focused on sector councils recently. These Canadian institutions, which bring together labour market partners to address the human capital development needs of individual sectors, are seen as a new institutional structure that may contribute to Canada's adeptness in the knowledge economy.

The possible strengths and weaknesses of sector councils recently stimulated a discussion paper and subsequent interdepartmental seminar, sponsored by the Applied Research Branch. The discussion paper was authored by Andrew Sharpe of the Centre for the Study of Living Standards.

In Canada, the first sector councils began to emerge in the mid- to late 1980s. In 1992, the federal government took a crucial step in support of sector-level labour force development by announcing the Sectoral Partnerships Initiative. Currently, 22 sector councils are operating with the help of federal support and more are in the preliminary stages of development.

A critical feature of the sectoral council approach to labour force development is the ability of each council to autonomously identify and respond to the needs of its particular sector. This autonomous approach to problem solving results in a great deal of diversity among councils. This diversity displays itself in the ways employees may be represented on a council, in the focus or interest of the membership, or in the types of activities eventually undertaken by each council. The human resource development objectives package established by each of these business-labour teams has the potential to evolve and keep pace with the actual "on-the-ground" needs of each sector, an important device for gaining or maintaining a competitive edge in an increasingly global marketplace.

This capacity to evolve in a unique way, and pursue human resource directions that are distinct from other councils, makes it difficult to measure the precise effects of these new institutions on the overall functioning of the labour market and economy. Sector councils are a relatively new labour market institution, and arguably little is known or understood about the links between them and improved productivity and job growth. Interestingly, participants at a recent conference jointly organized by the OECD and the government of Canada, "Workplace Practices: Achieving Better Outcomes for Enterprises, Workers and Society," striving to identify labour market institutions that contribute both to increasing productivity and to an equitable sharing of the gains, noted that the Canadian experience with sector councils represents a promising new labour market innovation.

Sector councils represent a promising new labour market innovation for Canada.

Given its pan-Canadian or interprovincial focus with respect to the labour market, the federal government is keenly interested in the broader challenges as well as the wider benefits for society that sector councils may represent. The discussion paper points to a number of broad, external challenges that represent an economic rationale for sector councils, including:

• an inadequate provision of labour market information,

• the inability of private sector companies, acting independently, to set occupational and industrial standards,

• an undersupply of employer-sponsored training, and

• the unwillingness of companies to invest individually in human resource development when others may "free-ride" on their efforts.

Institutionally, sector councils have made progress in a number of these challenging areas, resulting in some wider benefits to society. These include:

• a greater climate of trust between business and labour within certain sectors leading to better collaboration on human resource issues,

• more effective development and delivery of labour market programs,

• better public policy that is based on joint advice of business and labour, and

• new labour market mechanisms (e.g., training trust funds) and initiatives.

The discussions that occurred as part of a recent HRDC seminar on sector councils reviewed these challenges and opportunities in the context of an emerging pan-Canadian role for the federal government in labour market development. Participants shared the following insights.

• Sector studies are crucial supports for industry in identifying significant human resource deficiencies that can only be addressed through common resolve.

• Sector councils are critically important in sectors where there is a preponderance of "microbusinesses," and the potential benefits of pooling resources are therefore high.

• In other industries, sector councils are proving themselves to be adept instruments for getting information and skills-upgrading products to an increasingly diverse workforce.

Sectoral development throughout the country remains a key element in the federal government's emerging pan-Canadian labour market strategy. An important challenge for sector councils will be to continue to address their human resource needs while recognizing the changing role of governments.

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