British Columbian technology industries are experiencing a drop in their
growth rate, and many CEOs are blaming the slow down on high taxes that
they say are driving IT professionals out of the province.
High provincial and federal taxes are forcing BC companies to locate 40 per cent of the new jobs they create outside of the province, according to the survey of 216 CEOs performed by the BC Technology Industries Association (BC TIA).
“We’re still growing here – we’re just not growing as much as we should be and we’re creating jobs in other places that we should be creating here,” said BC-based Electronic Arts vice-president Paul Lee.
His company has been forced to create jobs outside the province that it would rather locate in BC because the province has the second highest tax rate in North America, Lee said.
One in every two IT employee who leaves his or her job also leaves the province, and BC TIA executive director George Hunter also blames that high number on the province’s tax rate.
“That’s what the HR people are saying inside the companies, that’s what the recruitment firms are saying – that it’s a combination of better wages and a far better taxation rate and, at the end of the day, that means a huge difference in your take home pay,” Hunter said.
Career consulting manager Kathy Herties of KPMG isn’t surprised CEOs blame money for their employee turn-over rates. Employees don’t always tell the truth when they leave a job because it’s much easier to claim they’re leaving for monetary reasons, Herties said, even though IT workers rate money a distant sixth in factors that they consider important in a job, according to a KPMG survey of 1,200 employees.
Herties does hear BC employees complain about the province’s New Democratic Party, and Canadians workers in general complain about taxes, but Herties maintains that internal office politics are more likely to be the driving force when employees leave their jobs.
“In an exit interview, an employee may say to a CEO, ‘I’m leaving because I can’t afford to live here – the cost of living is too much; the taxes are too much.’ The reality, though, is that they may be leaving because they feel that they haven’t contributed. You don’t want to burn your bridges,” Herties said.
Of the CEOs surveyed, 65 per cent reported having significant difficulty in hiring executive, management and technical employees.
The BC TIA report indicates that one out of every six new jobs created in BC last year was in the technology sector. There are currently 46,000 workers employed in the technology industry. Although employment in the BC technology sector grew by 5.2 per cent in 1998, that’s down from 7.3 per cent in 1997.
Both levels of government were criticized by the CEOs surveyed. Only 23 per cent of the CEOs surveyed rated the federal government as effective in creating a nurturing environment for the technology sector, while 53 per cent found Ottawa to be ineffective. Only eight per cent of those surveyed rated the provincial government as effective in creating a supportive environment for the technology sector, while 79 per cent rated the NDP government as ineffective.
But Jeff Gaulin, a manager at the NDP government’s Information, Science and Technology Agency said the slow down was “just part of the natural growth of any industry.
“We’re looking at a 16 per cent growth next year (in technology jobs) – that’s more than the national average, that’s more than any other sector in this province. That’s phenomenal growth,” said Gaulin.
He adds that the government is also cutting taxes. The NDP will have cut $539 million in both business and personal taxes by the end of the year, according to Gaulin.