There’s a Surprise Leader in Canada’s Race for Smart Global Jobs

  • Quebec accounts for 42% of national labor force growth in 2016
  • GSOFT, Ubisoft, Breather among companies adding positions

When there’s a skateboard ramp in your office, and an in-house barista to serve you coffee in between coding tasks, chances are you’re in California. Unless, of course, it’s Quebec.

Simon De Baene is installing the Silicon Valley perks at his Montreal-based software company GSOFT, which expanded its workforce by 60 percent in the past year, with more to come. That’s just one example of the mini-boom that’s vaulted Quebec, long seen as Canada’s economic laggard, to the top of the country’s job-creation league.

Simon De Baene

Photographer: Christinne Muschi/Bloomberg

And not just any old jobs: smart ones, the kind Canada’s policy makers want to replicate nationwide, as they seek new sources of growth after the oil crash. Quebec’s unlikely position in the vanguard of that effort, two decades after it almost seceded, has been rewarded by investors who made its bonds the best performers among 10 provinces last year.

“We have an incredible quality of life in Quebec: great engineers; we’re creative; and the cost of living is really good,” said De Baene. “We have the ideal environment to build up successful organizations.”

Montreal, epicenter of the job gains, is one major Canadian city without runaway home prices or exorbitant power rates. It’s Toronto without the hangups. Meanwhile the provincial government’s finances are improving, and the weakest exchange rate in more than a decade is helping companies win international orders.

Quebec added 85,400 full-time jobs in 2016, more than the other nine provinces combined, and growth in its labor market accounted for 42 percent of the Canadian total. The unemployment rate hit a record low 6.2 percent in November, and held below the national average for a fourth straight month in December, something that’s unprecedented in data back to 1976.

Erik Hertzberg/Bloomberg

From the information-technology consulting firm De Baene, 31, co-founded when he was a student 10 years ago, GSOFT now makes 43 percent of its sales in the U.S., employs more than 200 and counts Walt Disney Co. and Tesla Motors Inc. as clients.  

France’s Ubisoft Entertainment SA, the maker of Assassin’s Creed, was among the first to take advantage of a government tax break when it opened an office in Montreal in 1997. Cedric Orvoine, vice president of human resources, said Ubisoft now has 3,400 employees in Quebec City and Montreal after increasing its head count by 180 people since April. He plans to add 120 positions annually over the next two to three years.

Breather is a Montreal-based startup that allows users to book meeting rooms and work spaces in cities including London, New York, and San Francisco. The company grew staff by 60 percent in 2016 to 83, more than quadrupling its customer-care team to 17, Human Resources Manager Frances Wilk said by e-mail.

Policy makers are increasingly pinning their hopes on such companies as the country pivots away from natural resources. Information technology service exporters generate only 3.4 percent of Canada’s gross domestic product and about 1.5 percent of exports, but companies within that sub-sector are seeing strong, often triple-digit revenue growth, according to a central bank discussion paper released in November.

Perpetual Deficits

GSOFT has two flagship products, one of which lets employers measure the mood of workers. Happiness at work is a topic De Baene takes seriously, blogging about it for a local newspaper.

A barista prepares coffee for employees of GSOFT.

Photographer: Christinne Muschi/Bloomberg

The joy is spreading to investors. Quebec debt returned 2.1 percent in 2016, the most among Canada’s 10 provinces, and spreads have narrowed since the April 2014 election that handed victory to the pro-federalist Liberal Party. “We are quite impressed with what’s going on in Quebec,” Hosen Marjaee, who oversees about C$35 billion ($27 billion) at Manulife Asset Management, said by phone from Toronto.

Marjaee has worked in Canadian bond markets since the 1980s. He said back then, perpetual deficits and the issue of sovereignty weighed on the province’s debt, but that’s changing. Indeed, Quebec delivered an unexpected budget surplus in the last fiscal year, and the separatist Parti Quebecois suffered its biggest ever defeat in the 2014 election.

Political turbulence was partly responsible for driving business out of Montreal over the years. Perhaps one silver lining is that people can still afford to buy a house there. Montreal benchmark home prices were C$312,700 in December, versus C$694,900 in Toronto and C$897,600 in Vancouver.

To be sure, the manufacturing sector has some challenges. Bombardier Inc. recently announced about 1,500 Quebec job cuts to take place over two years. Mondelez International Inc., the maker of Oreo cookies, said in November it plans to close a production plant in Montreal this year, with the loss of more than 450 jobs.

Dollar Effect

And the improving job numbers may mask a deeper problem. In November, some 20,300 people dropped out of the labor force, which is set to shrink as the population ages, according to Mia Homsy, the director of the Montreal-based Institut du Quebec, an economic think tank.

Still, that hasn’t stopped engineering firm Altitude Aerospace Inc., which counts Bombardier among its clients, from going on a hiring spree. The company, which modifies and repairs planes already in service, recruited 26 people in 2016, bringing its headcount in Montreal to about 80, according to founder and president Nancy Venneman.

With many projects in Europe and in the U.S., “the weak Canadian dollar definitely helps when we do the bidding,” Venneman said in a phone interview.

And the outlook is improving. Last month National Bank of Canada revised its forecast for 2016 economic growth in Quebec to 1.7 percent, from 1.5 percent, citing a revival in domestic demand and residential construction.

The surge in full-time employment is starting to boost consumer spending, which should stimulate more job creation, Eric Corbeil, senior economist at Laurentian Bank Securities in Montreal, said in a phone interview.

“The wheel has started to turn,” he said.