The spatial context of manpower policy: Implications of current Canadian policy on regional...

Geoforum, Vol. 8, pp. 11-17, 1977. Pergamon Press. Printed in Great Britain.

The Spatial Context of Manpower Policy: Implications of Current Canadian Policy on Regional Development and Planning

GORDON CLARK,* Ontario

Summary: Macro government policies are often considered outside the context of their spatial impact. Following recent discussions of the problem, this paper is concerned with a critical review of Canadian Manpower policy in the context of national efficiency, regional equity and their interaction. Thus Manpower policy is analysed with respect to its implications concerning regional development as well as implicit regional policy. It is contended that many of the problems of Manpower policy in the spatial context can be traced back to the implicit theoretical background of Manpower policy; Human Capital theory. A radical critique of Human Capital theory is presented and a brief discussion of the ‘functional’ relationship between regional inequality and national macro-planning is also noted. In general the paper concludes that Manpower and regional policies in Canada tend to be contradictory although more research is needed to analyse the spatial impact of macro-policy which may overwhelm spatial policy and significantly influence the future of the spatial economy.

The spatial context of manpower policy: implications of current Canadian policy on regional development and planning

Concern for the impact of government policy on the spatial components of the national economy has received increasing interest both in geography and planning. This interest has been noted in two themes: the analysis and development of explicit spatial policies designed to either ameliorate urban and regional problems or develop the infrastructure needed to stimulate regional development (see BouRNE, 1975 for examples of such strategies); and: the analysis of nominally non-spatial macroeconomic policies that inherently have significant explicit spatial impacts. With respect to this latter case, SWAIN and LOGAN (1975) have noted the importance of developing procedures and methods by which the spatial system is monitored for impacts of more general sectoral policies.

This paper attempts to understand the implications of a set of policies designed for basically national objectives, in the spatial context. In particular Canadian Manpower policy is analysed in an attempt to highlight the spatial implications of a particular national policy, both with respect to general issues of regional development as well as its interaction with the explicit spatial policies of the Department of Regional Economic Expansion (DREE). Inherent in most North American Manpower policy has been the more theoretical issues of ‘human capital’ and manpower utilization and returns. The paper will then in the first instance address the issues of Canadian

* Department of Geography, McMaster University, Hamilton, Ontario, Canada.

manpower policy with regard to its spatial implications and in the second instance issue will be taken with the humancapital school. Finally, more general issues and implications for research will be noted.

1. Canadian manpower and regional policy

In an important paper, ALONSO (1968) drew the distinction between national efficiency and regional equity. In a number of respects Canadian manpower policy has tended to reflect the first consideration, national efficiency. The Department of Manpower and Immigration (DMI) has developed its policy options on the following goal:

‘....to further economic growth in Canada by endeavouring to ensure that the supply of manpower matches the demand qualitatively, quantitatively and geogra- phically’ (Economic Council of Canada, 197 1,96).

Further this goal has been pursued in the context of the broad national goals of economic growth, full employment and reasonable price stability. In its brief to the Canadian Senate Poverty Committee, the DMI noted further that, while its mandate included reference to equity goals such as income distribution among individuals and regions, the intent and explicit targets noted by the DMI (1974) has meant that the efficiency question is overwhelming in its significance with respect to policy. With regard to current unemployment and inflation more-over, the DMI policy has almost been exclusively concerned with price stabilization and shortrun equilibrium, where the ‘client’ has been more often than not the individual employer. Thus with respect to the orthodox school

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of ‘human capital’ (see BECKER, 1962), DMI policy has consistently been implemented on the assumption that ‘labor’ or ‘manpower’ represents one aspect of the production process. The coordination of which has been seen as vital to the continued growth and stability of the national economy (BAETZ and COLLINS, 1975).

DREE policy on the other hand has more consistently been framed with reference to questions of spatial equity and economic opportunity for depressed regions. Thus writers such as ADAMS (1971) contend that Regional policy in general can be linked to equity based programs such as income security, education and welfare. MARCHAND (1969), in proposing the mandate for DREE, in part commented that the basic policy of DREE was:

‘to get down to the roots of the problems which have produced the existing disparities between regions in Canada and help make the basic economic and social changes needed to create new employment and earning opportunities and to make these opportunities available to the people who need them ‘. (HoU SE OF COMMONS, OFFICIAL REPORT, 1969, p. 6894).

Thus policies have attempted to provide the investment opportunities, infrastructure and skills necessary for the development of regional economies. While recent literature has rightly pointed to the bias towards capital intensive investment (USHER, 1975) it is nevertheless true that the basic conceptual policy goal has been equity in the spatial economy. As we shall see in the next section however, the effect of DMI efficiency policies has been to effec- tively counter DREE programs, so much so that Baetz and Collins among others have been very critical of the lack of integration between the two sets of policies.

2. Manpower policy and programs

HIGGINS (1972) has emphasized in the Canadian case, the more general proposition dominating most Manpower programs, that to influence national stabilization more efficient spatial integration is vital. While in the long-run this has implied balanced sectoral and spatial growth, in the context of shortrun stabilization Canadian manpower policy has attempted to manipulate spatial and sccroral trans- mission systems in order, in the first instance, to attempt to reduce the ‘trade-off between inflation and unemployment. While in Sweden the Rehn model (MEIDNER and ANDERSSON, 1973) has been significant over the past two decades in formulating macro policy, not until the mid 1960’s did manpower policy assume such significance in North American and Canada case more particularly. Of the general group of Manpower policies conducted by DMI, a number have particular importance.

Geoforum/Volume 8/ Number l/1977

Forward occupational forecasting. This has involved the estimation of sectoral and spatial labor demand by occupation over a period of ten years (up to the mid 1980’s). In the short run it has also involved the listing of current sectoral and spatial inbalances ( in terms of excess supply and excess demand) in SIC based occupations. This analysis has had two vital implications. The first relates to the coordination of demand and supply over space. Consistent with HOLT et al. (1973) among others, the DMI has attempted through a number of relocation and retraining schemes to coordinate the excess supply of such an occupation in region j. While this would at first sight seem a significant contribution to interregional employment and unemployment balance it is clear that coordination of demand and supply has often meant the depletion of highly skilled workers from relatively more backward regions. Further, the use of the Forward Occupational Forecast as a means of predicting future occupation needs may in fact tend to emphasize current patterns of regional inequality rather than substantially help in altering the skill mix and employment base of such regions over the forseeable future. Related to this policy has been that of migration, both interregional and international.

Migration policy. Concentrating on interregional migration policy, the DMI has a group of programs which include the following:

(i) Relocation grants, facilitating permanent relocation. (ii) Exploratory grants, to enable job search for

employment in other areas or regions. (iii) Trainee travel and community allowances.

(MANPOWER REVIEW, 1974)

Estimates for the year 1975-76 for these programs noted that expenditure would be in the order of fourteen million dollars with another fourteen million dollars allocated to support of individuals in the Development and Utilization of Manpower programs. (ESTIMATES, MANPOWER and IMMI- GRATION, 1975). Thus not only has the DMI attempted to improve the information flow over space concerning job opportunities, but it has also attempted to provide grants that would tend to eliminate the cost of moving for selected occupations. This last point concerning the occupational selecti- vity of Manpower programs rests on an important theoretical distinction between an assumption of a homogeneous or heterogenous work force. The implication of HOLT et al. (1973) is that occupational requirements for a given production process may in fact be very particular. Thus skills, particularly, may have relatively low substitutability between job functions. For example:

xr = ax; + b(x,+I-x,) +y,

where xy = a vector of total output in time t

y, = a vector of final demand in time t.


a = a matrix of current input requirements

b = a matrix of capital requirements.

Input requirements could be seen as either raw materials and labour quantity or more specifically, in the context of this paper labour quantity and quality (skill) (PETRI, 1972,563). Moreover, dependency on the degree of substitutability between the elements within a, the two matrices a and b may be highly related in that a given technology may require a particular a vector.

Manpower policy with respect to migration and skill availability has tended to be very selective (BAETZ and COLLINS, 1975). Empirical evidence has shown in Canada that in recession mobility is generally also very selective (MCINNES, 1975) both with regard to age and also occupation (VANDERKAMP, 1971). This has meant over a number of years that depressed regions have often been ‘stripped’ of highly skilled labour, while at the same time experience very high rates of unemployment. The inference being that the DMI through its efficiency policy has tended to help those in demand to move, but do little, if anything, to enable low skilled unemployed to adjust to changing occupational demands. This equity question has fallen into the mandate of DREE.

In the long run, DMI policy may also have another significant implication for DREE. Given a selective occupational need for newly established firms in ‘depressed regions’, the degree to which the existing workforce in that region is capable of adapting to new skill requirements will ultimately determine whether or not the employment generated by a new plant will affect the level of employment in that region or mean the migration of skilled labour into that region to take the employment opportunity.

3. Manpower models and research implications

In the literature, the distinction between types of occupations that have high rates of substitution and low absolute skill requirements, is generally unclear. Moreover, debate continues on how the economy in general should be regarded with respect to substitutability and complementarity. In this context BLAUC (1967, 272) notes that:

‘...to the right is a neoclassical universe characterized by substitutabilities in both education (skill) and the productive system (occupation); to the left is a Leontief-type universe of fixed-input coefficients, characterized by extreme complementarities in both education and industry. ’

That is, in context of the above discussion concerning the longrun impact of DMI policy on DREE, it may depend on whether a system is a ‘normal’ neoclassical system or a special case such as the Leontief best

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practice-solution system. Higgins’ argument is necessarily based on a Leontief system and for Canada, this issue remains a vital research question to be tackled. The current literature in geography also emphasizes the Leontief system, albeit, implicitly as analysis by KING and CLARK (forthcoming) emphasize the structural nature of much of regional unemployment. In this regard the lack of adequate skills or their obsolescence may have accounted for widespread long term unemployment.

Recent research by MELTZ (1974) in Toronto and Montreal suggests in fact in these two cities disparities between the vacancies recorded for particular occupations and the supply of such manpower is largely imbalanced. Further the recent work by Cheshire (1973) in Britain suggests much the same regional labour market imbalances. In this research however, a further dimension has often been ignored. Not only may there be strict production skill requirements but also there may be strict regional characteristics of the functions that such occupations have to perform. The work by Pred (1973) among others has emphasized that branch plant firms in different regions perform tasks that are specialized with respect to the aggregate industry. By this it is meant that particular plants may produce only a small component of a total industry product and forecasting occupational requirements on an aggregate scale (industry) for a spatially decentralized plant may tend to over- emphasize particular skill positions. The evidence presented by Pred (1973) certainly tends to suggest that among the major employment industries there is a wide variety of organization over space and hence skill requirements. In general Pred and Tornqvist suggest that highly specialized job functions tend to be located at the periphery. Given the DREE policy of industrial relocation schemes and the above discussion we can note three likely implications of a firm relocating (in entirety) in a generally depressed region, given the DMI policy results.

(1) With a hierarchy of occupational specialization, in the short run it is likely that no ‘qualified’ manpower would be available in the depressed region. Depending on the relative complementarities, skilled manpower would necessarily have to come from outside the region.

(2) In the long run to develop regional manpower resources equal to the needs of high skill occupations, educational and vocational methods would either have to be extended or at least tailored to such needs.

(3) Given the relatively long gestation period of such an investment, skills would have to be transferred from other regions so as to maintain an investment.

Thus DREE policy may have to be more extended to account for human-capital requirements, particularly if DMI policy is maintained and the skilled manpower is shifted to the core regions.

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4. Manpower policy and ‘human capital’

While it was argued above that DREE and DMI policies are essentially in conflict, with the latter set of programmes tending to ignore the more fundamental regional disparities while at the same time exploiting many depressed regions of their stock of skills; it has been claimed that in the long run Man- power policies provide a way of achieving national efficiency and regional equity. In its Sixth Annual Review the Economic Council of Canada stated:

‘Policies that reduce poverty by creating new output, and therefore new incomes, are clearly preferable to policies that simply redistribute existing output and incomes. Poverty could be reduced if not eliminated, by direct income transfers but as long as poverty reflects substantial unused manpower resources in the economy, redistribution schemes by themselves are likely to be second-best choices’(l969, 109).

In this section it is argued that unless the limitations of manpower policy are understood, hence the ‘human capital’ theory, and the reasons for reserves of unemployed, researchers may tend to over- emphasize the role that manpower policy can play in spatial and national equilibrium adjustment.

BLUESTONE (1970) has commented that the development of ‘human capital’ can be traced back to the late 19.50’s as a reaction against the more institutional-structuralist arguments concerning poverty, income distribution and interpersonal equality. Very generally, the notion is based on individual skills and value where human capital can be broadly defined as that:

‘national stock of wealth inhering in human beings, representing the capita- lized value of income streams resulting from expenditures, public and private, on education, health, training, migration and the like... ’ (MYERS, 1975,94).

Thus differences in income among individuals can be solely attributed to differences in human capital, which is (and this should be emphasized) individually derived. Manpower literature tends to emphasize that income distribution is then a function of individual investment decisions, the manipulation of which, provides the basis for policy (in a spatial context for example retraining and subsequent migration). Contemporary writings of Becker and Shultz can be traced back to Smith, Ricardo and Marx on the theme of individual differences in productivity and wealth, however as we shall see, there are some major departures.

In general, the ‘human capital theory’ (HCT) makes a


distinction between education as a consumption good and education as a personal investment according to some rate discounted against future returns. In the market, not only does an individual acquire a com- modity, human capital (or for example, education), that is assumed to be bought and sold, but also, education is selective in that grading and progression through the system represents the information by which qualitative choices can be made between different grades of labour. In the competitive system, the ‘screening’ of individuals is then both an investment by the individual in gaining maximum return and a process in the market whereby in the absence of price, a buyer may select between different grades of labour.

In the context of distribution (particularly interpersonal but also conceivably interregional) such theory has emphasized the role that education may play in determining relative shares of factor income. Thus the stream of flow of income for one individual may be seen as a direct result of that individual’s investment in human capital. This conclusion has been particularly important in anti-poverty programs in the United States. MANGUM and ROBSON (1973) note for a number of cities, retraining for the disadvantaged and in particular residents of black ghettos, has been a fundamental method of attempt- ing to reduce poverty and inequality. In Canada, this role has not been taken by the DMI, although as we previously noted, it has been assumed in the tong run that such retraining may achieve equity and efficiency simultaneously. Significantly BECKER (1962) has considered that this approach to distribution theory is a means of more vigorously defining the attributes of the neoclassical theory of production and distribution.

This approach has also seen a quite important contribution by neoclassical capital theory with the concepts of risk, uncertainty, depreciation and technological change playing important parts in explaining different factor income shares, beyond simple labour power. Thus returns are hypothesized to be a function not only of a simple quantity of labour input but also of the quality and scarcity of such labour input. In fact it is assumed that, following marginal utility maximization, individuals will maximize net returns with respect to both their own quantity of input and the level of education or skill embodied in their input. Hence, theoretical and planning emphasis has been placed on individuals rationally adjusting their levels of education with respect to their immediate consumption and future earning through investment.

In a number of cases HCT has been used to counter such arguments as discrimination and segregation in tabour markets as causes of differential levels of earning. For example JOHNSON and STAFFORD (1974) consider that the discrimination argument


attributed to differences in earnings between males and females may be misplaced in that:

‘....an alternative explanation is that the differential is primarily generated by the markets’ reaction to voluntary choices by females with regard to life- time labour force participation and on-the-job training’ (JOHNSON and STAFFORD, 1974,889).

A number of significant criticisms have been raised with respect to this theory. In general such criticisms embody a systematic argument that inter-personal and interregional inequality is a functional part of capitalism. As a result, manpower policy in fact is only one means of a more general group of programs that in capitalism attempts to perpetuate inequality. An important policy has been retraining and in more general terms, education. As we have noted earlier education and individual factor ‘returns’ are very tightly linked. This rather simplist view of the education process and how individuals gain educational attrributes has been attacked severely by SHAFFER (1961), ECKAUS (1964) and very recently by BOWLES and GINTIS (1976). Unlike many critics of economic theory, these authors argue for a com- plete rejection of the education concepts embodied in HCT and for a more realistic view of the process of societal education.

ECKAUS (1964) notes a number of problems. In the first instance, concern for a ‘price’ in the demand and supply of education rather than being obscured by government intervention, is an irrelevant concern given that societal responsibility is charged, at least in the first instance, with providing a minimum level of education. Further, such an objective is not necessarily economic and the combination of different objectives in the provision of this ‘public good’ may mean that even if a price was available it would not represent demand and supply. Thus scarcities are often not recognized in the price to the consumer (student) and society generally bears the price for individual outcomes. On this point it could be further claimed that the structure of society is also significant. Thus:

‘....in reality, the supply of skilled workers (and still more, of professional workers) is restricted by the fact that the families of unskilled workers cannot generally allow their children time for any education at all above thestatutory minimum. The extra wages of skilled men, therefore, measure not only their cost of training, but also a scarcity value arti- ficially created by the structure of ~~~~~~~‘(RoBINsoN, 1966, 12).

An important point made by Eckaus is that for an efficient valuation of an individual’s investment

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in education, such an individual would have to be aware of his present and ‘future’ marginal product and be in a poistion (vis a vis, the education system) to develop to this so-called optimum. Thus there are valuation problems related to using wages only or some derived psychic income. This also occurs in measuring the trade-off between present consumption and future returns. Evidence shown by I.DNG and HALTMAN (1975) suggests that even allowing for education and origin, gaps between blacks and whites of the same occupational group significantly differ.

BOWLES and GINTIS (1975,1976) develop their critique of the ‘Human Capital’ theory by following a Marxian interpretation of society and the firm. They clearly accept the view that labour is differen- tiated and also that such differentiation may be important in production. However, there are significant issues not faced by the normal neoclassical theorists. In general the emphasis on the individual and labour abilities of such individuals ignores the relevance of class and class conflict in the explanation of labour market phenomena. They further consider that ‘education’ performs two functions:

(1) The development and extension of the production process through greater capital accumulation and growth.

(2) The perpetuation of the entire economic and social order (Bowles and Gintis 1975,75).

In general the emphasis on human capital and its equilibrium conditions does not allow for study of the reproduction of human skills and the distribution between social groups. Further, it abstracts from production an essential component of control, that is how social requirements and relationships within the production relationships determine the use and input of given units of labour. Moreover, human capital theory abstracts from social and political institutions only the individual component which may or may not make investment decisions but which according to REISSMAN (1975), is a function of the existing order of social inequality and unequal power distribution. Thus while the neoclassical approach seeks to explain distribution of income according to the individual, in Bowles and Gintis terms, such theory is superficial and unrelated to the societal structure in which individuals are forced to operate. FOLGER and NAM (1964) noted some time ago an interesting phenomena not often accounted for by the ‘human capital’ theorists. They noted that the link between education and occupational attainment was not as strong as once supposed. Further, with compulsory education and generally higher societal acceptance of gross levels of attainment, educational qualifications would become a necessary but not sufficient conditions for occupational entry. Thus even if individuals are able to make decisions of education according to expected return, it may not help explain more decisive societal allocative mechanisms.

16 Geoforum/Volume 8/ Number l/1977

5. Geographical space and inequality

In the section above the discussion of manpower policy and its critics was limited to a general conceptual framework of society and the functions of education. While it is not the purpose of this paper to attempt to understand and develop the functions of spatial inequality with respect to the functioning of the national capitalist system, we could claim that the implications of Canadian Manpower policy tend to perpetuate the functional aspects of regional disparities. With respect to the labour market in particular MANDEL (1969) notes that regional disparities serve two functions:

(1) The perpetuation of existing inequalities in space.

(2) The selection of the highest skilled and greatest qualified in depressed regions and their subsequent movement to the spatial core.

(3) The neglect of the great bulk of unemployed, particularly with respect to the inability of DMI to tailor their retraining schemes to anything but national efficiency.

(4) In general the strengthening of the spatial core, and the continued exploitation of the periphery.

(1) A ‘reserve army’ of unemployed that in periods of accumulation crises can be shifted into the core of the economy to provide cheaper labour. Such a reserve army may include technologically displaced workers, a floating reserve with low participation rates and finally a segment of working poor that are characterized by irregular rates of employment (PEET, 1975). Manpower policy in Canada in fact serves to coordinate this reserve according to the short-run requirements of the spatial core of the economy. In particular selection is for efficiency with respect to quality and quantity. Manpower policy through migration and retaining serves to boost the work force particularly as wages take an increasing share of total income. In this respect, following BODDY and CROTTY (1974), manpower policy seeks to avoid the increasing monopoly power of labour in boom periods through the temporary integration of peripheral labour markets with the core.

Given these general propositions it is also clear that the limitations of manpower policy both from the underlying human capital theory and the function of labour market inequality ultimately means that Manpower policy will inevitably reflect the dominant class and spatial units of society. In the final analysis Manpower programs reflect the needs of the spatial core if only because political and social-economic power is distributed unevenly. Moreover, the social resources that ‘human capital’ theory contends influences individuals’ productivity and progress through the system inevitably reflect the dominant spatial system. In this regard education as a means of control (BOWLES and GINTIS, 1976) may help perpetuate the basic organization of society while manpower policy selectively manipulates the work force in space. In geography these elements have been relatively neglected, in this paper a number of relevant issues in this regard have been noted.

References (2) The expropiation of the surplus of the periphery by the core as a means of maintaining high rates of investment and accumulation. Unlike HIGGINS (1972), Mandel claims that balanced sectoral and spatial development is not possible in capitalism. Moreover, such imbalance is ‘functional’ as it provides the means of one section of the spatial economy to grow at the expense of others. Thus interaction in space is the transfer mechanism for the shifting of resources both human and material. Similar to HIGGINS (1972) is the claim that spatial integration of the economy is critical to its success; unlike Higgins however is the view that such integration necessarily means spatial inequality.

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Conclusions

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Originally we noted that Manpower policy has increasingly been seen as an important means of coordinating the spatial economy as well as a means of effecting recovery in spatial inequality. The discussion of this paper has served to highlight a number of tentative implications of current Canadian manpower policy. In the first instance DMI policy can be seen to be contradictory to DREE policy moreover, manpower policy may involve the following:

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MARCHAND B. (1969) Statement Before the House of Commons on Regional Policy. blouse of Commons, Official Report, Canadian Government, Ottawa.

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