Government debts and over-regulation areas of concern
TORONTO, Jan. 21, 2014 /CNW/ - According to the 17th Annual Global CEO Survey, released by PwC at the World Economic Forum in Davos, Switzerland today, 85% of the CEOs surveyed both worldwide and in Canada are confident in their revenue growth prospects over the next 12 months.
At the same time, there are some differences between Canadian CEOs and their global peers when it comes to growth strategies. Forty-percent of Canadian CEOs see their main opportunity for growth coming through new joint ventures, strategic alliances, or mergers and acquisitions, compared to just 20% of CEOs globally. To this end, 58% of Canadian CEOs surveyed entered into a new strategic alliance or joint venture over the past year, and 67% plan to do so within the next 12 months. In both cases, Canada sits well above the global average (34% and 44%, respectively).
In terms of their key markets, nearly 70% of Canadian CEOs see the US as the most critical country to their growth prospects over the next year, well ahead of the UK (25%), China (24%) and Australia (20%). Global results show a very different picture, with China (33%), the US (30%), Germany (17%) and Brazil (12%) identified as the top countries.
"What we're seeing is that CEOs worldwide have a 'glass half full' approach to their growth prospects. While strategies may differ, we've observed a consistent theme in our research that there is appetite to grow—despite the higher costs associated with over-regulation," says Bill McFarland, CEO of PwC Canada. "In Canada, organizations are focused on customers and innovation, as the U.S. economy continues to rebound."
Bolstering the workforce and developing innovation structures seen as key priorities, but both met with challenges
Canadian CEOs are more likely than those elsewhere to see developing a skilled workforce (77%, 64% globally), maintaining the health of the workforce (67%, 39% globally) and creating jobs for youth (62%, 33% globally) as priorities. More than half of respondents (56%) feel that creating a skilled workforce should also be a top three priority for governments—although 52% feel that government regulation has hindered their ability to find and attract skilled labour. Also, despite being of crucial importance to organizations, just 19% of CEOs feel that the government has been effective in creating jobs for young people.
The majority of Canadian CEOs (65%) also identified developing an innovation ecosystem which supports growth as an organizational priority—considerably more than the global average of 44%. However, nearly seven-in-ten (69%, compared to 47% worldwide) are concerned about how technological change will transform their business, and just 27% believe that the government has been effective in developing innovation incentives.
"Our results show that CEOs feel that there is real room for improvement on regulation, and there needs to be a focus on outcomes, rather than process, and on designing rules for the long term," says McFarland. "As innovation remains both a priority and a challenge, it will be essential for governments to help encourage innovation."
Canadians more positive about regulation than global peers
However, in discussing changes taking place within the business landscape, Canadian CEOs do have greater trust in government and have a more positive view of the impact of regulation. A significant majority of Canadian respondents say that regulation has improved their production and/or service delivery quality standards (81%) and has helped them pursue new market opportunities (63%). In addition, while more than two-thirds (69%) say that regulation has led to higher operational costs, 81% believe the government has been effective at ensuring financial sector stability and access to affordable capital.
Globally, less than half (46%) of the respondents feel that their respective governments have effectively ensured financial stability, and even fewer (35%) feel that regulation has helped them pursue market opportunities.
"When it comes to sentiments towards regulation and government, Canadian respondents sit in contrast to their counterparts worldwide," says McFarland. "Canadian CEOs have concerns about the impact of regulation, such as higher operating costs in an era of tightened spending, but Canada's performance through the recent economic crisis has likely instilled greater trust in governments not necessarily shared by their global peers."
Trust remains an issue amongst some stakeholders, but has softened for others While 37% of Canadian respondents said that media's trust in business had deteriorated, a significant number felt that trust had improved amongst clients/customers (42%) and employees (40%). "Overall, 42% of Canadian CEOs are concerned about the lack of trust in business, and are working to understand all of their stakeholders' perspectives throughout the decision-making process," says McFarland. "This involves having a greater lens towards social responsibility and employing ethical means of doing business and engaging with the community-at-large."
Global highlights from the survey include:
- The number of CEOs who see improvement in the global economy over the next 12 months leapt to 44%, up from only 18% last year. Just 7% predict the global economy will decline, sharply down from 28% in 2013.
- Just 27% of CEOs agreed or strongly agreed that sufficient consensus amongst members of the G8/G20 and OECD will be achieved for substantial reform of the international tax system over the next few years.
- In the US it is fiscal deficits that have CEOs most worried with 92% CEOs expressing concern, followed by Argentina at 90% and France at 84%.
- Three-quarters CEOs say that being seen as paying a 'fair share' of tax is important to their company.
For PwC's 17th Annual Global CEO Survey, 1,344 interviews were conducted in 68 countries during the last quarter of 2013, including 52 from Canada. By region, 445 interviews were conducted in Asia Pacific, 442 in Europe, 212 in North America, 165 in Latin America, 45 in Africa and 35 in the Middle East.
The full survey can be downloaded at www.pwc.com/ceosurvey. Copies are also available from the media contacts including related charts and information graphics to help illustrate your stories.
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About PwC Canada
PwC Canada helps organizations and individuals create the value they're looking for. More than 5,700 partners and staff in offices across the country are committed to delivering quality in assurance, tax, consulting and deals services. PwC Canada is a member of the PwC network of firms with more than 180,000 people in 158 countries. Find out more by visiting us at www.pwc.com/ca.
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SOURCE: PricewaterhouseCoopers (PwC Management Services LLP)
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