Ontario skills gap costing province more than $24 billion, report says
June 24, 2013 by Clare Clancy
Ontario is losing out on more than $24 billion annually in economic activity because of a gap between the skills workers have and skills that employers need, a new report suggests.
Employers—particularly in the manufacturing, health and finance sectors—can’t find workers with the skills necessary to promote innovation and economic growth, the Conference Board of Canada found.
“It’s something we can’t afford to let slide any longer,” said Daniel Munro, co-author of the report. “It’s damaging to the economy, it’s damaging to individuals and it’s damaging to businesses.”
The report, released on Friday, included an analysis of survey results from more than 1,500 Ontario employers, who were asked what skills they needed in their companies.
Along with a skills gap, another problem highlighted in the report is that of mismatched skills—people working in jobs that aren’t making full use of their training.
The research found that while a skills gap is costing the province $24.3 billion, mismatched skills are costing an additional $4.1 billion in foregone GDP, plus $627 million in provincial tax revenues annually.
“This is money that could go to pay for some substantial economic and social programs for Ontarians,” Munro said.
One solution would be for employers and educators to provide better learning opportunities for workers while on the job, continually updating skills, he said.
“You’ll need some way to continue to adapt to a changing economy,” Munro said.
Brad Duguid, Ontario minister of training, colleges and universities, has not yet had a chance to review the report, a spokeswoman said.
But he did speak at a conference Friday called “Closing the Skills Gap,” where the report was issued.
“We need to work with our partners in education and in the private sector to ensure that businesses are able to find workers with the specific skills and experience they require,” he said in a statement at the conference.
He added that 80 per cent of all new jobs in the future will require some form of post-secondary education.
Duguid said more research is needed so that decisions around skills development are “based on evidence not anecdotes.”
The Conference Board of Canada—a research organization focusing on economic trends and public policy—released its report a day after CIBC announced that one in 10 Canadian youth are at economic risk.
Young people are finding it difficult to gain the work experience necessary to be considered for permanent positions, the report found, leading to chronic unemployment.
Both CIBC and the Conference Board of Canada made similar recommendations—combining training and education to improve people’s skills.
Employers should offer practical learning options through paid internships and co-op placements, Munro said. At the same time, educators need to align curricula to economic needs and students need to make decisions in line with “labour market realities,” he said.
By closing the skills gap, individuals could move up on pay scales while the province makes up lost revenue, Munro said, though he cautioned that more research is required.
“We just don’t know at a very precise level what occupations have critical shortages,” he said.
In general, the report found that employers need post-secondary graduates in science, engineering, technology, business and finance. Only 10 per cent of respondents wanted employees with liberal arts qualifications.
While 57 per cent of employers needed workers with two- or three-year college diplomas, 44 per cent required four-year degrees and 41 per cent wanted employees in the trades.
Michael Bloom, a spokesman for Conference Board of Canada, said the potential revenue from closing a skills gap could reduce public debt or be invested in much-needed infrastructure improvements.
“Consider, for example, that a proposed expansion of public transit in the Greater Toronto-Hamilton Area would require an estimated $2 billion per year, over 25 years, to complete,” he said in a statement.
The Conference Board of Canada is planning to launch a research centre focusing on skills and post-secondary education in the fall. It will research these issues across the country over the next five years.
—The Canadian Press