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When we get back to work, a skills gap needs to be bridged

Students returning to school this week – well, some of them, at any rate – face a growing consensus about their futures: Don’t follow your bliss, follow the money.

The pandemic, resultant lockdown and slow reopening of the economy have thrown a wrench into the labour market, though we all hope it’s short-lived. The arrival of a safe, effective vaccine, for instance, should set us back on a course to normalcy, meaning the pre-coronavirus issues will return to the fore.

Canada, we’re all told, faces a skills gap, for instance. Prior to the pandemic, even as the ranks of the unemployed and underemployed grow, a variety of jobs went unfilled due to the fact those without jobs aren’t qualified to fill the vacancies. It’s a problem that’s only going to get worse, particularly as the baby boomers retire (assuming their economic circumstances allow them to do so).

In Ontario alone, the skills gaps costs the economy more than $25 billion in foregone GDP, the result of too many Ontarians not obtaining enough education to find employment in today’s economy. Skills gaps are projected to worsen if action is not taken to address them, and fears about a future of “jobs without people” and “people without jobs” are widespread, according to studies by the Conference Board of Canada.

Much of the discussion has centered on post-secondary education, where courses on offer don’t always lead to good job prospects. Students still continue to enter arts faculties even though the days of gaining a degree – any degree – and walking into a good job are long gone. Instead, many students are graduating with record amounts of debt only to find there’s no demand in their chosen field. Worse still, finding any kind of job is an uphill battle, let alone one that will allow them to start paying down the aforementioned massive debts.

Much of the public dialogue about the gap suggests that Canadian labour markets suffer from a shortage of workers in certain industries – think about the former boom in the Alberta oil patch, for instance – coupled with mismatched skills among the available labour supply. These circumstances, the argument goes, are exaggerated by the difficulty of moving workers from low-growth to high-growth provinces and industries, along with inadequacies in how schools develop skills and connect learners with employers.

The key, it seems, is finding the right mix of university, college, trade school and apprenticeship programs. And, more difficult still, coaxing kids to follow that route into what are – for today, at any rate – deemed higher-demand careers. That list includes the likes of science, engineering and technology, business and finance, and health-related fields

While there’s been some badmouthing of the post-secondary system, particularly of universities, those analyzing the skills gap argue higher education is still essential, even if the payoffs today aren’t what they used to be.

Completing post-secondary education is still the best route to a well paying, quality job in Canada but the premium is dropping as too few students are graduating from programs that are in high demand.

Reports note that the proportion of adults in Canada with a post-secondary education is the highest among all OECD countries, even though the cost of that education is roughly double the OECD average. Yet, more and more of those degree holders fall behind in the earnings scale with the share of Canadian university graduates who make less than half the national median income the largest among all OECD countries.

So, more graduates than most, but that hasn’t translated into good jobs and good wages.

Studies have found that this is largely the result of the programs Canadians have chosen to study. They examined various reports that have attempted to compute an annualized average “return on investment” on education and found stark divergences depending on the field of study.

The biggest bang for buck comes from specialized and professional fields such as medicine, law and engineering. There is a much greater risk of falling into a lower-income category for graduates of humanities and social sciences, with a limited risk for students of health, engineering or business.

The field-of-study premium isn’t just a Canadian phenomenon – it’s been observed in other industrial nations. But it’s not clear that students, armed with that knowledge, have been making the most profitable decisions. With the exception of commerce, in the last 10 years there hasn’t seen a meaningful influx of students into degrees with more advantageous earnings outcomes.

Adding to an already difficult situation are studies such as those by the Labour Market Information Council showing employers are increasingly placing emphasis on skills, rather than education.

Finding workers with the right skills is not a challenge unique to those regions or sectors experiencing the strongest employment growth. Workers are also acutely aware of these changes and the increased importance placed on skills (i.e. the actual capacity to be effective in a job) rather than just qualifications (i.e. the document signifying the completion of a course). A recent survey conducted by the Labour Market Information Council showed skills requirements as the second single piece of information most wanted by Canadians after wages. Moreover, workers – especially vulnerable ones such as people from low socio-economic backgrounds, Indigenous people and mature workers – could face additional barriers due to these rapid changes in the job market.

With studies suggesting today’s young people will have a tougher go of it than any other generation in the postwar period, there’s an added incentive to find the right course of study. For the kids returning to high school this week, the day of reckoning is not so far off that decisions can wait too long. Yes, the pseudo-relaxing days of summer are certainly over. No more bliss, it’s all about the money now. Well, right after we solve the COVID-19 issue, that is.

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