A 10 Point Action Plan for Canada’s Labour Market
In my various discussions over the past few weeks at Parliamentary Committees, with CEOs, policymakers, labour representatives and others, it’s clear that efforts to address the prevailing labour market challenges in Canada are fragmented. This is dampening our ability to achieve other goals such as competitiveness and inclusion.
There is also a misconception that quality jobs will be the dividends of other investments, like greening the economy, rather than the key ingredients to the success of these other initiatives and objectives.
I propose a 10-point action plan for Canada’s labour market with particular emphasis on addressing persistent labour and skill shortages:
1. Launch a comprehensive labour market strategy. Developing a strategy that ensures various policies and programs are coherent and mutually-reinforcing is the first step to any action plan. Moreover, since a well-functioning labour market, by its nature, cuts across many socio-economic areas, a strategy and action plan is needed to support the achievement of economic, social and environmental objectives. In essence, our goals to improve competitiveness, address housing affordability, transition to a lower carbon economy will not succeed if business and government cannot find the people and the talent to make those investments and transitions a reality. We cannot assume the good paying jobs will be the dividends of other initiatives.
A comprehensive strategy can bring together the various pieces in a way that that augments individual actions. It is also a great opportunity to bring together governments, employers, labour, educators, training providers and others in a collaborative and cohesive way to discuss opportunities and a path forward.
2. Establish two pillars of inter-connected action: Labour and skill shortages. It’s time to get serious about labour and skill shortages. These should be central pillars of the broader labour market strategy starting with the clear recognition of the differences between a labour shortage and a skill shortage. Each merit a different approach and policy response and one that accounts for regional differences, i.e., the situation in my hometown in Cape Breton is quite different than the one Toronto.
Specifically, a labour shortage is when there is a job opening and for all intents and purposes, no one applies. But this can manifest itself in a couple of ways: (i) the job market is humming along so well that there are no applicants for your opening because the labour market is at full employment (see point 3, however) and (ii) for any number of reasons, people may not be interested in the job on offer, resulting again in no applicants. Case in point: this happened during the pandemic with jobs in accommodation and food services.
In effect, this latter manifestation might not be a “shortage” in a technical sense since there are available workers (and with the right skill set). But from the perspective of the restaurant owner desperate for help, make no mistake it’s a shortage.
These are distinct from a skill shortage that occurs when a job opening attracts individuals who apply but without the skills required to perform the job well.
3. Leverage the significant untapped potential of underrepresented groups. Labour market participation and employment rates continue to remain low for certain groups like youth, experienced workers, Indigenous peoples, persons with disabilities, immigrants and women. These are important segments of our population who, with the right supports, are ready and able to work and whose active participation in Canada’s job market would bring benefits not only to those individuals but to the broader economy and society.
4. Ensure immigration continues to play a significant and complementary role. Hopefully by now, we can understand that in the context of slowing labour force growth and persistent labour and skill shortages, immigration is not, nor has it ever been, in competition with other individuals or groups for jobs.
As an aside, in the 1990s we thought, wrongly, that promoting early retirement would create employment opportunities for young people. A failed experiment to say the least. The real question is, and has always been, not whether immigration, but how much? Secondly, what is the skill composition of workers needed to unlock Canada’s potential (see point 6).
5. Policy and program design must go beyond targeting a population group. Many of our programs target specific populations, which in some instances makes sense. However, successful policy interventions to improve employment outcomes and participation of underrepresented groups should address the actual barriers that individuals face to fully realize their potential.
In some cases, groups may be facing the same barriers, e.g., some recent labour entrants and experienced workers may need support for basic skills or lack access to transportation or affordable housing. Moreover, given that individuals often face multiple barriers, interventions must take a holistic approach such as providing skills training, income replacement and wrap-around supports like transportation and childcare, rather than an ad-hoc, isolationist approach which is often the rule, rather than the exception.
Effective policy design must bear these barriers in mind, rather than focusing on just the socio-demographic characteristics of the population group in question.
6. Instill the language of skills into the mainstream of policies, programs and data collection. Having a degree or qualification is not the same as having the skills needed to perform a job adequately. Labour market policies and programs along with methods of collecting information are rooted in the old way of thinking, centering on qualifications or credentials.
We continue to use terms like “skill level” when referring to level of education. Take for instance the Federal Skilled Worker program for “skilled” workers with foreign work experience who want to immigrate to Canada permanently. The eligibility requirements are defined by the education typically required for a job rather than the actual skills say that are in short supply in Canada.
The world of work has shifted dramatically and while qualifications still matter, our policies and programs need to reflect the importance that skills now play in the job market.
7. Promote collaboration in the funding, design and delivery of skills training. Coordination among various stakeholders has always been important in designing effective programs and policies. However, success in the skills space necessitates first, an acute understanding of what the skill needs of employers are. Only then can education and training providers ensure that individuals receive the skills needed to succeed, which in turn positions governments to facilitate, and where appropriate finance, those skills and training programs.
8. Foster a cohesive and integrated approach to skills development. The roles and responsibilities that governments, employers, training and education providers play in the skills landscape is still evolving. The good news is that significant investments in the skills space in the past few years has occurred but much of it is fragmented and time bound.
Sustained, longer term investments in this area are much needed. A comprehensive labour market strategy that enables the testing and evaluating of innovative approaches and partnerships in skills development would help to take fuller advantage of these investments (see point 9).
9. Integrate evaluation into our programs and redefine success. No matter what new measure or policy is introduced, we should make every effort to include metrics and a framework for evaluating effectiveness. By evaluation, I mean how effective was the intervention compared to doing nothing?
This means going beyond the standard monitoring exercise of determining whether the person was employed 6 months after training. Rather, we should measure whether, and to what extent, did the chances of their employment or the quality of their job improve having taken the training (versus not). Moreover, international evidence points overwhelming to the fact that returns to skills training accrues over time (hence the importance to address the limitations that time bound investments in skills brings).
Importantly, in developing new ideas and initiatives, we should be open to accepting when something doesn’t work or when it doesn’t achieve the intended outcome. We can learn a lot from what didn’t work.
10. Streamline and promote open access to existing data. Before rushing out to acquire new (expensive) data that may not be effective in addressing the problem, let’s start by making the most of what we have currently. To this end, we need to streamline and promote more open access to existing sources of information on the demand for workers (job vacancy survey) and the availability of labour (EI administrative data).
For example, data on Employment Insurance recipients offers tremendous insights at a local level on the availability of workers. However, this data is difficult to access and comes with delays that diminish considerably its value. Streamlining access to these data will allow researchers, think-tanks, policymakers and others to diagnose with more precision what and where the problems are to enable more effective policy design.
Of course, all of this must be done while being mindful of privacy concerns, data quality and other considerations, but it can be done.