Skills and Higher Education in Canada

Canada’s performance in higher education and skills development has been fairly strong for many years. On key measures we are at or near the top of international rankings and our highly skilled people contribute to economic competitiveness, social innovation, and political and community well-being.
But there are troubling indications that Canada’s skills and education performance is deteriorating, that not enough is being done to address a range of economic and social problems, and that opportunities and benefits have been poorly distributed across regions and groups. In short, there are signs that we are not doing enough to achieve the high levels of skills excellence and equity we need. Action is needed to sustain and enhance the performance of higher education and skills development in Canada.
In this paper, Dan Munro explores two central needs to Canada’s skills problem: excellence, and equity.
Excellence means asking the question: is Canada producing graduates with the right skills to sustain and enhance the country’s economic competitiveness and social well-being?
And Equity means asking: Are some regions and groups being left behind?
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It’s not unemployment, it’s underemployment

There are a lot of different ways to describe the period after a young person graduates from their schooling, but increasingly in Canada, one word sticks out: underemployed.
That’s underemployed.
It’s a somewhat slippery concept, and an even harder one to prescribe policy around, but efforts have been made by various banks and other international bodies to track and measure underemployment. The OECD has assigned it a relatively formal taxonomy: visible underemployment, where an individual is working less than they would like; and invisible underemployment, where an individual is not working in a field or position that matches their capabilities or skills.
But the more compelling story goes like this: As short as 20 years ago, our combined attainment of education, work experience, and connections would place us, and many other young Canadians, on a secure career track that would allow us to pay back our loans, save for a house, and contribute to the overall productivity of this great country.
Today, that’s more or less not the case, and an increasing number of young Canadians are caught in a veritable limbo state: educated enough to work a skilled job given the opportunity, but either not working as much as they want, or nowhere close to the field that would exploit their full potential. The glibber among us call it the rise of the B.A.rista
Now typically when we talk about policies for youth, the conversation focuses on unemployment – on ensuring everyone at least has a job. And that’s understandable, if mostly unrealistic: new job numbers released last week by Statistics Canada tell us the youth unemployment rate sits at 13.9%, double the overall unemployment rate. Furthermore, job creation for Canadian youth is slowing to a halt, less than 1% of jobs created since 2009 were for this demographic. And while that’s nothing to be proud of, it is actually an improvement from other post-recession periods – where the unemployment rate stood at 19.2% in 1983, 17.2% in 1993.
We feel the more telling story lies elsewhere. In the pre-recession hey-day of 2005, the CGA Association of Canada found that 24.6% of young Canadians were underemployed. We must ask why.
This is not to say that youth unemployment is not a problem. It most certainly is. And it is also not to sound entitled, selfish, or declare a war on hard work – all criticisms routinely lobbed at millennials.  But we need to start asking better questions about the work today’s youth doing, and the skills they acquire: if you have a job, is it a good job that matches your skills? If you do not have a job, how can you get past survival and into the right job?
Concern about opportunity for Canadian youth is bubbling up in some form or another across the country:  individuals not yielding a sufficient enough return on their education, students caught in low-quality job traps, skilled graduates taking unpaid internships well into their twenties, firms coping with skilled labour shortages and mismatches, parents generally fretting their children will be unable to build a better life on their own, Gen-Yers feeling resentful towards older generations, and baby boomers looking on young generations as entitled and lazy.
As this mixture of tension and unease brews, real labour market problems are taking root. A young, underemployed Canadian will never make up for lost earnings and stunted career growth, will struggle to repay student debt, save for a house and prepare for retirement. That’s not to mention the impact on the Canadian economy of weaker consumer demand, loss of tax revenue and a slower housing market.
Although the policy options may not be very different to unemployment, we must make sure that they are inclusive of young Canadians facing underemployment.
A good place to start is focusing on tactics to better inform young people about the opportunities available to them. The U.S. has made some headway with President Obama’s new college scorecard initiative through which colleges must disclose information about value, affordability and career placements of different majors.
Second, employers must invest in young graduates that are stuck in the vicious cycle where they have no job because they have no experience because, again, they have no job. The Conference Board of Canada found that Canadian employers have reduced their investments in training by 40% since 1993. Higher education does not necessarily equate job readiness and employers are needed partners on the bridge from education to employment.
In the long run we must face the daunting task of restructuring our education system. Higher education institutions must be more in tune with the needs of students, employers and the labour market. When it was deemed Canada should embrace a “knowledge economy” in the 90’s, thousands of Canadians pursued higher education. Now the pendulum has swung the other way, with calls for Canadians to rush skills trades, most certainly flooding colleges and apprentice programs. Our policy approaches have been overly reactive, sewing consequences generations down the line.
Yes, many young Canadians can get a job – but do they have the right job? As young Canadians trying to succeed, to contribute, and be productive members of society, we do not think it sounds entitled to simply ask.

The modern university: relevant? Yes, but is this enough?

On May 9, 2013 Canada 2020 staff attended a Canadian Club of Ottawa lunch at which Allan Rock, President of the University of Ottawa and former Chretien-era cabinet minister, delivered a speech entitled “The Skills Mismatch and the Myth of the Irrelevant University”.
The speech reiterated that getting a university degree continues to lead to higher lifetime wages. Rock emphasized the pursuit of knowledge as the main goal of education (and, by extension, of the university). He stressed that thoughtful analysis and critical thinking will always be essential skills, and that universities remain the sole institutions where these core competencies are inculcated amongst the next generation.
As we perhaps should have expected, the speech and the short discussion that followed were somewhat self-congratulatory. Rock stressed the continued relevance of universities, especially in today’s knowledge economy. This is beyond dispute but, upon further reflection, I wonder if perhaps we should be asking another question: is simply being ‘relevant’ enough? The answer is no.
This narrow view of knowledge trivializes learning outside of the academic setting, which is both crucial and complementary.
When asked if universities were doing enough to prepare young graduates for the job market, Rock answered that graduates were still being hired and this in itself proved that universities were fulfilling their duties. Is this proof enough? In the United States, the McKinsey Centre for Government found that while 70% of educators thought that graduates were adequately prepared for the job market, less than 50% of employers and young graduates agreed. This is a disconnect, and a concerning one, especially in view of ever increasing tuition fees and higher and higher degree requirements to get a “good job”.
While I will not argue against having a university degree (I, after all, have a master’s degree) I do find that President Rock’s arguments trivialize the challenges facing the next generation. McKinsey & Company rather elegantly points out the paradox: “Higher education has never been more valuable but 48% of university graduates in the U.S. are now in jobs that don’t require degrees”. Although there is a lack of data on this phenomenon in Canada, the situation is likely not much different here.
One of the only comprehensive reports on the issue in Canada, by the Certified General Accountants Association of Canada, finds that in 2005, 24.6% of young university graduates held jobs that required less than a university degree.
Apparently the future is bright for University of Ottawa grads, though. The university self-reports that two years after graduation 82% of graduates working full time are employed in a field related to their studies. It would be interesting to know what they define as a related field, what percentage are actually working full time, and what methodology has been used, since these findings seem contrary to overall employment trends. The full-time/part-time/temporary axis is particularly important: working on temporary contracts is an increasingly normal – if shaky – reality for many young Canadians.
This is not to trivialize the university experience, nor the importance of higher education in general. But we must recognize that the modern university has to adapt and continually strive to do better. Young graduates are facing tremendous challenges and universities must open their eyes to these. In a world where the job market evolves at such a rapid pace, all actors – from industry to the not-for-profit sector – must be involved in creating interactive, dynamic and innovative learning environments. As demand for skills evolves faster than universities are adapting, partnerships beyond co-ops and internships are all the more crucial to training graduates.
Universities could do more by involving companies, multiple levels of governments and not-for-profits in their institutions – and, yes, this can be achieved without compromising academic freedom.
Courses should include more hands-on and practical case studies: in an ideal world, public policy students should take part in real strategic policy development in partnership with government departments and business students should develop and participate in the implementation of new supply chain systems for existing SMEs, not fictitious ones. Some universities have been better than others at providing such an experience for their students (notably the University of Waterloo and its tech industry partners).
Such a model would require more resources from all actors and likely yield smaller cohorts of students, but the young graduates trained would be the best and brightest in their field. The next generation of students expects interactive learning environments, with meaningful outlets for their ideas and entrepreneurial spirits. Millennials have more tools than ever to realize their aspirations: universities must keep up or risk losing this cohort. Indeed the demand for entrepreneurial university programs (diplomas and degrees in innovation, strategy and entrepreneurship) is already at an all-time high in Canada.
Certainly universities are still relevant and they are getting better at creating opportunities for their students. But could they be doing better? Yes. And unless university administrators recognize this, the ‘myth’ of the irrelevant university will persist.

The New Deal for Skills-Based Graduates

Unemployment rates remain high and the latest data shows an uptick. Why is this, when so many businesses and companies are desperate for trained workers?
The key to addressing this disconnect is to bring balance to the supply and demand for postsecondary graduates. In many sectors, this equation has lost its equilibrium. The proof is found across numerous communities and in many market segments where people’s skills just don’t match the available jobs.
Postsecondary education has been producing a steady supply of graduates, without enough attention to the demand side of the equation. In fact, our success in turning out graduates is in many ways adding to the supply-demand imbalance. The mantra of ‘build it and they will come’ does not serve colleges or their communities well in the short or long term.
The move towards the knowledge-based economy has been underway for decades, gaining momentum and fuelled by capitalism taking flight around the globe with China, India, Brazil and Russia garnering much of the attention. With traditionally weaker economies expanding and driving the emerging economic powers up the value chain the trend for specific-skilled jobs and workers will only accelerate.
How did we get to this point of imbalance? The knowledge-based economy shift has moved many low-skilled, high-paying jobs offshore and left low-paying, high-skilled and professional jobs requiring specific technical skills within our borders. We are faced with the need to raise the education attainment level of our population to ensure we have the skilled labour force needed for continued prosperity.
The framework for responding to this need has created a rush to increase student enrolment without the necessary focus and has yielded undesirable results –an undersupply of graduates in key disciplines, infrastructure that will become increasingly difficult to sustain, and most notably, a lack of innovative solutions and initiatives leading to a slow re-tooling of postsecondary programs.
Our habitual response has failed to recognize two key factors. First, the pool of skilled labour continues to shrink, which creates an urgent need to match graduates to marketplace needs. Second, the conventional way of supplying graduates is unfocused and does not ensure opportunities are met. This is evidenced by the gap between the individual skill sets, high unemployment rates and the unsatisfied needs of the knowledge-based economy.
Today, the economy does not have the capacity to absorb this historical level of waste nor should these historical shortcomings be accepted.
In the past, the unfocused supply could be absorbed within the fabric of the economy, masking inefficiency both in terms of financial and human costs. Today, the economy does not have the capacity to absorb this historical level of waste nor should these historical shortcomings be accepted. The continuance of the old system, primarily focused on supply, is irrational and does not address the challenge before us.
What is required is a new focused framework that is relative to today; that has direct links between the postsecondary student and the employer, with higher education acting as the conduit of knowledge and skill… a new deal that formalizes the link between the employer and future employee – the current student. And most importantly, a strong resolve by the private sector to work with colleges to close the skills shortage gap before it becomes lethal to the health of our economy.
The private sector has been too complacent in redefining and articulating its needs as well as expressing these needs to government, students, and parents – the public at large. Their demands on the education sector to provide specific training has been, for the most part, absent in the public forum.
An action-based approach that flips the current supply-demand approach to a demand-supply model is the most effective and efficient means to close the gap between individuals and the required skill sets, thereby returning balance to the education equation. The need for human capital is unmitigated for industries from finance to manufacturing and construction, according to forecasts from Human Resources and Skills Development Canada. Projected shortfalls of workers range from 200,000 to 1.8 million by 2031 according Dr. Rick Miner’s study Jobs Without People and People Without Jobs.
We need a resolute and focused plan that moves us to address the imbalance of our labour supply, where skill sets do not meet opportunity. This demand-driven approach requires a framework that includes proactive human resource planning in the province, a revenue and tax model that accelerates capital investment by the private sector and a learning and skill development incentive program shared by the public and private sector. While targeted investment directed at individual sectors may not be popular or palatable in some jurisdictions, the need to address the skills shortfall requires quick and decisive action. We must do things differently and not be bound by standard conventions to meet our commitments and obligations.
As a college, we will continually evolve our programs and services to fulfill our mandate. This translates into constantly innovating and investing in new programs and services with the support and foresight of industry partners, individuals, alumni and government while divesting from others. A vibrant college always continues to evolve and renew.
A healthy economy, excellent healthcare, high quality education, positive business conditions and secure retirement are dependent upon us reestablishing balance to the education equation by eliminating the gap between the skills shortage and those required by the marketplace.