Advanced Skills Shortages in Canada – Getting to the Root of the Problem

In November of last year, the Canadian Chamber of Commerce published a report on skills shortages in Canada, expressing a view felt by many: the skills shortage is a critical economic issue that impacts Canadian productivity, and ultimately, competitiveness in a global market. The Chamber commented in the report that skills shortages are not “just a ‘made-in-Canada’ problem”, saying that the country is in a global fight for talent.

As a representative body for all businesses in Canada, the Chamber hit the proverbial nail on the head. Industry in Canada is expected to suffer greatly with the aging working population slowly moving out of the market, affecting sectors from the food industry to mining, construction to technology. A survey put out by the Canadian Federation for Independent Business in 2006 found that because of a lack of skilled workers, many CFIB members were choosing to function with fewer employees and ignore new business opportunities. See the problem? Without the people with the right skills, there simply won’t be the same level of economic flourish that Canada has seen in the past—notwithstanding the current economic downturn Canada is experiencing.

Doing something about the issue

The Association of Community Colleges (ACCC) is a national, voluntary membership organization representing colleges and institutes to government, business and industry, both in Canada and internationally. The ACCC interacts with federal departments and agencies on members’ behalf and links college capabilities to national industries.

In a snapshot of the current skills shortage crisis in Canada, the ACCC reported that the construction sector will need approximately 260,000 new workers over the next eight years. Construction is not the only industry that will suffer without skilled workers. The ACCC has done an abundance of research on the industries that will be hard hit by advanced skills shortages.

The ACCC reported that the Canadian Food Industry Council indicates a skill shortage in the areas of meat cutting, floral design, natural foods, deli, bakery, pharmacy and store management. Expertise is needed in these areas, because as James Knight, CEO of the ACCC says “food isn’t something people just stop consuming, even if there is recession—and people just don’t realize how fundamental the food industry is.” He adds: “We need people interested in careers in food safety, real estate, advertising, store design, finance, information technology, marketing, franchise operations, merchandising, and human resources just to mention a few.”

Up-and-coming industries to support

With the growth of environmentally friendly operations, and new alternative energy businesses cropping up across the country, Knight says that there are new industries that will need advanced skills not currently available. “Eco-environment initiatives require certain advanced skills. There are new wind farms and operations producing solar energy that need sophisticated technical support for both installation and maintenance,” he explains.

The problem is not purely demographic

One thing is certain—there is not enough population growth to compensate for Canadian skilled employees who are retiring. A recent statistic reported that the first baby boomers will reach retirement age of 65 by 2012. In 2015, the Canadian government believes that 48% of persons earning a living will be between the ages of 45 and64. This means, in short, that Canada’s pool of human resources will be short about one million persons by 2020. And according to Knight, an important part of the answer is the development of the institutions that will train and prepare the graduates with the advanced skills needed to supply industries.

Knight says that the central issue has become the capacity limitations of colleges and institutes of technology. “We have a situation where thousands of qualified students are turned away every year because there aren’t spaces for them,” he laments. “This is tragic because when these students graduate, they will almost certainly become employed. College grads have an extremely high success rate.” Knight explains what many employers are learning in today’s business landscape—college grads come out of school with employment-ready skills, and therefore are more desirable than many university grads.  “Lack of capacity in colleges is the fundamental issue we’ve been hearing from across the country. The ratio of applicants to college programs in some cases is five to one, or ten to one, and many of these are university grads who did not find work. That is the basis of the issue,” he says.  

Healthcare is one of the areas suffering from the advanced skills crisis. There are currently 33 types of health or medical professionals trained in colleges, including lab technicians, physiotherapists, radiologists and nurses. Knight says “if you’re lucky enough to get into a college program related to health, then you’re in business, but if you can’t, you are among many who have the potential but can’t cross the threshold.”

The government’s recent announcement to provide economic stimulus to the Canadian market included significant sums of capital for infrastructure—an obvious benefit to sectors like construction, urban planning, and development. However, the concern is where the skilled workers will come from when college training is so difficult to come by. Knight points to the obvious limitation: “There will be an enormous demand for skilled carpenters, electricians, and plumbers once the infrastructure is under development to support this growth. However, where will these professionals come from if we can’t train them?”

There has been progress, but more needs to be done

The ACCC has been pressing the federal government for funding for colleges and institutes in Canada  to match the very large amounts transferred to universities. The January  federal budget committed $600 million for colleges. The next step is to allocate those funds. The plan is to expand the capacity Canadian colleges to accommodate the influx of applicants with more space, training equipment and instructors.  

Bringing more attention to this issue is paramount for the ACCC, despite the recent gains colleges and institutions have made. Knight says that the private sector is very aware of the need, but all governments could still use some education about where capital needs to be injected.

One industry report stated that in industries where there are skills shortages, six college grads are needed for each university grad. The demand for college grads is clear.

What’s Next? A More Balanced Approach?

The intense focus on universities has contributed to the shortage in advanced skills, Knight maintains: “Some governments are preoccupied with universities, despite the fact that the economy is demanding more college grads. There is also a fixation on university-based discovery research which attracts enormous public sector investment. Canada is investing billions into a particle collider in Saskatchewan, but the owner of a small business will not likely get a penny for applied research to get a new product to market. ” He adds that “it is important for governments to realize that most jobs are created by small and medium enterprises (SMEs) around the country. We must assist these businesses by supporting their access to the applied research capacities of colleges and institutes. I support discovery research conducted by universities, but the balance is wrong with more than 99 per cent of federal investment in research heading in that direction.  At least five percent should be directed to applied research at colleges carried out with and for SME partners. Investment in applied research at colleges is closely tied to job creation.”

One of the greatest concerns to the Canadian Federation for Independent Business is that governments will abandon their growing efforts to address skills and labour shortages.  “It has taken us years to get governments to recognize the current and growing labour crunch,” said Dan Kelly, CFIB’s Senior Vice-President for legislative affairs.  “We are worried that the current economic crunch will cause governments to go back to old-school job creation programs instead of working to building the labour force for the future.”

The key will be to recognize and support college and institute educational infrastructure.

As Knight says, “government investment in colleges generates a 16% rate of return—why not put more money into this system?”

More information on advanced skills shortages can be found on the ACCC website:  www.accc.ca. To contact the CFIB, visit their website at www.cfib.ca.

Fast Facts:

1. CFIB research revealed there were over 300,000 positions sitting vacant for four months or more in Canada’s SMEs.

2. Two-thirds of Canada’s SMEs felt it would become more difficult in the future, compared to only 4% believing it would become easier.

3. Even with the weaker economy, 81% of SMEs report they will maintain or increase staffing levels in the year ahead.

(Courtesy of the CFIB)

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