Canadian Chamber of Commerce – Preparing Canada’s Youth for the Jobs of Tomorrow

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On February 8, 2012, the Canadian Chamber of Commerce launched a 10-point national plan to improve Canada’s economic competitiveness. The Chamber will harness the power and voice of its national network to press for action from all levels of government, businesses and other key stakeholders.

Canadian Chamber-member businesses of all sizes and in all regions of the country cite labour and skill shortages as the greatest threat to their future prosperity. In the Bank of Canada’s winter 2011-12 Business Outlook Survey, 29 per cent of firms reported labour shortages are restricting their ability to meet demand, a three-year high. Going forward, labour shortages are expected to worsen as an increasing number of Canadians retire and growth in the labour force slows.

Additionally, rapid technological change and intense global competition will increase demand for highly-skilled, well-educated workers who can develop the new technologies and bring them to market and who can exploit the new technologies in the production of high value-added goods and services.

Our youth are the future of this country. Equipping them with the skills and knowledge to successfully transition and integrate into the labour market will ensure Canada’s economy remains competitive in the years to come.

Young People Hit Hard by the Economic and Financial Crisis

In Canada, 14.5 per cent of young people, ages 15 to 24, are unemployed.  In the United States, 17.6 per cent of young Americans are looking for work. Spain and Greece have the highest youth unemployment rates in Europe — 51.4 per cent and 47.2 per cent, respectively.

Unemployment can take a heavy toll on young people and their families: depression, stress, disillusionment and isolation. Many young people are moving back home with their parents. This is the Boomerang Generation.

Unemployment also imposes direct costs on the economy: increased unemployment benefits, lost income tax revenues and lost output. The social consequences may be as significant as the economic consequences. The collective frustration of a generation of unemployed youth is certainly a contributing factor behind the political unrest in countries across the Middle East and North Africa and protests in many European countries. Rising crime rates in the some countries and increased drug use are also consequences for a generation of youth that has become disheartened about the future.

Stay In School!

In high school, students acquire the minimum competencies needed to enter the labour market —notably, literacy and numeracy skills.

Young men and women who drop out of high school are much more likely to be unemployed than their counterparts who graduate. In 2009-2010, the unemployment rate for young adults (20 to 24 years of age) who had dropped out of high school was 23.2 per cent, almost double the rate of 11.9 per cent among high school graduates in the same age bracket. High school dropouts also earn less throughout their lives.

School enrollment in Canada is compulsory up to the age of 16 in all provinces and territories, barring Manitoba, New Brunswick and Ontario in which the school-leaving age is 18 or graduation, whichever comes first. Studies have found that raising the school-leaving age above 16 lowers the probability of being unemployed and boosts earnings.

Improving the Transition from School to Work

Apprenticeship training programs are an effective path to a career in the skilled trades. The Netherlands, Germany and Austria experienced milder youth unemployment in the global economic downturn partly because of their strong apprenticeship traditions.  Seventy per cent of Dutch youth, 20 to 24 years of age, are getting valuable work experience while in school. In Germany, one quarter of employers provide formal apprenticeship training and almost two-thirds of schoolchildren undertake apprenticeships. Many apprenticeship positions turn into permanent jobs.

Entrepreneurship skills training programs can be of value to youth seeking self-employment opportunities. In 2008, the University of Miami introduced The Launch Pad, an interdisciplinary entrepreneurship resource center where students can learn that entrepreneurship is a career choice, and one that can be started right away. The Center offers guidance in learning business basics, developing ideas, networking with industry experts and investors, and strategizing to take ventures to the next level.

Vocational education also offers the potential to reduce youth unemployment. The focus is traditionally non-academic and related to a specific trade, occupation or vocation. There is wide evidence that suggests that high-quality vocational education in high school, particularly class-based learning combined with work-based apprenticeships, can help engage youth who have become disaffected with academic education.  Nonetheless, less than 10 per cent of upper secondary school students attend vocational courses in Canada. A change in mindset is required to remove the stigma attached to technical and vocational occupations.

Post-Secondary Education

Post-secondary institutions equip students with important skills — advanced critical-thinking, ability to generate new knowledge and solve problems, and capacity to communicate clearly. The more educated the work force, the easier it is to shift into higher value-added economic activity that supports higher wages and a more competitive economy.

According to the Association of Universities and Colleges of Canada, from 1990 to 2010, about 80 per cent of the new professional and management positions created in Canada were filled by university graduates. Technical, administrative and health-support positions were by far the largest area of growth for college graduates. Jobs for people with high school diploma, or less, are disappearing.

Despite the benefits of higher education, university participation rates in Canada significantly trail those of many other countries. Canada ranks 21st among 31 OECD countries in the proportion of youth who enroll in full-time university study soon after leaving high school. Canada places 15th among OECD countries in the proportion of the population 25 to 34 years of age with a university degree. Being in the middle of the pack is simply not good enough.

Additionally, Aboriginal Canadians, the youngest and fastest growing segment of Canada’s population continues to experience lower participation rates in universities and lower degree attainment rates. Only 7.7 per cent of Aboriginal peoples have a university degree compared to 23.4 per cent of non-Aboriginal Canadians, and this gap has widened significantly since 1981.

The 2006 Census reported almost 470,000 Aboriginal Canadians under the age of 20. They are a significant potential source of skilled labour as Canada’s population ages. Their full participation in Canada’s education system is crucial to meeting future labour market needs.

A national commitment to first class education is essential. Canadians from across the country and from all walks of life should have an opportunity to pursue post-secondary education. Many countries around the world are taking action to encourage further growth in university participation in the decades ahead. Canada cannot afford to fall behind in the skills race.

The Best Way to Improve Job Prospects for Youth is to Improve the Job Market Overall

Public policies aimed at improving the competitiveness of businesses will ensure job quality for all, including young people. Canada has much to gain by removing internal barriers to trade and labour mobility, work disincentives in the income support system (including Employment Insurance) and burdensome regulatory procedures that stifle productivity, slow job creation and constrain economic growth.

Creating a more competitive economy requires action on multiple fronts. Most of all, it requires a strategy to unleash and harness the full potential of our young people so they can succeed and fully contribute to Canada’s economic prosperity now and in the future. 

Tina Kremmidas is the Chief Economist of the Canadian Chamber of Commerce

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