A highly skilled, educated and flexible labour force, is a prerequisite for success in today’s knowledge-based economy. Canadians value education and our post-secondary education attainment rates are already high by international standards. We can remain ahead of the curve by continuing to increase our education and skills. In short, we must make the most of the skills and talents of all Canadians and ensure there is opportunity for all to contribute to, and share in, Canada’s future prosperity.
We have to upgrade our skills and effectiveness through excellence in education systems and better workplace training. Canada has a tremendous opportunity to enhance the quality of our education and skills, and to increase the number of Canadians working. To maintain labour force growth, we need a range of sources—addressing under-representation of certain groups in the workforce, removing disincentives to work and increasing immigration of skilled workers. Improved workforce adaptability and mobility will also be important.
Making progress in these areas means that more Canadians will have opportunities for better jobs and higher incomes Also important will be the safety, creativity and sustainability of the communities within which Canadians live and the high quality of the social programs on which they rely.
Better skills and higher education levels enable Canadians to secure better jobs and earn higher wages. This is fundamental to securing Canada’s long-term prosperity. Similarly, to remain prosperous, our economy needs a workforce that is flexible and adaptable and people who embrace lifelong learning.
To meet these needs, our systems and institutions must:
In doing so, we will raise Canada’s overall skill level, enhance our ability to harness new ideas and technologies and set in place essential conditions for sustained growth and rising standards of living.
Governments, educational institutions, business, labour and individuals all have important roles to play in ensuring that all Canadians have the opportunity to develop their skills and use their knowledge to their full potential. This is perhaps the single most important investment we can collectively make to promote economic growth.
In addition to bringing more people into Canada’s labour force, we must constantly strive to improve the education and skill level of all Canadians. In other words, a world-class Canadian workforce must continually compete on quality. This means ensuring access and excellence throughout the education and skills continuum, starting with quality early learning and child care, and continuing through to post-secondary education and adult skills training and retraining.
The foundation of a world-class workforce begins with early learning and child care that helps ensure children arrive at school ready to learn. This provides the basis for learning later in life and puts children on the path of lifelong achievement.
Federal Support for Early Learning and Child Care Is Significant
The Government of Canada makes significant investments in early learning and child care (ELCC) and early childhood development, in collaboration with provinces and territories. These national investments are embodied in the 2000 Early Childhood Development Agreement and the 2003 Multilateral Framework Agreement on ELCC. Together, these agreements will provide just over $4 billion over the next five years in federal support to provinces and territories.
Building on these commitments, Budget 2005 provided a further $5 billion over the same period in support of a new ELCC initiative in collaboration with provinces and territories.
In total, the Government of Canada is providing $9 billion over the next five years to help enhance ELCC and early childhood development programs and services across Canada. Further investments will be made in collaboration with provinces and territories.
Canada benefits from effective primary and secondary school systems, with our youth ranking well in international comparisons, ahead of all but a few OECD countries. Young Canadians are already acquiring good levels of literacy in reading, math and science at primary and secondary schools, well above the OECD average and the U.S. Maintaining and building on this key advantage will make an important contribution to Canada’s future competitiveness and prosperity.
The Government of Canada is committed to advancing and investing in literacy as an essential component to building a learning society. Since 1988 the federal National Literacy Secretariat has been working with provinces, territories and other partners to increase awareness and understanding of literacy issues and to ensure Canadians have opportunities to develop and improve the ever-expanding literacy skills needed to function at home, at work and in the community.
The basic skills of Canadian workers are improving, although more will be required. In the decade to 2004, the number of working-age Canadians (25-64 years old) who had not completed high school fell from 19 per cent to 11 per cent. While this significant progress is encouraging, high school non-completion remains an issue, because leaving school prematurely can result in a high personal cost (e.g. lower wages), as well as a significant social cost related to the loss of human potential. These costs are likely to become more significant as other countries increase the education level of their workforces.
An affordable, accessible and quality post-secondary education system that is responsive to the needs of the labour market is essential to providing Canadians with the skills and adaptability required to be successful in today’s rapidly changing economy. The majority of the new jobs created today require a post-secondary degree or diploma. Workers that possess the education and skills most in demand in the workplace are more likely to have and keep jobs.
A post-secondary degree or diploma also provides benefits to the individual that go beyond simply finding a job. People with post-secondary education have the opportunity to earn significantly higher wages. Individuals—working full time over a full year—with a bachelor’s degree earn on average about 50 per cent more than high school graduates.
These benefits are recognized by Canadians, who know the personal and social value of post-secondary education. Today, more than 9 out of 10 youth surveyed aspire to post-secondary education. In fact, post-secondary enrolment in Canada is at an all-time high and is still growing. Canada should work to ensure that this trend in increasing enrolment continues.
All Canadians, no matter what their background, must have the opportunity to pursue post-secondary education. Minimizing barriers to post-secondary access is a critical part of improving educational outcomes and creating opportunities for all Canadians.
Numerous studies show that the decision to pursue post-secondary education is influenced by a number of interrelated factors such as parents’ education levels, secondary school performance, living in an urban or rural area and interest and motivation. The combined impact of these factors may be particularly acute for certain segments of the population whose participation rates (particularly for university) are below the Canadian average—including individuals from low-income families, persons with disabilities and individuals from rural areas.
Although not the primary determinant of participation in post-secondary education, family income remains the most common lens through which participation rates are often viewed. Financial barriers to post-secondary education are declining due to improvements in student financial assistance (e.g. the Canadian Opportunities Strategy, recent increases in Canada Student Loan limits, the introduction of the Canada Access Grant for first-year students from low-income families, and improvements in debt management measures for students facing exceptional financial difficulty in repaying their student debt). It is important that Canada remains vigilant to ensure that barriers to participation in post-secondary education are minimized.
Government of Canada support for post-secondary education amounts to close to $9 billion each year, including an estimated $3.8 billion in both cash and tax points through the Canada Social Transfer, and $5 billion in direct spending and tax expenditures. Total federal cash transfers and direct Federal support ($7 billion) have remained relatively constant at approximately 25 per cent of overall support for the post-secondary sector. In recent years, federal spending on post-secondary education has been increasingly focused on access and research excellence.
Direct support helps students and families save for future education via the tax system, as well as promote access to post-secondary education through grants, scholarships and loan programs. The tax system also helps offset the costs of post-secondary education. In addition, the Government of Canada provides significant funding for research and innovation through granting councils, research chairs and other measures in support of the growth agenda (see Chapter 5).
The Government of Canada recognizes the importance of achieving excellence in post-secondary education, and remains committed to working with provincial and territorial governments, as well as universities, colleges, educators and students, to ensure a dynamic and accessible post-secondary education system.
Canadians are among the most highly educated people in the world. In 2002, 43 per cent of our population aged 25-64 had some post-secondary education—the highest percentage of all OECD countries. For younger Canadians, the story is even better: for those aged 25-34, this proportion increases to 51 per cent—again the highest level in the OECD.
Differences emerge, however, when looking at college and university attainment rates individually. Canada is well ahead of the United States with respect to college level attainment (for those aged 25-64) but not as successful when it comes to university attainment, where the U.S. surpasses Canada.
Several countries, including the United Kingdom, the United States and Australia, are striving to make improvements to their post-secondary education systems in order to position themselves for future global competition. Canada must continue to strive for excellence in post-secondary education, both to produce the calibre of graduates best suited to the global labour market, and to ensure that Canada can attract the best and brightest students, professors and researchers to our colleges and universities.
A nation’s innovative capacity is a critical determinant of its economic growth. Canada’s future ability to innovate depends not only on the number of post-secondary graduates, but also on their field of study, their educational environment, the extent of their international experience and the level that they reach.
Workers with advanced degrees in science, engineering and mathematics increase the capacity of firms to conduct and invest in research and development and to successfully adopt new technologies. As well, professionally trained managers foster the creation of new businesses and secure the commercialization of new products and innovative technologies. Individuals with both strong science and business backgrounds often act as the key links between the research laboratory and the marketplace, and facilitate the transfer of knowledge needed to translate research leadership into economic success. Canada can do more to foster the development of workers with both science and business expertise.
On these measures, Canada’s performance is weaker than it should be. When looking at the proportion of youth with a university degree in science, Canada lags only slightly behind the U.S., which itself ranks in the middle among OECD countries. However, when it comes to the proportion of youth with a university degree in business, Canada lags far behind the United States, which is at the top of the OECD rankings.
It is important to have a sufficient number of people pursuing graduate education, as these students are the most likely to be at the forefront of the latest technological breakthroughs. However, relatively fewer Canadian undergraduates pursue graduate studies. In spite of increases in post-secondary enrolment, Canada still has a lower proportion of its population—by almost one-half—with a master’s or Ph.D. degree than does the U.S. Although it is difficult to compare higher education qualifications across countries, OECD data on qualifications from advanced research programs—which generally correspond to doctorates—suggest that Canada has only an average performance on the training of doctorates, lagging the United States and many other countries.
Advanced studies at the graduate and Ph.D. levels provide students with research experience, which is the skill set that technology-intensive firms need to support their technology development and adoption activities. Fewer people in Canada with graduate degrees means, for example, fewer replacements for aging professors, research and development workers and professionally trained managers. In a global, knowledge-based economy, these shortfalls may take on increasing importance, especially with emerging economies like India and China graduating significant numbers of students with advanced degrees (engineering in particular).
In order to benefit fully from an increased supply of well-educated workers, particularly at the graduate level and in the fields of science, engineering, mathematics and business, Canada must ensure that individuals have the opportunity to apply their skills in a business environment that fosters innovation and growth.
Finally, the quality of the environment in which students learn is also important. Facilities that are already or are at risk of becoming crowded, poorly maintained or out-of-date hurt the overall quality of education offered. This diminishes the ability of the post-secondary system to attract students and produce graduates that are qualified to use the most technologically advanced equipment and impedes capacity to perform top-calibre research. It is important to ensure that university and college capacity keeps up with growing enrolments and students’ learning and training needs.
The Government’s Investments Have Created a World-Class University Research Environment
"The federal government has invested substantially in knowledge creation since 1997 through increased funding to the federal research granting agencies and by establishing several key programs such as the Canada Foundation for Innovation, the Canada Research Chairs, a permanent program to fund the indirect costs of research, and increased financial support to graduate students. This has been a bold and coherent strategy.
It would be hard to overstate the impact that these programs have had on Canada’s universities. There’s a new vitality on our campuses, and a growing recognition globally that Canada is a major player in research."
Momentum—The 2005 Report on University Research and Knowledge Transfer
Workers in the skilled trades are important contributors to Canadian prosperity. These workers need a strong educational base and regular upgrading of their skills to keep up with change and competition. Colleges and apprenticeship programs are critical providers of this training. Labour and business must play a role. All stakeholders must work together effectively to support the acquisition of literacy and essential skills, apprenticeships and skills upgrading in the workplace.
Technological change is altering the skills and work environment for skilled trades. These impacts vary from "deskilling" (e.g. the introduction of pre-fabricated materials on job sites) to skill enhancing (e.g. new computer-based technologies) and vary across occupations and trades. Many trades are targeting higher levels of certification and training in their members.
A world-class workforce is adaptable and committed to lifelong learning that does not end after completion of formal education. Today, workers are frequently called upon to adapt to new technology and work processes throughout the course of their careers. Providing access to learning and skills upgrading opportunities to achieve this adaptation will be important. This is particularly true for members of the current workforce who do not have a post-secondary degree or diploma and who, without such opportunities, may be at risk of being left behind.
In spite of high rates of post-secondary education overall, there is still a relatively large pool of workers with low skill levels. Over 40 per cent of adult Canadians do not meet the minimum literacy standard deemed necessary to function and succeed in the knowledge-based economy.
Cooperative education programs enable students to gain an understanding of the kinds of skills needed in the workplace. Creating opportunities for more students to gain private sector experience would better prepare young Canadians for the workplace.
An increasing emphasis on improved literacy and lifelong learning requires more training and greater investments by employers. Yet Canada currently has a lower rate of workplace training investment by firms and individuals than some competing countries. The 2003 OECD Employment Outlook reports that 31 per cent of Canadian workers participated in employer-sponsored training, compared to 35 per cent for the United States and 45 per cent for the United Kingdom. Between 1997 and 2002, the rate of participation in employer-supported training increased only marginally.
For workers in small enterprises and with low skill levels, the current training investment trends mean poor access to formal training—leading to an increased skill and income polarization. This can be exacerbated by literacy problems. To illustrate, in OECD countries employees with trade certificates are half as likely, and employees with less than a high school diploma are five times less likely, to receive employer-sponsored training as those with a university degree. Furthermore, employees in small and medium-sized enterprises are only half as likely to receive formal training as those in large enterprises.
In sum, underinvestment and low participation in workplace training need to be addressed. Canadian workers must be supported by a culture of lifelong learning and stronger commitments by employers to enhanced workplace-based skills development.
Broad Policy Directions
Enhancing Canada’s World-Class Workforce
As discussed in Chapter 3, Canada’s aging population is expected to result in a decrease in the share of our population that is in the workforce. The projected decline in the number of people working will gradually reduce Canada’s ability to continue to improve living standards. This can be mitigated in part by increases in the productivity of Canadians and greater workforce participation.
Improving the inclusiveness of Canada’s labour market can help to offset the declining rate of growth in the workforce as the population ages. This goal could be achieved through increased workforce participation by a number of groups in Canada, including older workers, persons with disabilities, recent immigrants and low-income Canadians. All of these groups continue to have lower employment rates than the overall Canadian population. As noted in Chapter 3, raising the employment rate of these groups would increase Canada’s GDP per capita.
Older Canadians who wish to remain in the workforce represent an important resource. Canada lags behind a number of countries, including the U.S., in terms of the employment rate of those aged 55-64.
It is important that older Canadians who want to work are not faced with institutional and financial disincentives to doing so. One challenge in this regard is to ensure the capacity of older workers to retain employment and earning levels—they may need employment assistance services. Moreover, firms could be encouraged to provide workplace training for, and employment opportunities to, older workers. We also need to consider providing more mentorship and knowledge-transfer opportunities between older and younger workers.
The public pension system in Canada ranks among the best in the world in providing basic retirement income for seniors, while remaining affordable and sustainable. Still, our retirement income system must be able to adequately accommodate a growing variety of job types and retirement transitions. This would help to raise the level of workforce participation of older workers, while ensuring Canadians continue to have adequate income in retirement. The legislated review of the Canada Pension Plan with provincial co-stewards every three years provides such an opportunity.
Educational and employment outcomes for persons with disabilities are lower than those of Canadians without disabilities. For example, young persons (aged 15-24) with disabilities are less likely to attend school than those of the same age without disabilities (52 per cent versus 68 per cent). Adults with disabilities are also over three times more likely to be out of the labour force than adults without disabilities.
Efforts must continue to be made to improve the inclusiveness of Canada’s workforce by removing barriers to post-secondary education, specialized training and to workforce participation for persons with disabilities who wish to enter or remain in the workforce.
Immigration not only enriches Canada’s diversity, it also bolsters our labour force and our prosperity. Immigration is an important source of labour force growth and is expected to account for all of the net growth in Canada’s population within the next 10 years, if current trends continue. All other things being equal, to maintain the annual labour force growth rate observed between 1990 and 2004 (1.4 per cent) through to 2050, assuming constant birth rates, annual immigration levels would have to more than quadruple by then, rising to almost 900,000 annually.
Canada’s openness to immigration provides an important competitive advantage. More than 50 per cent of recent immigrants have some post-secondary education or trades certification. Incoming immigrants are, on average, more highly educated than the Canadian-born population, raising Canada’s overall education attainment level.
Increasing the number of skilled and educated immigrants—coupled with improved labour market integration policies and practices—would ensure continuing growth in the labour force, help minimize localized labour shortages and facilitate labour market adjustments in years to come. Higher employment rates for immigrants would also help mitigate the expected decline in the share of Canada’s population in the workforce and, consequently, contribute positively to Canada’s living standards.
The challenge lies in ensuring that the immigration system can meet the needs of the economy and helps fill gaps, and that this inflow of new, skilled, talented individuals can easily integrate into the workforce and the community. In this regard, provinces and professional regulatory bodies have crucial roles to play. Many immigrants have difficulty continuing in the professions and careers in which they were engaged in their country of origin. For example, immigrants who arrived in Canada in the first half of the 1990s have experienced lower earnings and poorer labour market outcomes relative to native-born Canadians with similar levels of education and skills.
Recent increased investments in settlement programs, advanced language training for work, and efforts to ease the recognition of the credentials of newcomers to Canada will speed the integration of immigrants into the workforce. This will enable them to more fully use their skills in Canada.
Thus, while Canada is working from a good base, our immigration system needs to be examined for gaps to see how we can do even better. Before increasing overall levels of immigration, we must ensure that the immigration system operates in an efficient and effective way in meeting Canadian objectives. Our immigration strategy must be a balance between increasing the number of immigrants coming to Canada to meet Canada’s evolving labour force needs, and having immigrant integration policies and practices that ensure their full participation in the workforce and the community.
Participation in the workforce is a challenge for many low- and modest-income Canadians. Social assistance recipients, in particular, face significant financial barriers to paid employment: moving into the workforce often means facing a series of obstacles that may make them financially worse off. All orders of government must work together to find ways to reduce the barriers that have prevented many low-income Canadians from participating fully in the workforce, help them achieve self-sufficiency and contribute to higher standards of living for everyone in the long run (see Chapter 7 for additional information).
In sum, strategies to expand our workforce and make it more inclusive are needed to help secure our collective future prosperity. However, numbers are not everything. In fact, raising employment rates of under-represented groups to the national average will only close a small part of our income gap with the U.S. (as discussed in Chapter 3). And more than quadrupling the immigration levels will just maintain the current rate of labour force growth. Moreover, measures that increase the quantity of Canadian workers must be set against the realities and pressures brought about by the global competition for talent.
Broad Policy Directions
Meeting the Demographic Challenge
Currently, there is a greater percentage of Aboriginal youth under the age of 25 than in the rest of the Canadian population. These youth are poised to enter the labour market, enter post-secondary education or move on to advanced skills training in the next three to five years. However, Aboriginal Canadians continue to face a number of barriers to successful labour market participation. In 2001, 5.3 per cent of young Aboriginal Canadians (aged 15-24) had a university degree or college diploma, as compared to 15.7 per cent of all Canadians of the same age group. On reserve, only about 2.5 per cent of the young Aboriginal population had a university degree or college diploma.
Many Aboriginal Canadians also face poor employment prospects, especially if they live in communities where there are limited economic opportunities. For Aboriginal Canadians who have a post-secondary degree or diploma and who live off reserve, the employment rate is virtually the same as that for non-Aboriginal Canadians.
Although gaps are closing, significant improvements in Aboriginal Canadians’ participation in higher education, and readiness for the labour market, would help them participate fully in the economy.
Broad Policy Directions
Creating Aboriginal Opportunities
Canadians invest a lot in their education, so it is important to ensure that they can easily find, and relocate to, where their education and skills are in demand. Canada enjoys a fairly mobile population and labour force, a key factor in adapting quickly and efficiently to changes in the structure of the economy. With the profound changes in the global economy currently underway, this flexibility may become increasingly important.
Initiatives, such as the 1996 employment insurance reform, and efforts under the Agreement on Internal Trade to remove inter-provincial barriers to labour mobility, have increased labour mobility. Nonetheless, regional unemployment rates continue to vary more across provinces than across U.S. regions, suggesting that labour mobility remains an issue for some provinces more than others. Provinces hold some of the keys to increasing labour mobility, including improved credential recognition and reduced barriers to internal trade.
While the Government of Canada is working with the provinces to improve labour mobility across the country, it is also investing through national programs and the regional development agencies to improve employment opportunities in each region. Priority areas for regional agency action include supporting research and technology infrastructure, helping firms become more innovative, building local capacity to deal with adjustment challenges, and diversifying the range of economic activity.
Mobility within a nation’s borders is important, but so too is international mobility and experience. In the past, the most highly skilled workers moved to advanced economies to employ their skills. The globalization of production has increased opportunities for these workers to apply their skills in their home country. At the same time, labour mobility between advanced economies has also increased. All of this results in more intense competition for talent. Workers with experience outside of Canada can bring home new skills, knowledge and practices, as well as networks of international contacts, all of which are important contributions to Canada’s competitive advantage.
Timely, accurate and relevant labour market information helps students and workers make well-informed decisions about educational paths, careers and jobs. It also influences decisions regarding business investment. Canada has good aggregate labour market information, but is less successful in getting this information to individuals, firms and educational institutions. Labour market information at the regional level could be improved. Enhanced labour market information would help better address supply and demand imbalances in some areas of the labour market where there are workers without jobs, or jobs without workers.
The Employment Insurance (EI) Program is the primary labour market program in Canada. It provides income replacement in the event of a job loss, and is designed to allow workers the time to find a job that is a good match to their skills and abilities. EI active employment measures, such as skills training, are designed to enhance the ability of Canadians to prepare for, obtain and maintain employment. It is therefore important to ensure that EI, on an ongoing basis, meets the changing needs of Canadians in the workforce; remains in line with evolving labour market needs; and maximizes the potential contribution of the program to the mobility, flexibility and adaptability of the labour force.
Broad Policy Directions
Improving Labour Mobility and Labour Market Efficiency