The Center for Literacy
Skills Shortages and Mismatches
In the years following the recession of 2007-2009 there has been a debate over whether there is, or will be, a "mismatch" between the skills that workers have and the skills employers need. Some argue that continued high unemployment since the recession is due largely to "mismatch", others find little or no evidence of a widespread mismatch at present. Another issue to consider: whether or not skills mismatch is a problem now, might it be one in the foreseeable future?
This selection of reports and commentaries show the range of the debate about skills mismatch since 2011.
Organization for Economic Cooperation and Development. (n.d.) Skills Mismatch.
http://skills.oecd.org/hotissues/skillsmismatch.html
“There are several ways to measure skills match/mismatch. Most of the academic and policy analyses on mismatch to date have focused on qualification rather than skills because of data availability. Some analyses use indirect measures of skills mismatch, but few have been based on direct measures. The Programme for the International Adult Assessment of Adult Competencies (PIAAC) will change this situation, as it will provide direct measurement of skills, as well as measures of the use of those skills at work.”
Desjardins R, & Rubenson K. (2011). An Analysis of Skill Mismatch Using Direct Measures of Skills. (EDU Working Paper No.63)
http://dx.doi.org/10.1787/5kg3nh9h52g5-en
This paper includes a literature review and an analysis of 2003-2007 Adult Literacy and Lifeskills Survey (ALLS) data relating to skills mismatch. The authors note that the upcoming PIAAC survey will allow for a more direct measure of the nature and extent of skills mismatches in participating countries. They point out that while much of the policy discourse focuses on the supply of skilled workers, the demand side of mismatch also needs to be looked at.
Conference Board of Canada. (2013). A Looming Skills Gap Threatens Ontario’s Future. [infographic]. http://www.conferenceboard.ca/infographics/skills-gap-info.aspx
Conference Board of Canada. (2013). The Need to Make Skills Work: The Cost of Ontario’s Skills Gap. http://www.conferenceboard.ca/e-library/abstract.aspx?did=5563
This Conference Board of Canada report finds that Ontario faces a skills gap that is costing it $24.3 billion in foregone GDP annually. This finding is based on the results of the Ontario Employers Skills Survey as well as an analysis of the economic impacts of skills gaps, as well as a review of Ontario and Canadian documents and data sources. The report recommends that employers increase their investments in employee training and development, that students become “consumers of education”, attentive to labour market trends, that educators adjust programs to better reflect labour market trends, and that governments to collect and share richer and more accurate labour market information.
Mallett, Ted. (2013). Help Wanted: Private sector job vacancies in Canada: Q2 2013. Canadian Federation of Independent Business.
https://www.cfib-fcei.ca/cfib-documents/rr3299.pdf
Canada’s labour market pressures eased off slightly in the second quarter of 2013 according to new job vacancy data compiled by CFIB. The percentage of jobs unfilled in the private sector dropped slightly to 2.4 per cent in the April-to-June quarter, compared to 2.5 per cent in the previous quarter. In total, the vacancy rate represents 289,800 unfilled private sector jobs, a drop of approximately 5,000 from the last estimate.
Miner, Rick. (2012). Jobs of the future: Options and opportunities. Retrieved July 4, 2012, from http://abclifeliteracy.ca/files/Jobs_of_the_Future_Final.pdf
This report provides an update on Dr. Miner’s 2010 report, People without Jobs, Jobs without People. Drawing on labour market and demographic data, the report notes that, with the ageing of the baby-boomer generation labour force participation rates are expected to decline, which is likely to slow economic growth and result in labour shortages, particularly in occupations requiring post-secondary education credentials. The report estimates that by 2031, 77% of the workforce will require a post-secondary education or training. A failure to ensure that workers have that training would result in a combination of labour shortages and high unemployment. While immigration could help to increase the size of the skilled workforce, Canada would need to target those immigrants whose credentials and work experience are easily accepted and whose language skills are strong. The report calls for greater recognition of the importance of higher education, and calls on Canadian industry to engage in more workplace training.
Miner, Rick (2010). People Without Jobs, Jobs Without People. Literacy Nova Scotia. Retrieved September 03, 2013, from http://www.nald.ca/library/research/miner/people_without/people_without.pdf
This presentation was given during the 2010 Spotlight on Learning conference, hosted by Ontario Literacy Coalition (OLC), and during Literacy Nova Scotia’s 2010 conference. Miner uses information from a variety of sources, including Statistics Canada, and refers to a number of surveys, to make the argument that unless action is taken promptly, the ageing of the population and an emerging knowledge economy will result in a situation in which large numbers of untrained workers will be looking for jobs requiring skills they do not have, while many jobs will go unfilled because of a lack of qualified candidates.
The author proposes some remedies such as increased immigration; boosting labour market participation rates among underrepresented groups; and improving literacy rates. But he notes that above all, attitudes must change so that postsecondary education or training is regarded as the norm for the majority of Canadians.
Office of the Parliamentary Budget Officer. (2014, March). Labour Market Assessment 2014. http://www.pbo-dpb.gc.ca/files/files/Labour_Note_EN.pdf
This report to Parliament analyses labour market indicators provided by Statistics Canada and finds that that most indicators remain “below trend”: employment is still recovering from the 2008-09 recession, but remains weaker than before the recession. The researchers found little evidence to support the idea of a national labour shortage or skills mismatch in Canada, although there is evidence to suggest that the labour market is tight in certain regions and sectors. Job vacancy rates are lower, and unemployment rates higher, in most provinces compared to pre-recession levels.
Tal, Benjamin. (2012). The Haves and Have Nots of Canada's Labour Market. In Focus, December 3, 2012. CIBC. http://research.cibcwm.com/economic_public/download/if_2012-1203.pdf
This analysis of Canadian job market data published by CIBC suggests a growing “skills mismatch”, defined as growing labour shortages in some occupations, alongside growing unemployment in others. The author suggests that simply asking business leaders whether they are having trouble finding skilled applicants is “hardly satisfying” unless there is evidence that employers are being forced to raise wages or increase on-the-job training. He identifies 25 occupations that account for 21% of total employment in Canada where the average unemployment rate is 1% and wages are rising at an average annual rate of 3.9%, more than double the overall rate. The report also identifies 20 occupations that show signs of labour surplus, including high unemployment rates and no wage growth. It warns that because of this mismatch, long-term unemployment will likely increase in coming years, particularly among those aged 45 and older, and that retraining will be necessary. Tal suggests that recent government plans to admit immigrants with targeted skills and to increase focus on apprenticeship will not have large enough effects to make a significant impact.
Another country where there has been some debate on the issue of possible skills mismatch has been the United States. It is important to note that labour market performance has been weaker in the U.S. than in Canada in recent years. Nevertheless, we see that the debate is running along similar lines: whether continued high unemployment reflects an incomplete recovery from a severe recession, or whether it reflects a growing mismatch between the skills workers have and the skills employers need. One of the American reports listed here finds localized mismatches in U.S. manufacturing and warns that there could be more severe mismatch in coming years; the others find little evidence of mismatch.
Shierholz, Heidi. (2014, January). Is There Really a Shortage of Skilled Workers? Economic Policy Institute. http://www.epi.org/publication/shortage-skilled-workers/
In the United States, “skills mismatch” has been advanced as a possible explanation for its persistently high unemployment. Is “skills mismatch” the cause? If that were so, says Shierholz, we would expect to see sectors of the economy where unemployment is lower than in 2007 (before the recession), sectors where job openings outnumber unemployed workers, and sectors where work hours and wages for those already employed would be increasing. In none of these areas is there any evidence of a skills shortage.
Boston Consulting Group. (2012, October). Skills Gap in U.S. Manufacturing Is Less Pervasive Than Many Believe. http://www.bcg.com/media/PressReleaseDetails.aspx?id=tcm%3A12-118945
There is currently a revival in U.S. manufacturing. It is possible that severe labour shortages could constrain this revival “unless aggressive steps are taken now”. However, the current skills gap is limited and "unlikely to prevent a projected resurgence in U.S. manufacturing by the end of this decade.” "BCG—using wage data and manufacturing-job vacancy rates—looked at localities where wage growth has exceeded inflation by at least 3 percentage points annually for five years." It "estimates that the U.S. is short some 80,000 to 100,000 highly skilled manufacturing workers. That shortage represents less than 1 percent of the nation's 11.5 million manufacturing workers and less than 8 percent of its 1.4 million highly skilled manufacturing workers." "The shortages are local, not nationwide, in nature and reflect imbalances driven by both location and job classes.”
Lazear EP, Spletzer JR. (2012, September). The United States Labor Market: Status Quo or A New Normal? http://www.kansascityfed.org/publicat/sympos/2012/el-js.pdf
“The recession of 2007-09 witnessed high rates of unemployment that have been slow to recede. This has led many to conclude that structural changes have occurred in the labor market and that the economy will not return to the low rates of unemployment that prevailed in the recent past." However, "(a)n analysis of labor market data suggests that there are no structural changes that can explain movements in unemployment rates over recent years. Neither industrial nor demographic shifts, nor a mismatch of skills with job vacancies is behind the increased rates of unemployment. Although mismatch increased during the recession, it retreated at the same rate. The patterns observed are consistent with unemployment being caused by cyclic phenomena that are more pronounced during the current recession than in prior recessions.” (edit of Abstract)
Media news reports and commentary
Castaldo, Joe. (April 26, 2013). Is there really a national skills shortage? The evidence is thin despite claims of politicians. CanadianBusiness. http://www.canadianbusiness.com/economy/what-national-skills-shortage-2/
This article suggests that while there is a skills shortage in some regions, it is not a national issue.
Curry, Bill. (May 5, 2014). Job-vacancy rate plunges as Tories drop Kijiji dara. The Globe and Mail. http://m.theglobeandmail.com/report-on-business/economy/jobs/ottawa-adjust-labour-data-raising-questions-about-national-skills-shortage/article18457198/?service=mobile
"The Conservative government has quietly adjusted its labour data to ignore job postings from Kijiji and similar websites, a change that essentially erases the dire warnings of labour shortages that Ottawa has used as justification for expanding the controversial temporary foreign worker program."
Fong, Francis. (2013, August). Three steps toward correcting youth un(der)employment. The National Post. http://www.nationalpost.com/related/topics/Three+steps+toward+correcting+youth+employment/8793028/story.html
In this article the author notes that “one could argue that our post-secondary education system was never designed to produce 100% job-ready workers immediately after graduation”, since until recently workers were expected to stay with one employer for decades, and employers received training. Now, because employees tend not to stay for very long with one company, employers don’t get a guaranteed return on their investment if they invest in training. “As a consequence, businesses are instead demanding new hires already have the necessary skills, or obtain them somewhere else. He cites a report by the Conference Board of Canada, that “Canadian corporations spent 40% less in 2010 on learning and development per employee relative to the early-1990s.”
Geddes, John. (2013, March). Canada’s jobs and skills mismatch: an expert on the federal budget’s training thrust. Maclean’s. http://www2.macleans.ca/2013/03/28/canadas-jobs-and-skills-mismatch-an-expert-on-the-federal-budgets-training-thrust/
An interview with CIBC deputy chief economist Benjamin Tal (see “The Haves and Have Nots of Canada's Labour Market”) in which Tal states that the problem is more complex than suggests by the federal government’s recent pronouncements on the subject.
Goar, Carol. (2013, August). Is Canada’s great skill shortage a mirage? http://www.thestar.com/opinion/commentary/2013/08/26/is_canadas_great_skill_shortage_a_mirage_goar.html
“Don Drummond, one of the smartest economists in the country, is dubious. He hasn’t found a shred of credible evidence that Canada has a serious mismatch between skills and jobs. In fact, most economic indicators point in the opposite direction.”
Grant, Tavia. (2013, March). Canada’s labour pain: 1.3 million jobless, but not enough skills. The Globe and Mail, Published Sunday, Mar. 31 2013, 6:41 PM EDT. http://www.theglobeandmail.com/report-on-business/economy/economy-lab/canadas-labour-pain-13-million-jobless-but-not-enough-skills/article10595715/
Notes that “(T)he Bank of Canada’s business outlook survey shows shortages are far less acute than before the recession.”
Helfand D. (2014, May). Liberal arts is the future of work, so why is Canada pushing 'job-ready' skills?
http://www.theglobeandmail.com/news/national/education/education-lab/as-canada-pushes-job-ready-skills-the-rest-of-the-world-embraces-liberal-arts/article18492798/
David Helfand, president and vice-chancellor of Quest University Canada, argues that Canada’s focus on ‘job-ready’ skills is at odds with employers’ desire for “employees prepared for the 21st century knowledge economy in which communication, collaboration, and creativity are the most valuable commodities – precisely those skills a liberal arts education provides”
Lane, Janet. (2014, March). Canada's Hidden Skills Gap. Ottawa Citizen.
http://www.ottawacitizen.com/opinion/Canada+hidden+skills/9654846/story.html
Lane, Director of Human Capital Policy at the Canada West Foundation, argues that while there has been a lot of talk lately in government and business about the skilled worker shortage in Canada, "what we should be talking about instead is the shortage in workers who have adequate essential skills". Like the Government of Canada, Lane sees these skills as the ones that every job demands in varying degrees, that are "transferable from one job to the next", and that "more employers than ever are complaining they lack". The problem, Lane says, is that "(t)here is an oversupply of people whose skills levels fall short and a huge number of jobs that need people to be further along the continuum."
McDowell, Adam. (2013, September). Widening ‘skills gap’ leaves ‘lost generation’ of graduates unable to find jobs in their field. The National Post. http://news.nationalpost.com/2013/09/02/widening-skills-gap-leaves-lost-generation-of-graduates-unable-to-find-jobs-in-their-field/
This commentator sees a difficult job market for recent graduates as evidence of a “skills gap” in which people are being educated to do things that are not in demand in the job market.
Pittis, John. (2014, April). Canadian job skills mismatch: truth or science fiction? CBC.ca
http://www.cbc.ca/news/business/canadian-job-skills-mismatch-truth-or-science-fiction-1.2597358
The experts quoted in this article say that skills mismatches are inevitable
no matter what the government does because it is impossible to predict what
skills are going to be in demand in the future. However, one expert does
offer the following advice to those considering their career path: “Don't
plan to do things a computer can do better. And work on interpersonal
skills, because so long as humans continue to exist, those qualities will
always be valuable.” Also, “ensure that you are as resilient as you can be
and that you have the broad set of flexible skills that allow you to take
advantage of an opportunity when it comes along."
Taylor, Peter Shawn. (2013, June). Junk Science Week: The real skills gap. The Financial Post. http://opinion.financialpost.com/2013/06/11/junk-science-week-skills-gap/
The author finds no convincing evidence of a national skills gap, and argues that while localized and regional skills gaps do emerge from time to time, it is better to let Canadians sort them out themselves than to look for policy solutions given the time lag of most federal initiatives.
Usher, Alex. (2013, March 21) Really, a skilled-labour shortage? In truth, we need arts grads. The Globe and Mail. http://www.theglobeandmail.com/commentary/really-a-skilled-labour-shortage-in-truth-we-need-arts-grads/article10053385/
Usher, Alex. (2013, March 19). Skills Shortages, Part 1. One Thought to Start Your Day [blog]. Higher Education Strategy Associates. http://higheredstrategy.com/skills-shortages-part-1/
Usher, Alex. (2013, March 20). Skills Shortages, Part 2. One Thought to Start Your Day [blog]. Higher Education Strategy Associates. http://higheredstrategy.com/skills-shortages-part-2/
In a series of articles and blogs, Higher Education Strategy Associates President Alex Usher challenged some current claims about the skills shortages in Canada. Usher addresses the skills mismatch issue in two blog posts. In“Skills Shortages, Part 1”, he uses a graph showing the ratio of unemployed to job openings by province and suggests that the numbers show that outside of the Prairies there is no evidence that skills mismatches are in any way driving unemployment. In “Skills Shortages, Part 2”, he looks at unemployment rates by industry and notes that claims of a large skills shortage in the construction industry are contradicted by the fact that “workers in the social sciences, education, and government fields (mostly university graduates) have unemployment rates of about 3%” while workers in the construction trades have a rate of 9%. Finally, in a March 21 op-ed in the Globe and Mail he argues that the idea that Canada’s economic problems are caused by people getting the wrong kind of education is misguided. He uses government data from British Columbia and Statistics Canada to show that people in the trades actually tend to have higher unemployment rates than bachelor’s degree holders. He argues that the labour shortages in the trades in Alberta and Saskatchewan due to the recent boom in the resource sector should not blind us to the risks of rising unemployment in the trades in other regions of Canada by overselling apprenticeships.
