Commentary on the 2016 Federal Budget | DataAngel.ca

There is much in the recently released 2016 federal budget to laud. Significant new spending has been allocated to helping groups in the population who bear the brunt of social and economic disadvantage, including Aboriginal adults, the unemployed, seniors, low income students and parents.‎ Collectively, these expenditures should simultaneously improve their economic lot and reduce the size of the gap between them and their more advantaged peers.

As laudable as these measures are, the 2016 budget fails to invest in measures that will ensure sufficient productivity growth to pay these expenditures back. Productivity growth depends on our collective ability to compete on global markets. Our analysis suggests a need for two sets of linked measures to release our productivity potential:

  • Measures that encourage Canada’s employers to create enough ‎high wage/high skill jobs to replace the jobs being lost to automation and offshoring, and,
  • Measures that ensure that Canadian workers have the cognitive skills needed to take full advantage of their enormous pool of technical skills and knowledge.

Many of Canada’s employers are obsessed with wringing productivity growth out of cost savings from production efficiencies and reductions in wages and benefits. Firms adopting these strategies may win a temporary reprieve from competition, but the associated dumbing down of jobs results in massive loss of the very skills that will allow us to compete in the future.

A smaller number of firms are adopting an alternative strategy that is focused on increasing the value of their products and services, something that requires higher levels of key cognitive skills.

The federal government needs to act swiftly and decisively to reward firms adopting this latter high wage/high skill/high value approach.

Having done this, the federal government will also need to act swiftly and decisively to ensure that Canadian workers have the skills needed to fill the growing proportion of high skill/high wage/high value added jobs. ‎

In the first instance, this would involve working with the provinces and territories to reduce the proportion of youth leaving the secondary system with literacy and numeracy skills below level 3, the minimum level demanded by high skill/high wage jobs. This proportion currently sits at 50%.

The federal government also needs to work with the provinces and territories to reduce the proportion of youth entering and leaving the post secondary system with literacy and numeracy skills below level 3. These proportions currently sit at 40% and 30% respectively.

It will take some time for these measures to have an impact on the distribution of key cognitive skills. Thus, the federal government needs to introduce incentives for firms to assess and upgrade the literacy and numeracy skills of the current workforce.

A failure to act practically guarantees that Canada’s standard of living will fall.

T. Scott Murray is a retired senior manager from Statistics Canada and President, DataAngel Policy Research Incorporated, a global specialist in education, skills and productivity.

T. Scott Murray, 19 McIntosh Way, Kanata, Ontario K2L 2N9
DataAngel Policy Research Inc.
email: dataangel@mac.com
website: www.dataangel.ca

Further reading:

Budget 2016

The Business Case for Investment in Essential Skills in Numbers

Maintaining Canada’s competitive position on global markets, ‎keeping employment, income and health inequalities from growing and getting more out of our tax expenditures relies on reducing the size ‎of occupational literacy skill shortages. The associated economic rationale for investment in literacy skill upgrading is compelling – investment would yield impressive returns. Firms investing in literacy skill upgrading will be more productive, more profitable and more competitive. Governments should adopt measures to ensure that firms invest more in literacy skill upgrading. Governments investing in literacy skill upgrading would also realize impressive returns on investment flowing from increased tax revenue and reductions in income support and health expenditures.

The Business Case for Investment in Essential Skills in Numbers (c) DataAngel Policy Inc 2015

The Business Case for Investment in Essential Skills in Numbers (c) DataAngel Policy Inc 2015

The underlying policy analysis was undertaken by DataAngel Policy Research.

Related documentation: The Case for Government Investment in Essential Skills
Related documentation: 12 Questions to Highlight the Importance of Government Action on Essential Skills
Related report: Smarten Up – It’s Time to Build Essential Skills

You can download pdfs of all our documents here: DataAngel | Resources

12 Questions to Highlight the Importance of Government Action on Essential Skills

Canadians have a collective interest in understanding the determinants of productivity growth and the social and economic processes that generate inequality in the things that we value most: employment, income and health. The available data suggests an urgent need for investment that serves to raise both the economic demand for, and the supply of, language, literacy and numeracy skills.

12 Questions to Highlight the Importance of Government Action on Essential Skills summarizes the logic that supports the case for investment in Essential Skills: the language, literacy and numeracy skills that adults need to apply their technical skills and knowledge to world-class level.

The underlying policy analysis was undertaken by DataAngel Policy Research.

Related documentation: The Case for Government Investment in Essential Skills
Related documentation: The Business Case for Investment in Essential Skills in Numbers
Related report: Smarten Up – It’s Time to Build Essential Skills

You can download pdfs of all our documents here: DataAngel | Resources

The Case for Government Investment in Essential Skills

Canadians want more jobs, to earn more without working more, to be healthier and to have access to the Canada’s rate of productivity growth is below the level needed to drive improvement in our standard of living and to maintain our competitiveness on global markets.

Achieving higher rates of productivity depends on increasing both our level of technical skill and knowledge and our levels of key cognitive skills – language, literacy and numeracy – needed to apply technical skills and knowledge to globally competitive levels. It also requires that employers create jobs that require workers to use their knowledge and skills rich.

Read more in our paper The Case for Government Investment in Essential Skills.

The underlying policy analysis was undertaken by DataAngel Policy Research.

Related documentation: 12 Questions to Highlight the Importance of Government Action on Essential Skills
Related documentation: The Business Case for Investment in Essential Skills in Numbers
Related report: Smarten Up – It’s Time to Build Essential Skills

You can download pdfs of all our documents here: DataAngel | Resources

Level 3 as a Minimum National Literacy Standard

The initial publication of literacy results from the 2011 OECD PIAAC international adult skills assessment abandoned the Level 3 proficiency standard that had been applied in reporting the results of 1987 LSUDA study, the 1994, 1996 and 1998 IALS studies and the 2003 IALSS study. The reason cited by a senior OECD official for the change was quite astounding “Level 3 is too demanding for the Italians, as 70% of their adult population fall below this threshold and that makes them feel bad.” Based on a careful analysis of the impact of skill level on individual, institutional and national success, I believe that there a strong reasons for Canada to maintain Level 3 literacy as a national standard, one that is needed to assure that we can continue to meet our collective social and economic goals.

Key elements of the evidence that supports Level 3 are presented in our paper Level 3 as a Minimum National Literacy Standard.

The underlying policy analysis was undertaken by DataAngel Policy Research.

You can download pdfs of all our documents here: DataAngel | Resources

Average Hourly Wage (2010$) by Essential Skill Level of Occupation 1997-2015

Average Hourly Wage (2010$) by Essential Skill Level of Occupation 1997-2015

This chart links rising wage inequality to shifts in the relative wages earned by the literacy level demanded by the job.

Workers in jobs that demand low levels of literacy have experienced no real wage growth over the past decade.

Workers in jobs that demand high literacy levels have enjoyed very attractive real wage gains.

This difference explains most of the increase in wage and income inequality observed in Canada over the period.

 

Underlying research and analysis was undertaken by DataAngel Policy Research

To download a pdf of this chart, click here: Average Hourly Wage (2010$) by Essential Skill Level of Occupation 1997-2015

Credentials are not enough | Policy Options

While we are among the most highly educated countries in the world, many of our workers lag behind their peers in international assessments of cognitive skills, like literacy and numeracy. In the most recent assessment conducted by the Organisation for Economic Co-operation and Development (OECD), Canadian adults aged 16 to 64 ranked in the middle of the class — at the international average score in literacy and below the average score in numeracy.

But research published in November 2015 by the federal Parliamentary Budget Officer (PBO) finds a rising incidence of overqualification among recent university graduates. Taken together, the two reports suggest that despite a substantial increase in educational attainment at the top end, the skill distribution of jobs has not kept pace.

Matching of education and jobs among university graduates ages 25-34, 1991-2014

Read Scott’s blog post here: Credentials are not enough | Policy Options