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

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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

Time for a Change of Course on Economic Policy | T Scott Murray

Canadian public policy has invested heavily in education on the assumption that a rapidly rising supply of degrees and diplomas would drive rapid enough productivity and GDP growth to maintain our competitiveness on global markets and, by extension, our standard of living. Our analysis suggests that this singular focus on driving up the quantity of technical skills and knowledge generated by these investments needs to be balanced with measures focused on quality, on market efficiency and on fostering skill demand. Our analysis suggests a need for four additional sets of policy measures if we are to maintain our competitiveness on global markets.

First, provincial and territorial governments need ‎to pay much more attention to the quality of their output at the secondary and post-secondary level. More specifically, they need to reduce the proportion of students leaving these systems with language, literacy and numeracy skills below the level needed to apply their technical skills and knowledge to globally competitive levels. Currently, an estimated 30% of college and university graduates fail to meet this standard. It would appear that no one has been minding the store. Affordable and proven instructional technology exists to reduce this percentage, so all that is lacking is political and bureaucratic will.

Second, ‎the federal government should, in partnership with the provinces and territories, create a set of national credentials that certify language, literacy and numeracy levels for employment. Currently 40% of all workers have levels of these skills below the level demanded by their occupation, a degree of misfit that costs the economy an estimated $9 billion in lost earnings per year. Again, our educators have been granting credentials to people who do not have the expected skills. Employers need a reliable means to screen workers at the point of selection. The assessments needed to support such a system have already been developed with federal support and a national distribution network is in place. All that remains is for educational institutions to be forced to apply the certification tests that signal that their graduates are work ready and globally competitive.

Third, the federal, provincial and territorial governments need to introduce measures to increase the level of key cognitive skills demanded by jobs in Canada. Ironically, the current level of skill demand in the majority of jobs is low enough that workers are losing enormous amounts of economically valuable literacy and numeracy skills. These skills cost a lot to create and are key to increasing the share of high value-added goods and services on offer from Canadian producers. Canadian employers are dumbing down their jobs in the mistaken assumption that the associated cost savings will provide a durable productivity advantage. The only way to release the productivity potential of Canadian workers over the longer term, and to reduce the staggering amount of literacy skill loss that is occurring.

Finally, federal, provincial and territorial governments must create incentives for Canadian firms to assess and upgrade the language, literacy and numeracy skills of any worker with the skills below the level needed to satisfy the demands of their occupations. These occupational skill shortages are significant, but if eliminated, offer the prospect of significantly higher productivity growth rates than we have managed over the past decade and healthy returns on skill upgrading investments to workers, their employers and taxpayers.

It is worth noting that a failure to implement these measures, while needed to maintaining our current standard of living, are also needed to get full value out of the federal government’s planned infrastructure investment. Without these measures, taxpayers will never get what they paid for and were promised.

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

An Open Letter on Literacy to Prime Minister Justin Trudeau


A letter to Canada’s new Prime Minister about the nation’s pressing illiteracy issue.

It’s so refreshing to have a Prime Minister who loves and celebrates books. But think about the huge percentage of people you now lead for whom basic reading and writing is a struggle. And the numbers get progressively worse when we look at things like health literacy; some studies suggest 55% of Canadian adults are unable to understand the information their doctors tell them (88% of seniors are in this position). The lowest rates of literacy are found in impoverished communities, including new Canadians and First Nations.

Mr. Trudeau, I know you’ll agree with me that this just isn’t good enough.

Read the full text of the letter on Bookriot here: An Open Letter on Literacy to Prime Minister Justin Trudeau

Want employment and wage growth? It’s skills stupid! | Broadbent Institute

skills.training

It is critical to confront what will happen to the Canadian economy and society if governments fail to act on skill shortages. Jobs will continue to move offshore to equally skilled but cheaper markets. Employment levels, wage levels, benefit levels and tax revenue will fall. The level of wage and income inequality will rise sharply as high skilled individuals capture the benefits of their higher productivity in the knowledge economy.

Read Scott’s full blog post here: Want employment and wage growth? It’s skills stupid! | Broadbent Institute