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

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

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


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