Province-wide skills gap hinders Ontario’s economic activity
Toronto, June 21, 2013—Ontario is losing out on as much as $24.3 billion in economic activity and $3.7 billion in provincial tax revenues annually because employers cannot find people with the skills they need to innovate and grow in today’s economy, according to The Need to Make Skills Work: The Cost of Ontario’s Skills Gap.
“This is money that could provide substantial economic and social benefits to Ontarians. Closing the skills gap could help the province reduce public debt or invest in much needed infrastructure improvements,” said Michael Bloom, Vice-President, Industry and Business Strategy. “Consider, for example, that a proposed expansion of public transit in the Greater Toronto-Hamilton Area would require an estimated $2 billion per year, over 25 years, to complete.”
- While much has been written about Ontario’s skills challenges, little has been done to examine their true economic costs, and what can be done to prevent a skills crisis.
- The Ontario economy is also losing out due to skills mismatches—individuals who are employed in jobs that fail to fully utilize their skills and training.
- Better linkages between employers and post-secondary institutions, and among post-secondary institutions themselves, will improve workplace-based experiential learning.
Skills gaps currently affect much of Ontario’s economy, including sectors that account for almost 40 per cent of employment: manufacturing; health care; professional, scientific, and technical services; and financial industries. Skills gaps are projected to worsen if action is not taken.
“Ontario cannot afford to live with a skills gap of this magnitude. The need for action is urgent, since changes in education will take years to bear fruit in the labour force,” said Bloom.
To get a clear picture of employers’ skills needs, the Conference Board conducted the Ontario Employer Skills Survey. More than 1,500 Ontario employers, representing over 760,000 employees (13.5 per cent of the workforce) from across the provincial economy, responded to the survey.
Survey results show that employers most need post-secondary graduates in science, engineering, and technology; and business and finance. The most widespread needs are for employees with two- or three-year college diplomas (57 per cent); four-year degrees (44 per cent); and trades (41 per cent).
The negative impact on the Ontario economy goes beyond the issue of skills shortages. Another issue with economic consequences is skills mismatches in the labour force –individuals whose skills and training are not being fully utilized in the jobs they have.
The Conference Board estimates that these mismatches, by themselves, cost Ontario’s economy and workers up to $4.1 billion in foregone gross domestic product (all GDP figures in 2002 dollars) and $627 million in provincial tax revenues annually (all tax revenue figures in current dollars). Many post-secondary education graduates have skills and training in sectors with few available jobs. In addition, employers sometimes fail to make the most of their employees’ skills and talents.
Many stakeholders have a role to play—individually and collaboratively—in alleviating Ontario’s skills gaps:
- Employers can increase their training and development investments and provide more experiential learning opportunities—such as apprenticeships, co-op placements, and paid internships.
- Educators can better align programs to the needs of the economy.
- Governments can allocate additional resources for experiential learning opportunities, and collect and share better labour market information.
- Students can match their own education and training planning to the realities of the labour market.
Read The Need to Make Skills Work: The Cost of Ontario’s Skills Gap.