Canada has a skills shortage – but which skills, and where? Lack of data leaves the experts unsure

Another in-depth look by the Globe on data gaps:

Five years ago, then prime minister Stephen Harper’s Conservative government was convinced that Canada’s labour market was sinking into a deepening skills-mismatch problem: There were plenty of skilled jobs available, but not enough qualified applicants to fill them.

In the February, 2014, budget, the Tories attempted to drive home the point by including a Finance Department study that said the job-vacancy rate (open jobs as a percentage of all jobs) was north of 4 per cent, its highest level since 2008, despite still-high unemployment of 7 per cent.

But that study contradicted Statistics Canada’s data on job openings, which put the vacancy rate at barely above 1 per cent.

It turned out that some of the government’s stats were gleaned from internet job postings on sites such as Kijiji, and those counts were badly tainted – double-counting some jobs and including some positions that had already been filled.

The so-called Kijiji Jobs Report, as it became known, was a major embarrassment for the Harper government. Critics accused the Conservatives of using half-baked statistical evidence to justify their economic policies.

But it was unclear whether Statscan’s numbers were right either. Job vacancy estimates from the Conference Board of Canada and the Canadian Federation of Independent Business yielded still different results.

The episode was a wake-up call: If Canada faced deepening shortages in key skills, it lacked the statistical detail to see them properly, let alone do anything about the problem.

In the five years since, there has been a renewed focus on bringing Canada’s labour-skills data into the 21st century – with increased funding to match.

But progress has been slow and the stakes are rising. A growing economy and aging population have eaten into the available labour pool, slicing the unemployment rate to a four-decade low. An increasing number of companies complain that they can’t find enough skilled workers.

To help fill the labour gaps, successive federal governments have increased what’s known as “economic” immigration, targeting highly skilled foreign workers. The provinces have also been given increased powers to recruit immigrants to fill their skills needs. All this comes against a backdrop of rising automation and artificial intelligence, which will dramatically reshape the labour market.

Finance Minister Bill Morneau has said that skills development will be a focus of his March 19 budget. But if Canada is going to embark on a skills overhaul, it will need to fill the gaps in its data first.

“Being able to gather that information, in terms of the [skills] supply and demand, I think is going to be really important, given the scale and speed with which this [change] is happening,” says Dominic Barton, head of Mr. Morneau’s Advisory Council on Economic Growth, probably the most influential voice shaping the government’s long-term economic priorities. “There is an urgency to this.”

This challenge didn’t exactly sneak up on policy-makers. It’s been a decade since the Harper government’s Advisory Panel on Labour Market Information (LMI), chaired by prominent Queen’s University economist Don Drummond, issued a 228-page report containing wide-ranging recommendations to modernize Canada’s labour data.

“Reducing unemployment or raising wages by a better matching of workers and jobs by as little as a tenth of a [percentage] point would raise GDP by some $800-million,” Mr. Drummond wrote. “That is why we need to spend more money on LMI and spend it smarter.”

Identifying problems with Canada’s labour skills data differs depending on who you ask. Academics, economists, policy-makers, employers, teachers and workers all use the information. But there are two common complaints.

First, information isn’t sufficiently “granular” – it doesn’t drill down deep enough to identify specific skills in supply or demand in the marketplace, or precisely where these skills are available or needed.

Second, data are too scattered among a variety of agencies and levels of government, which don’t do a great job of sharing their information with each other or making it user-friendly.

Statscan is the primary producer of labour data in this country. But the Harper government slashed Statscan’s labour market information budget by more than 20 per cent between the 2011-12 and 2013-14 fiscal years.

In the wake of the Kijiji Jobs Report, however, the Conservatives re-opened the taps, and the flow has accelerated under Prime Minister Justin Trudeau’s Liberals.

Statscan’s current budget for labour data is more than $30-million, up nearly 40 per cent from 2013-14 levels. Still, it’s a small slice of the agency’s total annual budget of more than $600-million.

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Source:     Canada has a skills shortage – but which skills, and where? Lack of data leaves the experts unsure David Parkinson March 11, 2019