Good morning, Mr. Chair and members of the committee. Thank you for the opportunity to make this representation.
Canada West Foundation is a non-partisan think tank based here in the west. Much of our recent work has had direct impact for Canadians and businesses in the changing economic landscape. Specifically, we have made recommendations about removing the barriers to building the infrastructure that is much needed for economic diversification and success, and we have published guides for businesses about how they can participate in CETA, CPTPP and the new USMCA trade agreements. The trade commissioner service partnered with us on the CPTPP, and we've offered recommendations for bringing private sector supply chain intelligence into national trade infrastructure planning and prioritization.
We also did the foundational research for the plant protein supercluster with support from WED. We've been working on a multi-year project to document some of the economically successful partnerships between natural resource firms and indigenous communities across the west, and we will soon release a paper on how to achieve an integrated western electricity grid.
But now for something completely different. My focus in being here today is to stress to you all the critical importance of increasing productivity and economic growth to improving the basic cognitive skills of the workforce. Much is being made about the importance of having a skilled workforce with an emphasis on the STEM skills that we believe will help us become more innovative and enable the diversification of the economy. However, advanced technical skills are impossible to build without basic cognitive skills, and 40% of the workforce does not have adequate levels of these basic skills. These working-age adults must be assisted to improve their basic skills now.
I present three compelling reasons.
One reason is that 42% of young people aged 16 to 25, including recent graduates of our education systems across the country, do not have the literacy and numeracy skills to continue to learn effectively and efficiently or to function fully and productively in 97% of the jobs in the Canadian economy.
The second reason is that, in today's workplace, jobs are changing quickly and machines or algorithms are replacing some tasks. This makes the ability to adapt the most important skill of all, but adapting is about learning and applying new skills quickly, and this takes adequate levels of literacy, numeracy and language skills. Without this capacity, many people currently in the workforce will not be able to keep their current jobs or find new ones.
Here is the most compelling reason. Recent analysis of the international adult skills data has found that increasing the literacy skills in the workforce by an average of only 1% would, over time, lead to both a 3% increase in GDP and a 5% increase in productivity.
What's more, this research also shows that improving the skills of people at the lower end of the scale, levels one and two on a five-level scale, will have more impact than improving the skills of people who are already at level three or higher. As the people most at risk of losing their entire job to automation are the people employed in low-skilled jobs, this would have the added advantage of assisting them to find a new higher-skilled job.
There is no doubt that increasing the basic cognitive skills, literacy and numeracy of the Canadian workforce would help to grow the economy. A 3% increase in GDP over time would amount to, in today's dollars, $54 billion a year every year. While this would not happen overnight—it would take years to reach that steady-state return on investment—some returns would be available as soon as we started to improve the skills of our workforce.
How do we do that? There are four main ways. First, obviously, we must stop allowing our youth to graduate from high school and post-secondary programs without adequate levels of cognitive skills. I realize that this is not the purview of the federal government, but this government can require that literacy skills be embedded in all federally supported workforce education and training initiatives for both youth and working-age adults.
It can also encourage or even incentivize employers to improve the skills of their workforce by, first, changing work processes to increase the knowledge and skill demands of current jobs, which will help employers to keep up with foreign competitors and also assist their employees to be prepared for the ongoing automation of jobs.
Second, assess the skills of job applicants with tools that reliably certify skills and competencies so that employers can make better hiring decisions. This should reduce the skill mismatches that are happening in today's workplaces and avoid the skill loss that happens when people work in jobs that do not use all their skills.
Third, employers should be investing in literacy, numeracy and problem-solving skill upgrading for current employees by embedding it into all other training.
Fourth, work processes should be adjusted to ensure that the skills gained through training and upgrading are put to use and do not stagnate or deteriorate.
Lastly, the federal government could make sure that the new government-funded future skills centre is mandated to incorporate basic cognitive skills into its research program.
I close by saying that there is an urgent need to prepare today's workforce for the increasing skill demands of the new economy. The more urgent necessary prerequisite for this is an investment in increasing literacy and other basic cognitive skills for the people who most need it. Fortunately, this investment will have the added benefit of dramatically increasing productivity and, ultimately, GDP.
Thank you. I look forward to your questions.