Thank you very much for the opportunity to meet with you. I thought it would be useful for me to share with you some comments as we look at the skills gap stuff. Maybe I can turn a few lights on for those of you who are preparing what sound to be two very interesting documents.
When we think about the labour market, some carry an image of a barbell—two weights on the end of a thinner pipe. The one end is manual services, the middle is sort of the routine medium skills, and the ball at the other end represents the abstract high skills. If that's the way the labour market looks, and some would say that it's close enough, you can begin to probe those terms—manual services, routine skills, and abstract—and concern yourself with what needs to be there and what the skills actually translate into. Certainly formal education is needed less for the manual services. More is needed for the routine, and it's almost a necessity for the abstract, high-skill jobs.
The people who work in what's called STEM—science, technology, engineering, and mathematics—are found in the abstract block. Of course, this isn't a static picture. People move around. People move from the manual services to routine, and from routine to abstract. Indeed, as StatsCan's nice chart shows, people also move from what might be viewed as abstract high skills into medium skills and they are underutilized.
Another way of looking at it is a slightly more complicated view. It says that every job or occupation is made up of two characteristics: the knowledge work and the service work. What combinations might there be? You think of a fast-food worker as someone whose service component is high. The knowledge and subject matter specialization may be relatively low. A production worker in a plant, on the other hand, may have fair knowledge or medium knowledge of what he or she is doing, but the service emphasis—the interactions with other people, with customers—is less.
When you move out further, on to the high knowledge workers, you find some, again, who don't have a very large service component. These are people such as R and D engineers and research scientists. You have another group that relies, in a sense, on that combination of service and knowledge. A simple example you see running around town are Nerds on Site. They fix people's personal computers on a regular basis, which combines a service element with high-tech knowledge. There's a whole bunch of higher-tech jobs that are combinations of those two, such as consultant, sales engineer, and software application tech support. All of these require the ability to interact with people as well as a knowledge base that is crucial for what they're doing.
Let's talk about the services jobs very quickly. Some are low wage. There is little formal education and a short on-the-job training period. The interaction between customer and worker is important, and literacy is important. Literacy supports training and communication in that group. Park those thoughts, because we're going to come back to that in a moment.
The policy thrust you'd like to emphasize for low-skill jobs would include high school education and literacy at or above level three. You may want to think about increasing the minimum wage so that people who are working in those areas have the time and resources to take some further training. You might also encourage employers to offer training during working hours.
For the knowledge workers it's a little different. They need more formal education. They need some communication skills with clients and with other employees. But for that group, your policy is really for the post-secondary education system, including graduate school, initially, training during working hours, reducing immigration backlog in high-demand areas, if you, again, have shortages in that area that you want to do something about.
If you take one step back and ask what it is you're trying to do, I think the aspiration that would be shared by all parties and by all Canadians would be that we want to realize a high-wage workforce. In some sense, we want the results of our overall workforce to have a compensation that is as high as can be obtained in reflecting their various skills. You're going to get that if you move towards full employment.
You should encourage wage increases rather than discourage them. We should try to strengthen some of the institutions that support the way in which labour markets work, particularly the minimum wage system. We should move towards a living wage with indexing. We should be encouraging unions to form and to participate in wage-setting, training, and other conditions of work. Those kinds of approaches will give you that high-wage workforce.
I have a couple of quick comments on the workplace. I know my time is tight. In workplace training, consider a grant-levy system to fund the training of employees. Courses could be in-house or through outside suppliers. Participation requires that training take place during the workday. This is something that came out of the advisory group on working time and distribution of work, where we found that it was key for women particularly, but also for men, who have obligations outside of the workplace and work time, to be able to take their training in normal hours. The notion that you're going to study nights for your job may sound great unless the two of you are raising five kids and trying to get them all into bed.
Apprenticeship programs, a more formalized way of workplace training, can be encouraged, broadened in many occupations. We don't do well there relative to other countries, other than the U.S., which doesn't do very well at all. The co-op programs are useful for those in university, by giving them the opportunity to combine work and education in what they do.
So what should government do? Well, it can certainly help people move permanently or on a temporary basis to tight areas. What should government do about so-called shortages? It can help people move from surplus areas. It can certify skills that will make people able to recognize potential employees who have the necessary skills. Information about the job market is always helpful. Infrastructure is important for doing that, the systems for keeping track of openings.
Sometimes you have to ask, what should government not do? In essence, the one thing we don't want them to do is to avoid a macro response. If wages improve, if people start moving around and saying we have to slow this all down through restrictive fiscal and monetary policy, that would be a mistake.
Employers have a real role to play. They're the ones who are employing these people. They're the ones who are screaming about shortages. They're the ones who are saying government should provide work-ready employees. Well, first off, you should question that. It's not clear that that's the role of the education system or the governments.
On their actions on their own behalf, they could help raise wages if you're having shortages. Recruit more broadly. Provide flexible schedules. Upgrade the skills of your existing workers. Improve productivity. Restore internal career ladders that have, by and large, disappeared in most organizations. Workers and unions can also help. They certainly encourage skill certification, mobility as needed, workplace training participation. Developing literacy levels at every opportunity should be another thing you undertake.
The final message is, don't panic about shortages. Some local labour markets are tight. You've seen some interesting new data now from the vacancy survey. We say something is tight when it's 4% or 7% of the vacancy rate to the total employee base. That's not a terribly difficult issue. If we look at vacancies relative to the unemployed, what we find is that there are many more unemployed than there are vacancies in all industries and in all regions.
Mobility, postponement of projects, and we talked about how higher wages, training, and higher productivity can all help.
You should also realize that the source population in Canada will continue to expand, and those are the people who are 15 years and older. The labour force will continue to expand as new entrants in numbers exceed those who are retiring, leaving, or dying. The labour force participation rate, depending on how you measure it, for the total labour force is going to be declining. If you look at only the 15 to 64 age group, it will continue to rise. Indeed, if you look at every age-sex group, participation rates are rising, and rising out through 2025, 2030, and 2035.
What happens, though, is that you have a weighting issue in which the elderly, in significant numbers, are retiring and bringing down the overall participation rate, even though the elderly participation rates are rising from very low levels.
Let me wrap up, then, by simply saying that I think focusing on the skills rather than on the occupations is an important thing. I think you have to take a long-term view. You heard about a signal being given on the computing side, for example, which transmits to people deciding what career choice to make four, five, or six years earlier, and by not making a choice to go into that field now, it leads up to low numbers four or five years later. So these are lags, and they aren't the kind of thing you run out and fix before the next election. Well, maybe in the next election we could do some work, but you're not going to fix it in the next month.
So take the time, think about what you want to do, and think about the kind of society you want to live in.