Canada lags other countries in taking a “skills-first” approach to its workforce, fully utilizing and rewarding those skills, and focusing them on entrepreneurship and innovation, economists and a university professor said at a Future Skills Centre webinar.

Canada also needs to recognize immigrants’ skills and support equity, diversity and inclusion (EDI) in the workplace, despite the Trump’s administration’s opposition to EDI, they said.

Studies by the Organisation for Economic Co-operation and Development (OECD) show that Canadian workers have significantly higher qualifications than are required for their jobs, said Glenda Quintini (photo at right), senior economist at the OECD.

“This means there isn’t a full use of the skills of these workers in [Canada’s] labour market,” she said.

The OECD has a new tool, the Skills-First Readiness and Adoption Index, a multi-dimensional index to measure the extent to which countries are focusing on skills required by the workforce as opposed to qualifications or occupational experience.

Canada has the most highly educated labour force and population among OECD countries. However, this higher education attainment doesn’t translate into skills (such as literacy, numeracy, problem-solving and so-called “soft skills”) actually needed in Canada’s labour market and economy.

Quintini said Canada ranks in the bottom 10 of 38 OECD countries – and below the OECD average – when it comes to the extent to which skills are signalled, recognized and rewarded; the extent to which education, training and academia focus on skills in their programs; and the country’s enabling framework to move toward a skills-first approach.

“In Canada, the pressure from the labour market to adopt a skills-first approach is high,” she said. “There is a lot to gain, but Canada is further behind than other countries in doing that.”

Canada has spent too much time focusing on developing technologies – such as green tech and AI – and not enough attention on how to use these technologies to achieve benefits for all Canadians, said Dr. Wendy Cukier (photo at left), PhD, founder of the Diversity Institute and a professor at the Ted Rogers School of Management at Toronto Metropolitan University.

When it comes to AI at work, for example, a survey on employment and skills by the Diversity Institute, the Environics Institute and the Future Skills Centre showed that the way that people understand AI use – and the level of AI use by Canadian SMEs – varies dramatically.

The survey showed that “half of the people who say they’re using AI in the workplace have no formal training [and] no guardrails, and we know that that’s a real problem,” Cukier said.

“What we really need are people who understand organizations, human behaviour, policy and ethical frameworks, and can ensure effective [AI] adoption,” she said. “Because without adoption, you have no innovation.”

Part of the reason for Canada’s low productivity is due to the uneven investments in technology like AI and the outcomes of these investments, Cukier said.

“Some companies get really good gains and some are pouring money down a big black hole.

What we have to focus on is how to use technology effectively to drive productivity, creative destruction and innovation,” she said.

One reason for the gap between Canadians’ high education levels and low productivity “frankly is bias at multiple levels,” Cukier said.

Surveys show the experiences of different segments of the population of discrimination in the workplace “is profound,” she said. People in the non-profit sector and government sector report higher levels of discrimination than in the private sector.

Black people are far more likely to be employed in jobs requiring only high school education, she noted.

People with severe disabilities who have graduated from university have worse employment outcomes than high school dropouts.

“This not, frankly, just about skills. This is about tackling barriers to work and education,” Cukier said. “One of the most shameful things is that in Canada, on average, immigrants earn 50 percent of Canadian-born workers after five years in the country.”

Focus on permanent immigrants with skills Canada needs

Canada continues to have a challenge with recognizing the credentials of immigrants trained abroad, said Pedro Antunes (photo at right), chief economist at the Conference Board of Canada.

“We do have people with high educational attainment but [who] aren’t necessarily working in their field,” he said.

There have been mistakes made on immigration over the post-pandemic years, including the current push against immigration, Antunes said.

“We need to get through this period and resettle on an immigration rate” that is steady, stable and more focused on the stream of permanent immigrants to Canada, he said. “And it should be focused on the skills that we need and the occupations that we need to close our gaps.”

Canada also must focus on unlocking private sector investment capital to improve productivity, said Antunes, who co-authored a Conference Board of Canada report on this issue.

Quintini said the OECD’s indicators showed that countries that tend to do best globally with a skills-first approach tend be those where there’s a lot of stakeholder engagement, including in determining education curricula that builds around learning outcomes along with skills required in the labour market.

“We know that over-qualification is often associated [with] certain fields of study,” she noted.

Better career guidance for young people could help them understand what the prospects are in the fields they choose, she suggested.

Cukier said that universities “like to talk about innovation [but] they don’t like to change. We really need to rethink what we’re doing.”
Most faculty working in universities have never worked outside of universities, she said. “It’s ridiculous in my view to expect them to suddenly embrace preparing their students for employment tracks. I think what we have to do is really focus on some of the skills for success.”

Cukier said she sees a huge opportunity in thinking of some innovative approaches, such as taking a history major or a philosophy graduate and providing them with some intensive training and work-integrated learning to open the doors to employment.

She also urged Canadians to reject the blowback to equity, diversity and inclusion in the workforce and postsecondary education system that’s emanating from the Trump administration.

“To me, equity, diversity and inclusion (EDI) is not about ‘wokeness,’” she said. “It’s about ‘Marketing 101.’ The population’s changing. So our strategies have to change as well.”

“We’re getting a lot of spillover crap from the U.S.” on EDI, Cukier said. “We’ve had a lot of – I can only say garbage – in the media, fuelled by social media influencers and so on that we have to stand up and push back against.”

Equity, diversity and inclusion are fundamental to Canada’s economic growth and innovation, she said.

Business owners who are immigrants, for example, are more likely to export and they have knowledge of those foreign markets Canada is trying to break into, Cukier pointed out.

Equity, diversity and inclusion “isn’t about being nice,” she said. “It’s about taking advantage of our competitive advantage.”

Finding solutions to an aging workforce

Canada, like many other countries, is struggling with an aging workforce, balancing immigration, and equipping workers with the right skills while growing the labour force.

Quintini said the OECD Employment Outlook 2025 report showed that growth in GDP – growth in productivity, in other words – is going to slow dramatically unless the aging workforce problem is addressed.

“To sustain living standards and address structural labour shortages, many countries will need people to work beyond 60 or 65,” according to the report.

Reducing incentives to retire early through increasing the statutory retirement age and tightening access to early retirement schemes have been at the heart of the policy agenda in many OECD countries, “and continued efforts are needed to raise the average age of labour market exit,” the report said.

Quintini said countries are trying to mobilize their workforces by encouraging workers to retire later and by upskilling and reskilling workers to ensure that productivity of individuals increases to help boost GDP and capital growth.

Canada and other countries also to have to make adjustments to jobs and the workplace, to make flexible options more widespread and keep both men and women in the labour market longer, Quintini said.

Cukier said Canada “really needs to centre skills around entrepreneurship and innovation, whether people want to start a business, want to drive change in university, or build a new health care system.”

“I would challenge everyone to think about how we can drive change in the institutions, whether it’s postsecondary, the service providers or employers, to create a more inclusive and productive ecosystem,” she added.

Canada also needs a vision for how the country can use technology to achieve its economic and productivity goals, Cukier said. “There are huge ways that technology can help us with skills assessment, development and utilization. And we are nowhere near where we need to be with that.”

“The thing that would help us drive transformation is that if we all linked arms and embraced accountability and outcomes,” she said.

“Because in the current environment, if we don’t start doing what works at scale, replicating things that produce outcomes and getting rid of the stuff that doesn’t, including many predatory training programs, we will not get to where we need to.”

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