Canadian businesses are under-investing in training their employees while industry and academia are still operating in silos when it comes to training the future workforce.

There needs to be more incentives for companies to de-risk training, more training in professional skills, and more experimentation in training, reskilling and upskilling, experts said at Research Money’s 24^th annual conference in Ottawa.

Rather than seeing training as a one-time thing, “We really need to start framing skills development and skills as investments,” said Tricia Williams (photo at right), director of research, evaluation and knowledge mobilization at the Toronto-based Future Skills Centre.

“This is investing in the human capital that’s going to catalyze the next 30, 40 years of economic growth and prosperity in Canada,” she said during a panel session titled “Workforce Transformation: Upskilling and Reskilling in the Face of Automation.”

Yet Canadian employers are investing significantly less their employees than their business peers in Organisation for Economic Co-operation and Development (OECD) countries, Williams said.

Future Skills Centre research shows Canadian employers invest an estimated $240 per employee annually, while OECD countries average around $750 per employee annually.

“We’re a bit comparable to Eastern Europe,” she said. “So we’re under-investing in skills development.”

Williams said the Future Skills Centre hears from its partners that businesses want to see the return on investment (ROI) in skills training.

“We haven’t yet as a country been able to make that very clear what that ROI is so they’re willing to take the expense and take the risk of it,” she said.

“I think we have to think creatively about how do we fund and incentivize more investment in this area to maybe de-risk some of it,” she added.

A big problem is that universities, colleges, businesses and some third-party training organizations are still operating in silos when it comes to skills training, said Arvind Gupta (photo at right), professor of computer science at the University of Toronto.

“I think it’s time to break down these silos,” he said. “We should all be part of a continuous system,” and be willing and encourage people to flow between the different organizations and structures in that system.

Gupta said when he was a graduate student 40 years ago, a lot of his classmates were working at Nortel and IBM while pursuing a graduate degree – often through night courses.

“Today it would be impossible in that same department for someone to do that,” he said. “This idea that people should be transitioning between postsecondary and the workforce in a seamless way, going back and forth – somehow we’ve lost that.”

Gupta said he was recently talking to a company official in California whose firm is continuously supporting and sending its employees back to university classes, including working with universities to offer night classes if the company can guarantee sufficient enrollment.

“I can’t even think of how we’d do that in Canada. I don’t think there’s a mechanism,” Gupta said.

The Ontario government has cut the University of Toronto’s core budget by about 10 percent during the last 10 years, he noted.

“We can barely offer enough classes for our undergraduates. We’re overwhelmed with demand for just [educating and training] the standard 19-year-old coming to university.”

Canada’s universities haven’t been able to articulate that making the connections with businesses, developing these relationships, and providing students with the training companies are looking for is something of value universities could provide to society, Gupta said.

“They [universities] are more articulating that they’re overwhelmed with demand for their standard curriculum. We’ve basically stopped engaging industry in this discussion because we can’t do anything about it.”

Crucial to work with industry partners and provide training in the skills businesses require

Eva Reddington (photo at right), vice-president of policy, program development, evaluations and government relations at Vancouver-headquartered not-for-profit Mitacs, said it is crucial to be agile in the training offered and listen to and meet companies’ demand for the types of skills they’re looking for.

Mitacs, which connects academia and industry, has 80 business development advisors across the country to gather that intelligence from companies, postsecondary and economic institutions, and other partners, she said.

Mitacs’ Business Strategy Internship program brings together student interns and companies to assess the processes, products and new services that businesses need. “Being very demand-driven and listening to the market is huge,” Reddington said.

About 83 percent of Mitacs’ industry partners are small and medium-sized businesses, she noted.

Mitacs has a co-investment model where it secures industry funding and leverages that with government funding.

“But I think a key thing we do is we have the industry partner at the table from the get-go,” Reddington said. They co-create the project with an academic institution, with a postsecondary academic supervisor, and with agreement on timelines and expectations.

Collaborating with institutional partners in training also is a must, Reddington said. For example, Mitacs partnered about five years ago with Simon Fraser University to provide interns with training in entrepreneurial mindset thinking. “We co-created this curriculum that to this day is extremely effective.”

The Future Skills Centre’s Williams pointed out that it’s also important to be proactive and think about what’s emerging as required skills for Canada’s workforce.

For example, as part of reducing greenhouse gas emissions and the drive to net zero, governments financially incentivized homeowners and businesses to install energy-efficient heat pumps.

“Nobody was thinking, ‘Who’s going to install those heat pumps? Have we developed a workforce to do that?’” she said.
“Canadians are not getting the training they need basically in time to meet demands. We have this idea that the labour market will magically sort itself out,” Williams said.

The Future Skills Centre has over the last six years funded 400 different research and innovation pilots around skills development.

However, there’s a need for training programs with a longer funding horizon and the space and time to create and implement innovative skills-training, reskilling and upskilling programs with new funding models, Williams said.

Gupta pointed out that Canada’s Employment Insurance program is set up so that employees who are laid off collect EI and then if they’re laid off long enough they become eligible for government-funded training reskilling and upskilling programs to get them back into the labour market.

In contrast, in Germany workers who are laid off are immediately incentivized to get into training programs right away, he said. Companies anticipating layoffs can tap into a fund to start retraining people in advance of those layoffs.

But in Canada, “we silo our EI system, we silo our training system, we silo our postsecondary system,” Gupta said. “It doesn’t really make sense in a modern economy when jobs and skills needs are changing so quickly.”

Gupta noted that about 60 percent of Canada’s graduate students leave the country because they can’t get viable or career-advancing employment here.

“Why not attach them [though work-integrated learning and training programs] to the labour market before that happens, before they have to leave the country?” he said.

Businesses need to buy into and support employees’ training

Canadian businesses also have the responsibility to work with training organizations to provide and support opportunities for their employees, the panellists said.

For example, Reddington said Mitacs tried an upskilling pilot a couple of years ago with a company.

“One of the biggest reasons it failed was the employer buy-in,” she said. “We laid out expectations but a lot of the time the employer said we need you to do x, y, z, as opposed to actually pursue the course.”

“I think the buy-in from the participants themselves and also the employer is key,” Reddington said.

Williams said the Future Skills Centre had a similar experience during a project with Calgary Economic Development. The Alberta government wanted every student to have a work-integrated learning opportunity during their education.

The idea was to create a platform, a one-stop shop which businesses could access and look for students for the work-integrated opportunity.

“The hard part was serving the needs of businesses,” Williams said. “They could figure out how to serve the needs of learners. But doing both of those at the same time was too hard.”

She noted that the Future Skills Centre opened a call last fall for a novel pilot skills training program, providing six months of funding. The Centre was expecting about 300 applicants but instead got 900 proposals from across Canada

“[It speaks to] the lack of money to do these kinds of pilots [that have] very innovative thinking around solving skills challenges,” Williams said.

Gupta said at the University of Toronto he created a graduate program where every student has to do a thesis on a problem that’s posed by industry.

Initially, it was hard to get interesting problems, for students to imagine doing a problem that came from industry, and for faculty to imagine supervising a problem from industry, he said.

“Fast forward seven years and I think this is the program that has the largest number of applications of any graduate program in Canada today,” Gupta said.

The program accepts four percent of students who apply, or about 100 students who get to work with 500 companies in the program and who pay the students for participating.

The students’ thesis committee has two advisors, one from the company and one from the university, he said. The program now encompasses seven departments at U of T and includes multiple industry sectors.

Ninety-two percent of the students who complete the program stay in Canada when they graduate, Gupta noted, compared with other Canadian university graduate programs in computer science where that retention rate is less than 50 percent.

“These things [types of programs] take a lot of work to get people to start understanding the value of collaboration,” he said. “But once it starts happening and people get it, they realize it’s so powerful.”

“The companies we work with think this is so powerful, that they get to work with these brilliant young people who solve really hard problems.”

Canada should be thinking about how to replicate this program at other Canadian universities, even though such programs are expensive, Gupta said. “Why is the incentive system so perturbed that other universities say this doesn’t make financial sense to run something like this?”

More training in professional skills is required

Mitacs engaged Statistics Canada to look at the performance of companies that engaged with Mitacs’ work-integrated learning opportunities compared with those that didn’t.

According to StatsCan’s report, companies that engaged with Mitacs:

• experienced an 11-percent boost in productivity, a nine-percent increase in revenue, and a 16-percent  rise in sales over three years.
• Increased their R&D spending by 37 percent seven years after partnering with Mitacs, while companies that didn’t collaborate with Mitacs decreased their R&D spending  by 54 percent.
• Experienced a steady increase of 18 percent in employment levels over seven years, while non-engaged companies saw a reduction of five percent.

Showing that kind of impact does speak to companies considering investment in training, Reddington said. “You have to show them what the payoff is for them as a company.”

Mitacs also assesses project proposals for their innovation merit, she said. “We have a very rigorous review process. We want to put participants and companies where they are doing work that’s been agreed on, that’s been vetted by researchers.”

Gupta said universities aren’t putting nearly enough emphasis on co-curricula training, especially training students in professional skills such as teamwork, communications, how to have an entrepreneurial mindset, how to write a business plan and other skills.

“Universities tend to do this [type of training] off the side of their desks,” he said. “They’ll do it when there’s some extra money. They won’t do it when there is no money.”

Government tends to treat this type of training as “a nice-to-have, not a must-have,” he added.

Yet, Gutpa said: “For the long-term success of my students in computer science, professional skills are as critical as learning how to build the next generative AI engine.”

Gupta said when the university talks with employers, they say these are the professional skills that students are missing.

“They [students] are not getting credit for it, it’s not required as part of their graduation. But I think this is so critical,” he said. “Why is it so difficult for our postsecondary system to adopt this as a core part of the curriculum?”

Reddington said Mitacs also hears from its industry partners that post-secondary students lack professional skills, knowledge of the industrial environment, and the ability to sell themselves.

Mitacs’ work-integrated learning experience helps students learn these skills and apply them to industry challenges, she said. Mitacs also has done some training specifically to help postdocs “sell” their research and themselves to industry.

Williams agreed that as the world moves into the next era, with AI and robotics, “what is uniquely human will be very valuable [and] we haven’t really been thinking about that future state environment.”

For example, the U.S. is doing more experimentation around skills-based hiring, or defining the skills required for the job and not necessarily looking at or putting as much weight on formal qualifications like degrees.

“The half-life for skills is much shorter when you look at some of the current technological skills,” she noted.

However, some skills such as collaboration, problem-solving and analytical thinking take years of investment and are much harder to train for when an employee is in a job, Williams said.

The Future Skills Centre is doing more thinking about the “outcome” of training, or what happens after people leave the training program, she said.

The Centre’s Aspire Atlantic project, for example, is a sector-based training model that aims to bridge the gap between the needs of employers and workers seeking to advance from unemployment or low-wage jobs into middle-skilled jobs with advancement opportunities. 

The Future Skills Centre also is working with a B.C.-based organization, SkillPlan, on widening the recruitment into the skilled trades. “It took us three years of partnership to build a platform to develop specialized curriculum and courses and materials,” Williams said.

“Helping employers articulate what are the skills we can train for, what do we need people to have in place, and thinking a little bit creatively around skills-based hiring would be a direction I’d like to see more of.”

Need to overcome interprovincial competition, short-termism, incrementalism

Canada needs to become more collaborative and less competitive when it comes to its highly skilled workforce, suggested Urs Obrist (photo at right), senior science and technology counsellor at the Embassy of Switzerland.

He pointed out during a Q&A with the panel that when comes to students getting training, the word “poaching” doesn’t exist in Switzerland.

“This notion is: ‘Education is there as a good,’” he said. It doesn’t matter if young students train in industry or move to a different company to learn more there.

Students often train in industry through the professional education stream and then go into Switzerland’s applied sciences universities or other universities. “That’s where the actual innovation happens,” as the theoretically minded academics in universities collaborate with the up-and-coming young applied sciences professionals, Obrist said.

Switzerland has 26 different cantons, each with its own constitution, government and parliament. Yet the country managed to get all professional degrees acknowledged across all the cantons, no matter in which canton the credentials were obtained in.

Canada has 10 provinces, most of which don’t mutually recognize each other’s professional credentials. “That could be a vision for Canada, to bring down those barriers,” Obrist said.

Gutpta noted that the federal government’s second-largest discretionary spending item is on research and innovation. Yet Canada suffers from short-termism and incrementalism, he said.

He pointed to the five federally funded global innovation clusters as an example of incremental programming rather than being focused on big industry-driven missions.

“We spend lots of money. Why aren’t we thinking big when we spend this money? Why aren’t we thinking, ‘We want to be the best at what we do?’” he said.

Panel moderator Sandra Noel (photo at right), president and CEO at Dynovus Consulting, concluded the session by asking the panellists for a one-sentence takeaway.

“Innovation is just about people and we have to get the people piece right. Otherwise, the rest will not work,” Gupta said.

Reddington said there’s still “lots of work to do between academia and industry – getting them in the same room, talking the same language, getting them to agree.”

Said Williams: “The labour market won’t magically sort all this [training] out by itself. It takes dedicated effort and investment.”

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