The Canadian workforce is currently grappling with a significant skills gap, presenting a profound challenge for businesses and the economy at large. Recently released data has highlighted that a staggering 77% of Canadian businesses are unable to find candidates with the suitable skills necessary to fill vacant positions. Even when applicants possess relevant skills, nearly half, or 44%, lack the proficiency required to secure employment. This issue is particularly concerning given that there are approximately 700,000 job vacancies across the country, despite Canada boasting one of its largest-ever graduating classes with nearly 360,000 students from colleges, universities, and trades. As the labor shortage deepens across various sectors, the disconnect between formal education and real-world job requirements is becoming more apparent and harder to ignore.
Skills Shortage will Likely Worsen
Forecasts indicate that Canada’s skills shortage issue will likely escalate in the coming years. An anticipated 700,000 skilled trade workers are expected to retire by 2028, creating a significant gap in the workforce. The current apprenticeship system, which is both slow and outdated, is proving inadequate to fill this void efficiently. Currently, only 32% of male and 35% of female apprentices complete their training, a process that can take up to four years. Other countries have achieved much higher completion rates in considerably shorter timelines, often two years or even less. In addition to the trades, Canada faces shortages in essential sectors such as nursing, technology-related positions, construction engineering, and K-12 education. Notably, a shortage of 100,000 nurses is projected by 2030. Demand is simultaneously rising for roles related to artificial intelligence and advanced manufacturing, putting further strain on the labor market and highlighting the need for an improved approach to workforce readiness.
The existing educational infrastructure and apprenticeship systems require significant reevaluation and redesign to bridge the widening skills gap effectively. A reliance on traditional methods of determining skill sets, such as degrees and certifications, is coming under scrutiny. Many employers are losing confidence in qualifications as a reliable hiring basis, as these do not always correlate with job readiness. This growing sentiment is prompting a shift towards skills and competency-based hiring, where applicants provide portfolios of skills and work testimonials. By 2028, it is projected that 85% of Canadian companies will have adopted some form of skills-based hiring practices. Additionally, innovative programs by companies such as Shopify, where candidates are trained straight from high school, are redefining pathways to prepare individuals effectively for industry-specific roles, suggesting that novel educational and training models can be part of the solution to this pressing issue.
Rethinking How to Prepare People for Work
The dissonance between employers’ expectations and the skills provided by traditional academic institutions has necessitated a reevaluation of how Canadians are prepared for the workforce. Some organizations are looking beyond degrees and diplomas as markers of readiness, instead placing greater emphasis on skills-based or competency-based hiring practices. This approach allows candidates to showcase their skills portfolios and provide testimonials from previous work experiences as a means to secure employment. Companies like Shopify have started to hire high school graduates, running them through tailored training programs to equip them with the necessary skills for specific roles within the company. As of this year, nearly 80% of Canadian companies have embraced skills-based hiring practices, which marks a significant shift from the 74% adoption rate observed in previous years.
In the evolving job market, traditional educational institutions such as colleges and universities must adapt to remain relevant. Simply introducing more programs or expanding existing ones won’t address the core issue at hand. What is required is a fundamental reassessment of how these institutions prepare students for the real-world workplace environment. This entails not merely offering conventional coursework but integrating skills that are in high demand within the job market. As corporate expectations diversify and evolve, educational model reforms prioritizing flexibility and practical competencies over traditional academic benchmarks will likely prove more effective in bridging the current skills gap.
5 Steps Canada Should Take
A comprehensive, multi-faceted strategy is imperative for Canada to address the deepening skills crisis effectively and sustainably. First, modernizing the apprenticeship system by shifting from a time-based to a competency-based model could greatly enhance the speed and efficiency of training. Allowing learners to demonstrate skills on demand, regardless of location or format, could reduce completion times to two years or less. This approach values demonstrated competence over the duration or method of learning and can involve diverse formats such as workplace mentorship, boot camps, micro-credentials, and virtual labs.
Accelerating skills recognition through micro-credentials represents another crucial step. By adopting micro-learning and stackable micro-credentials, Canada can better address labor shortages across sectors. This strategy involves recognizing short, focused learning experiences capable of equipping individuals with specific skills or knowledge. It has already proven successful in fields like IT and project management where professionals thrive based on industry-recognized certifications, without formal academic degrees. Expanding this model into sectors like health care, finance, and manufacturing could create alternative pathways to employment and help mitigate workforce challenges.
Recognize Informal and Experiential Learning
A large number of Canadians acquire valuable skills through informal, self-directed learning experiences or within workplace settings. Despite this, the mechanisms to convert informal learning into formally recognized credentials remain fragmented and are often bureaucratic. Enhancing Canada’s prior learning assessment systems to become a nationally coherent, on-demand competency-based framework is crucial. This approach would allow certified assessors to validate individuals’ skills, subsequently linking those skills to job profiles and occupational standards. Streamlining this process would not only improve labor market efficiency but also present a fairer system that acknowledges diverse learning backgrounds, thus offering a viable solution to current economic challenges.
Simultaneously, reassessing and shortening post-secondary programs can enhance their alignment with labor market needs. Many existing college and university programs are increasingly misaligned with industry demands, requiring extensive reviews to ensure that graduates possess applicable skills. By designing competency-based, work-integrated learning models that span two to three years and involve industry collaboration, educational institutions could significantly enhance job readiness among graduates. Such reforms offer a pathway to create a more dynamic, responsive educational system that evolves alongside market demands, ensuring that new graduates are better prepared to enter the workforce.
Incentivize Employer Investment in Upskilling and Reskilling
Canada is facing an escalating challenge with its skills shortage, projected to grow significantly in the coming years. By 2028, around 700,000 skilled trade workers are expected to retire, creating a substantial gap that the current apprenticeship system seems ill-equipped to address. This system is outdated and sluggish, with only 32% of male and 35% of female apprentices completing their multi-year training. Other nations boast faster, more effective training methods. Beyond trades, Canada is experiencing shortages in fields like nursing, technology, construction engineering, and K-12 education. A significant nursing shortfall, with a projected deficit of 100,000 nurses by 2030, is particularly concerning. Concurrently, there’s increased demand for roles in artificial intelligence and advanced manufacturing. To tackle these shortages, traditional educational pathways need reevaluation, with a shift toward skills-based hiring gaining momentum. By 2028, 85% of companies may adopt this approach. Innovative programs such as Shopify’s direct-from-high school training offer potential pathways to bridge these gaps.