‘Credential inflation’ is shrinking already tight talent pools and leaving critical skills underused across Canada
Canadian employers have spent decades using university degrees as an easy filter for job candidates, particularly as applicant volumes grew and HR teams looked for simple ways to triage large piles of résumés.
But growing evidence suggests that habit is leaving critical skills on the table – according to Lightcast’s recent “Fault Lines” report, 66 per cent of job postings worldwide require a university degree, while only 31 per cent of workers have one. That numerical gap points to a structural mismatch: employers are asking for more formal education than the labour force can realistically provide, particularly in a period of demographic aging and slower workforce growth.
As Tony Fang, economic and cultural transformation chair and full professor at Memorial University of Newfoundland, explains, in Canada employers face “credential inflation,” where the actual skills required in workplaces today sink to the bottom of a sea of bachelor’s degrees.
Considering the pace at which technology is changing job descriptions, the status quo of hiring according to education only is no longer sustainable.
“Those kinds of requirements become obsolete very quickly,” Fang says.
“It’s important to maintain very proactive auditing of job requirements and skill requirements.”
Credential inflation and wasted human capital in Canada
The consequences of credential inflation are especially visible in Canada’s highly educated workforce, says Fang, where many workers who have invested in postsecondary education are still finding themselves in roles that don’t use their knowledge at all.
“We select them based on the credentials, we select immigrants also based on credentials, education, but we are not matching them up well,” Fang says, adding that degrees where they are not genuinely required is no longer a harmless habit.
“So it turns out they may not have the necessary relevant skills to perform the jobs at hand. You end up with lot of old education and old qualifications, which is a waste of human capital.”
That “waste” shows up in several ways for HR and employers, Fang says: workers who are disengaged because they are overqualified for what they do, teams that lack the specific technical or interpersonal skills required for evolving roles, and organizations that have spent recruitment time and money on the wrong fit.
When credentials are crucial – and when skills should lead
Fang recommends a more nuanced approach to hiring, including audits that distinguish between roles where credentials are essential and where they are simply habitual, and data tracking to see where it works and where it doesn’t.
The Lightcast report echoes this distinction in different terms, suggesting that legacy workforce models built around formal qualifications no longer fit a world where technology is reshaping jobs at speed.
The problem, Fang says, is that similar credential expectations have crept into generic roles where degrees add less value.
He contrasts regulated professions with “very generic jobs” where skills and experience can be demonstrated more directly, such as “admin assistance, marketing, sales, and so on, for which you could demonstrate your competence [in] a combination of skills and experience, rather than general education.”
Building more rigorous, skills-based hiring processes
As Fang points out, skills-based hiring can itself be a more rigorous and thorough – therefore successful – strategy. If degrees are no longer enough, HR needs different selection tools that can stand up to scrutiny from hiring managers and candidates alike.
“Work sample tasks for technical roles have very high predictive power – probably not surprising,” he says, also mentioning structural interviews for roles that require specific personality or leadership characteristics.
Rather than relying on résumés and unstructured interviews, Fang says, employers can introduce technical work samples or simulations that are more closely tied to job performance. That aligns with Lightcast’s call for more sophisticated talent strategies in the face of “permanent labour scarcity.”
Fang says employers should not abandon education altogether but combine it with more direct assessments of capability. By creating a more comprehensive screening process mixing skills, credentials and education according to the role, they will select a more well-rounded employee.
“Build a skilled base assessment into the hiring process, even if you have some educational requirements,” Fang says.
“For example, doctors, nurses and engineers, it doesn’t guarantee you would necessarily have a good performance. You still need to complement that education with skill-based assessments to make sure individual candidates can perform the task well.”
