Bank of Canada Governor David Dodge's take on the importance of investing in skills
Bank of Canada Governor David Dodge spoke on Canada’s Competitiveness: The Importance of Investing in Skills at the first annual David Dodge Dinner and Lecture hosted by the Humber Institute of Technology and Advanced Learning in Toronto, last month.
Three global trends — technological change, globalization, and demographic shifts — must be central to our thinking as we prepare our workforce and our economy for the challenges that we face. So, in light of these trends, how do we best develop our labour force to boost our productivity?
The key to achieving these goals lies in co-ordinated effort. Skills development is a shared responsibility of business, academic institutions, the public sector, workers and students.
We need a system of incentives for continuous learning and upgrading of skills, and an infrastructure that delivers the training. This has always been important. But it will be particularly important in the next two decades, as labour force growth in Canada slows.
This system of incentives must benefit both workers and firms. If companies don’t see the payoff from training and skills development for their workers, they won’t make the investments. If workers don’t see what’s in it for them, they won’t devote the time and energy to improve their skills.
The first step to improving skills is to build an excellent infrastructure for early childhood development, feeding into a school system that effectively teaches basic skills. For Canada to generate productivity gains in a world market that’s embracing technological change, provincial education systems must continue to boost literacy and numeracy rates among students.
There’s no longer such a thing as an unskilled job. The workers of today and tomorrow need to know how to learn, so that they can continuously improve their skills after they leave school.
If we find more innovative ways to keep students engaged in their education, they will leave school with the enthusiasm they need to continue learning throughout their career. For some students, especially boys, school can feel like incarceration.
One reason why drop-out rates are high is that some students don’t see the connection between what they’re being taught in school and what they want to do when they leave school.
In order to be motivated to learn math, language or science, students need to understand that this knowledge is relevant to the careers they want — that these courses are the foundation on which they will build their skills and interests.
No one who learns a musical instrument practices scales so that they can be really good at playing scales. They practice scales so that they can play the songs they like. And students need to see first-hand the opportunities that will open up for them by studying hard and staying in school. Colleges, and the industries that support them, play a key role in providing that motivation, through programs that give high school students a first-hand look at the career options ahead.
The flip side of the aging population is relatively smaller cohorts of young people. But that doesn’t mean that we can stop focusing on the problems we face in preparing these young people for the workforce. Indeed, the fact that we have smaller cohorts means that we must do better — we can’t afford to squander the potential of these young people.
Once they have finished high school, they need to learn the skills that will help them to become productive workers in the expanding sectors of the economy.
Of course, it will always be critical that Canada stay on the leading edge of advanced research and theory. But pure research always needs to be complemented by the ability to commercialize, customize and market the products that result.
Service industries will also require increasing numbers of skilled workers. Older people buy relatively more services as a percentage of their overall consumption. The health-care sector, for example, will require more medical technicians, therapists, nurse practitioners and home-care workers to meet growing demand.
And as our population ages, the demand for leisure and travel services is increasing. The hospitality and tourism sectors can differentiate Canada from other destinations by delivering the exemplary service that only well-trained workers can provide.
In order to learn relevant skills, students should be trained to use the latest tools and production methods employed by the sector for which they’re training. This means innovative partnerships between educational institutions and industry, to give students access to equipment and methods that are actually being used by leading-edge businesses. It means embracing the classic notion of apprenticeship to help make education and training as efficient and as relevant as possible.
One more word on apprenticeships. We need to focus on creating a new generation of skilled craftspeople to replace the generation that is retiring. This is not a new problem. I was writing papers about it in the early 1970s, and it still hasn’t been resolved. Existing shortages in some skilled trades are likely to worsen, particularly in those trades where Canada used to rely on imported skills to meet domestic demand.
The time to train this new generation is now, so that they can gain from the experience of the older generation while learning the latest techniques.
But, as we improve the training of young workers, demographics will demand that we also make better use of older workers over the next couple of decades. And that requires continued and innovative on-the-job training.
Employers may be reluctant to invest in training older individuals because of the shorter period in which to recoup training costs and because of a perception that older workers are less “trainable.” These are misperceptions.
First, because of rapidly changing technology, the payoff period for any training has become shorter and the need for the continuous upgrading of skills greater. Second, research suggests that successful training depends on the design of the training program, not on the age of the trainee. We should help older workers to continue to get the skills they need to remain in the workforce — should they wish to do so.
I’ve said that improving the skills of Canada’s workers is a shared responsibility. So let me say a word about the role of the public sector. Boosting productivity requires microeconomic policies that encourage innovation in Canada’s private and public sectors.
Sometimes this innovation results in the displacement of workers. Public policy should assist those workers to upgrade their skills — not just when they lose their jobs, but during their entire working lives. That requires the right mix of policy incentives for individuals and employers to continue to invest in training. And it must be a continuing process, not just a remedial one.
I don’t for a minute believe that these are easy tasks. But the more flexible and efficient we can make our labour force, the better prepared we will be to improve our productivity and to increase the real incomes of Canadians in the years ahead.
So let me conclude with a challenge. Just as we need to improve the productivity of our factories and enterprises, we also need to improve the productivity of our training and education system.
So I challenge Humber College and other educational institutions to constantly evaluate and improve the methods they are using to develop the skills of Canada’s workforce.
And I challenge subsequent lecturers in this series to come up with new ideas to help them achieve this goal. Creating the world’s most innovative framework for education and training is not a simple task. But it’s an extraordinarily important one. Because the more innovative we can be in skills development, the more innovative we will be as a nation. And that is the best way to promote sustained, long-term economic prosperity for Canadians.
Three global trends — technological change, globalization, and demographic shifts — must be central to our thinking as we prepare our workforce and our economy for the challenges that we face. So, in light of these trends, how do we best develop our labour force to boost our productivity?
The key to achieving these goals lies in co-ordinated effort. Skills development is a shared responsibility of business, academic institutions, the public sector, workers and students.
We need a system of incentives for continuous learning and upgrading of skills, and an infrastructure that delivers the training. This has always been important. But it will be particularly important in the next two decades, as labour force growth in Canada slows.
This system of incentives must benefit both workers and firms. If companies don’t see the payoff from training and skills development for their workers, they won’t make the investments. If workers don’t see what’s in it for them, they won’t devote the time and energy to improve their skills.
The first step to improving skills is to build an excellent infrastructure for early childhood development, feeding into a school system that effectively teaches basic skills. For Canada to generate productivity gains in a world market that’s embracing technological change, provincial education systems must continue to boost literacy and numeracy rates among students.
There’s no longer such a thing as an unskilled job. The workers of today and tomorrow need to know how to learn, so that they can continuously improve their skills after they leave school.
If we find more innovative ways to keep students engaged in their education, they will leave school with the enthusiasm they need to continue learning throughout their career. For some students, especially boys, school can feel like incarceration.
One reason why drop-out rates are high is that some students don’t see the connection between what they’re being taught in school and what they want to do when they leave school.
In order to be motivated to learn math, language or science, students need to understand that this knowledge is relevant to the careers they want — that these courses are the foundation on which they will build their skills and interests.
No one who learns a musical instrument practices scales so that they can be really good at playing scales. They practice scales so that they can play the songs they like. And students need to see first-hand the opportunities that will open up for them by studying hard and staying in school. Colleges, and the industries that support them, play a key role in providing that motivation, through programs that give high school students a first-hand look at the career options ahead.
The flip side of the aging population is relatively smaller cohorts of young people. But that doesn’t mean that we can stop focusing on the problems we face in preparing these young people for the workforce. Indeed, the fact that we have smaller cohorts means that we must do better — we can’t afford to squander the potential of these young people.
Once they have finished high school, they need to learn the skills that will help them to become productive workers in the expanding sectors of the economy.
Of course, it will always be critical that Canada stay on the leading edge of advanced research and theory. But pure research always needs to be complemented by the ability to commercialize, customize and market the products that result.
Service industries will also require increasing numbers of skilled workers. Older people buy relatively more services as a percentage of their overall consumption. The health-care sector, for example, will require more medical technicians, therapists, nurse practitioners and home-care workers to meet growing demand.
And as our population ages, the demand for leisure and travel services is increasing. The hospitality and tourism sectors can differentiate Canada from other destinations by delivering the exemplary service that only well-trained workers can provide.
In order to learn relevant skills, students should be trained to use the latest tools and production methods employed by the sector for which they’re training. This means innovative partnerships between educational institutions and industry, to give students access to equipment and methods that are actually being used by leading-edge businesses. It means embracing the classic notion of apprenticeship to help make education and training as efficient and as relevant as possible.
One more word on apprenticeships. We need to focus on creating a new generation of skilled craftspeople to replace the generation that is retiring. This is not a new problem. I was writing papers about it in the early 1970s, and it still hasn’t been resolved. Existing shortages in some skilled trades are likely to worsen, particularly in those trades where Canada used to rely on imported skills to meet domestic demand.
The time to train this new generation is now, so that they can gain from the experience of the older generation while learning the latest techniques.
But, as we improve the training of young workers, demographics will demand that we also make better use of older workers over the next couple of decades. And that requires continued and innovative on-the-job training.
Employers may be reluctant to invest in training older individuals because of the shorter period in which to recoup training costs and because of a perception that older workers are less “trainable.” These are misperceptions.
First, because of rapidly changing technology, the payoff period for any training has become shorter and the need for the continuous upgrading of skills greater. Second, research suggests that successful training depends on the design of the training program, not on the age of the trainee. We should help older workers to continue to get the skills they need to remain in the workforce — should they wish to do so.
I’ve said that improving the skills of Canada’s workers is a shared responsibility. So let me say a word about the role of the public sector. Boosting productivity requires microeconomic policies that encourage innovation in Canada’s private and public sectors.
Sometimes this innovation results in the displacement of workers. Public policy should assist those workers to upgrade their skills — not just when they lose their jobs, but during their entire working lives. That requires the right mix of policy incentives for individuals and employers to continue to invest in training. And it must be a continuing process, not just a remedial one.
I don’t for a minute believe that these are easy tasks. But the more flexible and efficient we can make our labour force, the better prepared we will be to improve our productivity and to increase the real incomes of Canadians in the years ahead.
So let me conclude with a challenge. Just as we need to improve the productivity of our factories and enterprises, we also need to improve the productivity of our training and education system.
So I challenge Humber College and other educational institutions to constantly evaluate and improve the methods they are using to develop the skills of Canada’s workforce.
And I challenge subsequent lecturers in this series to come up with new ideas to help them achieve this goal. Creating the world’s most innovative framework for education and training is not a simple task. But it’s an extraordinarily important one. Because the more innovative we can be in skills development, the more innovative we will be as a nation. And that is the best way to promote sustained, long-term economic prosperity for Canadians.
