College system overlooked, underappreciated (Guest commentary)

TD Bank’s chief economist explains how employers can temper rising labour costs

Canada’s workforce is aging and will eventually shrink, prompting some to make dire predictions about the country’s ability to compete and prosper in the future.

Their concern is greatly exaggerated. A permanent shortage of labour supply cannot exist because the market will adjust, eventually with a price that reconciles supply and demand.

This is not entirely comforting news for Canadian companies. They are not only faced with finding new employees, but also paying the high cost of attracting and retaining them. However, employers can reduce these costs.

For instance, they can more effectively mine untapped opportunities that already exist within the traditional talent supply — the post-secondary education system. Yet for many companies, this requires thinking outside the institutional box.

Most employers still view post-secondary education through the lens of universities, because most senior executives came through this system and these schools do serve students and employers well.

However, Canada also has a strong college system. It’s just often overlooked and underappreciated. That’s certainly been my impression since my involvement in the Rae Review of Postsecondary Education in Ontario in 2005. The lack of data on colleges was unfortunate, if not emblematic of a prevailing perception. It’s time to align perception with reality.

In a recent presentation hosted by Toronto’s George Brown College, I shared some employment statistics that clearly demonstrate the growing importance of colleges. According to Statistics Canada, between 1990 and 2005, job gains for college-educated workers outpaced the increases for university-educated workers by about 110,000.

The Ontario youth unemployment rate paints an even more compelling picture, showing an unemployment rate of 6.9 per cent among youth with diplomas and certificates versus 9.2 per cent with degrees. While colleges offer both diploma and degree programs, in general terms, the statistics show college students are well positioned for gainful employment.

It is worth paying attention to how students act with their time and money. Thirty-eight per cent of all post-secondary enrolment in Ontario is in the college system. An estimated 1.5 million Canadians are studying in colleges for credit or non-credit courses. And of all university graduates, 22 per cent go on to college in preparation for a career. Those students comprise seven per cent of the entire college population.

Smart employers will take a particularly close look at colleges as a key partner in the development of talent pools that have not been fully utilized. Immigrants are most often identified as the ideal new source of skilled labour, and with good reason. In just a few years, they will account for 100 per cent of labour force growth. However, immigrants, along with Aboriginal Canadians, people with disabilities and mature workers, have comparatively low labour force participation rates and when they do find employment, they tend to earn lower incomes.

Colleges possess a distinct advantage in training these specific groups. First, their own student populations are already significantly more diverse than universities.

Eighteen per cent of college graduates were not born in Canada, and a further 13 per cent are first generation immigrants. Nine per cent of Canadian college students self-identify as Aboriginal compared to three per cent for surveyed university students, and 10 per cent of college students report having a disability as opposed to six per cent of university students.

Secondly, and as a direct result of their diversity, colleges have acquired specialized expertise catering to the needs of these groups. Relevant training for language skills, work adjustment, cultural orientation and foreign credential recognition are all areas in which colleges lead in the entire educational system.

Finally, colleges maintain traditionally close ties to industry employers. They offer customized programs and training on a contract basis to more than 1,000 major employers in Ontario every year — placing them in the ideal position to bridge the training gap between employers and these new talent pools.

None of this is to make an argument in favour of colleges over universities. Economic success for Canadians requires both systems to be strong and used in the most effective manner possible.

Canada’s employers must adjust preconceptions of their future employees. They must broaden their perspective on where future employees will be educated, such as Canada’s strong college system. And they must partner with colleges to engage people who have not traditionally been fully engaged in the workforce. Only by adopting a broader mindset will employers be able to control the rising cost of imminent adjustments in the skilled labour market.

Don Drummond is senior vice-president and chief economist at TD Bank Financial Group in Toronto.

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