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Will federal budget truly fix the skills gap?

OTTAWA - It's been almost five years since economist Don Drummond was asked by concerned federal and provincial labour ministers to find solutions to the mismatched job market that has increasingly worried employers, governments and workers alike.

But Drummond's response for governments to spend $13 million — a bargain in the world of social policy — to overhaul and improve labour market information has gone all but unnoticed.

Now, this week's federal budget will make that very same issue — deemed "critical" in 2008 — its centrepiece.

As businesses yell louder about their inability to find the right people, and the unemployed and the underemployed voice equal frustration, the federal government is poised to revisit its labour market interventions, design some new programs to bring together the private sector and underutilized pools of workers, and demand better results from the provinces.

Will this time be any different?

"We're not going to find the fix overnight," said Sarah Anson-Cartwright, director of skills policy at the Canadian Chamber of Commerce whose job it is to push full-time for a more efficient labour market.

"We get a sense that now, there's a real momentum and a real sense of the need to engage. Everyone seems to realize we have a looming skills crisis."

One of only two recommendations that was actually implemented from Drummond's lengthy list of 47 ideas was the creation of a job vacancy survey by Statistics Canada. Now a year old, the survey has enough data to compare this year to last, and give some regional and industrial breakdowns.

At last count, it shows there are about 241,700 job vacancies in Canada, with the highest vacancy rates in Alberta and Saskatchewan. The national job vacancy rate has remained steady for the past year and a half, and even at a regional level, has fluctuated very little.

At the same time, the most recent labour force survey shows there were 1,332,600 unemployed people in Canada. That's about 5.5 workers for every available job, providing employers with a large pool of prospective employees.

The problem, say analysts, is that the jobless and the jobs don't match. And there is not enough sharing of detailed information to reorient training and education to fix the problem.

The job vacancy data suggests there are plenty of positions available in health care, arts and entertainment, mining and science and technology. But that kind of information is not nearly detailed enough for the educators, employees and families trying to anticipate the exact demand for labour, says Angella MacEwen, senior economist at the Canadian Labour Congress.

The problem may well be on the employer side too, however. It's impossible to tell at an aggregate level whether higher wages or better on-the-job training efforts would quickly fill some of those vacancies, MacEwen said.

Still, there is a widespread recognition that over the medium-term, as the working population ages, labour shortages will become more and more common, MacEwen and others agree.

Over the past few years, the federal government has turned its attention to many different demographics in an attempt to expand the labour pool: raising the age of retirement to 67, fiddling with the immigration and temporary foreign worker rules, improving the recognition of foreign credentials, putting some money and thought into youth employment.

Now, there is talk in federal circles of specific initiatives to improve employment among people with disabilities and aboriginal peoples, where high rates of unemployment are standard.

Officials are considering a proposal from Indspire, an indigenous education institute, to match $50 million in training funds that the organization would raise in the private sector. Similarly, they are looking at partnering with community organizations that bring together businesses and people with disabilities.

But this type of targeted, boutique program is only going to scratch the surface of the mismatch, says Matthew Mendelsohn, director of the Mowat Centre, a Toronto-based think-tank.

Provincial cooperation is essential, he says, if the country wants to make sure its training and education initiatives help workers meet the needs of employers.

Almost $2 billion of the $2.5 billion that the federal government transfers to provinces every year for labour market development is tied to employment insurance. But so many of the underutilized pools of labour are not eligible for EI, Mendelsohn says, pointing to people with disabilities, aboriginal people and youth.

"The amount of money the federal government puts into training these people is quite small," he said. "As long as most of the dollars are tied up with EI eligibility, we're not going to achieve great results."

The federal government has indicated it wants better accountability and measurement for how that $2.5 billion is spent. But going so far as to remove its link to EI would be very provocative right now, especially given the push-back Human Resources Minister Diane Finley has received after her most recent reforms to EI, Mendelsohn says.

In an interview, Drummond said he still believes that many of the country's mismatch problems could be solved by going back to his original proposals from the task force created in 2008. Back then, he and his task force recommended that provincial and federal governments build a detailed, public and searchable database that would enable anyone in the country to access relevant labour market information from across the country.

"If you had that, you would resolve a lot of the other things."

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