Reality Check: Skills gap? What skills gap?

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Much has been made about the supposed Canadian “skills gap”, or the mismatch between the skills needed to fill vacant jobs and the skills actually possessed by workers. But new research by TD Economics suggests that the “gap” is largely a myth.

The study, Jobs in Canada, finds that concerns about the skills gap are unsupported by the available evidence, and that the existing data makes it almost impossible to determine if the situation is any worse than it was a decade ago. As the authors note:

Views on the job market are vulnerable to being driven by anecdote. Our findings pour some cold water on perceptions that Canada’s job market is deeply dysfunctional and currently facing a crisis with respect to skills. Our data test uncovers some evidence of tightness in a number of occupations that have been widely-perceived to be encountering labour shortages. Yet, our analysis failed to provide a real smoking gun.

The paper also addresses the skills issue as it relates to post-secondary education. Again, the authors fail to find much evidence that universities and colleges are failing to provide graduates with needed skills:

Some believe that the post-secondary system is graduating too many Canadians in areas which are not in demand, thus leaving a large pool of underemployed people. OECD over-qualification and under-qualification rates for Canada relative to other countries provide some supporting evidence. Still, the job market outcomes of recent graduates, including those with liberal arts degrees, are likely better than many Canadians perceive.

They add:

A closer look reveals that the perception related to recent Canadian graduates flipping hamburgers is exaggerated. For instance, the 2011 NHS data showed that unemployment rates for the 25-29 year age cohort with some form of PSE ran in the 6-8% range depending on the level of education (see Chart 22). For people aged 25 to 64 years old that received their Bachelor degree in Canada, the unemployment rate is just 3.7% and only 5.5% for people aged 25-29years. The comparable unemployment rates for those with high school are 6.9% and 10.4%, respectively.

Recent discussions around the need to “reform” Ontario’s universities have been driven in part by variations of the skills gap hypothesis. With no real evidence to support the idea that institutions are under-performing in the skills/employment area, students, faculty, and citizens should all be wondering why certain policymakers are so convinced there is a problem.

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