Can the federal government deal with the skills gap?

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On Thursday, Bank of Canada Senior Deputy Governor Carolyn Wilkins addressed the Toronto Regional Board of Trade to talk jobs and wages.  In particular, the Bank has been concerned that in an economy with as tight of a job market as Canada’s is nationally, we haven’t seen wage growth that should be associated with it.  As Wilkins outlined, there are a myriad of factors that have been suppressing that growth, outside of the way in which the current oil price difficulties in Alberta have skewed the national numbers, but even with an eye to those factors, is this something that the federal government can actually manage to do anything about?

In her speech, Wilkins pointed to three main factors as to why we’re not seeing the wage growth we should be – that there is a skills mismatch in the economy that isn’t able to be solved by just throwing more money at people; that people who have jobs are reluctant to look for new or better ones, and that means that the job churn that the willingness to “trade up” leads to is restrained; and that Canadians are reluctant to move to other parts of the country for new opportunities, with a big factor being housing affordability.  There were a few other issues of note as well – things like “superstar” firms that dominate markets and essentially becoming the only employers in town, so they feel less need to raise wages to attract talent, as it’s coming to them regardless.  And then there’s the gig economy – all of those Uber drivers have found themselves in a position where their bargaining power has been reduced, which again, keeps wages low.

Wilkins was confident that as the economy gets back to growth after the current detour caused by the temporary oil price crash that Alberta has been suffering through, that we would see the return to job churn and employers finding it worth their while to offer higher wages.  Nevertheless, these three main factors offer interesting policy challenges for the federal government to try to deal with as they look to keep the economy growing in the face of the headwinds of low oil prices and potential trade disputes between the United States and China – our two biggest customers.

We know that they are aware of the skills issue, because just this week, Minister of Women and Gender Equality, Maryam Monsef, was doing the rounds in the press to talk about how removing barriers for women and minorities, like the LGBT community, can lead to economic growth.  This is a message that the Bank of Canada has sent on numerous occasions, so it’s good to hear that the government is listening.  But are they actually absorbing the message?  That’s often the bigger question.  An early warning sign is that around the issue of immigration in Quebec.  The province is dealing with a labour shortage, and yet the newly elected CAQ government came in on a pledge to cut immigration by 20 percent, and there has been some agitation around the notion that they should be allowed to insist that any immigrants be able to speak French upon arrival – to “help integrate faster,” natch.  And this is before François Legault’s open musing that they want more Europeans to immigrate (no coded signals there).  Ensuring that the barriers that immigrants face are lifted has also been part of the Bank of Canada’s cautions around the job market in the past – but acceding to these demands by Quebec would be putting up more barriers for those immigrants (though, to be fair, the federal government has been pretty hostile to these demands in Question Period over the past week).

It should also be noted that the government has been chasing those “superstar” firms like Amazon quite openly, despite the fact that there are demonstrable problems with the wages that Amazon pays its employees – particularly in its warehouses.  By inviting in companies that dominate markets to the detriment of wage growth, it would seem antithetical to their stated goals.  Add to that, housing affordability may be an intractable problem for them to solve with any of their own policy levers – particularly if everyone keeps looking at it from a demand-side problem (and this isn’t just the government – it’s all federal parties who keep making these promises, which will only serve to raise housing prices even more, as they fill the vacuum left by the removal of whatever tax each party seems to think will “stimulate” the housing market).

Amidst this, we’re hearing the rumours bubbling up that the upcoming federal budget may be dubbed as a “skills budget,” likely with targeted investment into training programs and a lot of positive language about breaking down those barriers that people have been identifying, and given that it’s a pre-election budget, anything they can do to make it look good in terms of spending promises will likely be put in the window (so long as it keeps the debt-to-GDP ratio on the decline – they’ve long-since made it clear that eliminating the deficit is not a priority).

But, this having been said, I suspect the even bigger challenge this government is going to have, even if they put a “skills budget” in the window, is that they won’t be able to actually sell it to Canadians, or to those who need those investments in training.  This is a government that can’t communicate their way out of a wet paper bag, and they manage to step all over their own messaging whether it’s a good news story or a bad one.  If they stay true to form, any discussion around breaking down barriers to employment and closing the skills mismatch is going to be swallowed up in their vacuous pabulum about “helping the Middle Class and those looking to join it™,” which will serve absolutely nobody’s interests.  They can’t seem to help themselves, and our national discourse over serious issues like depressed wages winds up poorer for it.

More from Dale Smith.     @journo_dale

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