Social Policy in Ontario

Don Drummond, one of the smartest economists in the country, is dubious. He hasn’t found a shred of credible evidence that Canada has a serious mismatch between skills and jobs. In fact, most economic indicators point in the opposite direction.

• Statistics Canada’s latest survey of job vacanciesshowed there were 6.3 unemployed people for every job vacancy. That doesn’t suggest a shortage of skills. It suggests an oversupply of workers.

• There are no wage spikes in the skilled trades, information technology or scientific, professional and technical services. If Canada had skill shortages, employers would be paying a premium for workers in those fields.

• Ottawa does not have the ability to forecast labour needs accurately. Its methods are flawed, its projections unreliable, Drummond says. He is in a position to know. He spent 23 years in the federal finance department and 10 years as chief economist for the TD Bank.

The only proof he could find of a misalignment between the skills of Canadians and the needs of employers was a chart on page 62 of the 2013 federal budget. It showed that 4 per cent of available jobs were unfilled. That worked out to roughly 600,000 positions; a far cry from what StatsCan was reporting.

Puzzled by this discrepancy, Drummond asked finance department officials how they came up with the figure. (The attribution under the chart said “finance department calculations” using data from Statistics Canada andWANTED Analytics, a headhunting firm). They refused to provide further information, saying it was “confidential.” With no way to corroborate or verify Ottawa’s number, he discounted it.

At this point, he considers it a strong possibility that Ottawa’s heavily promoted Canada Job Grant — the centerpiece of its economic plan — is built on a false assumption.

No mainstream economist has gone this far. There is certainly dissatisfaction with the program. The provinces, angry about losing control of workforce training, are solidly against it. Small business isn’t happy. And academics and think-tanks are skeptical it will work. But Drummond is the first to question Finance Minister Jim Flaherty’s contention that “there are too many jobs that go unfilled in Canada because employers can’t find workers with the right skills” and Employment Minister Jason Kenney’s assertion that a shortage of qualified workers is hampering projects from Labrador’s iron mines to Alberta’s oilsands.

It is worth remembering that the Conservatives have a history of launching major policy initiatives with little or no evidence. The government’s multi-billion-dollar Safe Streets and Communities Act, featuring harsh jail sentences, was unveiled when crime was dropping. Stockwell Day, defending the crackdown, said it needed to curb an alarming rise in “unreported crime.” Its decision to cancel Canada’s long-form census was justified on the grounds that 10,000 people complained the questionnaire violated their privacy. In fact, 27 individuals had complained. Then there was the F-35 fiasco. Peter MacKay insisted there was no need for competitive bids because Lockheed Martin’s Lightning II Joint Strike Fighter was the only one that met Canada’s needs. That, too, turned out to be more fiction than fact.

Drummond is not yet prepared to put the Canada Job Grant on this list. But he does think the $900-million shared-cost program is (the provinces and employers would be required to pay two-thirds of the bill) ill-conceived and unlikely to work.

If it falls flat, the prime minister who has declared the shortage of skilled workers “the biggest challenge our country faces” would have a serious political problem on his hands. He would have to create the jobs he keeps promising instead of dispensing training grants. And he’d have to do it fast. The 2015 election is approaching rapidly.

The notion that hundreds of thousands of jobs are available for trained applicants is appealing. It is just not clear that it’s true.

< http://www.thestar.com/opinion/commentary/2013/08/26/is_canadas_great_skill_shortage_a_mirage_goar.html >