Canadian Manufacturing

Skills shortages cost Ontario billions of dollars annually: report

Conference Board report says province losing $24.3-billion in economic activity each year

TORONTO—Ontario is losing out on billions in economic activity and tax revenue because employers can’t find people with the skills they need to innovate and grow in today’s economy, a new report claims.

According to the Conference Board of Canada’s The Need to Make Skills Work: The Cost of Ontario’s Skills Gap report, released at the Closing the Skills Gap conference in Toronto, the province is seeing shortfalls to the tune of $24.3-billion in economic activity and $3.7-billion in provincial tax revenues annually thanks to a lack of skilled workers.

“This is money that could provide substantial economic and social benefits to Ontarians. Closing the skills gap could help the province reduce public debt or invest in much needed infrastructure improvements,” the think-tank’s vice-president of organizational effectiveness and learning Michael Bloom said in a statement.

“Consider, for example, that a proposed expansion of public transit in the Greater Toronto-Hamilton Area would require an estimated $2-billion per year, over 25 years, to complete.”

Skills gaps currently affect much of Ontario’s economy, according to the report, including sectors that account for almost 40 per cent of employment: manufacturing; health care; professional, scientific, and technical services; and financial industries.

And the think-tank projects that skills gaps are only to worsen if action is not taken.

“Ontario cannot afford to live with a skills gap of this magnitude. The need for action is urgent, since changes in education will take years to bear fruit in the labour force,” said Bloom.

To get a clear picture of employers’ skills needs, the Conference Board conducted the Ontario Employer Skills Survey, which found employers most need post-secondary graduates in science, engineering, and technology; and business and finance.

With more than 1,500 Ontario employers responding to the survey, results show that the most widespread needs are for employees with two- or three-year college diplomas (57 per cent); four-year degrees (44 per cent); and trades (41 per cent).

The negative impact on the Ontario economy goes beyond the issue of skills shortages, though.

Another issue with economic consequences is skills mismatches in the labour force, according to the Conference Board—individuals whose skills and training are not being fully utilized in the jobs they have.

The Conference Board estimates that these mismatches alone cost Ontario’s economy and workers up to $4.1-billion in foregone gross domestic product and $627-million in provincial tax revenues annually.

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