Parisa Mahboubi is a senior policy analyst at the C.D. Howe Institute.
Do your skills match the requirements of your job? For a large portion of Canadians, the answer is no, which raises serious concerns for policy-makers.
While skills are essential for individual success in the labour market, they need to match properly with job requirements to enhance productivity and achieve desirable outcomes for workers, employers and society at large.
Although some skills mismatch is inevitable or temporary, the problem can worsen and become persistent in the face of technological changes and aging demographics, requiring governments and businesses to place a high priority on improving labour mobility and providing appropriate training opportunities.
Skills mismatch generally occurs when workers’ skills are more or less advanced than the skills required to perform their jobs. While overskilled workers are unable to use their full potential at work, underskilled workers have skills that are lower than required to perform their job. Both situations can lower morale and productivity.
Factors that can contribute to skills mismatch are general economic conditions, new technology, demographics, imperfect information about workers’ skills and the policy environment for labour mobility and lifelong learning.
My recent C.D. Howe study, Bad Fits: The Causes, Extent and Costs of Job Skills Mismatch in Canada, shows that about 13 per cent of full-time workers in Canada are either under- or overskilled, in terms of literacy, numeracy and problem-solving, for their job, with the underskilled and overskilled about equally divided for each skill. While skills needed in today’s labour market are not limited to these cognitive skills, they are skills that workers need to use essentially in any occupation (but to varying degree) and are fundamental to all learning.
The good news is that Canada generally ranks among those developed countries with relatively lower levels of skills mismatch. However, there are two reasons for concern.
First, the skills mismatch problem is significantly more pronounced among certain socio-economic groups. While workers with higher educational attainment are more likely to be overskilled, women, immigrants and older workers are more likely to be underskilled for their jobs. Relative to non-immigrants, however, the greater underskilling problem of immigrants entirely disappears with time spent in Canada, highlighting the importance of settlement policies that provide rigorous and accessible skills training, language programs and job-search workshops for newcomers.
Second, the skills mismatch problem can worsen in the years ahead as the labour market is evolving because of technological advances, work-force aging and the growing role of newcomers in Canada’s labour force.
There is certainly worry out there: Taking into account a broader set of skills such as ICT (information and communications technology), interpersonal, decision-making and physical skills, the majority of Canadians (92 per cent) considered themselves as being skills mismatched for their jobs. The issue is complex for employers and employees alike: There are workers who may need no further training in some types of skills, but they may need to advance other skills to excel in their career.
Some potential reasons that may force workers to stay in jobs that do not align with their skill set include lack of information about alternative job opportunities; barriers to labour mobility or investment in training; employers’ reluctance to train their staff; and lack of employment opportunities because of economic circumstances.
The results from my study highlight the importance of providing more opportunities for skills development and lifelong learning for all workers and better addressing individual training needs, particularly, among underskilled people such as older workers and new immigrants.
Therefore, governments need to promote participation in lifelong learning. Governments can also help reduce both the overskilling and underskilling problems with policies that enhance labour market flexibility and ease labour mobility. For example, removing barriers for certified and licensed workers can help reduce overskilling since there will be more jobs available that match their skills level.
Finally, businesses – in addition to providing training opportunities for underskilled workers – can reduce mismatches within their organizations by appropriately reassigning tasks, providing relocation assistance and finding innovative ways to use workers’ skills in order to optimize productivity.