In a recent Globe and Mail commentary, Wilfrid Laurier University President Max Blouw argued that universities "are not, and should not be, in the business of producing 'plug and play' graduates – workers who can fit immediately into a specific job in which they spend the rest of their lives." Instead, he makes the distinction between what economists call general and job-specific skills.
For the most part, universities are in the business of teaching general skills – those that are transferable across all employers – such as communication, analytical and critical-thinking skills. Universities have come to teach some less general, occupation-specific skills (especially in professional programs) that are transferable across many but not all employers. (While it is obvious that everything one learns in an economics degree is useful in all jobs, perhaps an advanced course in managerial accounting would not help you much in your job as a social worker.) Individuals invest their money, time and effort in obtaining such transferable skills, expecting a payoff in terms of higher productivity and wage offers in the future.
Traditionally, training in job-specific skills – the types of things you would learn on the job, of great value only to a specific employer – would be left up to the employer. Employers were willing to pay a full wage while employees learned specific tasks, with the expectation that the employee would stick around and, ultimately, the employer would enjoy the benefits of higher productivity. Employers thought of this on-the-job training as an investment. This arrangement worked because the job-specific skills were not typically transferable to other employers.
Dr. Blouw essentially argues that universities should stick with teaching the general skills, and employers need to fully return to their role in training workers with job-specific skills.
But employers are reluctant to take this role; many of the skills once thought of as job-specific now seem more easily transferable across several employers, particularly within an industry or occupation class. Employers are not willing to expend resources on such training, as other employers will be able to attract the trained employee with a slightly higher wage and enjoy the higher productivity without absorbing the cost of investment. As a result, employers are seeking individuals that are "plug and play" graduates for their job openings – and when they don't arrive we hear complaints about the severe skills shortage.
It's not clear universities have any role to play here. I expect a market-based approach is the better option.
On the employer's side, we cannot enforce employment contracts that would require employees to stay on the job for an extended period after on-the-job-training so that employers reap the benefit of their training investment. I don't think we want the legal infrastructure to allow such arrangements. The best employers can do is improve their employee retention practices and offer competitive wages and benefits. I don't see a way to rationalize policy intervention in the form of employer subsidies.
On the employee's side, those being trained must be willing to take on some of the investment costs, by being paid a relatively low wage commensurate with their productivity while in training. In return, they will receive a higher wage in the future with the same or a different employer seeking their new skills. For a university graduate, this is nothing more than the standard internship. The legal infrastructure already exists for such an arrangement. Providing such internships should not the responsibility of universities.
In my view, policy intervention requires the clear identification of a market failure. Otherwise, policy can do no more than redistribute the economy's resources from one group to another. Often, such redistribution is desirable. In the case of university graduates, however, I'm not convinced we need governments to do anything in terms of on-the-job training.
Tammy Schirle is an associate professor of economics at Wilfrid Laurier University in Waterloo, Ont.