INVESTING IN SKILLS: THE GREAT ENABLER

1. INVESTING IN SKILLS: THE GREAT ENABLER Craig Alexander Vice President of Economic Analysis May, 2016

2. CANADIAN ECONOMY EXPERIENCING MODEST GROWTH

3. COMMODITY CORRECTION A HUGE BLOW

4. GLOBAL ECONOMY STRUGGLING

5. U.S. ECONOMY A BRIGHT SPOT IN GLOBAL OUTLOOK

6. INTEREST RATES TO REMAIN LOW TO SPUR GROWTH

7. CANADIAN DOLLAR MAKING FIRMS MORE COMPETITIVE

8. CAPITAL SPENDING WILL BE WEIGHED DOWN BY COMMODITY SHOCK

9. FEDERAL GOVERNMENT STIMULUS ON THE WAY, BUT MODEST BOOST

10. GROWTH RELIANT ON NON-RESOURCE EXPORTS

11. REGIONAL ECONOMIC STORY WILL VARY GREATLY

12. LABOUR MARKETS WILL REFLECT LOCAL ECONOMIC CONDITIONS

13. HOWEVER, LONG-TERM ECONOMIC PROSPECTS BEING SHAPED BY FUNDAMENTAL FORCES • Globalization • Technical change (disruptive technologies) • Structural shifts in the economy and income • Urbanization • Demographics (aging population, increasing diversity)

14. FUTURE OF CANADIAN ECONOMY IS IN HIGH-VALUED SERVICES

15. SHIFT TO HIGHER VALUE ADDED ACTIVITIES TO PROSPER: RACE TO THE TOP

16. BUT CANADA HAS A PRODUCTIVITY PROBLEM

17. QUEST FOR CANADA IS TO RAISE INCOME GROWTH, BUT HOW TO DO SO WITH AGING POPULATION?

18. UNLESS WE CHANGE TACK, ECONOMIC GROWTH AND RISE OF STANDARD OF LIVING WILL SLOW

19. CANADA RELIES LESS ON CAPITAL, WHICH MEANS IT RELIES MORE ON LABOUR

20. CANADA HAS AN ESSENTIAL SKILLS CHALLENGE

21. LITERACY NOT A BINARY OUTCOME “Literacy is the ability to identify, understand, interpret, create, communicate and compute, using printed and written materials associated with varying contexts.” “Literacy involves a continuum of learning to enable an individual to achieve his or her goals, to develop his or her knowledge and potential, and to participate fully in the wider society.“ United Nations Educational, Scientific and Cultural Organization (UNESCO)

22. STRONGER SKILLS BOOST EDUCATION ATTAINMENT

23. PROMOTES LIFE LONG LEARNING

24. RAISES EMPLOYMENT, REDUCES DURATION OF UNEMPLOYMENT

25. STRONGER SKILLS BROADEN JOB OPPORTUNITIES

26. RAISES INCOME AND IMPROVES STANDARD OF LIVING

27. INVESTING HAS A HUGE PAYOFF • Raising literacy scores of those with poor and weak by one level could create as many as 800,000 additional jobs – 3.5 years worth of annual job creation • It could also lower the national unemployment rate by more than 1 percentage point • A Statistics Canada survey found that lifting literacy scores by 1% could lift labour productivity by 2.5% and raise output per capita by 1.5% • This suggests that a 1% increase in literacy could boost national income by $32 billion • Raising literacy scores to adequate could create a payoff of $80-$100 billion

28. JOB CREATION IS SHIFTING INCREASINGLY TO HIGHER SKILL POSITIONS

29. THIS IS FUELING SOCIO-ECONOMIC PRESSURES

30. CANADA TENDS TO IMPORT STORIES FROM THE U.S. WHERE WORKERS NOT GETTING A FAIR DEAL

31. IN CANADA, LABOUR PRODUCTIVITY IS DRIVING INCOME

32. A STRONGER SKILLED WORKFORCE CARRIES HUGE BENEFITS • Increased output and profitability • Lower error rates • Increased ability to do on-the-job training • Better team performance • Improved labour relations • Increased quality of work • Reduced time per task • Better health and safety records • Better employee and customer retention

33. CONCLUSIONS • Canadian economy is struggling at the moment, but economic conditions in Ontario will be above average • But, structural forces of globalization, technical change, urbanization, demographics is deeply changing the economy and the labour market • Ontario must become more productive and competitive. If it doesn’t the standard of living will not continue rising and governments will not be able to deliver on key priorities – including health and education • Building the skilled workforce of the future is key. Youths, immigrants, older workers and others need strong skills to succeed.

34. Thank you www.cdhowe.org @CraigA_Eco