Skills and Productivity: Which Skills Shortages Are Impacting Canadian Productivity?
Canada has a productivity problem. Labour productivity growth—the amount of output produced per hour worked—has stalled. The Canadian economy’s labour productivity at the end of 2023 was around the same as it was in 2017. This is the second time that Canada’s productivity growth has been notably weaker than the United States’ in recent decades, with the first occurring between 2003 and 2012.
Skills, knowledge, and ability determine how effectively a worker can complete tasks for a given role. It’s not just the supply of skills in an economy that matters for productivity—imbalances between the skills that employers demand and the skills of an economy’s workforce, including skills shortages or mismatches, affect firms’ performance and the wider economy.
This report examines the intersectionality of skills shortage and how this can affect an employee’s ability to perform their jobs. As well, looking into how this can affect job satisfaction.
Key Insights
Skills shortages explain around 7 per cent of the productivity gaps that opened in the two most recent periods in which Canadian productivity growth lagged that of the United States—between 2003 and 2012 and again from 2018.
Skills shortages vary over time. Currently, Canada is facing a shortage in the construction sector which is also affecting the utilities and mining industries. These sectors require technical skills, such as setting up, repairing, and operating machinery and equipment and designing structures or engineering systems.
Between 2018 and 2021 Canada experienced widespread and severe skills shortages across the knowledge-based services industries. These sectors require high levels of foundational, analytical, and interpersonal skills.