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The Future of Work: Addressing Skill Imbalances in Canada

We’ve lost our balance. Skills shortages were especially acute during the post-pandemic recovery. A Statistics Canada survey from 2022 revealed that over half of employers were grappling with skills gaps and more than two-thirds were struggling to find candidates with the necessary skills. In the spring of 2023, over half of small businesses expected recruiting and retaining skilled workers to be a significant obstacle in the next three months.

This research explores how skill imbalances are expected to evolve over the next two decades, driven by technology adoption and demographic shifts. As automation and AI technologies continue to grow, what skills will employers be looking for? What policies do we need to stem the tide of growing skill shortages in critical industries? How can data be used to adapt curricula to address current and future skill requirements? Solutions call for a range of measures, from interventions across education levels to improved integration of immigrant talent.

Key findings

Skill imbalances will contribute to rising job vacancies in Canada. Job vacancies will reach 917,000 by 2040 and the job vacancy rate will reach 3.8 per cent, resulting in over $11 billion in lost economic activity.

Vacancies in technical and manual services are expected to increase by 30 per cent between 2023 and 2040, reaching 366,000 by the end of the period. Demand for foundational and interpersonal skills—like oral comprehension and coordination—will grow in this sector, while imbalances in technical skills will decline.

Vacancies in knowledge-based services are expected to increase by 35 per cent between 2023 and 2040, reaching 365,000. While this sector requires a high level of proficiency across a wide range of skills, the imbalance for foundational and interpersonal skills is expected to increase the most.