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Building a Modern 21st Century Workforce - Summary

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Introduction

Canada has a skilled and well-educated labour force, underpinned by robust education, training and employment supports. Emerging trends and societal changes demand that we reflect on what works and what can be improved to build a more productive and inclusive workforce. These forces require new strategies to drive economic growth and labour productivity to help position Canadians to benefit from good, sustainable jobs and a better quality of life. Public, private, labour, Indigenous and not-for-profit organizations must be agile and responsive and work together to meet workers’ and employers’ evolving needs. This will help position the nation as a world leader in fostering a modern, 21st-century labour market ready to advance economic priorities and a digital and green economy.

With this in mind, the Government of Canada wants to gather diverse perspectives from across Canada on:

Input received will help to inform how modern approaches to skills development, education supports and lifelong learning can equip the workforce of tomorrow.

Purpose of discussion paper

This discussion paper aims to open a dialogue on how to foster a modern, inclusive and productive labour market for the 21st century. It provides an overview of the current labour market context, major trends, a snapshot of Canada’s skills development landscape and opportunities moving forward.

The vision is to build on our strengths, seize opportunities and address challenges to advance economic priorities in a digital and low-carbon economy.

Tell us what you think

Your input is valued. We are seeking your views on the following general questions related to the themes and priorities in this paper (and outlined below):

Please take some time to consider these questions, along with the themes and priorities in the paper, and send your feedback by completing this online questionnaire. The questionnaire takes approximately 20 to 30 minutes to complete.

The input gathered through this process will help inform future policies and programs to build Canada’s workforce of tomorrow.

We recognize that First Nations, Inuit, and Métis have unique rights and priorities. That is why we are engaging with Indigenous partners to help ensure Canada’s workforce reflects the unique and diverse needs of Indigenous people.

Discussion themes for building the workforce for the 21st century

Labour market trends and key drivers of change

Canadian Economic Context

Overall, Canada’s economy is healthy. It had one of the fastest employment recoveries in the G7 following the pandemic, saw a rise of 1.1% in real gross domestic product (GDP) in 2023, and is projected to continue GDP growth through 2025. Canada is also recognised as a good place to invest and grow. It is ranked third overall in total foreign direct investment (FDI), behind only the United States and Brazil, and has broad market access being part of 15 free trade agreements covering 51 countries and 1.5 billion consumers.

However, lagging labour productivity in Canada is a worrisome trend in a global economy undergoing significant changes. This trend affects many sectors and is primarily due to inefficiencies within sectors rather than between sectors.

The impacts of these labour market trends vary for different groups. For example, individuals with lower education attainment and lower skill sets are at greater risk of the impact of economic shocks. In addition, employment and unemployment rates vary across demographic groups. Among others, youth have experienced rising unemployment rates (13.5% in June 2024) and Indigenous people aged 25 to 54 at all education levels had higher unemployment rates in 2023 (7.7%) than the non-Indigenous population (4.5%). Even though racialized individuals are more likely to pursue a university education, their employment income is lower than non-racialized and non-Indigenous graduates.

Despite some recent easing in labour market tightness (such as, number of job vacancies), there are persistent gaps in some sectors such as health care and social assistance (including nurses and early child educators) and construction. Such shortages are anticipated to persist for various occupations.

Demographic Changes

Canada’s aging workforce poses both risks and opportunities. Many older workers, who are healthier than ever before are choosing to remain in the labour market. Although the supply of labour will decrease as this group exits, it will drive a loss of skills but also allow for a restructuring of labour demand. With millennials now making up the largest segment of the Canadian population, this will have important implications going forward.

Addressing needs for various groups will be essential to shape a thriving labour market. Youth have much to offer. Newcomers will also be essential to the workforce. However, newcomers are still more likely to be unemployed than Canadian-born adults. And refugees have even worse labour market outcomes.

While Canada has made progress in becoming more inclusive, more remains to be done to remove barriers to maximize labour market participation. Under-represented groups continue to experience under-employment and lower participation rates. For example, despite a growing Indigenous population, employment rates are still lower and barriers persist for this group. For persons with disabilities, they continue to experience higher rates of unemployment; and women continue to experience lower participation rates and gender wage gap. By addressing barriers, sizable gains can be made to overall economic outcomes by harnessing this untapped potential through greater inclusion.

Technology and the future of work

The experience of technological change at a scope and pace never seen before is a global phenomenon. Canada is not immune to this change which has impacted all areas of the economy, labour supply and demand. Some occupations will feel the impact of changes more than others, in particular those that are vulnerable to being automated.

Investments in new technologies will be needed to augment labour productivity, which can support job creation and new opportunities. From opening new markets for businesses to encouraging more meaningful engagement of workers through innovation and creativity over predictable, mundane tasks, there are real opportunities to seize.

Generative artificial intelligence (generative AI) is the clearest example of a transformative technology that can help improve productivity. In the Canadian workplace, its use is still relatively low, which means that the full impact of AI on productivity, employment and skills is yet to be realized. Employers are reporting that they are already looking more and more for workers with digital skills.

These changes signal a need for a mindset shift and new approaches by both businesses and workers. We already see that the type of work Canadians are doing is changing, particularly around gig work. Increased technological adoption will amplify this shift in worker models and create an opportunity for workers to have a greater voice in shaping healthy and productive workplaces. For example, the post-pandemic period showed how mental health has been increasingly a priority for workers and employers. In addition, flexible work arrangements present opportunities for participation, however attention will be needed to monitor the boundaries of work-life balance.

Aligning workforce development strategies with changing economic priorities in emerging growth areas

Preparing Canadians for the jobs and the economy of the future

New global realities mean thinking and doing things differently. Adopting a growth mindset to knowledge and skills acquisition will prepare Canada’s current and future workforce to effectively use new tools and technologies and become more productive while fostering greater efficiency and inclusivity.

The Government of Canada’s economic policy aims to build a green, digital and resilient economy through whole-of-government efforts. These include:

The transition to a sustainable economy is driving demand for new skills. This demand could see up to 400,000 jobs added where an enhanced skill set will be critical. These opportunities are already being created in clean energy and renewal battery industries and projections indicate significant new jobs created in natural resources and agriculture.

Canada is poised to gain by being proactive in seizing strategic opportunities in such areas as electric vehicles, battery supply chain, renewable energy and carbon capture technology. The potential for mining critical minerals is also high. And despite the declining but continuing use of hydrocarbons in combustion applications, countries that focus on producing hydrocarbons with ultra-low production emissions will have a competitive advantage.

A snapshot of Canada’s skills development landscape

Addressing current and future anticipated needs

Strategic workforce development approaches are being focused on 4 groups of workers to drive growth and productivity:

  1. Equipping new entrants to meet on-the-job demands: Concerted efforts have been made to improve the quality and consistency of more granular labour market information. These efforts inform training investments that facilitate skills development aligned with industry needs in both emerging and growth areas.
  2. Growing the workforce from within Canada: Inclusion of all Canadians who want to work is a priority. With a focus on outcomes, emphasis is being placed on improving programming for underrepresented groups and those further from employment.
  3. Upskilling and reskilling the existing workforce: To enable workers and employers to keep up with shifting skills demands within shorter cycles of change, increased attention is being placed on supporting skills upgrading and retraining so that individuals can make the most of opportunities.
  4. Attracting and retaining global talent: Investments are being made to strengthen supports available from pre-arrival, foreign credential recognition, and better coordinated and more integrated settlement services with employment supports and career development.

Workforce Development

Canada’s workforce development involves a broad network of actors that are providing a range of supports to meet diverse needs. This includes governments, unions, education and training providers, industry or business associations, employers, Indigenous governments and organizations and not-for-profit organizations, among others. To maximize collective return on investments, working together there are opportunities to improve coordination, fill gaps and identify efficiencies.

Employers, unions and workers face common challenges that span across regions and nationally. To help address these challenges, the Government fosters cross-sectoral collaboration to test innovative approaches, identify promising practices and help replicate proven practices based on reliable evidence across the country. The Government also administers national programs to address worker needs such as Employment Insurance, Job Bank and labour market information investments, in addition to supporting federally delivered programs to provide Canadians with consistent access to programming that addresses specific needs.

Provinces and territories play a key role in their capacity of having core responsibilities for education. This includes early years, primary and post-secondary education, private institutions, apprenticeships, skilled trades certification and various professional accreditations. They are also responsible for labour market programs that respond to unique jurisdictional needs.

Indigenous governments and organizations also play a key role in providing employment and training supports. This includes the delivery of labour market programming funded through mainstream programming as well as more specifically through programs such as the Indigenous Skills and Employment Training Program and the Skills and Partnership Fund. These programs enable Indigenous communities to enhance their workforce capabilities to ensure sustainable employment opportunities and economic growth.

Employers and unions make important contributions to workforce training. Through both formal and informal investments, employers meet organizational needs and enhance labour productivity. However, Canadian business investments seem to lag those of international peers. Additionally, small and medium-sized enterprises face particular challenges, including limited financial resources and employee release time being common constraints to support training. Given the importance of these enterprises to the Canadian labour market–employing 10.3 million workers or 90% of private sector employment–helping them facilitate employer-supported training is a priority for any success in building momentum as a nation. Unions also play a key intermediary role between employers and workers to support skills development that meet workforce needs. They provide a wide range of technical training and skills upgrading opportunities as well as offering upskilling and mentorship opportunities for unionized apprentices and journeypersons.

Many Canadians are taking initiative and taking courses or find training options that help them to develop skills to improve their performance in their current jobs and to prepare them for new opportunities. However, affordability challenges are a growing concern. Many Canadians face financial barriers, especially those with low income. Flexible training formats that allow workers to pursue upskilling while balancing work and family responsibilities are essential to meeting the needs of Canadians. Better access to information that links jobs and training information in a way that is personalized to individual needs is also an area in which Canadians need better supports.

Moving Forward – opportunities to foster a modern, diverse, inclusive, and productive 21st century labour market

Creating an inclusive and efficient labour market that aligns with economic priorities requires coordinated, deliberate actions by all involved. The paper identifies 3 overarching priorities in building the labour market for the 21st century.

Priority 1: Ensuring better alignment between workforce strategies, training institutions, labour groups, employers and economic priorities

Businesses could invest in more training; training institutions, labour groups and employers would have the tools and information to drive workforce development strategies toward future priorities.

Canada could have strong ecosystems that drive consultation and coordination among partners on a regional or national basis, aligned with priorities for growth.

Employers and sectors could be engaged in identifying their skills and training needs to ensure programs effectively train new entrants into the workforce (for example, youth) and upskill existing workers.

Priority 2: Eliminating inefficiencies and barriers in Canadian labour markets

Efforts could be made to foster a labour market free of regulatory and other barriers to employment, training and career progression to drive employment outcomes and participation rates.

Immigration pathways could be aligned to both labour strategies and long-term human capital needs across the economy.

Employment barriers could be removed for underrepresented groups. A culture of new workforce development initiatives could be encouraged that is agile and innovative, continually incorporating new best practices identified through experimentation and impact analysis.

Priority 3: Maximizing labour productivity through strategic skills development and lifelong learning

Essential skills development across jurisdictions and institutions could focus on workforce development as a driver of growth in a clean, digital economy.

Existing workers could have access to upskilling throughout their careers, addressing a persistent gap in the policy landscape for proactive workforce development programming.

Conclusion

Canada’s labour market is going through several structural shifts–demographic changes, shifting economic priorities, climate change, and the rapidly changing nature of work. Layer on lower labour productivity, global talent competition, and changing business and worker models–it is evident that a complex, coordinated set of actions are needed to best position the country to thrive in the years ahead.

Our advantage is a highly networked range of organizations across sectors that are leaning in and are eager and motivated to play an active role in working together in the best interest of Canadians and the nation. All recognize that increased social dialogue among industry, employers, education and training providers, Indigenous and not-for-profit organizations, academics, governments and other interested groups is essential. It allows us to establish a common understanding of some of the opportunities and challenges that we face as a country now and into the future–and together, identify priority areas for action and how each of us can play our respective parts.

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