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Nov 27, 2018

GM’s closing is a warning shot: Canada’s not ready for the age of disruption

November 27, 2018

General Motors’ move to cease production at its Oshawa plant at the end of 2019 will put more than 2,500 people out of work. The company’s increased focus on electric vehicles, cited as a main reason for this decision, is part of a broader economic shift.

A host of new technologies such as artificial intelligence and the online gig economy are poised to reshape many sectors in the years ahead – and the evolution of the labour market means workers will increasingly wonder who will support them during these disruptive times.

This has led to significant uncertainties. Which industry might be disrupted next? When will it happen, and to what extent? This poses a tough challenge for policy-makers who could be faced with a radical reshaping of the labour market, a business-as-usual scenario, or anything in between. Yet, the Oshawa plant closing reminds us that these conversations shouldn’t default to a “wait-and-see” approach, which won’t help workers who are in need of better supports right now. Instead, there’s a growing international consensus that governments must focus on overhauling skills training for adult workers who might face multiple job transitions.

There’s little evidence that Canada is doing enough. Canada lags its peers in other advanced economies on investments in social spending generally, and investments in skills training for adults in particular. Countries such as Denmark and France spend proportionately three times as much as Canada on skills training that better positions their workers to thrive in a labour market with frequent job transitions and higher skills requirements.

Moreover, too many unemployed Canadians cannot access the skills-training support that they need. Eligibility for employment insurance is typically a precondition for public skills-training programming. Fewer than 40 per cent of unemployed Canadians are currently EI-eligible, down from more than 80 per cent in 1978 – while Canadian employers are spending roughly 30 per cent less on training than they did in the early 1990s. Without adequate government or employer support, there’s nowhere to turn for many workers seeking to upgrade their skills and find new positions.

But the conversation can’t just focus on how much governments spend, particularly at a time of constrained fiscal resources; it also has to focus on how effective their spending is. Here, again, the evidence is troubling: Provincial employment services across the country, which are mostly delivered by third-party organizations, have struggled to place out-of-work clients in meaningful employment.

For example, Ontario’s auditor-general found that in 2015-16, only 38 per cent of Employment Ontario’s employment-service clients were employed full-time after completing training programs, and only 14 per cent had found employment in professional occupations, more suitable jobs, or jobs in their field. The numbers are even worse for Ontario’s Second Career program, which was introduced in the wake of the 2008-09 financial crisis and focuses on high-demand jobs, clocking in at 17 per cent and 10 per cent respectively.

Financial incentives can help lay the groundwork for a smarter, more outcomes-based approach to skills training, encouraging service providers to spend more time networking with employers and ensuring their clients aren’t just cycled into the first available job that presents itself. But these approaches must also be designed carefully to ensure that providers don’t simply focus on their easiest-to-place clients, ignoring those who might otherwise harm their bottom-line figures, but need help the most.

While emerging technologies and the ongoing march of globalization are placing significant pressure on existing industrial, regulatory, tax and policy frameworks, updating them intelligently represents a golden opportunity to help position Canada as a leader in the new digital, borderless economy. But the General Motors announcement is a reminder that failing to take advantage of this opportunity to reform skills training, education and other vital social supports to be more responsive, client-centred and focused on outcomes will leave Canada out-of-step with the trajectory of the global economy – and risk leaving more workers disrupted out of their jobs, with nowhere to turn.

Published by The Globe and Mail

Release Date

November 27, 2018


Sunil Johal


The Globe and Mail

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