1. Assessment and recommendations

Managing labour market uncertainty due to COVID-19

This OECD report comes at a time when Canada and the world is facing the COVID-19 pandemic crisis, which represents a source of great economic uncertainty. Due to confinement measures necessary to protect public health, there has been a shock to the Canadian labour market. For example, following a drop of over 1 million in March 2020, employment fell by about 2 million in April 2020. The magnitude of the decline in employment from February to April (-15.7%) far exceeds declines observed in previous labour market downturns. At the same time, Employment Insurance (EI) claims have soared, with 2 million claims over the last two weeks of March alone. COVID-19 restrictions have started to gradually ease as of May 2020 and have been followed by an initial rebound in employment, but it remains to be seen how the economic recovery will unfold. After rising 5.2 percentage points in April to 13.0%, the unemployment rate in Canada has continued to increase in May, hitting an all-time high of 13.7%.

Prior to the COVID-19 outbreak, the Canadian labour market had been performing very well, albeit with unemployment differences across provinces. In 2019, unemployment stood at 5.7%, slightly above the OECD average of 5.2% but one of the lowest rates in the last 40 years. However, this federal picture does not capture differences across provinces – unemployment ranged from a low of 4.7% in British Columbia to a high of 11.9% in Newfoundland and Labrador.

Automation is likely to accelerate in a post-COVID labour market with different spatial impacts across Canada

The long-term impacts of COVID-19 on local labour market outcomes will become clearer with time, but there is a major risk that it could exacerbate economic and social inequalities. It is also likely to accelerate the pace of automation in the labour market. To reduce their exposure to any potential future social distancing and confinement measures, more firms could decide to invest in technology to automate the production of goods and services. The adoption of automation in the workplace tends to accelerate in times of economic crises, as firms replace workers performing routine tasks with a mix of technology and better skilled workers. Firms worldwide are starting to use robots to perform roles workers cannot do at home. For example, retailers in the United States are using robots to clean floors, while robots in South Korea have been used to measure temperatures and distribute hand sanitiser. It has also been argued that the current economic uncertainty is leading firms to reassess business models that rely on global supply chains.

This OECD report looks at economic regions across Canada to better understand how the future of work is going to affect local labour markets. It includes a special focus on the Province of Ontario, given that it represents almost 40% of Canada’s Gross Domestic Product.

Even before COVID-19, automation was having a profound impact in Canada as elsewhere. Overall, the OECD estimates that 45.6% of jobs (as a share of total employment) are vulnerable to automation in Canada, of which 15% are at high risk, meaning that these jobs are made-up primarily of tasks, which could be easily replaced by machines. These estimates are based on the Nedelkoska and Quintini (2018) methodology, building on individual level data from the OECD Survey of Adult Skills (PIAAC), which provides insights into the task composition of each person’s job as well as their skillset.

Occupations at high risk of automation tend to be concentrated in some sectors, which are not evenly spread across Canada. In the Province of Ontario, around 45% of jobs are at risk of automation – 14.7% of jobs being at high risk and another 30.2% likely to experience significant change, meaning the job will remain but the skills required to succeed could fundamentally change. This is the equivalent of almost 1.1 million jobs at high-risk and another 2.2 million jobs that could significantly change across the Province of Ontario (see Table 1.1). The risk of automation varies from a low of 41.1% in the Ottawa economic region to a high of almost 50% in the Stratford-Bruce Peninsula economic region. Across Ontario, the regions of Ottawa and Toronto face the lowest risk of losing jobs to automation. This can be partly explained by the sectoral composition of these local economies, which rely on finance and science and engineering, as well as services and public administration professionals that typically face a lower risk of automation.

There are a number of regional labour market characteristics that make some places more vulnerable. Economic regions in Ontario facing a higher risk of automation tend to have larger employment shares in goods-producing sectors, a higher prevalence of rural areas and a lower share of working-age population. They also tend to have a higher proportion of people in the labour force with lower levels of skills.

Table 1.1. How could the future of work affect economic regions in Ontario, Canada?
Automation could have substantial impacts on local labour markets across Ontario
Economic region	Total employment (2018)	Jobs at high risk of automation		Jobs vulnerable to significant change
		Number of jobs	Share of total employment	Number of jobs	Share of total employment
Hamilton-Niagara Peninsula	746 459	117 586	15.8%	231 533	31.0%
Kingston-Pembroke	201 995	31 050	15.4%	61 598	30.5%
Kitchener-Waterloo-Barrie	722 500	112 939	15.6%	221 266	30.6%
London	332 186	55 211	16.6%	105 162	31.7%
Muskoka-Kawarthas	171 266	28 234	16.5%	54 486	31.8%
Northeast	245 777	39 151	15.9%	76 573	31.2%
Northwest	92 295	14 101	15.3%	28 536	30.9%
Ottawa	703 418	88 330	12.6%	200 542	28.5%
Stratford-Bruce Peninsula	151 555	26 391	17.4%	48 418	31.9%
Toronto	3 503 584	493 044	14.1%	1 044 197	29.8%
Windsor-Sarnia	299 670	50 152	16.7%	94 528	31.5%
TOTAL	7 170 704	1 056 188	14.7%	2 166 839	30.2%
Note: ‘High risk of automation’ refers to the share of workers featuring a risk of automation of 70% or above. ‘Significant change’ reflects the share of workers with a risk of automation between 50% and 70%.
Source: OECD calculations on Labour Force Surveys.

While much of the attention often goes to the downside adjustments to automation, the good news is that 23 of 65 economic regions across Canada (35%) created jobs primarily in less risky occupations between 2011 and 2018. Less risky means that the jobs being created are primarily within occupations that tend to have more complex tasks, which are less likely to be replaced by a machine. All together, these 23 economic regions account for about 60% of the overall Canadian labour force. In Ontario, this includes the four economic regions of 1) Hamilton-Niagara Peninsula; 2) Kitchener-Waterloo-Barrie; 3) Toronto; and 4) Windsor-Sarnia.

Table 1.2. Many regions in Ontario have created jobs at lower risk of automation
Change in job creation between 2011 and 2018, economic regions in Ontario
Creating jobs, predominantly in less risky occupations	Creating jobs, predominantly in riskier occupations	Losing jobs, predominantly in riskier occupations	Losing jobs, predominantly less risky occupations
Hamilton-Niagara Peninsula	London	Muskoka-Kawarthas	Kingston-Pembroke
Kitchener-Waterloo-Barrie	Northwest		Northeast
Toronto			Ottawa
Windsor-Sarnia			Stratford-Bruce Peninsula
Source: OECD calculations on Labour Force Survey.

The OECD has developed these four scenarios as a framework to guide place-based actions that respond to particular community needs. For example, in those regions that are able to generate jobs in occupations which are less subject to automation, it would be important to focus on increasing labour market participation, especially from under-represented groups. In regions such as Hamilton-Niagara Peninsula, Kitchener-Waterloo-Barrie, Toronto, and Windsor-Sarnia, more focus can be placed on mentoring programmes, which connect people to work. Training programmes can also focus more on providing adults with new opportunities to re-skill to keep their jobs and advance in their career.

For those regions creating jobs but in risky occupations, more can be done to look at how firms are deploying and using technology. Here, community colleges in Ontario can play an important economic development role by working directly with employers to raise the demand for skills. This includes helping companies move into higher value-added products and service market strategies. Community colleges can work with employers to improve local skills utilisation and productivity through management training, the co-development and dissemination of relevant R&D, product testing and technology transfer.

For regions losing jobs in riskier occupations, there is an opportunity to focus on leveraging the entrepreneurial ecosystem to stimulate new job creation. Local leaders can focus on working directly with SMEs to help them grow and access new markets – both domestic and international. This could include supports for business incubators and supporting knowledge transfer among firms to spread a digital culture.

Finally, for those regions losing jobs, predominantly in less risky occupations, they appear to be in a more difficult structural adjustment situation. In these cases, local leaders need to identify policy complementarities between employment, skills and economic development programmes to leverage new job opportunities, especially in occupations that are less vulnerable to automation. Workforce development programmes should focus on providing “on” and “off” ramps for people to re-skill, while economic development policies should focus on leveraging the existing human capital base to diversify the economy into more productive employment opportunities.

Structural shifts across regional labour markets were already impacting the quality of jobs and employer demand for skills

Canada, as most OECD countries, has also experienced changes in the skills composition of employment over the past two decades, characterised by a shift of employment shares towards high-skill jobs. Labour markets across the OECD have become more polarised, with declining employment shares of middle-skill jobs relative to jobs with higher or lower skill levels. Looking at the 1998-2018 period, Canada experienced an increase in the employment share of high-skill jobs, while both middle-skill and low-skill jobs declined. Polarisation dynamics in Canada partly reflect increases in the supply of skills over the past decades.

All provinces have witnessed a rise in the employment share of high-skill jobs and a decline in the share of middle-skill jobs between 2011 and 2018, but regional differences are pronounced. For example, in Ontario, while Kingston-Pembroke has experienced a clear polarisation pattern over the last decade, in Muskoka-Kawarthas the employment share of middle-skill jobs increased between 2011 and 2018. The higher concentration of middle-skill jobs in some regions might pose challenges in the longer term, as middle-skill occupations often involve routine and repetitive tasks that could be subject to automation.

Alongside automation and job polarisation, labour and skills shortages are affecting some sectors and occupations more than others in Canada. Prior to COVID-19, companies were reporting labour and skills shortages in Canada, and the pandemic crisis is likely to increase demand for some occupations and specific skills. The 2018 ManpowerGroup Talent Shortage Survey reported that labour shortages represented an issue for 41% of employers in Canada. Shortages are affecting some sectors more than others. Surveys undertaken with more than a thousand Canadian entrepreneurs by Business Development Canada show that manufacturing and retail trade are the sectors where the largest share of companies report difficulties in hiring (56% and 54% respectively). Difficulties in hiring typically reflect challenges both on the labour supply (e.g. shortage of applicants, workers lacking the experience and skills needed for the job) and demand (e.g. conditions offered by employers). Automation and new technologies could represent an opportunity to tackle shortages and boost productivity in sectors at high risk of automation facing shortages, such as manufacturing and retail trade.

The increasing sophistication of technology in the workplace is also making some skillsets obsolete while increasing the demand for others. COVID-19 is likely to affect both workforce and skills needs in Canada. For example, it has been suggested that the pandemic crisis could cause labour shortages in essential services and affect infrastructure in Canada. The agriculture sector is also reported to be experiencing labour shortages, as COVID-19 has led to delays in arrivals of temporary foreign workers that the industry relies on. COVID-19 is also making digital skills more important than ever. It has been suggested that it will be crucial for employees to develop higher cognitive, social and emotional skills as well as greater adaptability and resilience in a post-COVID labour market.

Many actions are being taken at the federal and local level to anticipate labour market change

It should be highlighted that Canada has already taken important steps to ensure that local communities are ready for the future of work. For example, in February 2019, Future Skills was launched to encourage collaboration amongst public, private, labour and not-for-profit organisations to generate reliable evidence and drive transformative change in Canada’s workforce skills development policies and programmes. Future Skills includes:

• The Future Skills Council: an advisory Council to the Minister of Employment, Workforce Development and Disability Inclusion with members from public, private, labour, education and training providers, not-for-profit and Indigenous organisations. It provides advice on emerging skills and workforce trends, promoting transformative changes within Canada’s skills development system through a multi-sectoral approach.

• The Future Skills Centre: an independent applied research and innovation centre that prototypes, tests and evaluates new approaches to skills assessment and development, and disseminates the results widely to encourage broader adoption of proven practices.

Another example includes the Sectoral Initiatives Program, which aims to address current and future skills shortages by supporting the development and distribution of sector-specific labour market intelligence, national occupational standards, and skills certification and accreditation systems.

While the Government of Canada provides funding under the Labour Market Development Agreements and the Workforce Development Agreements, provinces and territories have the flexibility to design and deliver employment programmes and services best suited to the needs of their local labour markets. These agreements with provinces and territories contain devolved funding arrangements that enable place-based responses to workers facing structural adjustment as well as those who are far away from the labour market and need support to re-enter the labour force.

In Ontario, Employment Ontario delivers employment and training services to the public across the province. This employment service is under reform to become more responsive to individual workers and firms. Ontario has also a network of Workforce Planning Boards as well as Local Employment Planning Councils that aim to balance the supply and demand of skills by producing local labour market information, as well as tools and resources to inform their community about future jobs.

In the short term, it is clear that policy will concentrate on supporting employment and economic activity, as communities throughout the country suffer from the ongoing COVID-19 pandemic. Canada is working to address socio-economic challenges linked to the crisis, for example by rolling out a 75% wage subsidy to help employers keep workers on payroll through the crisis. A new temporary salary top-up for essential workers earning less than CAD 2 500 per month has also been introduced, aiming to boost income of front-line hospital workers, those caring for seniors, as well as workers engaged in the supply chain of food and essential goods. Workers who have already lost their income will be able to turn to the new Canada Emergency Response Benefit, which provides CAD 2 000 a month for up to four months. Several measures have been taken in support of young people in Canada. The Canada Emergency Student Benefit provides financial support to post-secondary students and recent post-secondary and high school graduates who are unable to find work due to COVID-19 and do not qualify for the Canada Emergency Response Benefit. The Canada Student Service Grant provides up to CAD 5 000 to support students post-secondary education costs in the fall. Youth are also being supported with the suspension of repayment and interest on their loans until 30 September 2020.

Over the longer term, policy responses could prepare workers for the upturn, while addressing the specific challenges facing people, places and firms in keeping pace with the future of work. This will require targeted action to build the skills in-demand in local labour markets and promote adult learning opportunities, while also fostering economic diversification towards sectors facing a lower risk of automation.

What are the policy opportunities in Canada going forward?

Helping places leverage local assets to make the transition

The increasing sophistication of technology in the workplace is making some skillsets obsolete while increasing the demand for others. Demand-led training systems are better able to ensure that workers build the skills needed in the local labour market. Ad-hoc initiatives in Ontario have been undertaken to measure and collect data on employers skills needs. As an example, the Conference Board of Canada, a Canadian not-for-profit think tank, conducted the Ontario Employer Skills Survey in 2013 to obtain a clear picture of employers’ skills needs.

A comprehensive employer survey does not seem to be regularly conducted in Canada. As labour market demands rapidly shift, employment and training providers will need to work more closely with employers to understand and respond to these shifts. Previously, at the federal level, a Workplace and Employee Survey had been in place to examine the way in which employers and their employees respond to the changing competitive and technological environment. Such a survey could be re-visited. The need for collecting information on employers skills needs becomes even more crucial today, as the COVID-19 pandemic crisis is likely to heavily affect employers needs and skills demand going forward.

In Ontario, the employment and training system has recently experimented with innovative initiatives to prepare people for the future of work that could potentially be scaled up. For example, the SkillsAdvance Ontario pilot funds partnerships that connect employers with the employment and training services needed to recruit workers with the right skills. It also supports job seekers to get into jobs by providing them with sector-specific services. Ontario has also tested the feasibility of a career pathways approach, focusing on building the academic and workplace skills that learners need for entry-level positions within demand sectors, while also providing a bridge to more advanced college credentials and employment opportunities. There is a clear opportunity to assess the success of these initiatives and determine the feasibility of scaling them up across the province.

Across the OECD, there is renewed interest in the role of industrial policy to strengthen relevant sectors of the local economy. The tradable sector – which includes all those economic sectors that produce goods or services that can be traded across regions and international borders – is recognised as a driver of productivity growth. Jobs in this sector, however, typically face a higher risk of automation, as they often entail routine and repetitive tasks. This is mostly due to the fact that the tradable sector includes many economic sectors that have an especially high risk of automation, such as agriculture and manufacturing. However, tradable services, which form a small but growing part of the tradable sector, are most likely at much lower risk of automation. Policy makers need to embrace the long-term benefits from shifting towards the tradable sector as productivity growth can lead to better wages and standards of living, while also addressing the risks related to automation that come from this shift. In the context of the future of work, policies can look within the tradable sector and identify how to steer support towards occupations with tasks that are less vulnerable to automation. Given that industrial and skills development policies often pertain to different government departments, policy co-ordination is crucial.

Local skills ecosystems can be instrumental in providing access to relevant specialised knowledge and skills. There may be benefits to be generated by focusing on clusters of expertise as well as regional strengths through a local skills ecosystem approach with the goal of creating a diversified labour market. Local skills ecosystems have a high level of social capital and strong multi-sector linkages between employment services, training organisations, as well as economic development actors, providing local firms with easy access to specialised support to innovate into new activities. Local skills ecosystems can emerge organically and in some cases governments can play a role in providing incentives for their development. The establishment of a local skills ecosystem is often dependent on a strong anchor institution, such as a higher education or vocational education institution as well as a catalyst for change (e.g. evidence suggesting that the region is likely to experience significant adjustment as a result of automation).

Building on local skills ecosystems, policies could promote diversification into activities that are closely related and connected to the existing skills base of the population. As communities respond to structural adjustments resulting from automation, evidence suggests that local networks connecting industries with overlapping skill requirements are predictive of where firms are most likely to diversify economic activities. A successful example of this diversification approach can be found in Akron, Ohio, United States, which was the location of four major tire companies in the 1990s. After experiencing major economic and jobs decline in this activity, the city invested in polymer technology, establishing a National Polymer Innovation Centre, which has since been a new source of job creation in the city. The city has managed to leverage the existing skills base and local knowledge and applied it to new technology and production processes. “Smart Specialisation” strategies within Europe could also provide useful examples for Canada. They generally aim to focus local development activities in areas where there is a critical mass of knowledge and innovation potential.

Recommendations to help leverage local assets and respond to the future of work

Foster demand-led training and labour market information

• Mainstream an employer skills survey across Canada to collect comprehensive data and information on skills challenges that employers report both within their existing workforces and when recruiting, the levels and nature of investment in training and development as well as the relationship between skills challenges, training activity and business strategy. One option could be to build on the coverage and scope of existing surveys, such as the 2018 Business Council Skills Survey.

• Strengthen programmes with sector-focused training. There is an opportunity at both the federal and provincial levels in Canada to build on the SkillsAdvance Ontario pilot programme to target skills training to local sector needs, by testing, replicating and scaling sector-focused training.

• Explore the feasibility of career pathway programmes that would support post-secondary institutions (i.e. both colleges and universities) in building stronger relationships with employment service providers and employers. This could take the form of providing more flexible funding options that enable post-secondary institutions to offer shorter credential programmes as well as invest in student support services and employer engagement capacity.

Promote economic diversification building on local skills assets

• Local Workforce Planning Boards as well as Local Employment Planning Councils in Ontario could play a stronger role in the development of local skills ecosystems. Local skills ecosystems are clusters of firms working horizontally across a value chain, with the education and training system, to foster knowledge exchange and co-ordination. Currently, local boards and councils in Ontario mostly produce labour market information. They could be given more autonomy to manage programmes that aim to better connect both the demand and supply of skills available in a local economy.

• Promote economic diversification into activities at lower risk of automation related to the existing skills base of the population. For some workers, developing completely new skills can be challenging, for example if they have been doing the same job throughout their entire work life. The establishment and promotion of local industry networks can help to identify opportunities to build on the existing skill base of the labour market to shift employment towards occupations facing a lower risk of automation. The Future Skills Centre may wish to pilot and evaluate new innovation projects that help transition workers from declining to growing economic sectors. The Labour Market Information Council also has an important role in articulating how skills can be transferred across industries and sectors.

Supporting people to make the digital transition

While fears of “technological unemployment” mount across the OECD, automation is more likely to change tasks within jobs rather than replace entire jobs. This requires workers to access up-skilling opportunities to remain employable. Digital skills are reported by employers among the skills most in need across Ontario and Canada. Canadian employers require a skillset that includes general workforce digital skills and a suite of “soft” skills, needed to make workers more flexible and adaptable to future labour market changes. Despite a growing narrative around the importance of learning to code, for most Canadians, foundational digital skills alongside a suite of non-digital skills — in particular, interpersonal skills — are critical foundations to be competitive in the labour market.

Changes in the world of work will affect everyone, but adults with low skills are most at risk of experiencing a deterioration in their labour market prospects. While more adults participate in training in Canada compared to the OECD (52% and 41% respectively), gaps in access are present across segments of the population. Across OECD countries, low-skilled workers participate much less than higher-skilled workers in training, but this gap is particularly large in Canada (28 percentage points relative to 23 percentage points). Many of these individuals can be stuck in a “low-skills trap” in a lower-level job with limited opportunities for on-the-job training and professional development. As the COVID-19 pandemic crisis poses new and unexpected economic challenges, low-skill workers might suffer more than others.

While a range policies and programmes have been implemented in Canada, there is an opportunity to leverage local action and scale up best practices that support people to transition into digitally intensive jobs. This would be particularly important for Indigenous people, immigrants, persons with disabilities as well as older workers that typically face disadvantage in the labour market. In Kitchener, Ontario, Communitech is an excellent example of a community-based initiative designed to promote and grow digital jobs. This local organisation provides support to all companies (e.g. from start-up to major corporations) to think more critically about how technology can help them improve their business organisation, while also raising awareness about skills training opportunities for all groups of people that are needed to transition workers into tech jobs.

At the local level, worker engagement is an important element to ensure a human-centred policy response to the future of work. Workers that are facing disruption due to technological changes often experience multi-faceted challenges linked to the labour market and are excluded from conversations about the future of work. Many of the workers most at risk of automation often face the greatest burdens of job instability and insecurity.

Recommendations to support people to make the digital transition

Ensure the employment and skills system targets workers in need

• Tailor employment services to support workers who could be affected by automation. As the labour market changes, employment services will need to serve not just the long-term unemployed and those facing barriers to the labour market, but workers affected by labour market disruptions and technological change.

• Expand the scope of programmes targeting low-skill adults. Targeted training opportunities for low-skill workers and jobseekers exist, but their scope could be expanded. For example, as part of the SkillsAdvance programme of Employment Ontario, a course was developed specifically aiming to provide low-skill unemployed people with relevant training to get them into jobs. However, it only graduates 50 people annually.

Promote a human-centred response to the future of work

• Surveys and interviews of workers in occupations and sectors facing a high-risk of automation could help provide workers perspective on the future of work. Such surveys could gather information on workers challenges, needs and perception of the future of their work, while also learning about their daily-life challenges and aspirations.

• Integrate worker perspectives into local policy response. This information would play an important role in ensuring the future of work policy agenda places workers at the centre. Policy could build a positive narrative about the opportunities emerging from the future of work, while also tackling the multi-faceted barriers workers face. Future Skills is considering this in its approach but more could be done at both the provincial and federal level. For example, non-profit organisations as well as unions are part of the groups being engaged in discussions with the Council and the Centre. Since unions represent a decreasing percentage of the Canadian workforce, it could be helpful to identify additional ways to consult workers to address their needs.

Ensuring firms have access to skills and training opportunities

Digitalisation and the changing nature of work bring a range of benefits; however, SMEs often struggle more than larger companies in accessing training opportunities. In general, digitalisation has the potential to ease firm access to skills through better job recruitment sites, outsourcing and online task hiring. Digital technology gaps for SMEs are not only related to technical skills, but also the managerial skills to accompany the adoption of digital technologies. The ongoing COVID-19 crisis has placed further focus on the importance of digitalisation for SMEs, as their lower level of technology adoption compared to bigger firms heavily affects their ability to survive.

In Canada, the gap in training participation between SMEs and large firms employees is larger in Canada than on average across the OECD. It amounts to around 15 percentage points. As SMEs account for 60% of employment in Canada, it is crucial to develop targeted strategies to ensure SMEs invest in preparing their workforce for future changes in the labour market. SMEs often face training barriers due to a lack of financial resources and technical expertise to engage in effective workforce development and human resources planning.

Policy has a role to play in providing the right incentives for firms to get the skills needed in the future of work. Having the right incentives to training employees in place is important, especially for SMEs, as they face more challenges than other firms in securing the financial resources to conduct workforce training. The OECD Survey of Adult Skills also shows that the lack of time, due to workload and childcare or family responsibilities, as well as the lack of information, are other challenges typically preventing SMEs from accessing training.

The Government of Canada has introduced the Canada Job Grant Program, providing opportunities for employers, individually or in groups, to invest in their workforce, and undertaken external evaluations to assess and improve its effectiveness. The Canada-Ontario Job Grant (COJG) is funded by the Government of Canada and delivered by the Government of Ontario. The programme foresees flexibility in terms of training co-financing, to ensure that SMEs have a lower burden compared to large firms. Employers with 100 or more employees need to contribute half of training costs, while employers with less than 100 employees need to contribute one-sixth of training costs. A review of the Canada Job Grant Program undertaken in its second year (2016) found that the majority of employers receiving grants were small businesses (i.e. with less than 50 employees). The review found that, while the programme is generally meeting the needs of employers and many participants benefited from the training (e.g., acquired skills, earned a credential/certificate), the achievement of expected outcomes in terms of increasing labour market attachment and improving the employment situation of participants could be improved. Recommendations emerging from the review pointed to the need to ensure increased employer investment in training through the grant and the need for flexibility in the use of funds to meet local labour market needs. In the context of some provinces, an important challenge was that many employers, particularly small businesses, do not have a good understanding of their training needs and therefore might not be optimising the use of the grant. The creation of networks of businesses within the same sector or partnerships between SMEs can play a crucial role in helping SMEs navigate labour market changes and better understand opportunities that can emerge from good training programmes. In February 2020, the Ontario Ministry of Labour, Training and Skills Development has started carrying out a comprehensive evaluation of the Canada-Ontario Job Grant programme to inform re-design and programme improvements.

Finally, to address the changes brought by the future of work, firms will also need to make better use of their existing skill base. For local economies to grow and individuals to succeed in the labour market, skills need to be put to productive use at work. Traditionally, workforce development initiatives have focused on the supply side of labour markets, however, there is increasing recognition of the value of demand-side efforts, including engaging employers in making optimal use of their employees’ skills. Promoting the emergence of high-performance work practices could be a means to putting skills into good use across local communities in Canada. Such practices include, for example, employee reward programmes, more flexible working hours, mentoring and leadership development courses, as well as a company culture that promotes training and development.

Recommendations to ensure firms have access to skills and training opportunities

Improve the effectiveness of training for SMEs

• Encourage SMEs to be aware of their training needs. For this to happen, it would be important to foster increased take-up of programmes aiming to help SMEs better understand their training needs and offer training accordingly.

• Raise awareness on existing financial incentives available, for example through public campaigns and/or online guides. This would help SMEs take informed decisions on how to finance workforce training.

• Promote the emergence of employer-led training networks, which could actively define training requirements and deliver programmes.

Ensure firms make use of available skills

• Support the emergence of high-performance work practices. Support could be targeted to staff and management training, or to the use of external experts to undertake diagnosis and upgrading of workplace organisation and technology. Funding for action-oriented business research could be another alternative.

• Build awareness of the benefits from effective skills use, for example through targeted campaigns or by setting up award mechanisms for employers who implement high-performance work practices.