For small- and medium-sized businesses, the persistent skills gap will require a national innovation strategy and skills development on a large scale.
by Malika Asthana. Originally published on Policy Options
August 10, 2022
Rising inflation. Increasing fuel costs. Supply chain backlogs. The list of issues facing businesses in 2022 is growing and while these challenges require solutions, the reality is they’re also adding to problems that already exist. Take for instance the growing talent gap – the distance between the skills that employees have and those they want and need. It’s not a new problem; it’s a persistent concern compounded only by more recent challenges, especially for small- and medium-sized businesses.
As governments work to alleviate the pain on businesses caused by recent pressures to keep them competitive, they can’t forget that people need to stay competitive, too.
It shouldn’t be this way
There’s a dearth of research into the state of skills development in these all-important mid-sized businesses, both in Canada and the United States. It shouldn’t be this way. Small- and medium-sized businesses are a critical part of the North American economy. In Canada, 88.5 per cent of the private sector workforce is employed by businesses with 500 or fewer staff members. In the U.S., such businesses employ 47 per cent of the private workforce.
As a leader in learning technology, D2L is passionate about facilitating conversations on the future of work and skills development. Our fifth annual white paper on this topic was produced in conjunction with Innovative Research Group. We conducted a number of surveys on the needs of small- and medium-sized enterprises (SMEs) when it comes to upskilling.
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The results in Enabling Upskilling at Scale: Adapting to Meet the Needs of the Working Learner, focused on employers, targeting decision-makers involved in learning and development at SMEs, as well as their employees. These surveys were conducted in both Canada and the U.S. for organizations with 20 to 499 employees between November and December of 2021.
Our findings are frankly worrisome. Recruiting and retaining talented employees ranks as the number one concern among employers surveyed – outranking wages, technological adaptation, benefits or remote work policies.
In fact, only 21 per cent of Canadian small- and medium-sized enterprises reported feeling very confident that they’ll have the people with the skills and talent needed to grow their organizations. American employers are more optimistic – 47 per cent of them said the same – but in either scenario, the outlook is relatively bleak.
Training employees is expensive and takes time, both of which are at a premium when you’re trying to run a midsize enterprise. We asked both employees and employers about off-the-job training, an option that allows employees to continue upskilling without the expense of building in-house programs. What we found was that while employees in both Canada and the U.S. want this option, few have done it.
More than 70 per cent of Canadian employees and 78 per cent of U.S. employees said they were either somewhat or very interested in taking on external training. However, only 12 per cent and 17 per cent, respectively, said they’d done so in the prior year.
The reasons why this happens are familiar: time and money. An almost equal proportion of employees in Canada and the U.S. (43 per cent and 42 per cent) cited the high financial cost and around a third of respondents in both countries said they were already too busy at work or with other commitments, such as child care or families.
At the same time, the compensation that employers offered was inconsistent. Sometimes there was an offer of guaranteed time off or reimbursements, but frequently it was dealt with on an ad-hoc basis. This puts the onus on employees to take a chance and shoulder the costs up front, if not entirely.
Clearly, something needs to change. While multiple levels of governments have repeatedly offered skills training incentives, it’s becoming clear that the work is incomplete – and in an economic situation such as the one we find ourselves in, the pressure is on to get it right.
As part of our research, we offer a few recommendations on how to help.
Canada needs a national workforce innovation strategy: There needs to be a shift in how we think about delivering high-quality and accessible skills training through existing education infrastructure. A national strategy would provide a unified vision for training providers, governments and employers so they could unite and focus their efforts to improve the current situation.
Tax advantages should incentivize employers: SMEs need to support their employees in pursuing external training and education. Rather than grants or tax credits for employees, taxable incentives for employers would theoretically provide consistency over a longer term. It would ensure that employers are recouping part, or all, of the costs of their investments in training.
Leverage technology to support skills development – at scale: Finally, but most importantly, there is a need to figure out how to enable skills development on a large scale. This issue is broad and needs solutions that are capable of broad implementation and success. One way is to fund accessible technological tools that provide skills for individual companies, but also across entire industries.
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Canada’s federal government is on the right track with its upskilling for industry initiative We need a sustainable model for upskilling that workers can access that’s not necessarily tied to specific employers. But we need to take that to the next level.
One option for employers is curating a pre-approved catalogue of credentials from training providers that are aligned to skills needs. Technology can serve as the platform to make this catalogue accessible to working learners across sectors and regions, and can be turned on for employers of all sizes with government support.
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Our research shows that we have a tough job ahead of us. But we already possess the necessary tools and know-how to get it done. We can shrink our skills gap and ensure that employees, employers and our economy all remain competitive. We can support economic growth and resiliency and ensure our competitiveness in the long term.
This article first appeared on Policy Options and is republished here under a Creative Commons license.
