Canada has much lower rates of participation in job-related training than several other advanced nations including the United States. The problem of how to encourage firms to provide more training is extremely complex. Over the last decade, the Conference Board of Canada has done important work in this area. Through a series of case studies and other types of evaluation research, the Board has developed a business case for the provision of employer-supported training which highlights a number of benefits including increased productivity, reduced error rates, a better health and safety record, and increased customer and employee retention.
There are many policy levers available for encouraging employers to train their employees. Few Canadian jurisdictions have used any of these levers. While a few provinces provide training grants, Québec is the only province with a train-or-pay scheme. More research needs to be done to determine which incentives would be most effective in the Canadian context.
A number of Canadian firms have launched initiatives to provide training to low-skilled workers with impressive results. But these firms remain in the minority. The Conference Board’s research suggests that some barriers to training low-skilled workers are quite persistent. One of the most troubling aspects of Canada’s economy is that the competitive human resource strategy of too many Canadian firms is based on a low-cost/low-added-value approach. This approach perpetuates a low-skill/low-wage equilibrium in which neither employees nor employers demand higher levels of skills. Firms that gain their competitive edge from low-cost, low-skill work have little incentive to invest in labour force development.
The rise of workforce intermediaries in the United States appears to be one of the most promising responses to the problem of the low-skill/low-wage equilibrium. Workforce intermediaries have significantly improved the prospects of low-wage workers in local labour markets. The emergence of these new ‘labour market arrangements’ is an important development that should be closely monitored.