To close its productivity gap, Canada needs to rethink its higher education system

Source: ForeignAffairs4

Source: The Conversation – Canada – By David J Finch, Professor and Senior Fellow, Institute for Community Prosperity, Mount Royal University, University of Calgary

Canada is facing a productivity crisis that threatens wages, competitiveness and long-term prosperity. Canadian productivity lags behind the United States by 28 per cent and ranks 18th among Organisation for Economic Co-operation and Development (OECD) countries.

Productivity is the economic value of the goods or services produced compared to the amount of work it took to produce them. Productivity should matter to every Canadian, because it directly influences inflation and income, and its effects are felt by all.

Productivity emerges from the interplay of three forces: robust capital investment, a supportive business environment and, most critically, people with the competencies the economy demands.

People play a disproportionate role, as they not only drive investment decisions but also shape the business climate. Collectively, people are known as human capital: the knowledge, skills and capabilities embedded in the workforce.

Building this capital is a shared responsibility of families, educators, employers and policymakers. It begins early in life and continues throughout both formal and informal learning experiences. The question is whether Canada’s current approach to building that capital is fit for the challenges ahead.

We are researchers in management and economics who collaborated with a team of researchers and industry experts on The Productivity Project, concerned with how Canada develops its human capital. Partners in this project include the Alberta Centre for Labour Market Research, the Canada West Foundation, Mount Royal University’s Institute for Community Prosperity and the LearningCITY Lab.

Post-secondary education and its limits

In Canada, post-secondary education plays an oversized role in developing human capital. The percentage of the population that has completed post-secondary education in Canada is 63 per cent — 22 per cent higher than the OECD average.

Today, 15 per cent of the working-age population have graduate degrees, the same share that held bachelor’s degrees in 1997.

Canada also invests 20 per cent more in post-secondary education than the OECD average. Yet despite this, it’s also a global leader in graduate underemployment. The number of unemployed degree holders now exceeds the number of jobs requiring such qualifications by a factor of five.

Compounding this is a persistent mismatch between the competencies Canadian workers have and those the economy needs. Research indicates Canada’s most pressing shortfall lies in foundational competencies, not in job-specific expertise, as is commonly assumed. Chief among these is adaptability — the capacity to learn, unlearn and relearn.

Adaptability depends on literacy: the ability to comprehend, analyze and apply information to new problems. Canada scored above the OECD average in a recent international assessment, but the data shows that only slightly above half of the Canadian workforce can meet the increasing literacy demands of most jobs. Research suggests that a one per cent improvement in literacy can boost productivity by up to five per cent.

This gap between the competencies Canadian workers have and those the economy needs will only widen with the rapid rise of artificial intelligence and automation.

Canada’s demographic squeeze

Demographic shifts are heightening Canada’s productivity challenge. Like most developed countries, Canada’s education system has its roots in the Industrial Revolution, when life expectancy was just 40 years.

For individuals born in 2024, life expectancy is projected to be 83 years. Longer lives now mean longer working lives: 40-year careers are now the norm, and 60-year careers are fast approaching.

Yet Canada continues to spend $60 billion annually on a post-secondary education system optimized for a single stage of life — young adulthood — rather than a lifetime of learning. Eighty-three per cent of post-secondary students are 29 or younger, and 67 per cent under 25.

The human capital system that has sustained Canada’s social and economic prosperity over the past 150 years doesn’t possess the capacity to lead Canada into the future. The solution is not as simple as spending more money; the future demands a paradigm shift in how Canada develops its human capital.

The first step is to detach from the current model and ask a fundamental question: what is the most effective way to unlock the full productivity of all Canadians?

Rethinking the learning model

Over the past year, our multidisciplinary team of researchers and industry experts at The Productivity Project explored this question through a six-report series, Productivity and People. This series synthesizes interdisciplinary research, with new data to explore a new learning paradigm.

Two conclusions stand out. First, a true paradigm shift requires collaboration among policymakers, employers, credentialing bodies, learning providers and individuals.

Second, learning pathways are limitless and today, only a fraction of learning occurs in classrooms; the vast majority takes place in workplaces, community organizations, libraries, places of worship, on sports fields and stages, and through podcasts, blogs and books.

Accelerating this paradigm shift offers Canada a unique opportunity to improve its productivity by unlocking the value of existing learning assets.

From closed systems to open learning

Two decades ago, the technology sector faced challenges much like those confronting today’s post-secondary system. Its response was to embrace open innovation — harnessing ecosystem collaboration to accelerate innovation.

Open learning unlocks the full learning ecosystem, from the workplace to volunteering and self-directed learning. Open learning resembles a dynamic climbing wall, where learners are empowered to explore infinite learning pathways. The result is a far more inclusive and agile lifelong learning system, designed to drive innovation through collaboration and competition.

Open learning stands in contrast to the legacy higher education system. In Canada, public institutions control an estimated 90 per cent of the post-secondary marketplace, and often lack the incentives, culture and structures to deliver the dynamic and innovative learning the country needs. The result is a post-secondary experience resembling not a climbing wall of endless possibilities, but an inflexible ladder from a bygone era.

Unbundling learning and credentials

While post-secondary institutions don’t monopolize learning, they do monopolize recognition. As a result, at the centre of this paradigm shift is the unbundling of learning pathways from the recognition of learning.

Today, a bundled four-year degree composed of 40 courses costs about $75,000. Given this, it’s not surprising that almost one-third of students never complete their degree.

An unbundled system would allow individuals to select their own learning paths, with outcomes assessed and certified by an independent authority that has the support and legitimacy of the provincial government.

The importance of unbundling teaching from assessment is not new. In 2009, the European Higher Education Area released the Leuven Communiqué declaration that set priorities for the expansion of lifelong learning through the open recognition of all learning.

In Canada, governments applied the principle of unbundling when they introduced driver licensing more than a century ago. The driver’s license remains the country’s most extensive open learning system: individuals learn however they wish, and a standardized, independent assessment determines competence.

To confront Canada’s lagging productivity, the country needs to fundamentally change how human capital is developed. Canada’s future social and economic prosperity depends on leaders willing to champion a new human capital paradigm that aligns with today’s realities and anticipates tomorrow’s opportunities.

Janet Lane, a senior fellow at the Canada West Foundation, co-authored this article.

David J Finch receives funding from the Alberta Centre for Labour Market Research.

Joseph Marchand currently receives funding from the Government of Alberta to create and fund the Alberta Centre for Labour Market Research. He has previously received federal funding from the Canada First Research Excellence Fund and the Social Sciences and Humanities Research Council.

– ref. To close its productivity gap, Canada needs to rethink its higher education system – https://theconversation.com/to-close-its-productivity-gap-canada-needs-to-rethink-its-higher-education-system-264663