Could Quebec’s skills training model help solve Canada’s labour shortage?

Pooling resources to create “training mutuals” could be a way for small- and medium-sized businesses to train workers, an IRPP study shows.

From Yves Blanchet, PhD of Université de Montréal

From baggage handlers at Canadian airports, to health-care workers, teachers and carpenters, Canada is beset by a shortage of workers in almost every business sector and region of the country.

Job vacancies reached more than one million in April, up 2.4 per cent from March and up 44.4 per cent from a year earlier, Statistics Canada reported. Businesses don’t see any sign of the situation abating. According to the Bank of Canada’s most recent Business Outlook Survey, the share of firms reporting labour constraints remained at a near-record high in the second quarter of 2022. Many businesses reported plans to raise wages to attract and retain workers.

Investing in skills training of existing and potential employees can be another solution to fill the vacancies. However, most Canadian employers are small- and medium-sized businesses, which tend to invest a smaller proportion of their revenues in training than large firms.

To encourage businesses to invest in skills development, Quebec has taken its own unique approach. Since the early 2000s, small- and medium-sized companies, often working in the same sector, have had the option to pool their resources to deliver skills development options to their employees. The concept, known as “training mutuals,” could hold lessons for other Canadian provinces and territories.

One of the objectives of training mutuals is to identify common training challenges facing companies and to offer solutions. General managers of newly created mutuals contact companies in the sector to get a clear picture of their training needs. They then identify available training programs and launch new ones when needed, secure necessary financial and organizational resources, and encourage companies and their employees to participate in them.

Training mutuals, which function as semi-public intermediaries in the workplace training system, can be an effective way to encourage smaller and medium-sized firms to invest in training. It also makes it more accessible to those workers who need it most. Pooling resources can make it less costly for individual businesses to offer training programs and can reduce the hesitancy of firms to invest in training for fear of having their employees poached by competitors.

The first training mutuals were established in Quebec between 2002 and 2007 and their status was embedded in provincial legislation in 2008. Over the next four years, more than 20 mutuals were created. However, some were short-lived because they weren’t financially viable. Currently there are six active training mutuals in the province.

A recent study published by the Institute for Research on Public Policy (which publishes Policy Options) takes a close look at four training mutuals in operation between 2008 and 2017 in the graphic communications, construction, child-care and seniors’ residence sectors. Not all were successful. Some faced challenges in recruiting members and obtaining funding.

To be successful, training mutuals must be able to properly identify training needs, clearly define the objective to be achieved, avoid competition and duplication, and optimize existing resources. Success also depends on the willingness of businesses, unions and other stakeholders to become actively involved in the operation of the mutual and to invest in training. Mutuals must also show an ability to work with other organizations to secure the appropriate resources.

Making Canada’s skills-development system up-to-date and more effective should be evidence-based and grounded in top-quality research

As rising interest rates dampen consumer spending, the hiring challenges that businesses currently face could ease. But many of the conditions fueling the current demand for labour are structural, including an aging population and rising skills requirements due to the adoption of new technologies in the workplace. Canada’s transition to a low-carbon economy is also expected to increase the need for skills development for workers in emerging industries and sectors undergoing transformation.

We need a strategy to address Canada’s long-term training needs. While some recently proposed solutions such as the Canada training credit target workers, businesses should also be more proactive in solving their skills needs.

Provincial governments should consider adopting Quebec’s model to complement their existing workforce development measures. If the right conditions are met, training mutuals could make a significant contribution to skills training across the economy.