Canada's skills crisis is growing - here's how we can fix it

Canada Standard

23-05-2025

Canada is facing a significant skills shortage. According to recent data, 77 per cent of Canadian businesses surveyed say they are unable to find suitably skilled candidates for the jobs they have available.
Even among those who apply with relevant skills, 44 per cent don't have the required level of proficiency to secure employment. At present, there are about 700,000 job vacancies across the country.
This mismatch persists despite Canada having one of its largest-ever graduating classes - nearly 360,000 students from colleges, universities and trade schools.
As labour shortages deepen across sectors, the disconnect between formal education and real-world job requirements is becoming harder to ignore.
Canada's skills shortage is expected to worsen in the coming years. Between now and 2028, 700,000 workers in the skilled trades are due to retire.
Canada's antiquated apprenticeship system is struggling to produce enough workers to fill this gap. It is slow, outdated and has low completion rates: just 32 per cent of male and 35 per cent of female candidates complete their training.
Completing an apprenticeship can take up to four years in Canada, while many other nations have much higher completion rates in two years or less.
It is not just trades that Canada has challenges with. If current trends continue, Canada is projected to face a shortage of 100,000 nurses by 2030. Significant shortages are also expected in technology-related positions, construction engineering and K-12 education, where demand for teachers and school administrators is rising.
Meanwhile, rising demand is expected for jobs related to artificial intelligence and advanced manufacturing and supply chain management.
Some employers are losing confidence in using qualifications as a basis for hiring. Increasingly, they feel degrees and diplomas don't adequately prepare people for work.
As a result, some organizations have moved to skills-based or competency-based hiring where candidates share skills portfolios and work testimonials to secure a position. As of 2024, approximately 80 per cent of Canadian companies have implemented some form of skills-based hiring practices, up from 74 per cent in 2023.
Read more: Employers should use skill-based hiring to find hidden talent and address labour challenges
Other companies, like Shopify, take candidates from high school and put them through custom programs designed to ensure they have the skills needed to work in a particular organization or industry.
Colleges and universities have long been seen as the primary pipelines for skilled labour. But as employer expectations evolve, Canada needs to reconsider the role these institutions play in producing skilled workers.
Simply expanding existing programs or opening new programs will not solve the underlying problem. What's needed is a fundamental rethinking of how we prepare Canadians for the workforce.
Canada's new government, in collaboration with provinces, territories and industry, needs to pursue a five-pronged strategy to address the country's deepening skills crisis:
1. Modernize the apprenticeship system.
Canada must transition from a traditional, time-based apprenticeship model to a flexible, competency-based system. Instead of being tied to rigid journeyperson-to-apprentice ratios and multi-year timelines, learners should be able to demonstrate their skills on demand anywhere, anytime. The goal should be to reduce completion times to two years or less.
Learning should be accessible through multiple formats, including workplace mentorship, YouTube tutorials, boot camps, micro-credentials and virtual labs. What matters is not where learning takes place, but whether a learner can demonstrate competence.
2. Accelerate skills recognition through micro-credentials.
Canada should fast-track the adoption of micro-learning, stackable micro-credentials and competency-based certification. Micro-credentials are short, focused learning experiences that recognize specific skills or knowledge.
In fields like IT, project management and supply chain management, many professionals succeed without formal academic degrees, instead relying on industry-recognized certifications.
This model must expand into other sectors, especially health care, manufacturing and finance, where skills-based hiring could address labour shortages.
3. Recognize informal and experiential learning.
Millions of Canadians develop valuable skills through informal, self-directed and work-based learning.
Yet Canada's prior learning assessment and recognition systems, which convert informal learning into certified learning, remains fragmented, under-utilized and overly bureaucratic.
Canada needs a nationally coherent, on-demand competency-based assessment system. Certified assessors should be able to validate individuals' skills and link them to job profiles, occupational standards and credentials. This is not just an equity issue, but is an economic imperative. Other countries are much better at this than Canada is.
4. Shorten and re-design post-secondary programs.
The misalignment between program outcomes and labour market demands is well-documented. Closing this gap should be a top priority for post-secondary reform.
Many college and university programs could be made shorter, more agile and more aligned with workforce needs - especially programs linked to workforce needs and skills in demand.
Competency-based, work-integrated learning models that are designed with industry and delivered in two- or three-year formats could dramatically increase job readiness.
5. Incentivize employer investment in upskilling and reskilling.
Canada needs a stronger incentive framework for continuous learning. Canada's training credit - a refundable tax credit that helps offset the cost of eligible training fees - helps some individuals, but employers still view training as a cost rather than a driver of productivity, retention and competitiveness.
A new approach should include tax incentives for employers and employees investing in learning; co-funded, industry-led training partnerships; industry-sponsored micro-credentials; and public recognition for employers who demonstrate leadership in workforce development.
Canada cannot meet today's workforce challenges with outdated systems and thinking. Doing more of the same and expecting different results is no longer an option. What is needed is evidence-informed and future-focused reforms that prioritize skills, flexibility and inclusion.