Career transition inefficiencies and skills mismatches are costing the Canadian economy $146 billion in lost earnings each year, representing nearly five per cent of national output, according to new research from education company Pearson.
The study, titled “Lost in Transition: Canada’s Economic Opportunity from Closing Gaps in Learning Paths,” examined the economic impact of learning gaps during major career transitions, including moves from formal education to work, job changes, and disruptions caused by AI automation.
Automation drives largest losses
The research found that automation disruption accounts for the largest portion of economic losses, with individuals needing to find new roles as parts of jobs become automated representing $111 billion in lost earnings annually.
Job transitions account for $26 billion in losses due to involuntary separations such as redundancies, while delays in moving from formal education to full-time employment cost the economy $9 billion each year.
The study also highlighted challenges facing young Canadians, with 11 per cent of those aged 18 to 24 not in employment, education or training in 2023. More than 25 per cent of young Canadians aged 15-24 who were not in employment, education or training had never held a job.
Five-point action plan proposed
Pearson outlined five recommendations to address the skills gap, recognizing that education and training responsibilities sit largely with provinces and territories while key labour market tools are federal.
The recommendations include supporting educators with future-focused curriculum that builds foundational knowledge while adapting to technological and economic shifts, and using AI and technology to personalize learning and reduce administrative tasks for educators.
The company also called for AI-driven technology to understand workforce trends and inform education policy, incentives for organizations to invest in skills development through tax breaks and public-private partnerships, and collaboration between government, businesses and educators to promote continuous learning.
“Canada is facing a widening skills gap that is threatening our economic future. We have an immense opportunity to enhance education and skills development at the local, regional, and federal level,” said Jessica Biga Wadstein, Pearson Canada country head.
“It’s crucial that Canada strengthen its commitment to harnessing the power of AI to build a more adaptable, resilient workforce that will power sustainable economic growth and long-term prosperity,” she said.
Part of global research series
The report forms part of Pearson’s “Lost in Transition: Fixing the Skills Gap” research series, which warns of a potential global “skills chasm” between employer needs and employee capabilities and calls for fundamental changes in approaches to learning and skills development.
Pearson, which describes itself as the world’s lifelong learning company, serves customers in nearly 200 countries with digital content, assessments, qualifications and data through approximately 18,000 employees.
