When was the last time you thought about what that toonie does for you? It’s all too easy nowadays to spend one but what is its purpose?
Our Executive Director, Rachel Sumner, an economist in her first career, explains that at its very basis any currency is a medium of exchange. It enables two economic agents, most often a buyer and a seller, to exchange goods or a service for a specific amount of the preferred currency which represents the value (the price) of the good or service being purchased. And so, in that way, it is also a means of communication between the two parties; it serves to represent the agreed value of the exchange. It is also a commonly understood medium of exchange.
This is unfortunately not the case in Canada’s labour market right now. Skills are rapidly becoming the preferred currency but few understand how to effectively make the exchange.
As Canada’s knowledge economy evolves to face the realities of digital transformation that will enable it to compete globally as well as provide all Canadians with the goods and services they need, knowledge is becoming democratized, even commoditized. Access to knowledge grows cheaper and more readily available with every new device connected to the internet so knowledge economies, like Canada, which has been competing globally based on the knowledge capital of its workforce, is being forced to find new ways to compete as other economies enter the ‘knowledge game’.
But it’s not just new entrants into the global knowledge economy we need to be concerned about. Digital transformation and innovation in machine learning and artificial intelligence are also reducing the value of knowledge capital. The value is no longer derived simply from possessing the knowledge, but from what you do with it and from the skills you can leverage to create new economic value out of the knowledge you possess.
We are therefore seeing a new skills economy emerge where the preferred currency of exchange between an employer and an employee is not just knowledge, i.e. “Come work for us and we’ll enable you to gain more knowledge”. Instead the exchange has become “Come work for us, use your existing skills and we’ll enable you to develop more skills which will increase your value in the labour market.” Skills are therefore becoming the new preferred currency of exchange.
But the problem in terms of the current model of exchange is that we don’t have a commonly agreed and understood language for skills. An individual cannot effectively articulate their skills in the labour market and really derive maximum benefits from them. For example, Rebecca has developed digital marketing skills in her current job role. But by simply stating ‘digital marketing skills’ on her resume, a hiring organization struggles to understand the level of competency Rebecca might possess. If she claims to have an intermediate level of competency, that is highly subjective because there is no agreed definition of skill competency to which all economic agents can refer. The hiring organization is therefore required to put a variety of other activities in place to figure out whether Rebecca really does possess the skill at the level of competency before they can consider hiring her. These all adds cost, friction and the potential for error in the hiring and selection process.
Equally, not all organizations are committing to develop the skills of their workforce. Instead they rely on the individual employee’s recognition of the need and invest in their own lifelong learning to remain meaningfully employed. However, there is a growing body of evidence that organizations that actively invest in workforce development are not only winning the war for talent but also creating and capturing more economic value for their shareholders.
It’s time that all economic agents unite around the development of a skills and competency framework that enables both employers and individuals to clearly communicate the skills needed and the skills offered … to expedite the easy flow of this new form of currency in the labour market.
Join us as we begin to design skills and competency frameworks for employers in advanced manufacturing, healthcare, energy, and more.
- Organization looking to helping your workforce develop relevant skills should contact us to see how we can work together to reskill your workforce.
- Individuals looking to develop new skills should book a free consultation with our Customer Success Manager.