What makes you think that you can remember better than a billion Chinese?

1. What makes you think that you can remember better than a billion Chinese? T. Scott Murray, President, DataAngel Policy Research Incorporated Telephone: (613) 240-8433 e-mail addresses: dataangel@mac.com scott.murray@dataangel.ca baboon@rogers.blackberry.net

2. Why We Care About Skills and Learning: Old news People are the common denominator of progress. So... no improvement is possible with unimproved people, and advance is certain when people are liberated and educated. It would be wrong to dismiss the importance of roads, railroads, power plants, mills, and the other familiar furniture of economic development.... But we are coming to realize... that there is a certain sterility in economic monuments that stand alone in a sea of illiteracy. Conquest of illiteracy comes first. John Kenneth Galbraith, The Affluent Society (1958) US (Canadian-born) administrator & economist (1908 - 2006)

3. Why We Care About Skills and LearningSources of Policy Interest • GREED: concerns about skill barriers to economic growth, productivity growth and rates of technological innovation • skill supply and demand balance • high end skills vs essential skills • EQUITY: concerns about the role of skill in creating social inequality in economic, social, educational and health outcomes • RETURN ON TAX INVESTMENTS: concerns about the demand for and efficiency and effectiveness of investments in public goods and services such as education and health • CULTURAL ASSIMILATION: concerns about linguistic and cultural preservation

4. A Framework for Thinking About Essential Skills Profiles of Skill Supply and Demand Firm & Job Specific Skills and bodies of knowledge Home Environment The Community …depend upon • Family • Health • Culture • Consumer markets • Health • Citizenship • Culture • Education • Analytic Problem Solving • decision making • job task planning and organizing • significant use of memory • Workplace • Inter-Personal • teamwork • leadership • practical intelligence Use of tools associated with pervasive technologies of production e.g. ICT’s …depend upon • Intra-personal • Ability to Learn • motivation • metacognition • Written Communication • reading - text • reading - documents • writing • Oral Communication • speaking • listening Motor Skills Numeracy The World of Work

5. A balanced public policy response: increasing skill demand, increasing skill supply, better matching of workers to the demands of jobs Better matching of worker skills to job demands through assessment Increase the knowledge and skill intensity of work Skill Supply = skill stock + net skill flow from lifelong, life-wide learning • Markets for skill: • Education • Labour • Health • Social Skill Demand Skill upgrading for youth and adults + quality of early childhood experience + quantity of primary & secondary education + quantity and quality of tertiary education + quantity and quality of adult learning (formal, non-formal, informal) +/- immigration +/- emigration - skill loss associated with insufficient demand+/- social demand for skill+/- economic demand for skill Outcomes

6. Learning to read to reading to learn: 6 Market Segments D Fluid and automatic readers < 80% Level 3: 40 C Not yet fluid and automatic readers: 75 B2 Canadian born high school only men: 350 B1 Educated immigrant women: 350 A2 Canadian born less than high school: 375 : : 375 A1 Uneducated immigrants Learning to read Reading to learn Proficiency dominated by cognitive strategies Proficiency dominated by mechanics of reading 0 225 275 325 375 500 Level 1 Level 2 Level 3 Level 5 Level 4

7. To maintain our competitiveness in global markets we need at least Level 3 literacy that allows people to be efficient problem solvers in information-rich environments. This level of literacy is the equivalent of the chainsaw in the knowledge economy

8. Literacy market segments C Almost fluid and automatic readers D Not reliable with Level 3 tasks E Have Level 3 need 4 A1 Uneducated immigrant women A2 Men LT High School Have Level 4 need 5 B1 Educated immigrant women B2 High school only men Level 3 Levels 1 and 2

9. Why skills will become more important to outcomes in the future: • Globalization of markets for capital and technology: everyone has access to the same inputs a the same costs so competitive pressure is rising • Rising skill supply in the developing world: they are able to compete head on • Diffusion of information and communication technologies: increases productivity, amplifies skill-based inequalities

10. Demand for Literacy Skill is Projected to Grow Rapidly, Supply Flat Where are the required skills going to come from? Where are the required skills going to come from?

11. Surpluses of Level 1 and 2 workers, a huge shortage of Level 3 workers

12. Constraints: • Demographics: not enough kids in Canada no matter what their skill level to change overall supply quickly enough • diffusion of information and communication technologies: increases productivity, amplifies skill-based inequalities • Pending labour shortage in Canada will force employers to hire more low skilled workers • Poor state of government finances precludes large public investments

13. Policy prescription: • Reduce flow of low skilled youth leaving education system • Increase skills of adult population through instruction supported by government incentives focused on reducing proportions of workers at Levels 1 and 2 • Increase the demand for skill through job, and process redesign to ensure new skill supply is put to good use

14. Costs: $29.34 billion Of raising all adults to the level needed to compete on global markets and to reduce skill-based inequality: prose Level 3 • The total cost of literacy upgrading is $29.34 billion. • $13 billion of the estimated instructional costs pertain to adults aged 65 and over. • $17.4 billion of the $29 billion instructional cost would be directed to adults with less than a high school education. • Manufacturing would require the largest instructional investment for employed workers: $500 million • Sales and service occupations would require the largest instructional investment : $2.3 billion.

15. Direct economic benefits: $86.8 Billion or $3244/worker/year in earnings • Annual earnings are estimated to increase by $83.7 billion. • Regular Employment Insurance benefit payments could drop by $330 million per year. • Social Assistance payments could drop by $2.1 billion per year. • Workers compensation payments could drop by $487 million per year.

16. 5 year rate of return on investment: 1390%

17. Rate of return on SME investments to Level 3 • Less than 20 employees: 2078% • 20 – 99 employees: 1995% • 100 – 499 employees: 2046% • 500-999 employees: 2115% • 1000+ employees: 2315%

18. Direct economic benefits to health: $996 million • Annual savings of $888 million could be realized on hospital visits at the national level • Annual savings of $42 million could be realized on physician costs at the national level • Annual savings of $42 million could be realized on dental costs at the national level • Annual costs on eye care would rise by an estimated $24 million at the national level

19. Implications of inaction: • Massive job losses are inevitable • Falling incomes • Rising income support costs • Rising health costs • Rapid increases in wage and income inequality • Rapid increases in inequality in other valued outcomes: health, education, social inclusion • Lower productivity and GDP growth