Canada has a skills gap problem — a big one. There’s a major mismatch between the skills that we need for the economy and the skills that are currently available in the labour market.

To function at its peak and provide a better life for all Canadians, our economy needs to fill tens of thousands of critical positions in engineering, technical occupations (medical technologists, dental care occupations), higher-skill goods (mechanics, electrical trades), and other higher-skill services (nurses, teachers, social services and therapy professionals). The worker shortage in these “clusters”, as categorized by the Conference Board of Canada in a recent report, is costing us a lot — around $2.6 billion this year already!

To put that in perspective, $2.6 billion is roughly the annual budget of the Canada Border Services Agency, which means we could have funded the agency for a whole year on the value lost because of the skills gap.

How did the skills gap happen?

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The skills gap is a complex problem with many factors contributing to it:

Population decline

Canada’s population is aging — almost 1 in 5 Canadians are over the age of 65. At the same time, our fertility rate hit a record low of 1.25 children per woman last year, far below the minimum rate of 2.1 children per woman required to maintain a stable population through births alone. Immigration is the only reason we’ve had any population growth in the past 10 years.

Simply put, we’re short on Canadians. 

Immigration

For thousands of businesses across Canada, immigration is not a question — it’s an imperative. But in 2024, RBC published a report highlighting the misalignment between the occupations and skills prioritized in the immigration selection process and the realities of the labour market. Many of the skills and credentials that newcomers bring to Canada are not necessarily aligned with what we need to effectively address the skills gap. Part of this is due to the fact that the immigration system has traditionally  prioritized university degrees over other degrees, with college and trade certifications underrepresented — only 12% of people coming have college certificates and only 4% have trade certificates — even though two-thirds of the 80% of vacant positions that require formal post-secondary training need non-university credentials.

Credential recognition

At the same time, when newcomers to Canada do have the skills the economy needs, they are often prevented from using those skills because their credentials, education or licenses are not quickly recognized. They are then forced to find other jobs that are not their field or go back to school, delaying their effective integration into the labour market.

Education

Canada has one of the mostly highly educated populations in the world. While this is something to be proud of, the degrees students are graduating with are not necessarily in high-demand fields.

International students

Data from Immigration, Refugees and Citizenship Canada shows that between 2018 and 2023, nearly 800,000 study permits were issued to international students enrolled in business related programs (a low-demand industry), compared to the less than 32,000 permits issued to healthcare related programs and the 36,000 issued to the trades — two high-demand industries included in the Conference Board of Canada’s clusters.

Technology

The rapid emergence of AI has changed the job market. There is a fast growing need for workers to have skills in the fields of artificial intelligence, robotics, quantum and cyber security.

With that comes the requirement that graduates have the skills to effectively work with new technologies. But, according to a 2025 RBC report, there is a growing gap in graduates’ technical skills related to AI, cyber security and working with big data.

Geography

The skills gap is not experienced the same across our vast country, and each province and city has different needs and different gaps. As the Conference Board of Canada says, “no region in Canada has a surplus of skilled workers sufficient to offset shortages elsewhere.”

How do we fill the skills gap?

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A multifaceted problem requires a multifaceted approach and the combined efforts and insights of all stakeholders — business, education, and government at all levels.

Domestic talent

We need to consider student success and employer engagement as mutually interdependent. Businesses, chambers of commerce and local government understand the urgent labour needs of their communities. Colleges and institutes are a critical part of the talent pipeline. An important part of our collective economic prosperity relies on improving connectivity and collaboration between post-secondary and businesses, supply and demand.

Even as we think about how to best equip youth to succeed after graduation, we also cannot overstate the importance of lifelong learning and ensuring that Canadians, irrespective of their age, have access to the learning opportunities they need to remain relevant and compete in the labour market. Colleges and institutes play a crucial role in upskilling and reskilling workers to keep pace with the evolving needs of business and emerging and already-here technologies.

International talent

Currently, there is no unified, national approach to attracting, developing and retaining international talent that considers Canada’s specific sectoral needs as well as specific regional needs.

This necessitates more collaboration among all levels of government, particularly in relation to the federal and provincial/territorial selection of immigrants. We need a system that respects the constraints of the community, the needs of employers, and the rights of the employees. And this can only happen if temporary and permanent immigration are situated within our economy, and provinces are meaningfully involved in decision-making.

A National Workforce Strategy

Municipal, provincial/territorial, and federal governments, business and educational institutions must work together to address current skills shortages and future skills gaps. Only when there are greater dialogue and collaboration among all stakeholders will we bring about a unified approach to talent that is informed by regional and sectoral needs.

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To learn more about the Canadian Chamber’s work in this area, visit the new Immigration Council and the National Workforce Strategies Committee.