Literacy, Skills Development and Economic Growth

In June 2004, Statistics Canada released a groundbreaking study on the impact of literacy and numeracy skills on economic growth as measured by gross domestic product (GDP) and labor productivity. This is the first study to link investment in human capital to broader issues of growth and productivity, and the results are a compelling argument to invest in literacy and skills development. Based on data for 14 OECD economies from 1960- 1995, the study concluded that:

• investment in skills training and education is three times as important to economic growth over the long run as investment in physical capital;
• rather than being simply a by-product of economic growth, a gain in skills leads to a gain in economic growth;
• if observed relationships hold true, a country that achieves literacy scores 1% higher than the international average ends up with labor productivity 2.5% higher than that of other countries, and per capita GDP 1.5% higher;
• adults with Level 1 skills (the lowest skill level measured by the International Adult Literacy Survey) appear to exert a strong negative influence on growth.

Literacy scores, human capital and growth across 14 OECD countries is available in PDF format at www.statcan.ca.

By the Numbers

The International Adult Literacy Survey defines numeracy (math literacy) as: “The knowledge and skills required to apply arithmetic operations, either alone or sequentially, using numbers embedded in printed material, such as balancing a chequebook, figuring out a tip, completing an order form or determining the amount of interest on a loan.” Numeracy, in other words, is largely about our ability to deal with the basic calculations in our daily lives.

Sad to say, however, statistics suggest there’s still a big job to be done to bring everybody up to speed on the numbers.

• Over 40% of the population has difficulty with everyday tasks such as reading prescription instructions or measuring volumes for household chores. This means that approximately four out of 10 Canadians are at a basic or low numeracy level.
• Canada lags such countries as Sweden, Switzerland and Germany in numeracy skills. This lag could have long-term effects on Canada’s ability to compete globally.
• Most people require basic numeracy skills to perform simple projects regardless of career choice. For example, numeracy skills are used to collect and record data (such as a customer survey), analyze data (calculate the results of the survey) and present findings (explain what the results mean). For more information on numeracy, go to www.mathliteracy.ca.

Community Spirit

Since the Canadian Association of Municipal Administrators (CAMA) challenged municipalities to set up workplace-education programs in 1994, more than 130 have. Cities such as Moncton and Winnipeg are early adapters, says Patricia Nutter, Director of CAMA’s Municipal Leadership Project. These municipalities understand that the changing face of local government requires an increasingly educated workforce with transferable skills. “It’s part of the myth that people who are in the workforce automatically have adequate literacy skills,” says Nutter. “That’s not necessarily true.”

Suddenly finding themselves overwhelmed by an increasingly computerized workplace, employees often need essential-skills upgrading. There’s also a growing need for employees to sharpen broad-based literacies such as information-processing, critical thinking and problem-solving, all of which are crucial to operate efficiently in today’s knowledge-based economy.

Funded by the National Literacy Secretariat of Human Resources Skills Development Canada, CAMA neither promotes a particular program nor does the implementation. Instead, it offers assistance by sitting down with stakeholders such as management and unions to help build linkages, seek out funding and resources, and organize a needs assessment to plot a course of action.

For more information, contact Patricia Nutter at pnutter@lincsat.com or at 613-725-9150.

Benefits Package

There’s good evidence that the gap between current skill levels and those needed to maintain business competitiveness can be addressed effectively through workplace education. In a 1999 Conference Board study, 98% of employers surveyed reported a significant payoff to both employees and the organization from such programs.

Here’s the percentage of employers reporting particular organizational benefits in Turning Skills into Profit: Economic Benefits of Workplace Education Programs:

• Increased quality of work - 82%
• Improved capacity to cope with change in the workplace - 75%
• Improved capacity to use new technology - 73%
• Improved labor-management relations - 65%
• Increased output of products and services - 65%
• Increased profitability - 56%