Students are starting to get the message as more enroll in high-demand, high-paying fields of study but momentum is hindered by rising tuition and an inflexible system
TORONTO, Aug. 29 , 2017 /CNW/ - Despite having the highest proportion of adults with a post-secondary education among OECD countries, the margin for error on Canada's education policy has never been narrower given the gap between education and employability, finds a new CIBC Capital Markets report.
"The cost of that mismatch is already visible in both disappointing youth employment conditions and the rising share of Canadians earning below average incomes," says CIBC Deputy Chief Economist Benjamin Tal, who coauthored the report with CIBC Senior Economist Royce Mendes. "Those vulnerabilities will be fully exposed in the next economic downturn. The time to act is now."
"With the running speed of the economy slowing down due to demographic realities, the margin for error on Canada's education policy has never been narrower," he says.
The CIBC report notes that at around 30 per cent, the enrolment rate for high-demand, high-paying fields, such as business and STEM (science, technology, engineering and math), is still well behind degrees associated with more mid-range earnings power. But, the trend is changing.
University enrolment has risen by more than 30 per cent in high paying fields since the start of the 2007 school year, well above overall enrolment growth, which is up 18 per cent over the same time period.
"That gradual shift to higher paying fields hasn't come cheap," says Mr. Tal.
Universities have reacted to the pickup in enrolment. Programs in fields that already have high tuition fees, such as business and STEM, have risen by 38 per cent over the last decade – almost double the pace seen in less costly programs.
The already high level and the strong recent price appreciation are the main reasons students in those fields are left with higher debt loads upon graduation, the report says.
"That's a problem," says Mr. Tal. "The price appreciation can slow or even derail the positive momentum observed in recent enrolment trends. If Canada wants to have more graduates in STEM or any high-paying field, education needs to be affordable. This type of pricing only exacerbates already ingrained income inequalities across the country."
Universities can help by reallocating resources and increasing subsidies in certain fields, the report says. "Higher-education is an example of an area that should not be a perfectly free market in which higher demand is wholly reflected in higher prices," he says.
And, while Canada has the highest rate of post-secondary graduates among OECD countries, it lags the average in graduating master's and doctoral-level students.
"A wide array of professions benefit by way of a higher starting salary from adding a master's or Ph.D. to one's resume," Mr. Tal says.
The report also notes that although students today are increasingly likely to choose university over college due to the perception university is always the better choice, the advantage in terms of employability afforded to those with a degree has been diminishing.
"Employment rates across those with college, bachelor's and above a bachelor's degree education have converged over time, currently showing virtually no difference," Mr. Tal says.
The report calls for more collaboration between government, industry and educational institutions to ensure that the education system as a whole catches up with the rapidly changing market.
More college-university partnerships will also help add flexibility to accommodate the changing needs of today's students, 40 per cent of whom say they "are very likely" to pursue additional training after graduation, the report says. For example, Ontario offers 45 joint college-university programs.
"No doubt, things are moving in the right direction," says Mr. Tal, "but it's not moving fast enough. Only 8 per cent of Canadian students are in such a dual system—at this point that rate should be much higher."
"This is clearly a suboptimal situation given the increased cost and time it takes students to achieve the education required to succeed in today's labour market," he says.
CIBC is a leading Canadian-based global financial institution with 11 million personal banking, business, public sector and institutional clients. Across Personal and Small Business Banking, Commercial Banking and Wealth Management, and Capital Markets businesses, CIBC offers a full range of advice, solutions and services through its leading digital banking network, and locations across Canada, in the United States and around the world. CIBC Capital Markets provides integrated global markets products and services, investment banking advisory and execution, corporate banking and top-ranked research to corporate, government and institutional clients around the world. Visit www.cibccm.com for more information on CIBC and CIBC Capital Markets. Ongoing news releases and more information about CIBC can be found at www.cibc.com/ca/media-centre/.
For further information: Benjamin Tal, Deputy Chief Economist, CIBC Capital Markets, at (416) 956-3698, [email protected]; or Susan Kirwin, Senior Consultant, Public Relations, 416-980-5192 or [email protected]