So-called “soft skills” are the most in-demand skill sets across all sectors and sizes of organizations, according to a report by the Future Skills Centre.

Many jobs in the current and future economies require mastery of several skill sets – technical, soft, digital and more – “emphasizing how essential it is for workers to have multiple skills in their toolbox,” says the report by Steve Richter (photo at left), manager of policy, and Laura McDonough (photo at left), associate director of insights & knowledge mobilization at the Future Skills Centre.

They note that researchers at McGill University examined how job postings have in recent years shifted emphasis from education requirements towards skills requirements. While skills credentials are complementary, employers are increasingly aware of the skill sets needed to perform jobs, especially soft skills.

For instance, job postings describing cognitive skills increased by 3.4 percent from 2017 to 2022, rising by seven percent and 10.2 percent for social and character skills, respectively.

Technical-oriented skills, while still important, saw decreases or little growth: financial skills decreased by eight percent, while software skills and basic computer literacy only increased by 0.6 percent and 1.5 percent, respectively. 

Research by the Conference Board of Canada (CBoC) found that information and financial services are among the sectors that sought soft skills the most, followed by education and health care.

The research found that across each of manufacturing, knowledge-based services, and technical and manual services, needs in technical skills are projected to decrease while needs in soft skills, like communication and analytical skills, are projected to increase.

Soft skills are difficult to automate, but also time consuming and expensive to teach, often built over many years of education and training.

While many employers say that soft skills are essential, there is no consensus for how soft skills should be evaluated and certified, making it difficult for learners and workers to trust that employers will recognize their competencies. It is also difficult for employers to make hiring decisions on the basis of skills they do not know how to define, assess or evaluate.

In June 2025, there were 492,000 vacant jobs in Canada – despite the lowest vacancy rate since 2017. Many of these vacancies are due to skills imbalances, which occur when the skills demanded do not match the skills in supply, the Future Skills Centre’s report says.

Employers across all sectors in Canada report continuing challenges to find the skills they need. The Conference Board of Canada found a considerable gap between the skills needed for the future economy and the skills possessed by the current Canadian labour force, costing the economy $2.6 billion in 2024 and reduced productivity by 0.1 percentage points.

Specifically, Canada is short at least 64,000 skilled workers in engineering, technical occupations, higher-skill goods, and other higher-skill services, with each excess vacancy costing the Canadian economy an estimated $40,400. 

The skills gap is most acute for small and medium enterprises (SMEs), which account for approximately 99.6 percent of Canadian businesses in 2024. SMEs often lack the human resource capacity to invest in skills assessments and upskilling their current workforce, impacting effective recruitment and retention.

A recent survey of Canadian SMEs revealed that roughly half of those surveyed said they had difficulties finding candidates with the appropriate skill levels for open positions.

When SMEs do hire, providing their workforce with additional training is often a challenge. In 2022, 70 percent of employees at Canadian SMEs expressed interest in external training opportunities, but only 12 percent actually did any external training in the preceding year. Smaller firms often have less cash on hand or limited access to capital, restricting their ability to finance training. These small firms also need their workforce at work – it is a high opportunity cost to send workers for training.

Changes in skills and training ecosystem are needed to strengthen resilience of Canadian workforce

Many immigrants to Canada struggle to have their skills recognized, complicating their transition to employment commensurate of their skills.

For instance, a recent study found that more than 25 percent of recent immigrants that came to Canada with a bachelor’s degree were employed in jobs requiring only a high school diploma or less, a figure three times higher than the rate for Canadian-born workers.

Postsecondary institutions play a critical role in skills development as roughly 80 percent of vacant jobs require some form of postsecondary education.

Postsecondary education leads to higher wages over time and to the acquisition of a wide range of skills, including soft and digital and other skills. However, research also suggests postsecondary programs must rethink traditional models and consider how soft skills can be taught alongside existing technical skill instruction.

The recent results from the Organisation for Economic Co-operation and Development’s Programme for the International Assessment of Adult Competencies also show a correlation between postsecondary institutions attainment and skills proficiency.

However, postsecondary institutions across Canada are currently struggling to address significant budget deficits following changes to the number of international student permits and their associated tuition revenues. Many colleges and universities across Canada are reducing programs and laying off staff.   

In addition to skills shortages among workers, labour shortages are particularly acute in key sectors like health care and construction.

As Canada’s population ages, demand for health care services increases. According to a Conference Board of Canada report, there are over 80,000 vacancies for nurses, early childhood educators and social and community support workers at present (this includes registered nurses, registered psychiatric nurses, nurses’ aides, ordinaires, patient services associates and licensed practical nurses). The vacancy rates for these occupations is set to increase by at least 30 percent by 2040.

Health care currently represents approximately 12.4 percent of Canada’s annual GDP, or over $370 billion dollars. These job vacancies translate into lost productivity overall and less care for Canada’s aging population, who depend more and more on professional care. 

The construction industry represented approximately 7.4 percent of Canadian GDP in 2024, and an aging workforce has this industry on track to lose up to 21 percent of this workforce over the next decade.

The federal government recently injected billions of dollars into the Canadian skills development and training ecosystem, including:

• additional funds for the Labour Market Development Agreements to support training and upskilling for up to 50,000 workers.
• a national online training platform to help adults find short-duration training courses by skill type, location and format.
• Workforce Alliances and a Workforce Innovation Fund for at-risk sectors like auto parts, steel and aluminum, and those with growth potential such as energy, critical minerals and advanced manufacturing. 

“While impressive, these investments are not enough to meet the coming challenges,” according to the Future Skills Centre’s report.

“To build a resilient workforce that is able to respond to and adapt to changing labour markets, whether due to unpredictable disruptions or longer-term transitions, we need a range of training and upskilling pathways that equip people with the skills they need to enter, advance, transition and return to dynamic labour markets.”

Priorities include employers in every sector making more investments in skills training on AI for workers and figuring how to integrate AI into their operations to remain competitive, the report says.

Also, soft skills should be built into skills training and there should be more widespread implementation of soft skills assessments, especially among employers, enabling them to better assess the skills of applicants and workers.

“To build a range of training and upskilling pathways, we need options that account for differences between workers, regions, sectors, and career stages and operate at the individual-level, organizational or firm-level, and system-level,” the report says.

One way to ensure this customization is to take a place-based approach, taking into account the specific needs of local communities and groups, like older workers, recent graduates and newcomers with advanced degrees but lacking in Canadian experience.

Examples of how to implement place-based planning for training and upskilling, such as those from the Conference Board of Canada and Smart Prosperity Institute, identify how skills needs differ at the local level.

Place-based approaches apply to communities in transition to a lower-carbon economy, as well as efforts to help regions and sectors deal with the impacts of the on-going trade war with the U.S.

Policymakers should consider initiatives that bring together experts in these fields to foster partnerships where local and regional-level labour market information can be leveraged to design responsive solutions to local needs, the report says.

However, many federal programs only begin after a worker is laid off or has been unemployed for a certain amount of time. While these types of programs should remain in place, Canada needs upskilling programs that take proactive approaches to upskilling workers in vulnerable contexts – regional and sectoral.

“To meet the challenges ahead, and to make our national ambitions a reality, there is a growing desire among actors in the skills and training ecosystem to identify creative and practical strategies to strengthen the resilience of the Canadian workforce for the short and long-term.”

To this end, the Future Skills Centre has been convening the Resilient Workforce Working Table – a group of public policy and skills development experts, employers and labour groups, across sectors and regions, collaborating on the development of evidence-informed skills and employment solutions. 

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