david dodge : canada ’ s competitiveness - the importance of investing in skills remarks by mr david dodge, governor of the bank of canada, to the humber college institute of technology and advanced learning, toronto, 30 march 2005. * * * thank you, michael, and good evening. i am honoured to be here with you to kick off this lecture series. once again, i want to thank humber college and the canadian foundation for economic education for this opportunity. it ’ s a bit daunting to try to deliver a lecture this late in the evening. but the subject that i want to discuss tonight is one that should be of interest to all of us - the importance of investing in skills to improve productivity growth. as most of you know, this lecture series was announced by the cfee at a dinner here in toronto in november 2003. at the conclusion of my speech that evening, i said that, in an increasingly complex and competitive world, furthering our national economic welfare will depend importantly on the quality of our labour force. i also said that improving skills will require concerted efforts from all of us who are involved directly or indirectly in education : parents, educators, employers, community organizations, and policy - makers. it is this shared responsibility that i would like to emphasize this evening. i will begin with a brief discussion about some of the factors influencing canada ’ s productivity performance. then, i will review some of the larger forces at work on the world economy and their implications as we strive to improve productivity. finally, with these forces in mind, i will offer a few thoughts on how we can best develop canada ’ s human resources. what drives productivity growth? productivity plays a critical role when it comes to our national standard of living. productivity growth is the main element that contributes to continued improvements in real incomes and overall prosperity. rising productivity lets businesses pay higher wages, while keeping costs down, employment high, and profits coming in. that ’ s why economists like me spend a lot of time thinking about ways to improve the productivity of our economy. there are several factors that help to raise labour productivity - by which i mean the amount of goods and services produced per worker per hour. these factors include the education, training, and experience of the workers and the amount and type of equipment available to them. productivity can also be raised through technological innovation, and through changes in organizational and management practices. all of these key determinants of productivity influence how " smartly " human and

and what they want to do when they leave school. in order to be motivated to learn math, language, or science, students need to understand that this knowledge is relevant to the careers they want - that these courses are the foundation on which they will build their skills and interests. no one who learns a musical instrument practices scales so that they can be really good at playing scales. they practice scales so that they can play the songs they like. and students need to see first - hand the opportunities that will open up for them by studying hard and staying in school. colleges, and the industries that support them, play a key role in providing that motivation, through programs that give high school students a first - hand look at the career options ahead. the flip side of the aging population that i discussed a minute ago is relatively smaller cohorts of young people. but that doesn ’ t mean that we can stop focusing on the problems we face in preparing these young people for the workforce. indeed, the fact that we have smaller cohorts means that we must do better - we can ’ t afford to squander the potential of these young people. once they have finished high school, they need to learn the skills that will help them to become productive workers in the expanding sectors of the economy. i ’ m in the right place to be talking about this, because humber college has an exemplary record of training in areas such as design, merchandising, high - end services, and product innovation. of course, it will always be critical that canada stay on the leading edge of advanced research and theory. but pure research always needs to be complemented by the ability to commercialize, customize, and market the products that result. service industries will also require increasing numbers of skilled workers. older people buy relatively more services as a percentage of their overall consumption. the health care sector, for example, will require more medical technicians, therapists, nurse practitioners, and home care workers to meet growing demand. and as our population ages, the demand for leisure and travel services is increasing. the hospitality and tourism sectors can differentiate canada from other destinations by delivering the exemplary service that only well - trained workers can provide. in order to learn relevant skills, students should be trained to use the latest tools and production methods employed by the sector for which they ’ re training. this means innovative partnerships between educational institutions and industry, to give students access to equipment and methods that are actually being used by leading