I decided to post this here. It shows the shocking level of financial ignorance among young workers. Four in ten people under thirty five don't know how CPP works. This doesn't bode well for Canada's future.
Ryan Mallough is Director of Provincial Affairs, Ontario, for the Canadian Federation of Independent Business.
All provinces should be talking about financial literacy
Budgets are always big documents that cover a lot of topics and throw out a lot of dollar figures. That’s why the Ontario government’s Budget 2019 financial and workplace literacy commitments are not getting the notice they deserve, at home nor across the country. Yet they could very well be the budget’s hidden gems.
During the Canada Pension Plan (CPP) expansion debate early in the Trudeau mandate, the Canadian Federation of Independent Business (CFIB) polled Canadians, not only on their opinions of the expansion, but on their general knowledge of what the CPP is and does. A resounding 39 per cent of respondents aged 18 to 34 believed that the government pays into the CPP (it doesn’t).
I come back to this number frequently — it still seems bonkers to me that nearly four in 10 young Canadians don’t know how a significant plank of their retirement — and a major payroll deduction on every paycheque — works.
But when you really think about how we could get to a number like that, it’s impossible to avoid the question: where was the opportunity for young people to have ever really learned about it?
Coming out of high school, I couldn’t have told you what “CPP” stands for, nor “EI”, “RRSP”, “RESP”, “GIC” or “TFSA” – let alone anything about the benefits, drawbacks, or accessibility of any of them.
No high school or university course ever walked me through payroll deductions or how to file my taxes. I didn’t know how to establish a credit rating, how to impact my score or what having a good or bad score really means. Compound interest was a section in math class, presented without implication or context.
Budgeting was reduced to an Excel table that never seemed to include a credit card – odd for a country that has $599 billion in consumer debt.
I learned all these things eventually, mostly through trial by fire at the workplace. You pick things up along the way.
But there has to be a better way.
Canada’s small business owners think so; 53 per cent of them are dissatisfied with the job high schools are doing in preparing young people for the workforce. In Ontario, nearly nine in 10 support the introduction of a mandatory full-credit financial literacy course at the high school level.
If it’s done right and focuses on the practical, a greater emphasis on financial literacy will see students come out of high school far better prepared to make financial decisions and understand the fiscal debates that will impact them as they begin their careers.
On the other side of the financial literacy coin is workplace literacy.
We hear consistently from small business owners that their young hires are woefully under-prepared for the workplace. Too often employers are finding themselves in a position where they are teaching their young hires not only how to do the job they were hired for, but how to generally be an employee – skills like how to be punctual, communicate professionally and manage their time effectively.
I admit, as a Millennial it takes a lot to bite my tongue when this comes up. I know my generation to be as hard-working and ambitious as any other, but when I think back to my education, there really wasn’t an avenue to learn the soft skills employers expect workers to have when entering the workplace.
Furthermore, college, and especially the skilled trades, were never really presented to me as options when I was in high school. I’d be willing to bet nothing has changed if you walk into any high school classroom across the country today and ask students about their plans for the future. Very few – if any – would bring up college or vocational institutions. They’re seen as lesser – a fall-back option if university doesn’t pan out – and that’s not only a shame, but a colossal disservice to both our toprate institutions and the hard-working men and women in the trades.
What’s more, not highlighting these paths has contributed to a skilled tradespeople shortage across Canada. In fact, it has become the number one barrier to small business growth in Prince Edward Island, Nova Scotia, New Brunswick, Quebec, Ontario, Manitoba and British Columbia.
There needs to be a multi-faceted approach to addressing the problem, and young people should play a significant role — but they need to know their options. The Ontario government’s budget commitment last week to promote the skilled trades all the way from kindergarten to Grade 12 is a strong step towards a longterm solution.
The government of Ontario’s focus shows that governments are willing to listen. Their commitments on workplace and financial literacy might be small lines in the budget, but their impact could end up being very big for the future of Canada’s workforce.
A claim for equality of material position can be met only by a government with totalitarian powers. Friedrich August von Hayek