Yes, you have to level your citizen to level up your citizen skills. The passive tab shows skills you have that you don't actively use, the everyday skill tab has functionable buttons, but you'll still have to have your citizen skills on (at least subbed) to use them.
Collection Unsuccessful can happen if you are using the wrong tier tool for what you're harvesting, it also happens a lot in Dragons Den just because they thought to make higher level harvesting more difficult and expensive by adding a crazy failure rate.
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