Finance Committee on April 2nd, 2014

[The Chair, Conservative, James Rajotte]

I call this meeting to order. This is meeting number 27 of the Standing Committee on Finance. Our orders of the day are pursuant to Standing Order 108(2), continuing our study of youth employment in Canada.

We're very pleased to have six individuals presenting this afternoon to the committee.

From the Canadian Chamber of Commerce, we have Sarah Anson-Cartwright, director of skills policy.

From the Canadian Federation of Independent Business, we have Ms. Monique Moreau, director of national affairs.

We also have with us Jean Lortie, who is the corporate secretary of the Confédération des syndicats nationaux.

Welcome to you.

From Merit Contractors Association, we have the vice-president for southern Alberta, Peter Pilarski.

From the Progressive Contractors Association of Canada, we have the vice-president federal and Ontario, Mr. Sean Reid.

From the research department at Unifor, we have the national representative, Mr. Angelo DiCaro.

Welcome to all of you. Thank you for being with us. You have five minutes maximum for your opening statement. We'll begin with the Canadian Chamber of Commerce, and after all the presentations, we'll have questions from members.

[Sarah Anson-Cartwright, Director, Skills Policy, Canadian Chamber of Commerce]

Thank you, Mr. Chair and members of the committee. In the context of the skills challenges facing Canada, the committee's study on youth employment is valuable and timely.

I am Sarah Anson-Cartwright, director of skills policy at the Canadian Chamber of Commerce.

l'll start with a conundrum. Canada spends more money per capita on education than most other nations, we have the highest attainment rates in post-secondary education among OECD countries, and yet we know that many young people, including post-secondary graduates, are either underemployed or unemployed. You've heard from experts that the labour market situation is not as dire for young people as it was in previous post-recessionary periods, and yet we are all concerned, and rightly so.

At the Canadian Chamber, our members are preoccupied with the skills gap in our labour force. Economists are telling us that the skills gap is not as bad as we think, and yet for every employer struggling to find people with the right skills for the positions open, it is bad. It is the same for young people who are struggling to find gainful employment related to their field of study or in the occupation they trained for.

The public discussion of the skills gap and mismatches must not undermine young people's belief in the value of post-secondary education. Canada needs a both/and response as opposed to an either/or response. That is, we need more apprentices entering and completing in skilled trades, more college and polytechnic graduates, and more university graduates. Simply put, we may not have enough welders and pipefitters, but we don't have enough engineers, physicians, or computer scientists either.

In Canada, we invest so much in young people's education but we could invest a lot more time and effort in guiding their choice of post-secondary programs, fields of study, and potential occupations.

The question then is how to help more young people study or train for the kinds of jobs that will be available. The answer is information, more specifically, labour market information. We need to provide better information for youth to make more informed choices on post-secondary programs and career paths. Our focus on education and skills training will fall short if we cannot help people become qualified for the jobs available and encourage them to locate where there are jobs. Additionally, we can do a better job at cultivating more young entrepreneurs who can live and work wherever they feel a business will thrive.

For all the investment we make in the education of our young people, consider how little attention there is on research and planning for post-secondary studies and careers. How many students or parents have looked at the forecast demand for their potential occupations and where that demand will be?

Government should push labour market information onto high school students and their parents. Government needs to urge them to seriously look at the job market forecasts. Let's do our best to help young people make more informed decisions on their future education and occupations. Let's give them the best opportunities to find employment in Canada's dynamic labour market and economy.

Thank you. I look forward to your questions.

[The Chair, Conservative, James Rajotte]

Thank you for your presentation.

We'll now hear from CFIB, please.

[Monique Moreau, Director, National Affairs, Canadian Federation of Independent Business]

Mr. Chair, as many members of the committee know, CFIB is a not-for-profit, non-partisan organization representing more than 109,000 small and medium-sized businesses across Canada who collectively employ more than 1.25 million Canadians and account for $75 billion, or nearly half of Canada's GDP.

Our members represent all sectors of the economy and are found in every region of the country. Addressing issues of importance to them can have a widespread impact on job creation and the economy.

You should have a slide presentation in front of you that I would like to walk you through in the next few minutes.

CFIB's March business barometer on slide 3 shows a slight dip from last month, bringing us close to our initial measures in January of this year. So far, business operating conditions in 2014 have been stable, but not overly robust. We are seeing improvements in the prairie provinces, but only 36% of business owners see their businesses as being in good shape right now, the lowest reading since mid-2010.

[The Chair, Conservative, James Rajotte]

Pardon me, Ms. Moreau. I apologize.

There is a vote. I understand that there is a 30-minute bell.

Colleagues, I'm going to recommend that we do this presentation, two more, and then come back. I need unanimous consent to keep going at this point.

Can we finish CFIB, two more presentations, and then we'll go and vote?

[Some hon. members]

Agreed.

[The Chair, Conservative, James Rajotte]

Thank you. I appreciate that very much.

[Gerald Keddy, Conservative, South Shore—St. Margaret's, NS]

If we could shorten them up, maybe we could get all the presentations done and then come back.

[The Chair, Conservative, James Rajotte]

They were told five minutes before, so if they can, obviously we'd appreciate that, but they are allowed up to five minutes.

Ms. Moreau, I apologize for the interruption.

[Monique Moreau]

Not at all.

Overall, the point of that slide is to show that the economy is still acting sluggishly.

To help get us through this sluggishness, we believe governments need to address the issues of greatest concern to small businesses so that they in turn can focus their attention on hiring staff and growing their business, thereby growing the economy.

As you can see on slide 4, although small business owners remain concerned with their total tax burden and the impact of government regulations and paper burden on their business, among other issues, the shortage of qualified labour remains a priority issue for nearly half of our small business members.

When broken down by province, as you see on slide 5, the shortage of qualified labour reflects what we've been hearing from our members and what you may be hearing from your constituents. In the western provinces the shortage of qualified labour is very high. It is also trending high in Quebec, Nova Scotia, and especially Newfoundland and Labrador.

Slide 6 demonstrates the spread we typically like to see regarding hiring intentions. Overall, short-term hiring expectations are still running reasonably well with 26% expecting to add full-time staff in the next three to four months, versus only 7% who expect to cut back.

All this data is showing us that business owners are in need of employees across Canada. Small businesses play an integral role in the hiring of young people in Canada, giving many young Canadians their first experience in the workforce. This is further supported by the research from the fall of last year, on slide 7, where we asked our members to describe their hiring experience during the last three years. Over half of respondents had hired a young person. Only one in four employers had tried to hire a young person but didn't because the candidate lacked the necessary skills or experience.

Small businesses truly are the training ground for Canadian youth, spending $18 billion a year on training of youth and other employees. Approximately two-thirds of that amount is spent on informal on-the-job training. The reason for this big expenditure, as slide 8 demonstrates, is that over half of the jobs that small businesses are looking to fill require on-the-job training, and nearly half require a high school diploma or occupation-specific training. A third require a college diploma or apprenticeship training, where small businesses also play a big role. This demonstrates that the greatest human resources need in the small business sector is for the semi-skilled and junior employees. Small employers are often the first source of employment for those looking for entry level opportunities.

What can government do to help small businesses continue to hire youth? On slide 9 you see from our report, “Canada's Training Ground”, that we asked business owners what would incent them to continue to train underskilled and low-skilled workers. Overwhelmingly, respondents indicated that reducing their payroll and tax burden would help them the most, through the introduction of training tax credits, a reduced tax burden, and a break from EI payments during the training period. Conversely, new taxes on employers to be used for training was very unpopular.

I should mention that the data on this and the previous slide stems from our report in 2009, and the committee may be interested to know that we will be updating the data this year.

To encourage youth employment, we ask the government to consider the following recommendations on slide 10:

Introduce the EI training credit, or renew the EI hiring credit, with a focus on youth. As demonstrated in the previous slide, a break on EI payroll taxes is one way to recognize the informal on-the-job training that small businesses undertake when hiring a new employee and especially a young person. The cost in time and money can be significant when training a young person who may be working for the first time.

Maintain the freeze on CPP rates and ensure EI rates are lowered once the EI account is brought into balance. Small business owners welcomed announcements last year that the EI rates would be stabilized and that the government would not be increasing CPP premiums. Payroll taxes are the biggest disincentive to hiring for small business owners, and stability in rates and therefore costs could give them more confidence to grow their business.

Last, we encourage the government to support their provincial counterparts in the mutual recognition of apprenticeship programs across Canada. Apprenticeship prepares hundreds of young Canadians for the skilled workforce every year, but small business owners tell us that it is getting increasingly difficult to hire and train apprentices.

We thank the committee for the invitation to appear. This concludes my remarks.

[The Chair, Conservative, James Rajotte]

Thank you very much, Ms. Moreau.

Mr. Lortie, the floor is yours.

[Jean Lortie, Corporate Secretary, Confédération des syndicats nationaux]

Thank you, Mr. Chair.

My thanks to the Standing Committee on Finance for inviting us to talk about youth employment this afternoon.

The Confédération des syndicats nationaux is a union organization representing more than 300,000 workers across Canada, mostly in Quebec, but also from coast to coast in the federal public service. Our organization was founded in 1921; at least a quarter of our members are under the age of 30.

We are providing three broad topics for the committee's consideration.

The first topic is that working conditions for youth have been deteriorating for a number of years. The second topic we would like to work on deals with economic and fiscal policies for young workers. The third topic deals with policies to assist young people as they look for a job.

In terms of working conditions for youth in Canada, we are seeing more and atypical, part-time and casual work, more and more placement agencies and more and more disparities in treatment based on employment status and hiring date. In 2006, the Arthurs Report denounced the situation and recommended amending Part III of the Canadian Labour Code. The Canadian Charter of Rights and Freedoms must also be able to prevent disparities in treatment, specifically on the basis of employment status and hiring date.

In addition, better access to pension plans for all young Canadians implies contributions from employers and a more generous Canada Pension Plan if we want to make it possible for young people to plan their lives rather than doing so on their own when they can.

Finally, the unemployment rate for young workers remains high, especially in the regions.

In terms of economic and fiscal policies, we believe that, given the current situation of budgetary surpluses, Canada should invest in job creation in a major way, particularly in the manufacturing sector, which has lost more than 600,000 jobs in the last decade, especially in Ontario and Quebec.

We therefore call for Investment in a sector that is meaningful for the Canadian economy and that has a huge impact elsewhere. The federal government must be much more active than it is at present in supporting these policies with budgetary measures.

In terms of all the employment support policies, there are a number of partnership agreements with the provinces, certainly with Quebec. We warmly welcome the renewal of the Canada-Quebec labour market agreement that helps tens of thousands, hundreds of thousands of young people, who are neither in school nor working, with study or assistance programs. The assistance goes to client groups that are increasingly difficult to manage. The CSN feels that the government must address these issues.

We respectfully submit seven recommendations to the committee: you will find them in the brief we have provided.

Our first recommendation is to improve and modernize federal labour legislation, including the Canada Labour Code, in order to tackle the problem of discrimination based on employment status that mainly affects young Canadians.

Our second recommendation is to make sure that every employee in Canada has the right to be covered by a pension plan, and therefore to be able to plan for, and have financial security in retirement. Young workers would therefore be able to plan for their retirement rather than to have to resort to voluntary measures.

Our third recommendation is to recognize that the work-life balance should have more than lip service paid to it in the business environment. This balance must come in the form of measures to assist businesses and young workers so that the workers can raise their families, balance their work and their families, and even balance their work, their families and their studies.

Our fourth recommendation is to establish an industrial policy that would, by means of a Canada-wide expansionary fiscal policy, ensure job creation and recover the 600,000 jobs that Canada has lost in the last decade.

Our fifth recommendation is to rebuild an industrial base in Canada that would subsequently be able to support the service sector.

Our sixth recommendation is to manage employability measures to allow the youth employment market to develop, respecting all federal and provincial jurisdictions.

Our seventh and final recommendation is to give provinces the right to opt out if they wish when no agreement is in place.

Those are the recommendations that the CSN has for the committee. We support this initiative in analyzing the youth employment situation and we ask for the committee's support for the initiatives we are proposing.

[The Chair, Conservative, James Rajotte]

Thank you very much.

We will now go to Merit Contractors Association, please.

[Peter Pilarski, Vice President, Southern Alberta, Merit Contractors Association]

Thank you, Mr. Chairman.

My name is Peter Pilarski. l'm vice-president for southern Alberta with Merit Contractors Association.

Merit members across the country banked over 100 million man hours last year with over 55,000 construction workers in our hour bank benefit plan and 7,000 people in our office supervisory plan. Merit Alberta's single largest expense item is our tuition refund program, which provides full apprenticeship tuition refunds to any person who works for a Merit member company. This year, we will pay out approximately $2 million in refunds to over 2,400 apprentices.

Merit Alberta is second only to the Alberta government in our support for CTS students with the Merit Contractors CTS award, which is given to the top grade 12 CTS construction students in more than 120 high schools across Alberta.

Merit Alberta also provides 80 $750 post-secondary scholarships to the children of Merit member company employees to pursue post-secondary education, including apprenticeship training. Additionally, Merit Alberta provides annual awards to the top apprentices of our Merit member companies, as well as an award for a Merit member company that demonstrates a commitment to a training philosophy and culture within their organization.

Merit Alberta also runs the Merit College of Construction, which has provided an industry-leading supervisor training program and leadership development for supervisors program to thousands of construction workers over the years.

We have partnered with Careers: The Next Generation in Alberta to help place hundreds of high school RAP students; Women Building Futures, to connect women to construction employment opportunities; and Trade Up, an industry initiative aimed at helping young people to understand construction employment opportunities.

We have run construction boot camps, which provide young people with a basic exposure to construction, as well as the safety training programs they need before they can begin working on a construction site. Our boot camp graduates all get placements with our member companies for their first construction job.

Despite all these efforts throughout the years, the construction industry continues to face challenges in attracting enough young people. Our challenge is to determine why. A 2013 Canadian Apprenticeship Forum study found that compared to a baseline in 2004, youth between the ages of 15 and 17 were more likely to consider a career in the trades; viewed a career in the skilled trades as better than a career in law, business, or accounting; were more aware of available career options; reported a better understanding of the apprenticeship process; and were able to find information about the trades, if they were looking for it.

However, the most troubling finding in the report is that the same proportion of youth reported that parents, guidance counsellors, and friends have not encouraged them to consider a career in the trades. Unless we as a country directly address the societal biases that exist against working in the skilled trades, no government program or industry initiative will have the impact we need to meet our labour market demand for these occupations.

Students are told that a career in the trades is for the students who are not as smart and that university is better than a trade ticket. This is wrong. The skilled trades are becoming more technical and academically challenging, and our industry needs students to come out of high school with strong language and communications skills as well as strong math and science skills. Initiatives over the years to bring more aboriginal youth into the construction workforce have often struggled because those youth have often lacked the academic prerequisites needed to be successful in an apprenticeship program.

The Canada job grant program should be used for pre-apprenticeship training and for bridging programs to help those students who did not get the prerequisite skills they need to be successful in an apprenticeship program.

Most of Merit's board members started on the front lines of our industry and many of them now run successful companies that employ hundreds or thousands of people. This is the introduction that youth need to our industry and the type of message that needs to be coming from their parents, teachers, and guidance counsellors. The challenge is that the teachers, guidance counsellors, and many parents have gone through university and that is the route they know and advise. Industry and government could work together to help to change the image of the skilled trades, and that focus should be on educating adults as well as youth.

Merit is currently developing a program called learning about trades and technology education, or LATTE, which will give teachers and guidance counsellors an opportunity to spend a day on a construction site so they can get a real-life understanding about working in the trades. We would welcome government as a partner in this type of initiative.

Another challenge for construction is the way K-to-12 education is funded. In Alberta, principals get per student funding, which they use to run their school and hire teachers. Construction equipment, materials, and labs are expensive compared to the facilities needed to run an arts or drama program. There is little to no incentive for a principal to offer a construction program, which is relatively cost prohibitive. Dedicated federal funding on top of provincial education funding specifically for the space, materials, and equipment needed to provide construction education could be a way to ensure that construction is taught at the junior and senior high school levels.

Thank you very much for your time, and I'll take any questions.

[The Chair, Conservative, James Rajotte]

Thank you very much for your presentation.

Colleagues, we have about 15 minutes until the vote, and we have two more presentations. I need unanimous consent. What would you like me to do?

[Gerald Keddy, Conservative, South Shore—St. Margaret's, NS]

Mr. Chairman, if we could be brief, I think we should hear them. I've heard that we have another vote back to back with this one. Otherwise, we won't get to hear them.

[The Chair, Conservative, James Rajotte]

I can't cut down their presentations.

Okay. Let's proceed. Until someone tells me that we have to leave, I'll keep going ahead.

Mr. Reid, please.

[Sean Reid, Vice-President, Federal and Ontario, Progressive Contractors Association of Canada]

It's my pleasure to be here on behalf of the Progressive Contractors Association of Canada.

PCA represents and supports progressive, unionized employers in Canada's construction industry. Our member companies employ approximately 30,000 skilled tradespeople, unionized primarily by the Christian Labour Association of Canada. PCA's goal as an association is to ensure that Canada has a fair and open construction industry, cooperative labour relations, and a robust, inclusive, and highly capable workforce. Our members account for over 40% of all energy and resource sector construction in western Canada, and are leaders in infrastructure construction across the country.

Our members also lead the industry in the recruitment of under-represented communities into the trades, including women, first nations, and new Canadians, but especially in the recruitment and training of young Canadians. In western Canada, where provincial regulations best support the hiring and training of young workers, registered apprentices comprise over 35% of the total PCA workforce. This does not include thousands more young people presently working for our companies outside of an apprenticeship in trades in which certification is not mandatory.

But like most companies in Canada's construction industry, PCA members continue to struggle to find enough workers to meet growing demand, particularly in B.C., Alberta, and Saskatchewan. Canada's youth unemployment figures provide clear evidence that we still have an untapped resource available to us.

We believe the barriers that specifically prevent young Canadians from finding careers in the trades can be categorized as follows: barriers of perception, barriers of entry, and barriers of mobility. Let me briefly address each one.

First, careers in trades continue to suffer from a significant negative stigma in the eyes of many Canadian parents and educators. PCA believes industry should play the lead role in fixing this problem in partnership with governments at all levels and our training system providers. One initiative worth considering is the creation of a cost-matching grant program to support industry-led promotion of the skilled trades.

Second, there are numerous barriers to entry for young people into the trades, including cost, proximity to employers and training providers, and family circumstances. Regrettably, a number of provincial jurisdictions, including Ontario, where youth unemployment is among the highest in the country, are only making this problem worse by erecting new barriers for our young workers. These barriers include high journeymen-to-apprentice ratios, the expansion of compulsory trade certification, and a host of new fees, bureaucratic hurdles, and red tape. PCA encourages the federal government to facilitate a national dialogue with its provincial counterparts to identify and address these barriers and build a national trades system with lower barriers to entry across every region.

Third, there are barriers to mobility. If young workers are unable to find skilled trades opportunities in their home regions, then we owe it to them to provide every possible means to move to a region where they will find that opportunity. One solution the federal government should take a closer look at is the creation of a lump sum mobility grant accessible through the employment insurance system. Mobility grants allow a person who is unemployed in one area of the country to utilize future employment insurance benefits in the form of a lump sum payment in order to relocate to another area of the country where workers are needed. The funds advanced from these EI payments would then be used to fund job search, training, and relocation costs.

In conclusion, PCA thanks the committee for taking on this important study. The challenges are many that confront young Canadians in their pursuit of lasting employment, but there are also solutions and steps that industry and government can take together to make progress. PCA stands ready to play our part.

I'll be pleased to answer any questions you may have.

[The Chair, Conservative, James Rajotte]

Thank you very much, Mr. Reid.

I apologize, but members are getting very nervous about making this vote. We will come back here as soon as we can and resume with you. I do apologize for that, but the whips of all parties call.

The meeting will be suspended until further call.

[The Acting Chair, Conservative, Dave Van Kesteren]

Welcome, gentlemen.

I'm going to suggest we continue on. We're scheduled to go until 5:30. However, if our guests are willing, we could extend this further.

What happens in a case like that is, I think the Standing Orders indicate there can be no motions called. It would just be an information session. Are our guests willing to stay any longer? Do we have a willingness from the members to continue on for a period of time?

[Voices]

Agreed.

[The Acting Chair, Conservative, Dave Van Kesteren]

I think we're going to lose a few of our members, but I wouldn't mind taking a round then, too.

Let's shorten the rounds just a tad. We don't have that much time. Let's go three minutes the first round and then we can extend it from there. Does that work? All right, let's not waste any more time.

Mr. DiCaro.

[Angelo DiCaro, National Representative, Research Department, Young Workers Program Liaison, Unifor]

Good afternoon, Chair, and members of the committee. My name is Angelo DiCaro. I'm a national representative working in the research department of Unifor, Canada’s largest union in the private sector. Unifor represents 305,000 workers across Canada in nearly every sector of the economy.

We appreciate the opportunity to address this committee today on an issue which we fear if not taken seriously or dealt with meaningfully, will have lasting consequences for Canadians.

On the surface the issue is about youth unemployment. There are more than 382,000 young Canadians between 15 and 24 who fall into this category. Ostensibly, the solution to the problem is to get these 382,000 people into jobs. However, and as previous presenters have expressed to this committee, the more accurate and poignant analysis lies deeper beneath the standard reported unemployment numbers.

Youth unemployment in provinces like Ontario has actually fallen since the recession, yet youth employment-to-population rates sit at historic lows, a reflection of young people simply giving up and exiting the labour market altogether. The underemployment rate, which is captured monthly by Statistics Canada and includes not just the unemployed but discouraged workers and those who would rather work full time but can only find part-time jobs, is another metric that digs deeper into the youth labour market challenges, but it is very rarely reported. Currently one in five young Canadians are considered underemployed by this measure.

Equally as important to this committee’s analysis must be the foundational restructuring of Canada’s job market over the past generation and its impact on young Canadians. Of the 17 major economic sectors in Canada’s economy as measured by StatsCan, seven have turned out net job gains for young workers since 1976. Of those seven, which include sectors like construction, technical services, business services, and recreation, the two that have yielded the biggest job gains are retail and wholesale trade and hospitality. In fact, today half of all young workers in Canada are employed in either of these two sectors. One generation ago that number was far more modest, about one in four.

The average hourly wage for young workers in the retail and hospitality sectors is less than $12. That's the lowest in our entire economy.

As a result of this restructuring, more young workers today find themselves in low-wage jobs than they did a generation ago. This is a serious problem as the expenses many young people are expected to bear, including housing rent and tuition, continue to rise. Average student debt in Canada, for example, is $37,000.

Young workers are also far more likely to work in part-time and precarious jobs today than ever. A generation ago, 21% of young workers held a part-time job. Today, that number has jumped to 48%, and most of that jump is accounting for young workers between 20 and 34 years old. Yes, some of this has to do with young Canadians staying in school longer, but much of it has to do with the quality of jobs on offer.

There’s a prevailing myth that young workers favour part-time work. In fact, since 1997 there’s been a 33% jump among young workers who voluntarily work part-time. However, the number of young workers who are involuntarily working part-time, and who cite business conditions as the reason why they can’t find full-time work, has risen over that same time period by 231%. That is seven times faster than growth in voluntary part-time work.

Is it any wonder more than 150,000 young workers today hold more than one job. Is it any wonder that nearly 43% of all young people in Canada still live with their parents, and that's compared to 27% in 1981.

This unchecked restructuring of our economy has created a more vulnerable generation of workers with poorer labour market outcomes than generations past. To be clear, I am not saying more factory jobs will cure what ails our country’s youth unemployment crisis. I am also not saying young workers should steer clear of working in the retail and hospitality sectors.

What I am saying is that the eventual recommendations this committee makes to improve labour market outcomes for young workers have to consider these deeper structural challenges. Part of the policy prescription must tackle the worsening quality of existing jobs in tandem with any proposals designed to bring more jobs to market.

We understand the committee's objective is to explore solutions to improve youth employment outcomes in Canada. We invite the committee to consider the following policy prescriptions in light of the evidence we've provided above. There are three that I have.

One, establish a national multi-stakeholder retail and hospitality sector work standards and training council.

Less than 15% of workers in precarious forms of employment receive employer-paid training compared to almost 60% of workers in more secure forms of employment. There is currently no active multi-partner—

My five minutes are up?

[The Acting Chair, Conservative, Dave Van Kesteren]

I'm really sorry. Yes, it's well over.

Somebody, I'm sure, will ask you these questions.

[Matthew Dubé, NDP, Chambly—Borduas, QC]

Mr. Lortie, you mentioned underemployment. I would like to know more about it. Is it really a problem? If younger people are underemployed when they graduate, their skills will erode.

Could you tell us some more about that?