Human Resources Committee on May 15th, 2014

[Kellie Leitch, Conservative, Simcoe—Grey, ON]

I just want to finish. As the deputy mentioned before, all of these were evaluated still. There is still a mechanism.

[Jinny Sims, NDP, Newton—North Delta, BC]

I understand that.

Within the main estimates, Canada Industrial Relations Board states that it will transition to a new common document and information management and service delivery system, with several similar organizations, in order to mitigate financial pressures. Can you list specifically what is meant by similar organizations?

[Kellie Leitch, Conservative, Simcoe—Grey, ON]

With respect to the CIRB's plans for transition to a new common document management, I'm happy to say that we continue as a labour program to look for ways to modernize and make opportunities for employers and employees to access our systems, so that what we do is more accessible to them.

The CIRB is an independent quasi-judicial tribunal. The CIRB manages its own operations, so I'm not focused on those details. Tony Giles may know some of those details, but I would strongly encourage you to speak to Elizabeth MacPherson, the chair of the CIRB, because she is managing that transition plan. As I say, they're an arm's-length organization, and Elizabeth as the chair focuses, and is focused right now, on finding that transition, which I think will be a benefit to all Canadians.

[The Chair, Conservative, Phil McColeman]

Thank you, Minister.

That ends our first hour of business.

We appreciate your being here, taking the time to come today to deal with the questions. We did get a little off track at times but we appreciate the time you've taken here today with us. Thank you very much.

We'll take a pause just very quickly as the minister exits.

Committee members, please stay close because we have lots to deal with here.

[The Chair, Conservative, Phil McColeman]

I call the meeting back to order.

Before we move on to our next set of witnesses regarding the labour market development agreements, we have one piece of business I'd like to take care of, and that is the motions required as a result of the minister's visit. I will just run through them as quickly as I can, so bear with me, committee members.

Pursuant to Standing Order 81(4) the main estimates for the fiscal year ending March 31, 2015, were deemed referred to several standing committees of the House as follows...and it goes through the narrative that we had the minister here today.

I'd like to call the following votes by committee members.

CANADIAN INDUSTRIAL RELATIONS BOARD Vote 1—Program expenditures..........$11,823,711

(Vote 1 agreed to)

CANADA MORTGAGE AND HOUSING CORPORATION Vote 1—To reimburse Canada Mortgage and Housing Corporation for the amounts of loans..........$2,097,353,000

(Vote 1 agreed to)

CANADIAN CENTRE FOR OCCUPATIONAL HEALTH AND SAFETY Vote 1—Program expenditures..........$3,978,250

(Vote 1 agreed to)

EMPLOYMENT AND SOCIAL DEVELOPMENT Vote 1—Operating expenditures and..........$571,067,134 Vote 5—The grants listed in the Estimates and contributions..........$1,227,675,995

(Votes 1 and 5 agreed to)

Shall I report the main estimates 2014-15 to the House?

[Some hon. members]

Agreed.

[The Chair, Conservative, Phil McColeman]

Thank you very much, committee members, for moving through that quickly.

Now we move on to the second hour of our meeting. It actually won't be quite an hour because, witnesses, we have to do some committee business for the last 15 minutes, so it will be about a 45-minute session. This is for the study of our renewal of the labour market development agreements, the LMDAs.

We are pleased to be joined by Ms. Monique Moreau, director of national affairs of the Canadian Federation of Independent Business, who is with us here. Ms. Cammie Peirce, national representative from the national office of Unifor, is with us by video conference.

Each of you will have a presentation time of up to 10 minutes, so let's begin with Ms. Moreau for 10 minutes.

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

Thank you, Mr. Chair.

As many of the members know, CFIB is a not-for-profit, non-partisan organization representing more than 109,000 small and medium-sized businesses across Canada that 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. CFIB's position on issues is based on feedback from our members, gathered through a variety of surveys. We then pass those results on to you and decision-makers like you so that you can incorporate the perspective of smaller companies into your decisions.

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

Given their clout in Canada's economy, getting the small business perspective on how their businesses are doing can help us understand where the economy is going.

Slide 3 indicates an excerpt of April's Business Barometer, which is produced monthly to track the business expectations of Canada's small business community. The latest barometer from April 2014 shows some improvement, with the index rising to 65.7%. An index level of between 65% and 70% usually means that the economy is growing at its potential. So far, business operating conditions in 2014 have been stable, but not overly robust. We're seeing some improvements in the prairie provinces, but only 37% of business owners see their businesses as being in good shape, one of the lowest readings we've had since mid-2010. So the economy is still showing some sluggishness.

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

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

The shortage of qualified labour is an issue because of our job vacancy rates. As you see on slide 5, Canada's job vacancy rates remained stable in the fourth quarter of 2013. Private sector employers reported that 2.5% of jobs were vacant in the last quarter, October to December—no change from the quarter before. However, when you consider these vacancies by size of business, smaller businesses have the highest average of unfilled job rates. Firms with fewer than 19 employees have vacancy rates averaging 4.6% in the last quarter.

When you break down vacancies by skill level, as shown on slide 6, we see that over half of the jobs small businesses hire for are those that require on-the-job training. Our research shows that SMEs invest $18 billion a year in training. Much of this is invested in Canadians who come to work in small businesses, often for the first time.

When broken down by cost, you see the investment by type of employee on slide 7. It's particularly substantial when training a new hire with no previous experience. Part of the reason training costs so much is not because they're sending these new hires off to training courses, but rather because of the time spent either by the owner or another employee training, in the business, in an on-the-job, informal way.

The committee may be interested to know that we are in the process of updating this data and plan on surveying our membership on this issue later this year.

You've seen the investment that small businesses make in the training of their employees. What can government do to help small businesses continue to train and then hire individuals? We asked our members, and overwhelmingly respondents indicated that training tax credits, a reduced tax burden, and a break from EI payments during the training period were deemed to be the most useful. Conversely, new taxes on employers, to be used for training, was very unpopular, as you see on slide 8.

As this committee considers the substantial funding available for training Canadians to return to the workforce—nearly $2 billion—CFIB strongly suggests that you keep the small business owner in mind. SMEs pay over half of the EI premium and should have some say in how this training money is spent.

To that end, we ask the committee to consider the following recommendation as outlined on slide 9. Ensure that any funds administered through LMDAs recognize the informal, on-the-job training that SMEs conduct across the country. Employers are already involved in the development and training of employees, but government funding needs to recognize this type of training.

It also needs to recognize the realities of running a small business. Any training opportunities or programs created should be easily administered, low cost, and have little red tape. There is a lot of money at play in the LMDAs. Some options of spending it in a way that focuses on employers would be to introduce an EI training credit, renew the EI hiring credit, or provide an EI holiday for some small businesses.

Lastly, and importantly, there needs to be a public accounting of how the LMDA funds are used. Part of this money is paid for by employers, and an accounting of how this money is spent is critical for taxpayers.

This concludes my presentation and I look forward to your questions.

[The Chair, Conservative, Phil McColeman]

Thank you very much.

Now we move onto Ms. Peirce, by video conference, representing Unifor.

Please proceed.

[Cammie Peirce, National Representative, National Office, Unifor]

Good morning.

Unifor appreciates the invitation to appear before the Standing Committee on Human Resources, Skills and Social Development and the Status of Persons with Disabilities, in view of its labour market development agreement study.

We want to point out the important role that LMDA funds have played in assisting unemployed workers train for and find new employment. A tracking study of laid-off workers conducted by a McMaster University researcher documented the improved outcomes for laid-off workers who had access to training programs.

Training programs will not be successful if people who need the assistance cannot access the program. To qualify for EI part II tuition and training benefits, the unemployed worker must qualify for benefits under EI part I. However, less than four in 10 unemployed Canadians are receiving EI benefits at any given moment. This shrinking number is, in part, a result of the increase in precarious contract, temporary, and part-time employment.

Improving access to EI part I benefits will increase unemployed workers' opportunity for retraining, and ultimately, for more stable and secure employment. We support increasing access to all EI benefits by reducing the qualifying hours to 360 hours in all regions of Canada.

Unifor wants to emphasize the related need to extend EI part I benefits when a worker is in an approved EI part II program. Since it is a burden on the LMDA budgets, provinces provide only a small living allowance, if they provide anything at all. As well, it's typically family-tested, as if the allowance were a form of social assistance. Unlike social assistance, EI is not financed from public taxes. It is a social insurance program funded by weekly payroll premiums paid by workers and their employers.

EI provides income replacement for individuals, so family-income testing is not appropriate. During layoffs and closures, Unifor, actually former CAW members, usually women, were assessed very low income allowances, as low as $35 and in some cases nothing at all, because of their spouse's income. During the 1980s, workers were able to get EI—it was UI at that time—income benefits for up to two years if they were in approved training.

The lack of basic skills also represents a barrier to retraining programs, and ultimately, to sustainable employment. The extent of the problem was evident when CAW initiated adjustment programs for tens of thousands who had lost their jobs during the mass layoffs and closures that followed the 2008 economic crisis. As a result of our experience, we fought hard to ensure that Ontario's second career program included extended upgrading and literacy supports so that such workers had the prerequisites for college-level programs. Ministry staff said that they were surprised by how widespread the need for literacy and upgrading was in Ontario. Studies of the Canadian labour market as a whole have drawn similar conclusions.

The federal government is spending less than half of the maximum set out by the EI Act on the LMDAs. LMDA funding should be increased not only to address literacy and basic skills needs but also to include more specialized training programs that will lead to permanent full-time employment with decent wages. An LMDA funding increase would be financed through EI premiums paid by employers and employee premiums and not through government general revenues. Due to the current surplus, it would not be necessary to increase the premiums.

The success of training programs rests on providing workers with the skills required by employers as well as generic skills that provide workers with greater mobility in the labour market. Better collaboration is needed between stakeholders to address the labour market issues such as unemployment, training, and the rise of precarious work. A permanent federal labour market partners forum should be established to contribute to the successful training initiatives and to identify other labour market measures that are needed as part of a new Canadian job strategy. This strategy should stimulate the creation and maintenance of good quality jobs and not be limited to those in construction and resource sectors.

Provinces or territories without a labour market forum should be required to establish a forum with one of its responsibilities being an annual review and advice on how the LMDA and LMA spending priorities are made. Newfoundland and Labrador has established its own labour market committee, and the Forum of Labour Market Ministers report “Building Skills Together” highlights the Quebec labour market council.

In summary, our recommendations are to increase access to all EI benefits by reducing qualifying hours to 360 hours in all regions of Canada. This will allow more unemployed workers the opportunity to acquire the skills they need to find new employment.

We recommend extending EI part I income benefits for the duration of approved training under EI part II. Unemployed workers should have the opportunity to access training programs and still be able to provide for their children, buy groceries, and pay their rent.

We recommend expanding and insuring that EI part II funds include basic skills and prerequisites to training programs, as well as more specialized programs that will lead to permanent full-time employment.

We recommend increasing the LMDA funding to provide for these expanded programs. LMDA benefits are funded through EI premiums paid by employees and employers and would have no effect on the government's budget.

We recommend establishing permanent federal, provincial, and territorial labour market partners forums, and these forums would bring together the stakeholders, which are employers, labour, government, and educators, to shape and guide the LMDA program and a Canadian job strategy towards improving our workforce's skills and the quality of their employment opportunities.

Thank you for the opportunity to participate in this consultation.

[The Chair, Conservative, Phil McColeman]

Thank you very much, Ms. Peirce.

Now we move on to our rounds of questioning. They will be five-minute rounds.

Go ahead, Madam Sims.

[Jinny Sims, NDP, Newton—North Delta, BC]

Thank you very much. I want to thank both our presenters for bringing their perspectives to the table. I was really quite fascinated with the data here. It's always good to have data in front of us to help us move forward.

My first question is to Ms. Peirce from Unifor. As you know, with the Canada job grant, what it would look like was predetermined even before it was introduced, and it was, of course, universally rejected by the provinces and the territories. It took months to fix it.

Do you recommend a different kind of approach for negotiations of the LMDAs, and how would you see that rolling out?

[Cammie Peirce]

Yes, I would definitely recommend a different approach. When they rolled out the Canada job grant, it was done without consultation with any of the stakeholders. I think that was part of the problem with getting some acceptance. I know there were improvements made when they did some consultations, at least with the provinces.

I do think that in rolling out the LMDAs, it's important to talk to the stakeholders, which include employers, workers, government, and I think, educators, which is why I think we need to have that labour market partners forum.

[Jinny Sims, NDP, Newton—North Delta, BC]

I'm actually quite fascinated by these forums. I can't wait for them to be established across this country and then to have a federal one.

As you know, access to EI is at a historic low; less than four in 10 unemployed Canadians are eligible today. I can only imagine then how restrictive this is in terms of access to training. I know that, in one of your recommendations, you actually encourage expanding that access.

Can you comment on this restriction? What other consequences are there of such limited access, especially for Canadians who really want long-term employment opportunities and don't just want to be those repeat offenders who we've heard about? How could access be improved?

[Cammie Peirce]

Certainly it's a pleasure to comment on that. I'm going to just relate an experience I had recently based on a closure. I had a woman come to me who had just returned to work from a maternity leave. She'd been off work, but it was a part-time job. Based on the fact that she'd been there for a long time, part-time work, not enough hours, she was facing a period of unemployment with no income replacement. So at that point in time accessing any kind of retraining program is not an option.

Her priority is going to be to find work, any work she can find. Ultimately, it will not be work that is long term and in her best interests, and likely not in the best interests of the employer, because she's going to take work where she doesn't plan to stay.

[Jinny Sims, NDP, Newton—North Delta, BC]

Thank you. I think you've just pointed out one of the current dangers to getting the unemployed back to work to any job as soon as possible, and not looking at the long-term benefits.

Do you think it may be better to have them take part in skills development programs that prepare them for college or apprenticeship programs? What do you say about this sort of, as you mentioned, basic skills prerequisite training leading on to what I would call apprenticeships and other more skilled training?

[Cammie Peirce]

When we have people who are unemployed who have been working for a long time in the fields, they're not necessarily up to date when it comes to things like computers. If they've come into a job right out of high school, certainly they're going to be lacking in skills and it's going to be difficult for them to walk into those programs.

Initially, when we worked with people who had lost their jobs, they were not able to access training because they were not able to transition right into any of the approved training programs. So we were fortunate to be able to work with the Ontario MTCU, and it had some flexibility. We did establish some training programs that gave people the ability to have the skills they were going to need to go into these programs that were going to give them diplomas or certification. That actually gave them also the skills they needed to be able to transition from working to school. There is a bit of a transition there to writing a test from not having been in school.

So those were successful and those people were successful because not only did they have the actual skills, but they had the confidence. I think that's very important, especially when our goal is to be successful.

[Jinny Sims, NDP, Newton—North Delta, BC]

Thank you.

How am I doing for time?

[The Chair, Conservative, Phil McColeman]

You have about 10 seconds.

[Jinny Sims, NDP, Newton—North Delta, BC]

Okay, I'll wait for the next round.

[The Chair, Conservative, Phil McColeman]

Thank you very much.

Mrs. McLeod, you have five minutes.

[Cathy McLeod, Conservative, Kamloops—Thompson—Cariboo, BC]

Thank you, Mr. Chair.

Thank you to both the witnesses.

I guess I have a bit of a preamble. I think it's important to not look at the LMDA as being the catch-all for all our issues around employment. I think we need to really try to focus a little bit, and I do worry about that.

I just went on to the Canada Benefits website. It's a fantastic website. If you go to it, you can see that there are opportunities through the youth employment strategy program, through targeted initiatives for older workers, through the LMA, through ASETS, and through some programs that the provinces run. I guess I just don't believe that the function of the LMDA is to be a catch-all.

I also think we need to remember the goals. People talk about this EI surplus and I think we have to remember that the goal is that this is balanced over seven years. We had a number of years where there was a significant deficit in the last while, so again, to talk about it as a surplus I think is a bit of a red herring because we know the goal is over seven years.

I'm going to focus in, first of all, on the Canadian Federation of Independent Business. I was on the Red Tape Reduction Commission. Hopefully that's going to go lower and lower because I think there was some nice work done there. I see on page 4 it's down a little bit, I hope.

As to the shortage of qualified labour, I want to dig into that because that's been a bit of a debate in the House. Is there a shortage; is there not a shortage? The minister regularly and often says there's not a general shortage, but we certainly have shortages in specific sectors and in specific regions. Could you talk a little bit more about that and how the LMDA, especially as it might relate to mobility, might be able to support...?

[Monique Moreau]

Certainly.

We do know there are job vacancy rates and shortages of qualified labour all across the country. From our business owners we are hearing that they are struggling to find workers in all regions. It's not just the typical western Canada success stories that we're hearing. It is also in areas of the country, in Atlantic Canada and in central Canada. We do believe there is a labour shortage. We're hearing that from our membership, from the small and medium-sized enterprise community telling us that.

With respect to using LMDA funds, I appreciate your comments. I think it's something we're trying to stuff a lot of programming into. When you actually talk to a small business owner they don't say, “Oh, yes. My employee is succeeding because they went to an LMDA-funded program, that led them to a provincial training program, that led them to me.” They're just pleased to have someone walk through their doors, who they need to then train. That's the key piece here. Training programs are important, and we support the literacy skills and some of the other programs for training for Canadians.

As our data shows, there is a significant amount of training that takes place on the job, regardless of what background or education you bring with you when you arrive at that position. It's important to think about that component.

In terms of mobility, it's a struggle in this country. The country is vast. When we're asking individuals to move across the country—a welder from Saskatchewan to move to Nova Scotia to take a position there—we don't necessarily see that kind of mobility happening in our country. I think that's why we have shortages across the country as we do.

[Cathy McLeod, Conservative, Kamloops—Thompson—Cariboo, BC]

You're talking about the on-the-job training and the cost. Can you talk a little bit about the new hire with experience versus the new hire with no experience? What kind of training is required for that new hire with no experience?

I know you represent such a wide sector, but can you talk a little bit about what the employer is needing to do? Is it strictly orientation activities or is it certificate activities? Is it more comprehensive than...?

[Monique Moreau]

I could spend all day speaking to that, per sector.

I think generally it is the kind of training that is involved in orientation. It can be very specific training depending on the sector or the kind of business that you're in. It can be also the kind of investment involved with training apprentices. That is a provincial issue, so I won't delve into it in great detail. Not all provinces are up to speed in terms of the amount of journeymen and women who need to supervise an apprentice. In some provinces it's three to one. That's a big cost involved in having three journeypersons monitoring and approving the work of an apprentice, so it really does span the sector.