Finance Committee on April 25th, 2013

[Dr. Robin Boadway]

Clearly, at the bottom end of the skill distribution, that's the case. People who are not eligible for EI or who have exhausted their benefits and go on provincial welfare are noticeably worse off than other people in society. Those people are the ones who are the provincial responsibility at the moment.

[The Chair, Conservative, James Rajotte]

Okay, thank you.

Thank you, Mr. Brison.

Mr. Hoback.

[Randy Hoback, Conservative, Prince Albert, SK]

Thank you, Chair.

Mr. Lee, I really appreciate your testimony and how you gave your own personal experience about growing up and getting through it. When I listened to it, it kind of reminded me of some similarities to my own situation. There was one time in your life when you realized that there was more to this, and then you got a job, and you got a job with a company where you had the ability to go on with continuing education. I had the same thing. I got into a company that encouraged education, whether it was formal education through university or something else.

What we did in this last budget with the skills training grant of $5,000-$5,000-$5,000, do you feel that is one of those things that will encourage more employers to proceed with that skills training and the education for the skilled jobs we need right now?

[Dr. Ian Lee]

I was in the budget lock-up all day, like everyone else. They won't let you out before four o'clock. That was the part that captured my attention in the budget lock-up. I believe in retraining, both formally through post-secondary, and training delivered by companies.

We have been criticizing elected officials like you. Academics and NGOs have been criticizing what we've been doing in Canada for as long as I can remember, literally for entire my adult life, the last 40 years. I thought for a long time that one of the flaws was that it was top-down rather than bottom-up, and that it was driven by people in Ottawa or Toronto. There is nothing wrong with people in Ottawa or Toronto—I'm from here—but they don't understand what's going on in a small town in the Maritimes.

To respond to your question, the proposals in the budget brought the business employer into the game. They have to put skin in the game, so to speak, so that now it's a tripartite sharing between federal, provincial, and the employer working with the employee. But I think the driving force under the new policy is going to be the employer and the employee. The employee has to be involved, because he or she has to buy in and be committed to the retraining. That's why I was very strongly supportive of that proposal in the budget.

[Randy Hoback, Conservative, Prince Albert, SK]

Obviously, as you progressed in your career, you took your training and finished your university degree 10 years later. I give you credit for going through and having the perseverance.

What I find interesting right now is that there always seems to be this thought process that when you get to grade 12, hey, you're done school. There's no more training. There's no more need to learn anything else beyond that.

That's probably one of the biggest lies out there right now.

[Dr. Ian Lee]

I agree.

[Randy Hoback, Conservative, Prince Albert, SK]

I think there's always training going on.

How do we change that perception within the education system from a federal level—because that is controlled by the provincial level—so that we actually see that endorsement of ongoing lifelong learning, ongoing lifelong training, so that it becomes part of our culture?

[Dr. Ian Lee]

I'm not sure what the federal government can do. I mean, at the provincial level it is changing. You can see it in the statistics. That is to say, the dropout rate has been steadily declining over the past 10 to 15 years. The participation rate has been climbing for those who attend college and university and trades.

So I think there are changes going on, but I don't think it's fast enough, because we're in a much different economy than even 30 years ago or 20 years ago. It's much more sophisticated. Grade 12 is just simply completely inadequate.

I tell my own students, if you don't go on to college or university or trades, you'll be in the bottom two quintiles, I think, for the rest of your life. The data is very clear. In the slides I've provided to the committee, you will see the data. It is StatsCan data.

[Randy Hoback, Conservative, Prince Albert, SK]

Do you think we have enough...? From talking to some of the younger people in our economy, I guess one of the concerns from Saskatchewan is the actual opportunity to get into these courses.

I'll use the example of an electricians course in Prince Albert. For the longest period, up to actually three weeks ago, they could get to a certain level of journeyman's status, and then they had to go to Moose Jaw or somewhere else. There was always a bottleneck there, and not enough spots. We opened up more spots in Prince Albert so that they could do it in Prince Albert.

Do you think we need to see more provincial spending in that area so that there's actually not just the opportunity from the employer for the employee to go on and take that training, but actual spots in the skills that are required?

[The Chair, Conservative, James Rajotte]

You have one minute.

[Dr. Ian Lee]

I'll be very quick.

I don't have that data at my fingertips, but I certainly have spoken to a lot of employers and individuals who have expressed great frustration.

I think we do a fairly good job, notwithstanding Professor Boadway's comments, at universities, but the colleges have been the poor sisters, as have the training programs we've established. Not everybody is going to go to university. Only 20% of Canadian adults go to university. That means 80% don't. This means we have to get them into college, I think, or into trades.

[Randy Hoback, Conservative, Prince Albert, SK]

Okay.

Just quickly, Mr. Holden, you kind of made reference to the difference between using statistics in terms of percentages versus real dollars. You used one example of a 10% increase. Could you just highlight how that impact can actually distort numbers?

[The Chair, Conservative, James Rajotte]

Can we get a very brief response, Mr. Holden?

[Randy Hoback, Conservative, Prince Albert, SK]

If we don't have time, you can make a written response, too, Mr. Holden.

[Michael Holden]

Sure.

Well, in terms of the 10% increase, I wanted to highlight the fact that a lot of the time, if you have somebody at a low-income level and a high-income level and they both increase by the same amount, you end up changing just the size of the number that you're talking about, rather than the level of inequality between the two.

That was the point I was trying to highlight there.

[The Chair, Conservative, James Rajotte]

Thank you, Mr. Hoback.

Mr. Caron, you have five minutes.

[Guy Caron, NDP, Rimouski-Neigette—Témiscouata—Les Basques, QC]

Thank you very much, Mr. Chair.

Since we started this study, we have heard a lot about education and training of the workforce. I expect that to continue until the end of the study. I don't think anyone on our committee or even in the House will deny that those are extremely important aspects for greater equality for opportunities. However, although Mr. Boadway and Mr. Wilkinson spoke about it a bit, we have always minimized one aspect, and that is restructuring the economy and the impact it has.

Mr. Holden, you gave figures and simplified examples. I understood, but I would like you to provide more information. Since 1990, Canada's GDP has increased in real terms from about 60% to 80%, while actual salaries have stagnated. So revenue from growth has not been from salaries, but rather from capital. We acknowledge that people in the last two quintiles have, at least, very little revenue from capital. Is that not an example of the current systematic problem that leads to income inequality?

[Michael Holden]

The question of the factors that have been contributing to inequality were discussed by Professor Boadway I think very well—i.e., that things like technological change, the move of manufacturing overseas, and the loss of manufacturing employment have contributed to that problem.

On the increase in salaries, it's true that salaries have not increased to the same extent that the GDP has over the years. There has been some increase recently. There was a substantial decrease in the early 1990s, in particular, in incomes across Canada. We spent most of the rest of the decade and into the 2000s catching up on average for the entire economy.

I think one of the things that happened at the same time was that there became, over that same time period, an increase in the premium of particular types of skilled labour. Through technological change and other factors, these skilled jobs became much more valuable to our economy, and so we saw a polarization over that period.

[Guy Caron, NDP, Rimouski-Neigette—Témiscouata—Les Basques, QC]

Would you say that the federal government made a mistake when it began to record the restructuring of the economy that came from the effects of globalization? In fact, should we have transition and direct assistance programs for workers who were victims of that restructuring because they were forced to change industry and who might, for example, need workforce training programs to renew their skills and capacities?

One of the problems we had, for example, with markets opening up from NAFTA and other free-trade agreements was the fact that there were very few concrete measures for workers who were going to be displaced because our manufacturing sector was going to weaken.

[Michael Holden]

The difficulty, I think, is that it's easy to look at these things with 20/20 hindsight. The move to free trade, I think most people would agree, has benefited Canada on the whole. There have been industries that have shut down. There have been other industries that have prospered as a result, and in some cases what happened was unpredictable. The big example, in the late eighties when free trade with the United States was coming in was that we thought our wine industry was going to be decimated and it would no longer exist. That turned out not to be the case.

I think at the time these kinds of transition programs are being developed, it's difficult to predict what the needs are going to be.

[Guy Caron, NDP, Rimouski-Neigette—Témiscouata—Les Basques, QC]

I would like to give Mr. Muzyka and Mr. Boadway an opportunity to respond.

Mr. Muzyka, what do you think?

[Dr. Daniel Muzyka]

I think there are a couple of things in here that are important. You've heard the word “globalization” in terms of the income shifts, but technology is also a huge force that impacts that middle class, in which the value of the information and consolidation skills has become lower. Technology replaced a lot of those. We did actually see that the average income level—I'm just reading this—of the lowest-income group in Canada, after taxes, transfers, and inflation adjustments, rose from $12,600 in 1976 to $14,600 in 2010. That's in 1976 dollars.

I think the bigger impact is because of technology, in some ways, hitting that middle class group.

[Guy Caron, NDP, Rimouski-Neigette—Témiscouata—Les Basques, QC]

To wrap up, I would like to give Mr. Boadway a chance to respond, as well.

[The Chair, Conservative, James Rajotte]

Very briefly.

[Dr. Robin Boadway]

I'll just make one comment about training. One ought to distinguish in the training debate between training of new workers coming into the labour force and retraining of workers who have lost their jobs through layoffs or technological shock or whatever, a lot of which happened in the 1990s and the early 2000s.

The evidence on retraining of people who have lost their jobs and have come into the workforce is mixed. People find jobs through training, but they very rarely recoup the wage level they had before the job loss took place, and I think that's where the tax-transfer type of redistributed systems are really quite important.