Thank you.
I'm very pleased to appear before you today, for the first time, on behalf of Restaurants Canada. As Chair Rajotte mentioned, I've represented the industry many times before this committee with the Canadian Restaurant and Foodservices Association,or CRFA, and we're very excited to have a new look and new name. We still represent one of the largest sectors of the Canadian economy with $68 billion in sales and over 1.1 million employees. That's more than fishing, forestry, utilities, mining, and agriculture combined. An additional 257,000 people are indirectly employed as suppliers to the industry. Our 30,000 Restaurants Canada members include independents and chains in full-service and quick-service restaurants, caterers, pubs, and institutional food service providers in schools, hospitals, and other institutions.
Restaurants provide more first jobs than any other industry; 22% of Canadians got their career start in the food service business. No other industry helps more students to pay their way through school, or works with more young people to develop valuable job skills. Canada's restaurants currently employ nearly 488,000 young people under the age of 25; that's one in five youth jobs. Restaurants are a great training ground for all careers. These jobs teach the soft skills valued by employers that may be more important to a young person's career and working life over the long term than some occupational skills, things like dependability, communication, personal responsibility, teamwork, as well as problem solving and creative thinking. Our industry provides that all-important first step on the career ladder for thousands of Canadians.
According to a recent Statistics Canada study entitled “Unemployment Dynamics among Canada's Youth”, a significant proportion of unemployed youth are people entering the labour market for the first time, most often after having completed their education. These young people have never worked and most often experience a period of unemployment of varying duration before finding a first job. In 2012, more than 28% of unemployed young people between the ages of 15 and 24 were youth who had never worked. The point is that you cannot underestimate the resumé-building experience that jobs in the restaurant industry provide. Youth who gain work experience while studying are more likely to find employment, whether it is in another field or advancement in my sector. There are many career paths in the restaurant industry, from chefs to accounts to owners to CEOs.
So how do we improve youth employment outcomes? I have a couple of recommendations. Restaurants Canada members have consistently identified payroll taxes as an obstacle to job creation because they are a tax on jobs, but they are also the most regressive form of taxation. Those individuals at the lowest end of the payroll scale pay the highest amount proportionately. Young people under the age of 25 make up a high percentage of low-earning Canadians. This is because they tend to receive lower wages until they have built up work experience and skills. In addition, they often prefer flexible arrangements, such as part-time shifts, as they balance their work and education.
Young people under the age of 25 are the most vulnerable to the vagaries of high payroll taxes. They are the most likely to get passed over for jobs and suffer an above-average share of job losses. The regressive nature of payroll taxes contributes to their woes by providing a disincentive to hire them because the tax rate, compared to their wages, is disproportionately high. Canadian youth suffer from an unemployment rate that is consistently more than twice as high as the adult unemployment rate. In February 2014, it was 13.6% compared to 5.9% for those over 25.
As a result, Restaurants Canada proposes a youth new hires program to replace the hiring credit for small businesses that was in place in 2011, 2012, and 2013. This would mean that employers could receive an EI premium tax credit for the payroll of new hires, 25 years of age and under, when measured against their payroll for youth in the previous year. A more long-term solution would be a year's basic exemption in the employment insurance program, modelled after the year's basic exemption in the CPP program. It is a cost-effective way to provide targeted payroll tax relief to the groups most punished by this form of taxation: entry-level workers and labour-intensive businesses. At the same time, universal application makes it fair and easy to administer.
The YBE refers to the annual earnings level in which premiums are not applied, and could be in the range of $2,000 to $3,000. The timing for the introduction of a YBE is excellent since the EI fund is scheduled to be in surplus by 2015. It would assist employers in expanding payroll to provide more young people with entry-level positions and retain them in these jobs.
To conclude, restaurant jobs are often portrayed as being inferior or less valuable to society than other jobs are, when in fact they provide long-term career opportunities and a springboard to careers in other fields.
I have two United Way ads here. We need policies that reflect this vision of the restaurant industry and not this other vision. I'm going to pass these ads around.
If you see our jobs as a training ground and a gateway to opportunity, please consider our recommendations for modifications to the EI program.