Human Resources Committee on June 8th, 2006

[The Chair, Conservative, Dean Allison]

I call this meeting to order.

I want to thank the witnesses for being here on time and ready to go. I know that we have a few member who will be coming in as we get started.

Before we get started, pursuant to Standing Order 108(2), the Standing Committee on Human Resources, Social Development and the Status of Persons with Disabilities continues this morning with the study on employability in Canada. I believe we have some witnesses from the Department of Human Resources and Social Development.

I will let you begin. Once again, thank you for being here this morning.

[Andrew Treusch, Assistant Deputy Minister, Strategic Policy and Planning, Department of Human Resources and Social Development]

Thank you very much, Mr. Chairman. Good morning to you and to all members of the committee.

My name is Andrew Treusch, and I'm representing the Department of Human Resources and Social Development. I'm accompanied by colleagues: Ms. Donna Kirby, Mr. Peter Larose, Mr. John Atherton, Ms. Barbara Glover, and Monsieur Sylvain Segard. It's a very great pleasure to be here.

I will situate us. This is the second of our presentations to you as a committee. In the first, on June 1, our delegation was led by Ms. Karen Jackson and a number of officials. She gave you an overview on human capital development, as well as information on skilled worker shortages, labour mobility, and recognition of foreign credentials.

Today we will continue our presentations. You should have with you four sets of information related to seasonal workers, older workers, adjustment, and workplace literacy.

Once again, we have provided documentation on these issues in both official languages, with a focus on facts and research which may be of interest.

In addition, I would like to assure you that we are in the process of providing written responses to the questions asked of us at the previous session. Three information requests were made of us: first, about differences in access to post-secondary education for persons residing in rural and urban areas; second, about the cost to doctors of credential assessment; and third, about the relationship between EI and mobility.

On this last, I have familiarized myself with three or four studies and would be happy to answer a question in that regard today, pending the formal written response to the committee. This information will be provided to the clerk within the next few days, along with any other responses to the questions you may put to us today.

Previously we spoke to you about the drivers for change and their impact on the labour market. I want to expand on those, with a brief depiction of how we see the Canadian economy and the labour market adjusting to external pressures, as well as to changes here at home. This process is quite relevant to the challenges, as we see them, that relate to the employment issues you've raised with us: seasonal and older workers, as well as the issues of literacy in the workplace.

Now, it is worth restating that Canada's economy and labour market are performing very well. Not only are our macroeconomic indicators strong, but Canada's participation rate of 67.2%, in April of this year, is exceptional by historic and international standards, as is our unemployment rate of 6.4%.

However good our performance is, there are always difficulties and changes we must face if we intend to maintain or even improve this performance. The main factors at play are an aging population, the commodities boom, the rising dollar, globalization and an increasingly competitive environment as well as an ongoing transition towards a knowledge-based economy.

Responding to these drivers will be important to achieve both social and economic objectives and will require that we focus increased attention on increasing labour market participation through better recognition of immigrant credentials and by removing barriers to work; improving skills and promoting lifelong learning, including increased opportunity for adult re-skilling; increasing labour market efficiency and flexibility by reducing barriers to mobility and improving the flow of labour market information; reducing economic security, so individuals are better able to manage these transitions; and finally, supporting adjustment processes for individual sectors and communities to adapt to these changing economic realities.

In terms of the decks, I do not propose to present them to the committee today, due to their length, but I will highlight a few features of each.

With respect to labour market adjustment, first,

The Canadian economy is constantly changing. These changes are inevitable and crucial to both growth and prosperity. In order to adapt, we simply intend to shift the focus of our resources from less productive activities to more productive sectors.

Over the years, our economy has undergone a huge structural change, having shifted its focus, to a certain extent, from the manufactured goods industry to the service industry. These changes have led to the sudden arrival, and departure, of a large number of employees, and have created both opportunities and obstacles as the markets attempt to balance supply and demand.

Canada does well on adjustment. International organizations such as the Organisation for Economic Co-operation and Development attest to it, as does the International Monetary Fund, which rates our capacity for adjustment as high.

That means, for the most part, individuals make successful transitions as firms expand or decline and this economy changes. Well-functioning markets and a national pool of skilled, mobile workers contribute to reducing the imbalances in supply and demand experienced in some sectors and regions.

Nevertheless, more must be done. Skill shortages in growing regions and sectors reflect strong national and regional economies, combined with slower labour force growth and rising skill requirements. These upside adjustment challenges have the potential, if not addressed, to limit Canada's growth, if firms cannot find the workers and the other resources to expand and meet labour market demand.

So this structural evolution has a differential impact on the adaptation of individuals, communities, firms and sectors. Older workers, for example, while doing well overall, do take longer in general to find employment than younger Canadians, to return to work once they experience unemployment.

The issue of seasonal workers also illustrates some of the dynamics of adjustment and both the challenges and opportunities. With respect to seasonal workers, the seasonality of the Canadian economy has gradually diminished over the years, reflecting a decline in seasonal primary industries; technological advances; and the falling share of youth in the labour force, who traditionally rely on seasonal employment as a primary source of income.

Some regions are more seasonal than others, particularly Atlantic Canada, but seasonal employment is present in all regions across Canada. In fact, over half of seasonal workers are located in Ontario and Quebec. They represent a higher proportion of the workforce in Atlantic Canada due to the concentration of seasonal industries there.

For some individuals, seasonal work is welcome. It supports their preference for other activities, such as providing temporary opportunities for individuals to gain valuable work experience--such as students--or in certain regions, allowing residents to remain in their communities. However, for others, recurring seasonal employment may create challenges. For example, workers in undiversified remote communities are less likely to find alternate employment opportunities in the off-season, due to the nature of their employment.

With respect to older workers, Canada's population structure is changing; population aging is accelerating. The share of the population age 65 and over is forecast to expand rapidly in the coming decades, and this expected increase will be most pronounced in the Atlantic provinces and Quebec. Aging brings forth a number of challenges in a Canadian context. Its most significant effect for us is on future labour supply growth. Slower labour force growth can lead to a slowdown in economic growth rates and in the growth of our living standards. As a result, among other populations, it's notable that older workers--and here I'm speaking of workers between the ages of 55 and 64--will be an increasingly important source of experienced labour.

As the population in the Atlantic and Quebec regions is aging more rapidly and is saddled with, on average, a lower labour force participation rate, aging will be even more detrimental to labour supply.

As the population ages, older workers are becoming an increasingly important part of the workforce but continue to face barriers to remain in, and return to, employment--issues such as the currency of their skills, literacy, and other essential skills.

I will mention that I have brought with me today the 2005 report on Canada's aging and employment policies, a report of the OECD, which I would be very pleased to leave with the clerk of the committee. It provides both a review of Canada's performance in an international context and some recommendations that may be of interest to committee members.

In closing, I would now like to conclude with a brief reference to workplace literacy. It is clear that the Canadian workforce needs to be highly skilled and adaptable to compete in this global economy, and a foundation for skills development surely is literacy and numeracy and a propensity to lifelong learning.

In a knowledge economy, the labour market not only requires superior skills, but also constant upgrading and regearing of acquired skills. Better literacy promotes learning, makes transitions smoother and helps workers adapt more easily to changing professional demands.

There is a convergence of change both in our economy and society, this shift towards a knowledge-based economy combined with a low incidence in Canada of workplace training, which is resulting in some significant changes. And you will find much more data on the incidence of our literacy issue by sector, by region, by age, and by other factors in the deck that we've made available you.

I thank you for your indulgence, Mr. Chair, in hearing me thus far.

We would be glad to answer your questions.

[The Chair, Conservative, Dean Allison]

Thank you.

We'll start our first round of questioning, which will be seven minutes.

Mr. D'Amours.

[Jean-Claude D'Amours, Liberal, Madawaska—Restigouche, NB]

Thank you very much, Mr. Chairman.

Thank you for your presentation, Mr. Treusch. I'd like to broach a number of the issues you raised.

First, on page 2 of your brief concerning seasonal workers—or perhaps we should refer rather to seasonal work—you said that in many Nordic countries, seasonal work is a key component of the labour market.

That is interesting. Maybe that means we can finally recognize the work these people do across various industries throughout Canada whether it be in the building, farming, fisheries or tourism industry. As far as the fishery and agricultural sector is concerned, obviously we're not going to grow potatoes right in the downtown core of Toronto. Clearly, we need rural regions, where seasonal work is common place, so that we can provide these goods.

I'd like to focus on two points related to seasonal work and labour in general. First, as you know, I tabled a private member's bill so that people entitled to employment insurance benefits will no longer have to wait two weeks. We all know that the waiting period sometimes exceed two weeks. It can stretch out to four, five, six, seven and even eight weeks before a person in need gets his first cheque. This is unacceptable, in my opinion.

Some of us may be able to afford to wait two months before getting a pay cheque while still paying for groceries, the telephone and electricity bills, and their mortgage. But I'm not convinced that someone who losses his job has enough money in the bank to go two months without an income.

This is no longer the 1930s where you could go to the general store and buy material and food on credit. From what I understand the rationale behind the two-week waiting period, in the past, very little, if at all anything, was computerized. All the calculations had to be done more or less manually. In our days, all you have to do is push a button to know somebody's entire history.

I'd like you to comment on the scrapping of the waiting period. This would be an acknowledgement of peoples' needs. If someone is going to get employment insurance benefits for 26 weeks, he or she should at least be able to get a first cheque a few days after visiting an employment centre. The person may not receive the entire amount immediately, but at least it would help to pay the bills. You can't escape it, somebody has to buy food. And I don't think anybody here is about to offer to pay a needy person's bills. We need to find a way of helping such people, and one way of doing this would be for the government to be more flexible.

Could you comment on this.

[Andrew Treusch]

Thank you, Mr. Chair.

I think the member raises two issues. One is the incidence and nature of seasonal work in the Canadian economy in reference to Nordic countries. Certainly while Canada has still a fair bit of seasonal work, it clearly does relate to our northern geography, our climate. It also relates to the continued importance of natural resources extraction in the economy, and it does relate to rural and remote populations. So I essentially agree with that.

You'll note in the deck, however--and it's actually quite important to remind ourselves of this--on page 5, that over half of seasonal workers are in fact in the service industry, and some of these as well, if you think of things like tourism, also have a summer coincidence. There is perhaps a broader set of seasonal work than is often thought to be the case, and it's important to remember as well that a large number of these people are students, although different data sets have given different estimates there.

On the second point regarding the two-week waiting period, it would seem to be a policy issue that the member is raising. He's made reference to a private member's bill, and so I assume our members of Parliament will debate that and will put their arguments accordingly.

In the term “employment insurance program”, the second word I would focus on is “insurance”. We tried to preserve some of its insurance features. It's not inconsistent with an insurance program to have a short waiting period. It does then presumably protect the program against very short-term churn, where you might have people trying to apply and going through the administration, for periods that were shorter than that. One should remember as well that in those circumstances, depending upon the nature of the employment, sometimes severance is available for the individuals themselves, although this is probably less likely with respect to seasonal work.

So this is something that obviously we will be looking at insofar as it arises in your private member's bill.

[Jean-Claude D'Amours, Liberal, Madawaska—Restigouche, NB]

I know I only have a minute left, but tell me if I'm right.

When SARS broke out in the Toronto region, people who qualified for employment insurance benefits didn't have to wait two weeks before getting a cheque. If it's good for some, why not for others?

People living in the Atlantic regions where there is a lot of seasonal work know that there will be job losses, but they don't know when exactly. It usually depends on the weather. So if it's good for the goose, why not for the gander? What's the good of having a principle if it is not applied evenly? If this was the case, it was because people realized there was a need. If there's a need, why not apply this principle to every region in Canada and not only to a particular group in a particular situation?

[Andrew Treusch]

Mr. Atherton, from employment programs, will respond.

[John Atherton, Director General, Active Employment Measures, Department of Human Resources and Social Development]

I would suggest that the situation with SARS was a very specific and very rare occurrence. It was judged to be a national medical emergency. And the people in question were not yet sick, but it was feared that they might be sick as a result of contact with SARS, and so in an effort to get people out of the workplace and let them leave the workplace as quickly as possible, there was a deferral of the two-week waiting period in that case.

In my memory, it was the only time in which this has happened, and it surrounded a medical emergency of quite serious proportions, so I would put that on the table.

[The Chair, Conservative, Dean Allison]

Thank you.

We'll move to our next questioner.

Mr. Lessard, seven minutes, please.

[Yves Lessard, Bloc, Chambly—Borduas, QC]

Thank you, Mr. Chairman. I'd like to thank you, Mr. Treusch, for your presentation. I'd also like to thank your colleagues for being here today and providing us with this information.

When you described the lay of the land, you said that currently the economy is at an all-time high in terms of profitability and performance. You're responsible for social programs which also help people in tough times. One need only think of employment insurance, skills development, literacy, and so on and so forth.

Maybe you can clarify this for me, but I'm always surprised that there is such a heavy focus in most presentations on economic performance and far less emphasis placed on the harsh realities of unemployment, housing, training and employment. Let me use poverty, by way of example. We were told again recently that there are fewer poor people for the very reason that the economy is doing well. At the same time, we see the poor getting poorer. One indicator clearly demonstrates this: food banks are increasingly in demand. Representatives from the Canadian Association of Food Banks told us last year that in Canada, 850,000 people, including 250,000 children, got food from food banks. This year, the figure jumped higher. We were told recently there were 317,000 children. This brings me to my question. I gave you that little outline so my question would be clear.

To what degree does this issue concern you? Do you spend much time thinking about the plight in which those that lose their jobs find themselves in?

I believe that the fact unemployment insurance is not very accessible contributes to making families poorer. I'd like to hear your comments on the two aspects I just referred to, namely the real plight of the poor and particularly the impact of employment insurance on their situation.

[Andrew Treusch]

Thank you. It is a very challenging question from the member, Mr. Chair.

First, if I may just quibble a bit, I don't think I said that the Canadian economy is at full capacity or is going gangbusters. The message I meant to relay is that, compared to many other industrialized countries, the Canadian economy and the labour market in particular are performing very well. Looking backwards over a long series of years, the Canadian economy and the labour market have never performed better.

This is not to say that we do not have problems, serious challenges for individuals, for communities, for regions. And indeed, we would not be coming with information on some of these challenges of adjustment, seasonal work, and older workers if we didn't think there were serious policy challenges withstanding.

I do agree as well with the minister, of course, that if there were simply no problems, then perhaps the department could shut its doors and there would be little need for much of our programming. Our programming obviously exists, along with provincial programming, to support individuals through these transitions, whether it's access to post-secondary education, whether it's training opportunities, or whether it's income support for people who lose their employment through no fault of their own.

Poverty is a very large subject. There is a tendency in many countries where disparities in market income have been widening. Canada is not alone. This really attaches great importance to the social safety net, not only to programs like employment assistance, but also to provincial social assistance regimes. So when you make reference to food banks and the like, you really have to look, I think, at the workings of employment insurance, social assistance, as well as the influence of the tax system there.

Obviously we have concerns about people who lose their jobs. That's the very raison d'être for employment insurance and for employment measures themselves, the part II programs, where funds are revealed to be available and either we co-manage them with provinces or, in many instances, provinces deliver those services as well.

I would just point out in closing that the tax system is not unimportant here. While I'm not an authority, in terms of some of these individuals and the hardships you refer to there are a couple of features of the last budget. Both the employment tax credit, which supports employment, and the working income tax benefit set out...there's a proposal that can be an additional inducement to support people in making the transition into the labour market.

[The Chair, Conservative, Dean Allison]

You have one minute, Monsieur Lessard.

[Yves Lessard, Bloc, Chambly—Borduas, QC]

You're right to say that sometimes comparing and contrasting what goes on elsewhere helps to give us a better understanding of where we are at.

Let's consider what goes on in Nordic countries—because as you so correctly pointed out, we are a Nordic country—like Norway, Finland and Sweden. Clearly, they have far more generous employment insurance programs, as far as access and number of weeks are concerned, than Canada, which is nevertheless a developed, industrialized country. Have you conducted a study on this? Why should we be maintaining a more restrictive employment insurance program, from the unemployed's point of view, than these Nordic countries?

[The Chair, Conservative, Dean Allison]

Let's have just a quick answer, and then we'll move on.

[Andrew Treusch]

My quick answer, Mr. Chair—I understand the time—is to make reference to two things: the monitoring and assessment report that we publish annually on employment insurance, and its coverage. There's much more information there than I can take the time of members to give today.

[The Chair, Conservative, Dean Allison]

We're going to move on to our next questioner.

Madame Savoie, you'll have seven minutes, please.

[Denise Savoie, NDP, Victoria, BC]

Thank you. I'm pleased to join the committee as training and post-secondary education critic.

I'd like to continue with another question on employment insurance. We know that the eligibility criteria were tightened in the 1990s. What percentage of employment insurance revenue is used on training?

[John Atherton]

If you will just give me a minute, I'll give you the actual statistic. I know that $2.1 billion a year is spent on active employment measures.

[Denise Savoie, NDP, Victoria, BC]

By comparison with...? What's the total?

[John Atherton]

It's by comparison with the total revenues that are collected with premiums. I'm not an expert on the premium side, so I need to find that number.

[Denise Savoie, NDP, Victoria, BC]

I can move on to my other question and we can come back to this later.

[Andrew Treusch]

We will have these numbers here.

[Denise Savoie, NDP, Victoria, BC]

Good.

You also talked about how important a skilled labour force is to our economic growth. We know studies show that the further back the worker's initial training was, at high school notably, the worse his or her literacy is. I was wondering if you could comment on Canada's private sector's role in training workers as compared to other countries. Nordic countries were referred to, for example. Can you comment on this?

[Andrew Treusch]

Thank you for the question.

Again, we can make some studies available on this, but I think I can, with confidence, think of two or three studies on private sector or workplace training. One of the most recent, I believe, was by the Conference Board. These suggest that in Canada we tend to have less workplace training than other countries. I think our performance has improved somewhat in recent years, but it still does not place Canada in step.

It's probable that some of this relates to the structure of our economy, both the sectoral composition as well as the fact that Canada has a great deal of small and medium-sized enterprises, which obviously have less capacity to offer workplace training.

The second phenomenon about workplace training that is troublesome--and I believe it's referenced in one of these decks here--is that it seems that people who are already well educated and already in a relatively strong employment situation are more likely to receive workplace training than those in more vulnerable jobs or those who have lower levels of education.

One of the thrusts of our workplace strategy is to promote essential skills in the workplace. If you've had a chance to peruse the deck, you'll see it's quite striking that there are about 9 million Canadians of labour force age who do not have the requisite level three in literacy and numeracy that they will require to succeed in the knowledge-based economy. One of the strategies the department has is to promote literacy and numeracy, what we call essential skills that employers are looking for in the workplace, and we're making some efforts in that regard.

[Denise Savoie, NDP, Victoria, BC]

I understand that level of literacy has not changed in approximately 10 years, which is a very disturbing trend. I assume that as part of this employability study we will look to policies that can both help remedy this very serious problem to Canada's competitiveness and help us move forward.

Do we have any way of identifying the level of underemployment? I was a city councillor for the city I lived in, and I met with a number of people who were barely making it in the economy, housing costs being so expensive. Judging from our discussions, they seemed radically underemployed, given their potential. I'm wondering if we have any way of assessing that, if you could comment on that.

And then I'd like to get the answer that I see John has.