Human Resources Committee on Oct. 22nd, 2009

[The Chair, Conservative, Dean Allison]

Pursuant to the order of reference of Tuesday, September 29, 2009, Bill C-50, An Act to amend the Employment Insurance Act and to increase benefits is what we're discussing today.

I want to thank all our witnesses, who on short notice have taken time out of their busy schedules to be here. We really appreciate that because we're sure you had to move some things around.

We're going to start with your testimony, and I'm going to start with Mr. Schumann and continue down the list, for seven minutes each. I'll give you a one-minute warning by waving my hand to give you an idea of the time left. For the information of those of you who haven't been here before, we'll then have two rounds of questions, a seven-minute round and then a five-minute round, and there may even be a few statements during those times as well.

We'll get started with Steve Schumann from the International Union of Operating Engineers.

Sir, the floor is yours for seven minutes.

[Steven Schumann, Director, Canadian Government Affairs, International Union of Operating Engineers, Local 793]

Thank you.

Good afternoon, and thank you for the opportunity to appear before the committee today to discuss and share some concerns around the bill.

My name is Steven Schumann. I am the government affairs director for the International Union of Operating Engineers, or IUOE, for short. We are a progressive and diversified trade union. We represent workers in a wide variety of occupational categories. Our members help to build Canada's infrastructure, and they are involved in the production of Canada's resources and the delivery of critical health care and community services. We have been in existence since 1896.

Currently in Canada we have over 45,000 members, with representation in every province and territory through our 20 locals. We also have eight state-of-the-art training centres that develop and deliver heavy equipment operator training and a wide range of construction safety courses catering to the present and future needs of the construction industry. Many of our training centres deliver the provincial training programs for our trades.

Construction workers represent the largest share of our membership, around 30,000 members. They operate tower and mobile cranes. They operate heavy machinery, like bulldozers, graders, and backhoes. They are the mechanics and surveyors who work on the construction sites. They are the first to a job site and the last to leave. They work for commercial construction companies and civil and industrial contractors. They build roads, bridges, schools, hospitals, pipelines, and oil refineries, just to name a few. Our members shape the infrastructure and the skylines of Canada.

We strongly believe it is important to work with our employers, other building trade unions, and all levels of government to ensure Canadians are provided with the best opportunities to work and provide for their families.

Since this legislation will provide additional benefits to many Canadians, including some of our members, we support Bill C-50 even though we have questions around the fairness of this legislation. More importantly, we believe there has been a missed opportunity to make real changes. The time spent on this legislation could have been spent overhauling and modernizing the system in a more global context rather than a singular approach.

Unfortunately, we believe this legislation shows there is a continued lack of understanding towards the construction sector. This government, like previous governments, believes that all sectors of our economy can be dealt with in a one-size-fits-all approach. This has been seen with other initiatives, like the agreement on internal trade that overlooked the construction sector in many ways. This singular approach does not work and it must stop, to ensure that Canada's construction sector can survive with the skilled people we require to get the jobs down.

While many workers in various sectors of our economy will be able to apply for these benefits, only a limited number of our members will meet the criteria of collecting less than 36 weeks of benefits in the past five years. The construction sector is a very unique industry; it is cyclical in nature, and activity often differs substantially from region to region. The industry ebbs and flows in cycles corresponding to the level of investment and the strength of the economy. These investments come from both the private sector and through public investment at all three levels of government.

The construction industry also often stays active at the beginning of a downturn in the economy as ongoing work continues to completion. In turn it lags behind recovery, as planning and preparation do not take place until investment is in place. This can be seen right now. There are many areas of the country that have stayed fairly busy through the early parts of 2009, but we forecast in 2010 and beyond that there may be a serious shortage of work in many of the same regions that are busy now. Construction jobs themselves are very unique. Every one of these jobs has an end date. It may be a week, a month, a year, but that job will end when the project ends.

These are not typical nine-to-five jobs. Our members work tirelessly. They work lots of overtime to ensure a job gets done and that it gets done on time. They also face many shortages of work. When the jobs end, our members go off to find new jobs. On a regular basis they will travel to a different part of the city or province they live in, or in some cases a different part of the country. This can create challenges for our workers. They are forced to relocate at their own cost, usually for short-term opportunities. This can leave them with a heavy financial burden, to say nothing of the impacts on their families.

Sometimes our members may find work right away, or it may take a few days, a week, or even six months or more; it all depends on the various factors that are well beyond their control. As a result, many of our members are forced to make several claims a year for EI benefits. This is the nature of the construction industry; this is what makes us so very different from other sectors of the economy.

Simply put, Bill C-50 does not take into account these variations of our work hours and work schedules; thus, many of our members are excluded from applying for these benefits. We estimate that several thousand of our members will be unable to apply. For example, in Quebec we believe that 80% of our local's membership, around 1,000 members, will not be able to access it; in B.C. it is around 20%, which is about 2,000 members; and in Ontario we are expecting the same numbers, if not higher.

These are members who have been working for 10, 15, 20 years and have been contributing fully to the employment insurance plan. They are now going to be treated differently from other Canadians because they don't have an opportunity to access these benefits.

Another concern we have, which Mr. Blakely will focus more on in his presentation, is the need for clarification around the impact this legislation will have on apprentices. Apprentices are essential, and they're the lifeline and future for our industry in particular. We need legislation that promotes and encourages apprentices to continue their schooling and training. If they are forced to leave their program and find another job, they're not coming back to construction to be an apprentice; we'll lose them forever.

We are already facing a significant skills shortage, and we need legislation to positively address this problem, not make it worse. We believe that Bill C-50 could have the unintended consequences of making this situation much worse by forcing people out of apprenticeship programs because they can't seek these benefits and they need to look for more work. As I said, Mr. Blakely will focus a bit more on that.

We also believe that more has to be done, sooner rather than later. We cannot just pass this legislation and forget about doing more reforms. We believe there are several small but significant measures that need to be done, not only to make employment insurance fair for everyone, but also to encourage people to seek other employment rather than collect EI and to address the skills shortage issue.

Some of these measures would include creating one national EI standard that makes sense and that is fair for all regions; enhancing the work share program, because many of our members on the stationary side really do support that; more support for training and re-training to address some of the impending skills shortage; providing a tax credit or income deductibility to employees in the construction sector who want to travel across the country to work; and monetary incentives for employers to maintain and hire more apprentices.

We believe that by taking these measures you will ensure Canada can better respond to the needs of a post-recession economy and we will have the skills and workers available to fill the jobs that become available.

We are more than willing to participate in broader consultations with the government and all parties to develop viable solutions that benefit not only the construction sector but all sectors of the economy.

Thank you for your time, and I look forward to your questions.

[The Chair, Conservative, Dean Allison]

Thank you, Mr. Schumann.

We're now going to move to Mr. Blakely, who is with the building and construction trades department, AFL-CIO, Canadian office.

Mr. Blakely, the floor is yours.

[Robert Blakely, Director, Canadian Affairs, Building and Construction Trades Department, AFL-CIO, Canadian Office]

Thank you, Mr. Chairman and members of the committee. I'd like to thank you very much for taking the extra day to hear witnesses.

My name is Bob Blakely. I'm the Canadian director of the building trades. The building trades are the unions that represent construction workers in this country, everyone from the operating engineers Mr. Schumann represents, to refrigeration workers, pipefitters, electricians, and millwrights. We represent 50-odd trades and nearly 500,000 people.

With me today is Mr. Christopher Smillie, who is the policy analyst in our office. I'm introducing him because his dad said that if his name got in Hansard he would buy him dinner.

There is an issue that I believe has a very serious impact, and it is very important to a significant number of our members.

Mr. Schumann talked about a number of things we might want to see in EI. We're disappointed that there isn't a rationalization of the eligibility zones and anything to deal with the qualification period, but the long and the short of it is that we are prepared to support the broad strokes of Bill C-50. We're prepared to support it because it will materially assist a number of our members who are currently unemployed.

A number of people are now unemployed simply because of the meltdown of the markets, and construction workers are the first people off the bus on the downside of the business cycle and the last to get on it. The extended benefits are something that....

There are a number of people who will be disadvantaged. We believe there is a strong possibility of an unintended consequence in respect of the application of extended benefits allowed under Bill C-50 for apprentices and those who are qualified within their trade but in the wording of the Employment Insurance Act are directed to programs to requalify either on new equipment or procedures.

Simply put, apprentices go to trade school. It is part of their work. In Ontario, a number of trades have a five-year apprenticeship: five periods of apprenticeship over five years, each of which extends for eight weeks. That's 40 weeks that they are in school. We expect them to go to school. They must go to school in order to qualify.

In Alberta, in the electrical, the instrumentation, or the refrigeration trades, it's three years at eight weeks and one year at 12 weeks. That's 40 weeks of training. These people are deemed by section 25 of the act to be unemployed and available for work, and there is no assistance in the definition of special benefits for them. It is entirely possible that apprentices who worked every hour they could for the last five years will be disentitled from the extended benefits because they got EI when they went to trade school.

It may seem that all you have to do is fish through the act to find a fix for this. Well, we tried very hard to talk to a significant number of people, in government, in opposition, and in the bureaucracy, and we ended up getting a number of people saying don't worry, be happy, and other people saying that maybe we are right and there is a possibility that something bad could happen.

I don't have a fix on the number of journeymen this could affect, but there are 400,000 apprentices in Canada, and 60% of them are in construction. They ought not to be disentitled because they went to trade school.

I am asking that with respect to the in-school portion of the training that people access EI to get--those are programs they are directed to by EI or that are approved by EI in accordance with the act--you not disentitle them either by a minor amendment in subsection 12(3) or by regulation. The negative impact of taking training and then finding out it disentitles you from getting EI for a significant period of years will work against what we're trying to do.

If you look at the demographics, construction, like many other industries, is a baby boom industry, with 70% of people being grey-hairs or no-hairs. They are going to retire shortly, and we need to replace them. This is the wrong time to discourage people from taking training.

We ask that you not lose sight of what could be an unintended consequence and make it clear that people who access training will not be disentitled from extended benefits in the event they become unemployed. After all, employment insurance is a contract of indemnity against a foreseeable event, that being losing your job.

I look forward to your questions.

Thank you very much for your patience in listening.

[The Chair, Conservative, Dean Allison]

Thank you, Mr. Blakely.

We're now going to move over to the Quebec Employers' Council. We have Yves-Thomas Dorval and Norma Kozhaya.

Welcome. Thank you for being here.

The floor is yours, for seven minutes.

[Yves-Thomas Dorval, President, Quebec Employers' Council]

Thank you, Mr. Chair, ladies and gentlemen.

First of all, thanks to the Standing Committee on Human Resources, Skills and Social Development and the Status of Persons of Persons with Disabilities for inviting us to deliver our remarks about the bill.

Because we represent employers and companies from the province of Quebec, I will deliver my remarks in French.

The Quebec Employers Council operates in regular partnership with other organizations throughout the country, and, in particular, with the Canadian Employers Council. As it is not a provincial branch of a Canada-wide organization, the Quebec Employers Council has a keen independent interest in federal matters that affect Quebec employers, specifically issues of labour, development, human resources and taxation.

Employment insurance and all other payroll-based employer-funded plans are closely followed by the Employers Council. That is especially the case for employment insurance as employers fund the majority of the cost of the plan: their contribution is 40% higher than that of the workers.

We spoke publicly on the matter last September when the proposed amendment to the bill was announced. We come here today in person to reiterate the concerns that we raised then and that still remain.

The Employers Council first and foremost prefers that all enhancements made as a result of the current economic situation remain temporary. In this regard, we are pleased that the government has heard us.

Costs close to $1 billion, $935 million to be precise, amount to a major change in the plan. It is expected that, under the current rules, in other words without the changes in Bill C-50, the expected increase in plan costs could vary from 35% to 70% by 2015, according to our estimates. It would be wise to seriously consider the terms of the enhanced funding schemes being studied by your committee.

First, because it is a cyclical enhancement, we believe that it should not be funded by the Insurance Fund, but rather by the government's general revenue. That was the case for the enhancements announced in the last federal budget, and the same rule should apply to these changes.

Second, social responsibility also involves fiscal responsibility. This is not an economic context where taxpayers can dig into their own pockets any deeper to fund new public expenditures. The government should therefore ensure that any amendments have a neutral effect on the cost borne by the public purse. In other words, employers say yes to improvements to the employment insurance plan on condition that these improvements are accompanied by savings or cost reductions elsewhere in the plan.

Third, and still on the issue of funding, the Quebec Employers Council reiterates that it is important for the government to restore fairness through a 50/50 employer-worker split to fund the costs of the plan.

This brings me to a final remark. The QEC is concerned about the government taking a piecemeal approach to changes to the employment insurance plan. As I mentioned in my introduction, Bill C-50 calls for changes in addition to those already announced in the most recent budget, changes amounting to close to $4 billion. We are not against changing the plan. However, we believe that, in the future, every effort should be made to avoid making piecemeal changes and instead should make changes that take into account the concerns of all partners, and specifically those that I have just raised.

Thank you very much.

[The Chair, Conservative, Dean Allison]

Thank you, Mr. Dorval.

We're now going to start on my left, with the Liberals.

Go ahead, Mr. Savage. You have seven minutes, sir.

[Michael Savage, Liberal, Dartmouth—Cole Harbour, NS]

Thank you very much, Chair.

Thank you for coming. This is the last meeting we're going to have hearing witnesses on Bill C-50. It has been an interesting set of hearings that we've had. Normally when a bill comes forward you have people who come and say they support it, it makes sense, it's what's needed. You have others who come and say they don't support it and that it doesn't make sense. What we have on this bill is really two schools of thought: one, those who say it's a bad bill and it can't be supported; and others who say they don't like it, it doesn't do enough, but we'll take it and then move on to try to get other reforms. I don't think we've heard anybody, except perhaps the minister, suggest that this is the ideal solution to what EI needs right now. We have a bill here that is discriminatory, that is inadequate, that doesn't cover enough people, and that doesn't go back enough months to deal with the circumstances we have.

Armine Yalnizyan was here earlier this week. I was looking at her testimony to the Senate committee. The Senate did a pre-hearing on this bill. When she appeared before the Senate she put it as well as I've heard it so far. She said these are unprecedented economic times and it is an economic tsunami; therefore, it is incumbent on the government to address everyone who has been swept by this wave of economic dislocation, not only those who have been cherry-picked to be the most deserving of help.

Those others who have not been long tenured and who have not used EI for the period specified also had no control over whether they would have a job. Those in the fishing industry, forestry, tourism, hospitality, agriculture, and large parts of the construction industry, through no fault of their own, have periods of unemployment when they need to go on the EI system. Nobody who I have seen in the last six months while EI has dominated the national political landscape has suggested that this is the best solution for what we need. We've heard all kinds of other things, but we haven't heard this. Yet we're in a position now where this is the solution before us. As I've said before, I don't think it's realistic to say, “You take what you can get and move on,” because I don't think there is anything else.

At a suggested cost of $935 million, this is almost the cost of what it would be to have a 360-hour national standard, which the Parliamentary Budget Officer pegged at less than $1.2 billion, as an example.

So we're in a difficult position. This bill doesn't seem to make it. The chair said we sometimes have statements. I only have questions, but sometimes they're long. I want to ask you the question because a lot of people really aren't sure about the numbers either. We hear $935 million we hear $190,000. I'm not suggesting you should have the resources, but have any of you actually been able to look at those numbers and see if they make sense? We have to vote on this bill very soon.

I open that to anybody, if anybody has had a chance to do that.

[Robert Blakely]

Short answer: I wish I could give you the number, but I don't know. In the spring we lobbied really hard at our legislative conference and beyond for some reforms to the system. Clearly that's not going to happen, so you're left with asking, do you say to your members who could benefit from this, “Too bad, so sad, we're waiting for the perfect solution”? I guess the answer to that is no.

[Michael Savage, Liberal, Dartmouth—Cole Harbour, NS]

It seems like putting meagre reasons to support a bill if you're sitting here looking at a government in this country that has an annual budget of somewhere around the $250 billion range. When you take out all the stuff that's not really moveable, there's not a lot of discretionary money, particularly if a lot of it has gone on other measures. That's the situation we're in.

Monsieur Dorval, you mentioned that you believe the cost of this should be paid for out of the consolidated revenue fund, as were the changes in the January budget, the extra five weeks in training. I wonder if Mr. Blakely or Mr. Schumann have a view on that.

[Robert Blakely]

EI used to have $55 billion in it. It disappeared, and I guess it was the discretionary spending of the last three governments of Canada. Where should the money come from? Maybe if the money went there, the money should come back.

[Michael Savage, Liberal, Dartmouth—Cole Harbour, NS]

So it should come out of the consolidated revenue fund. I agree with that.

[Robert Blakely]

The only other place it can come from is the pockets of people through EI as premiums, and I don't know that that's necessarily fair.

[Steven Schumann]

I'd concur. We've talked to some of our members regarding this. They have such a...I want to say lack of faith in the system itself about what the value is, even when they make claims themselves. When we've asked them how best to approach it, they just shrug because they've lost faith in the system and how it works. I think until there is a major overhaul of the EI system, people are going to be skeptical about how it works, where the money's coming from, who's really paying for it.

[Michael Savage, Liberal, Dartmouth—Cole Harbour, NS]

Right. As you know, the new CEIFB, the Canada Employment Insurance Financing Board, has only been given a $2 billion fund to start with, which clearly is not going to be enough under any circumstance.

[Robert Blakely]

Nor is the ability of the board that was put in place to manage that: it has such a small window to recast the contribution rate.

[Michael Savage, Liberal, Dartmouth—Cole Harbour, NS]

So the inevitable result of that is that payroll taxes are going to have to go up.

[Robert Blakely]

Yes.

[Michael Savage, Liberal, Dartmouth—Cole Harbour, NS]

Mr. Dorval, is that your view?

[Yves-Thomas Dorval]

That is exactly right. One of our major concerns is the competitiveness of businesses that operate in Canada, and of course in Quebec, where we do business. Payroll taxes, in whatever form, or when related to various programs, undermine business competitiveness. I believe that, in Quebec, the majority of employers agree that there should be programs that provide for a safety net, and they are not opposed to making reasonable contributions. However, the bill cannot keep going up.

Our greatest concern, which I raised in our statement, is the possibility that the increase may reach 70% by 2015, in light of restrictions on the contributions from wages. As for employment insurance, we have noted that, in recent years, during times of economic growth, there is a decrease in the amount of benefits paid out. The main problem is that, given the current situation, the government is proposing a draconian increase to the benefits and a radical cut to the income—obviously, fewer salaries mean less revenue. It is also proposing an increase to certain components of the employment insurance program that are not benefits, which could easily lead to exorbitant increases.

This is why we are intervening, not just for the sake of saying “not in my back yard but in someone else's”. When we consider the entire structure of employment insurance, we must make sure that ultimately, the effects are neutral. The government cannot overtax payroll any more. In fact, payroll taxes not only represent a cost to employers, they also represent salaries not paid to employees. All other things being equal, the entire payroll is also the employers' salary costs. The higher the payroll taxes, the lower the amount paid to employees in wages.

[The Chair, Conservative, Dean Allison]

Thank you, Mr. Savage.

We're now going to move to Mr. Lessard from the Bloc. You have seven minutes, sir.

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

Thank you, Mr. Chair.

I thank our witnesses for being here and sharing with us their opinions on this important Conservative bill, which, according to Mr. Layton, was demanded by the NDP.

We are even happier to hear you say that we should be trying to find out what it is in this bill that will make it of value. I am referring to the parameters which we feel are essential and that tie into the principles that you are championing yourselves. For example, the Employers Council of Quebec believes that this plan must go back to its original mission, which is to provide income to people who lose their jobs.

On that topic, here are my comments to you, Mr. Dorval. I am not the one making your strategic choices, but when you talk about how money should be used, I feel that you are not aiming at the right target. Currently, according to data used by the Department of Human Resources, 64% of unemployed people have no access to the plan. This does not address your concern, of course. But were those people excluded because there was not enough money in the fund? No, $57 billion were used for other purposes, with only employers and employees contributing to the fund.

It seems as though you have given up the fight, and the will to see the order of things restored. If what you are saying is truly to be believed, I think that you should ask that the employees of the people you represent get access to employment insurance and that your money be used for that purpose. I would like to hear your comments on that.

[Yves-Thomas Dorval]

Thank you for your question. As I said, the most important thing is not only that employers and employees pay. I also want to repeat that employers pay 40% more than employees. I completely agree with you; in the past, money was grabbed in a way that seemed to us to be inappropriate and unfair.

Employment insurance, as its name indicates, is an insurance program. In certain circumstances, benefits are paid out as a result of a program or a regulation. It is up to the government to determine the insurance program's terms and conditions. These terms and conditions must depend on various factors. Any insurance program must take a number of components into account. We have no objection to the employment insurance program being reformed. We agree that it should be simplified and be less complex, but there is one condition. It must financially neutral, which is to say that it must not make money from the contributions. That answers the first part of your question.

The second issue is the following. This is a temporary program intended to deal with a temporary situation, and the funding should come from general revenue and not from the program itself. In other words, there was a money grab in one particular situation, and we now find ourselves in another particular situation. So there should be a contribution from general revenue, which benefited from that grab. We agree with you in that regard.

Finally, various terms and conditions have been defined in the past, and for various reasons. We cannot take one single factor into account, the number of hours worked on one coast or the other, for example, without considering all the effects—we spoke about that during earlier conversations—in particular ensuring that we do not set up any disincentives to get back to work.

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

That is fine, we are in favour of that approach. It is an aspect that we will have to study.

Let us take it a step further. It seems to me that there is something contradictory in your statement. Perhaps it is just a question of perception. You say that the system should go back to its fundamental values, which is to say that it would insure as many people as possible. But, at the same time, you say that we have to decrease premiums or that the plan should be revenue-neutral.

Would it not be more appropriate to refund the money that was appropriated from the fund in order to improve the system? I would like a very quick comment from you on that, because I also have a question for Mr. Blakely.

[Yves-Thomas Dorval]

Actually, we did not say that premiums must be decreased. We said that they must have a neutral effect, which is to say that they should not increase the burden on payroll taxes. That is what we said first and foremost. If you are going to make changes and increase the components that cost something, you have to look at the components whose costs you can decrease so that the overall cost remains the same.

Then we must ensure that we do not create an unforeseen situation, that is to say, collateral damage or secondary effects. We must ensure that the net effect is an incentive to get back to work.