Human Resources Committee on May 14th, 2012

[The Chair, Conservative, Ed Komarnicki]

We'll call the meeting to order.

We have with us today the Canadian Apprenticeship Forum, being represented by Sarah Watts-Rynard and David Suess, the incoming president.

We have also the Canadian Automotive Repair and Service Council, CARS. Jennifer Steeves, the president, is here with us today. She'll be presenting.

I'll just go through the process. Each of you will present, and then we'll have some questions from the committee.

Ms. Charlton.

[Chris Charlton, NDP, Hamilton Mountain, ON]

Thank you, Mr. Chair.

Before we start—and I apologize to the witnesses—I had given notice of a motion last week, and I wonder whether we could take a few minutes to deal with that motion right at the start of the meeting, please.

[The Chair, Conservative, Ed Komarnicki]

I would defer that motion to the last 15 minutes, after we've had the second panel, and conclude it at that point.

[Chris Charlton, NDP, Hamilton Mountain, ON]

Okay, so we'll have it in the last 15 minutes of the meeting.

[The Chair, Conservative, Ed Komarnicki]

Yes.

[Chris Charlton, NDP, Hamilton Mountain, ON]

All right.

[The Chair, Conservative, Ed Komarnicki]

Okay, we'll start with Ms. Steeves. Go ahead.

[Jennifer Steeves, President, Canadian Automotive Repair and Service (CARS) Council]

Thank you, Mr. Chair, co-chairs, and members.

I'm very pleased to have been invited to appear here today in relation to your study “Fixing the Skills Gap: Addressing Existing Labour Shortages in High Demand Occupations”. I will provide you with some context in relation to the automotive repair and service industry.

Repair and service establishments exist in every community across Canada. Given our vast geography, they reflect the necessity of vehicle ownership. In fact, there are over 21 million vehicles on Canadian roads, and more than 306,000 Canadians are employed in over 66,000 businesses across Canada. Fifty-five percent of these businesses employ one to four workers. The automotive aftermarket sector reached $18.7 billion in retail sales in 2009, and this was at the height of the economic downturn.

Performance Driven, the 2009 labour market study, noted that employers were reporting approximately 13,000 unfilled positions and that 37% of these were for automotive service technicians. Overall, 29% of employers in the industry have one or more unfilled positions, and this is impacting business growth. Related to this, a majority of employers—58%—said that their “new hires are not job-ready”.

Why is the private sector experiencing difficulty in finding sufficiently skilled people in certain fields? For our industry, the number one reason is the pace of technology advancements. Vehicle technologies are mainly responsive to government regulation—that is, aggressive fuel economy, emissions targets, and safety. As a result, 75% of new and emerging technologies are related to electronics and engine fuel systems. These advancements are comprehensive and complex. The skills impact is significant.

Second is essential skills. These important foundational skills impact the success of continuing learning and ongoing professional development. Those that are key to our industry occupations are critical thinking and communications.

Third is business skills. The importance of owner-operator business skills and the further development of those skills were noted in our Performance Driven study. These are busy people who are balancing many tasks every day. As a result, they often omit themselves from any training planning. Improved business practices would help them better schedule work flow and calculate how many technicians they actually need on staff and on the floor at a time, thus impacting productivity and profitability.

What are some key considerations in addressing and fixing the skills gap? Number one is labour market information. Continuity and currency of available labour market information—at the national, provincial, and local level—need to be coordinated. Further to this, better linkages need to be made among technology innovation, the skills impact for a workforce, and labour market pressure points.

Comprehensive LMI that examines skills pressure points and leads to the development of skills training that reflects technology demands will ultimately better support those seeking employment or those proactively trying to maintain their employment or grow their career. Applicants need current skills that reflect current technologies and workplace and customer expectations and safety.

Secondly, labour market information needs to lead to services that stakeholders—that is, employers, employees, and job seekers—can easily access and utilize.

Labour market data itself may not help a small-business owner. He does not have the time or expertise to interpret the data to his own situation; however, what they will respond to and invest in is a service or resource that will help them meet their recruitment and retention challenges. This is important. A skills assessment tool that supports the recruiting process, and that points to specific skills upgrading to improve a candidate's or employee's productivity, will get traction. To be relevant and useful, these kinds of tools need to be developed and updated based on current LMI.

Number three: harness available labour market expertise, and connect. This is a complex issue, fixing the skills gap, and a mechanism to connect governments with stakeholder expertise in a meaningful ongoing dialogue about the development and implementation of solutions will be key. An expanded service such as the “Working in Canada” website is positive, but unless connections are made to technical skills assessment tools, essential skills assessment tools, and available skills development opportunities, we will miss a valuable opportunity to more fully support the client.

Currently, much of the training skills information is based on that needed to enter the industry. There also needs to be information for those trying to maintain their employment, stay current, and transition within the industry. When labour supply and demand are this tight, you need to keep the workers that you do have current and employed.

There is a lot of potential here, and there are several organizations well positioned to support these kinds of enhancements. This expertise needs to be harnessed and exploited.

Number four: connect labour market information and skills required with various levels of education and training. Job readiness of those wanting to enter an industry can be improved if there are more proactive connections among national skills information, the labour market, and education and training. A system that would connect labour market data, employers, and education and training providers would provide better support to the job seeker, whether they are a young person, someone in transition, or a new Canadian.

Connecting educators at all levels with employers will help teacher, student, and parent understanding of skills expectations and the education and certification requirements that will increase job readiness. Again, linking with expertise in these areas is important.

Thank you for this opportunity. I look forward to your questions.

[The Chair, Conservative, Ed Komarnicki]

Thank you, Ms. Steeves. I appreciate that presentation.

Ms. Sarah Watts-Rynard, I understand you're going to present next.

[Sarah Watts-Rynard, Executive Director, Canadian Apprenticeship Forum]

Absolutely.

Thank you very much, and thank you for inviting us here today to talk about fixing the skills gap.

I wanted to start by defining apprenticeship, because this is a term that is commonly used, and we find that apprenticeships and the apprenticeship system are not well understood within the skilled trades community, let alone in the wider community.

Apprenticeship is a workplace-based training. It's generally 80% on the job and about 20% in a training institution. Apprentices must be registered by the provincial apprenticeship authority and ordinarily by an employer, so they have a job and they're employed prior to registration. Technical training takes place at a college or union training centre, with a private trainer, or online. Once an apprentice has completed the required hours of on-the-job training and modules of technical training, that person is able to challenge a certificate of qualification exam.

The benefits of this type of training include the ability to earn while you learn, to receive certification and good pay, to find career opportunities across Canada, and to become an entrepreneur and start your own business.

We wanted to talk today about some of the challenges. The Canadian Apprenticeship Forum has been hearing about current and anticipated skills shortages in sectors across Canada and how they affect productivity, the ability to innovate, and economic prosperity for a company, for a region, for a province, and for the country as a whole.

In 2011 we did a survey with employers, and 71% of employers told us that the skills shortages are affecting or will soon affect their ability to take on new contracts and do business, but only about 30% had an active plan to address that HR concern. Some of our research has also identified a number of barriers to apprenticeship. These are for employers but also for apprentices and other apprenticeship stakeholders. The barriers include a lack of awareness about apprenticeship, negative perceptions of trade careers, unstable employment, unwelcoming workplaces, cost of apprenticeship, basic and essential skills of apprentices, and shortcomings of workplace and technical training.

For today's presentation, I want to talk about three broad areas of challenges. I'm going to start with the skills mismatch that exists in Canada.

We have a high rate of youth unemployment. It was almost 15% in February. We know that youth underemployment is an even bigger problem across the country. We have a negative perception of careers in the trades, a perception that the trades represent a pathway of last resort. At the same time, we have severe skills shortages.

The average age of a newly registered apprentice is 26. One of the problems we're finding is that the school-to-work transition isn't being managed effectively. We're pushing youth to go in other directions, and they're finding trades careers relatively late.

Another one of the broad areas of concern is employer engagement. Even if we manage to convince youth that there are jobs available for them, we do still need to make sure that there are employers who are willing to take them on as apprentices. We feel it's necessary to continue to talk to employers about the return on training investment when it comes to apprenticeship. We've done quite a detailed study about return on training investments, looking across 21 trades, in small, medium, and large businesses across Canada. We spoke with those employers who actually hire apprentices and asked them about the financial costs of apprenticeships in terms of wages and benefits, administration costs, cost of a journeyperson's time, and materials.

For every dollar they spend in areas like this, we find they have a return of $1.47, and that's when you start to look at charge-out rates and the financial value that an apprentice brings to a workplace. It's important to continue to talk to employers about that, because we know that among skilled trades workplaces, only about 19% hire and train apprentices, and 50% of employers in skilled trades areas don't really have a very good understanding of apprenticeship. They don't understand what their responsibilities would be or how they would get involved with apprenticeship. Fourteen percent of these employers told us they would hire apprentices, if only they would come and knock at their doors. “We don't know where to find them,” they said.

So we do know that we have a lot more work to do in terms of speaking to employers about how this is a source of skilled trades workers.

The final broad area I wanted to raise with you is around apprenticeship completion.

In 2009 Statistics Canada data told us that there were about 409,000 registered apprentices across Canada. In the same year, around 31,000 apprentices completed and received their certification. So while we've seen registration rates double in the last ten years, completion has remained relatively stagnant. That completion rate isn't moving very much.

While the barriers to completion are complex, and I certainly wouldn't say that there are one or two solutions, I think there are some areas where something could be done federally with systemic barriers like inter-jurisdictional mobility of apprentices, so that when they have their certification, they're completely mobile between jurisdictions. But in the course of an apprenticeship, if someone were to lose their job in one part of the country, they would find it very difficult to move and have their hours and their training recognized in another part of the country.

As well, we hear—and this is from coast to coast—about EI wait times. Because apprentices are considered to be employees, they're eligible for EI when they do their technical training. But if you can imagine going to technical training, having a mortgage, a car payment, and a family to support and not actually getting your EI until you're back at work.... In some cases, people are waiting eight or ten weeks to receive their first EI cheque, and that does make it a little more difficult to motivate somebody to go back for their second or third round of training. When we talk about a completion rate, it's important not to put up barriers like that.

As well, there are incentive and completion grants that are offered by the federal government, but those are taxed back. Those are subject to taxation, which would lead more people to ask themselves if this is something that's worth applying for and waiting for.

I'll speak briefly about some of the recommendations we have put forward. I've provided a brief to all of you today, which goes into a little more detail, but I think this speaks to a need for better career awareness of trades and apprenticeship with regard to employers, youth, and the general public, and also to the professionalization of the trades—to start thinking about certification as something that has value for a journeyperson but also for their employer and the general public.

We hear about small and medium-sized businesses facing a number of barriers. They're not sure they have enough continuous work and they're not sure they can offer the full scope of the trade. As a result, they might not participate in apprenticeship training. There are some innovative approaches around consortiums, where you have small and medium-sized businesses getting together and sharing an apprentice, but that would certainly benefit by a review of the way tax credits are applied.

Also, I think the public sector really needs to recognize their role, not just as a funder but as an employer and as an owner community. By employer, the public sector actually employs only a quarter of.... When you look at the ratio of apprentices to journeypersons for those employed in the public sector, it's 3%. In the private sector, it's 12%.

When you talk about the owner community, the public sector is a huge user of skilled trades services and contracts for maintenance, construction, and fleet services, and they do have the ability to put a point system into bid documents or some additional motivation for contractors to hire and train apprentices.

Beyond that, and going back into completion, I think there's a need to look more closely at interjurisdictional mobility between the provinces and the territories, and certainly fast-track apprentice EI claims when they're going into technical training.

Finally, as I said, there are opportunities there to use tax levers as well around the incentive and the completion grants, credits for employers who train apprentices, taxes for those who perhaps don't, incentives for employers to train more apprentices than they need, and then maybe some supports for underemployed people to consider a second career.

[The Chair, Conservative, Ed Komarnicki]

Thank you very much for that presentation.

Mr. Suess, are you going to participate in the questions and answers, or do you want to make a quick comment at this time?

[David Suess, Incoming President, Canadian Apprenticeship Forum]

Mr. Chair, I think Sarah spoke to most of the key points. We collaborated on what she submitted and what she spoke to. I think my value would be maybe trying to clarify from the employer perspective some of the questions the panel may have.

[The Chair, Conservative, Ed Komarnicki]

Okay. We'll do that for sure.

We'll start our first round of questioning with Ms. Charlton. Go ahead.

[Chris Charlton, NDP, Hamilton Mountain, ON]

Thank you very much, Chair.

Thank you all so much for being here today and for your presentations.

I want to focus my initial round of questions on the apprenticeship side. You certainly suggested that incentives like the apprenticeship incentive grant and the apprenticeship completion grant, although obviously not 100% successful, have been important incentives leading toward a greater completion rate in apprenticeships.

Were you aware that those programs had been cut in the main estimates 2012-13? I think $113 million is gone from the apprenticeship incentive grant.

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

Point of order.

Let us be clear that it was because of uptake, not because of a choice in a cut. I think it's very important that we are very clear with respect to what decisions are made going forward.

I leave it to the member's discretion to make her comment, but let's be very clear: this was not a cut in this budget; this was based on previous uptake for apprentices.

[The Chair, Conservative, Ed Komarnicki]

I don't know whether--

[Chris Charlton, NDP, Hamilton Mountain, ON]

I would suggest that's a point of debate and not a point of order.

Nevertheless, if you look at the main estimates, there is now $113 million less under the apprenticeship incentive grant and $40 million less under the apprenticeship completion grant.

Even if the point is right that that's because of uptake, clearly there are barriers to uptake when you're saying there's a need for apprentices, certainly a need in the economy for journeymen, and you identified this as an incentive to try to raise completion grades.

Could you comment on that?

[Sarah Watts-Rynard]

I think it's been very effective in terms of raising the profile of the importance of apprenticeships, because anything that enables us to start to talk to employers and talk to apprentices about the perceived value I think is beneficial.

Uptake has been a challenge. I think there are reasons. The fact that it's taxed back is certainly one of those reasons. Somebody might question whether or not they wanted to go through the process.

I know there were some difficulties initially in the application process and some of the processing that had occurred that may have led to take-up that wasn't quite as good as we would have hoped.

[Chris Charlton, NDP, Hamilton Mountain, ON]

Have you been consulted by the government about how to perhaps increase take-up rates of those two programs, rather than just seeing the money no longer available for apprentices in your program?

[Sarah Watts-Rynard]

We have. The trades and apprenticeship program has a close relationship with the Canadian Apprenticeship Forum. They present to each of our board meetings, and have certainly spoken to us, not in terms of cuts, but in terms of take-up and how to improve that. I know many of our board members were approached with a survey asking how we could improve take-up.

[David Suess]

I think from the perspective of an employer and my new employer moving to Alberta, they were not even taking advantage of it. It was 300....

[Sarah Watts-Rynard]

That was the tax credit.

[David Suess]

That was the tax credit.

In our work with CAF, when we talk with employers—again, I'll have to be careful not to cross provincial and federal lines—it's what's required to apply for it. Do they even know about it? Who's out there helping to promote it and helping the individual apprentice process it? Because it all comes back onto the shoulders of the individual.

Again, the fact that they're having to be taxed on it is one reason they don't even bother. If they're out there working and are picking up some overtime, depending on their tax base, that $1,000 turns into.... They lose $600 of it. It's not just the base wage. It's because they're up in a higher tax bracket.

[Chris Charlton, NDP, Hamilton Mountain, ON]

Thank you.

I grew up in Germany, where apprenticeship programs are huge. They're a common part of most workplaces, and that's how most people get their training. So I really appreciate your point about the importance of raising awareness among youth that trades are a viable profession. They are family-sustaining jobs and are things we should be promoting. We could do a much better job of that in this country. I take your point that much of that is also a provincial responsibility.

I wonder if we could talk a little, with respect to the training, about the Red Seal program and specifically about the impact of that program on labour mobility. I know that one of the difficulties traditionally is that you get your papers in one province and it's difficult for you to work in a particular trade in another province. I think there have been huge efforts made to try to increase labour mobility.

I wonder if you can speak a little about where we've come from, where we are now, and where you would like to see improvements made.

[The Chair, Conservative, Ed Komarnicki]

Time is actually up, but it's a fair question, so take your time to respond. You can start with Ms. Watts-Rynard first, and then if Mr. Suess has a comment, fair enough.