In my professional life I'm here to talk about skill shortages. Skill shortages and foreign credential recognition are interrelated, so my remarks will start where I left off in October. Some of you will recognize some of the material, but that's not a bad thing.
We're the Canadian building trades and we represent 14 international construction unions that represent more than half a million skilled trades workers in Canada, and more than three million in the U.S. We work with major and small construction contractors in Canada that do business with the same energy companies in Alberta, Newfoundland, B.C.,Saskatchewan, and everywhere in between.
Canada, in our view, is entering a critical phase in our labour market, mainly due to retirements, an under-performing training system, and a projected unprecedented economic demand. There's more energy investment slated in Canada's economy than ever before, and more than the current labour force will be able to handle.
The major project management office website lists dozens and dozens of major resource projects on the horizon worth almost half a trillion dollars. My calculator wouldn't handle the zeros. Every billion dollars spent in the energy industry means about 2,000 direct and immediate jobs in construction, and 2,000 in other industries for three years. This is great news for the workforce, if as a country we plan and execute a plan properly.
It has been forecast by the Construction Sector Council, in their “Construction Looking Forward” report that was just printed about 15 days ago, that by 2018 we'll need about 200,000 new skilled trades workers. I'm going to give you a quick breakdown, as you can all read the report I'll table afterwards.
Their supply-side estimates break the annual change in the labour force into four components: retirement, mortality, new entrants, and mobility. From 2010 to 2018, construction employment is forecast to rise by 180,000 jobs. Added to these demands are replacements for retirements of 189,000, and the loss of 26,000 workers due to mortality. There are 169,000 new entrants from the Canadian population to meet these needs, leaving a recruiting effort to find 200,000 new construction workers from other industries and outside Canada. If this isn't a call to action for the committee I'm not sure what is.
Today I'll run you through five practical policy fixes we think would work for Canada. Hopefully the committee will take them into consideration.
First is support for industry groups and companies that train young Canadians in construction. Second is labour market development agreements and getting policy value for money through these development agreements. Third, incent people and employers who hire them into Red Seal apprenticeships to move through and graduate in a reasonable amount of time. Fourth, the industry needs help with workforce mobility. Fifth is access to good, reliable, real-time, industry-sourced labour market information, like the Construction Sector Council stuff, and a temporary foreign-worker program that makes sense and is practical.
I'll give you a quick background to bring you up to speed, for those who didn't hear my pitch in October. The key players that regulate the skilled trades in Canada are the Canadian Council of Directors of Apprenticeship; the Red Seal Secretariat, which is in HRSDC; and the provincial apprenticeship and licensing bodies. The key funder of provincial labour policy is the federal government.
So let's get into my first topic: support for industry groups and companies that train young Canadians. The business case for hiring an apprentice has been laid out quite clearly. I refer the committee to a study by the Canadian Apprenticeship Forum released in 2006. It concludes that every dollar spent on training returns $1.38 to employers. So hiring and training apprentices makes money for employers. We often have difficulty placing young people, and young people face many barriers to getting hired by contractors in construction.
Community colleges are another deliverer of curriculum. Some of the training they deliver includes pre-apprenticeships to actual Red Seal trades. Both training sources deserve public and private support to address the skills shortage issue. Did you know that the building trades in Canada receive no public money, and we train 80% of Canada's construction apprentices?
The federal government can help by having a procurement policy that includes clauses and commercial terms for construction companies requiring a training plan and apprenticeship hiring. Shell Canada has been very successful in its approach to this situation. Perhaps the committee would consider talking to our industrial partners in this regard. It might be a neat idea to tie Minister Oliver's regulatory reform package to training a workforce for the future, so that on large energy projects Canadians are assured we're training a construction workforce for the future.
I'm not preaching socialism or tied aid like last time, just practical solutions so Canada can reap the benefits of these large-scale industrial projects. Maybe this kind of policy could help the minister's battle with the radical environmentalists as well.
My second topic is value for money and labour market development agreements, LMDAs. LMDAs are a huge opportunity for the federal government to show leadership in the skill shortage situation. These deals give the provinces money, in what is basically a fully devolved process between the federal and provincial governments. The labour market development agreements make the federal government the writer of cheques. Why not use them to shape skill shortage and training policy?
Again, I'm not talking socialism or tied aid from the federal government, but how about getting value for money in these multi-hundred-million dollar deals that the federal government signs with the provinces every five years? Let's make sure we're getting value for money and ensure that the provincial regulators are planning for their labour markets in the future. Instead of giving provincial governments carte blanche to do yet another study or another website that tells us what we already know, let's set a path and show leadership on LMDAs. It might be a good start to addressing skill shortages.
There are currently no policy objectives tied to labour market development agreements. If the federal government were serious about skill shortages, it would include these measures—and not more websites or gimmicks for a quick-fix, but hard dollars for provinces and groups that train people in identified occupations needed by industry.
Third is the need to provide incentives for people and the employers who hire them. In construction we have a problem, and by extension, in the greater economy there is an issue. We have a problem with lots of registrations in red seal trades by people who, quick as a flash, never graduate. There's a small incentive to move through years one and two with the apprenticeship incentive grant, AIG—and for that, our organizations are thankful, but there is nothing for years three or four. There is a graduation grant. In total, it's a few thousand dollars over the course of a training cycle. An average construction apprentice is making $50,000 to $60,000 a year. This person can make a few thousand dollars in overtime every week. The incentive grant pales in comparison to what's out there in terms of work. These folks can work forever as a second or third year apprentice and never move through the system and graduate. In construction you're limited to a ratio of apprentices to journeypersons on a work site. If you never increase your number of journeypersons, you can never grow the number of apprentices.
We need real incentives, maybe by using a time limited system in the red seal program for someone to obtain their red seal. The federal government has a vested interest in the provinces graduating more journeypersons. Maybe this is another thing that could be linked to the labour market development agreements, for example, that you must graduatexnumber of journeypersons per year to remain eligible for LMDA funding. Maybe hard dollars could be provided to companies that graduate apprentices and have a track record of doing so, or maybe increased tax credits could be provided to employers who graduate journeypersons, whatever the committee thinks.
Fourth is the issue of the mobility of the construction workforce. Canada still doesn't have a system to facilitate the mobility of the construction workforce. The Standing Committee on Finance—which is really tired of hearing from me on this—has probably heard it said 30 times that our industry is dying for a way to get people to where the work is, or at least that the industry is very eager to have a system to assist with the costs. Did you know that Suncor and CNRL are catching up to WestJet as Canada's second largest airline? They have fly-in and fly-out programs for our members and others, the folks who go to the oil sands, depending on who needs people the most and who's offering a fly-in and fly-out that month.
Still, there is nothing for regular commercial construction, institutional construction, and the folks who will soon be travelling from southern Ontario to the Ring of Fire, if we ever get there. The confluence of energy projects coming down the pike, so to speak, will mean that people will be travelling farther and farther for construction work. I'm not talking about moving to where the work is, like the rest of us do. In construction, folks go to work for three weeks, three months, or three years, and they're always working themselves out of a job.
Canada needs to incent people to get on the plane and in the pickup truck. Canada needs to help defray the costs of travel to work sites. We propose a sensible tax credit. You spend $3,000 to get to work and you get a 15% tax credit, or something similar.
The revenue back to the GoC in the form of productivity and income tax paid would be tremendous. Ask any construction company or any large energy company if they would be in favour of defraying the cost of travel for securing a workforce. The answer would be yes. The draw on employment insurance would go down, as people would be working, and employers could reduce the costs of bringing in a workforce from abroad.
Our proposals and those of our partners in the oil patch, my friends at CAPP, have been shuffled to the bottom of the priority list by subsequent Ministers of Finance. Hopefully—and I'm hopeful—the current one can be encourage to assist.
Canada can help the skills shortage problem by properly incenting individuals to go to work. My penultimate solution is labour market information. In order to address the skills shortage problem in Canada, we need to make sure our labour market information is top-notch.
Recently, the Construction Sector Council lost certainty around core funding for labour market information. Does this make sense at a time when industry needs to know more about who, what, where, when, and why in real time? Why are we cutting industry-driven labour market information potential? Government and industry have spent millions setting up the LMI system at our sector councils.
I wrote this: “What is the deal with the cuts?” I wasn't supposed to say that.
This is not a case of good money going after bad money in the sector councils. Talk to the energy players. Talk to PCL. Talk to EllisDon. They all use this information, and it's a big deal to us.
Lastly, I know that discussion of the TFW program has been popular on this committee. Our organizations have been working for a while to give the temporary foreign worker program—which gives us skilled trades from the United States—front of the line status. The committee can refer to my testimony in October of last year. I talked about this at length. What a no-brainer. The Government of Alberta, the Department of State in the United States, and the White House are ready, and we still await news and action from the federal government on this one.