Human Resources Committee on May 28th, 2012

[The Chair, Conservative, Ed Komarnicki]

Yes.

[Daniel Kelly]

Very good.

Thanks very much for allowing us to be here today. We're thrilled to talk about a subject that is hot in the minds of small and medium-sized business owners from coast to coast: the shortage of skills and the increasing shortage of labour.

We've been on this issue for a number of years now—certainly it was peaking right before the recession—where small businesses across Canada wanted to talk to us about precious little else other than the problems they were having in finding, recruiting, and keeping staff. That obviously took a bit of a dip during the recession, but I note with interest that during the worst of the recession 40% of small and medium-sized businesses continued to say they had struggles finding the people they needed to put their products and services to market.

That is pretty compelling evidence, because while of course the problem of unemployment during the recession was significant and still is in certain parts of the country, prior to the recession we started to turn a great deal of attention to skills and labour shortages. That did take a necessary diversion, but I'm hoping we can get back on track, because of course any cursory look at Canada's demographic suggests that this problem is going to be with us for a great number of years to come.

I've put a deck in front of you today that gives you a bit of an overview of some recent data from CFIB. Some of it is a little older. When we asked our members what their main business constraints were after the sluggish domestic demand for their products and services, the shortage of skilled labour was number two. The shortage of unskilled and semi-skilled labour was also increasingly growing as an item of concern to small and medium-sized firms. As you see in the fourth graph that I've provided to you, that shortage of skilled labour is growing.

As we often say when we're asked about skilled labour, more and more small businesses are saying that skilled labour includes people who will show up to work, people who will work a full week without disappearing. Some of these are the skills small and medium-sized businesses are looking for.

The good news, when we look at employment plans for small and medium-sized firms, is that we've started to see a bit of a gap between those firms looking to hire and those firms looking to downsize. That is the first time we've seen that in a while. It's been bobbing up and down a bit as we come out of the recession, but we're starting to notice a significantly larger number of our members planning to hire than planning to downsize, which again is good news for the economy, good news on many fronts, but can be bad news when we're looking at skilled labour and other labour shortages.

Overall, 46% of our members across Canada say that the shortage of qualified labour is an issue to them. Broken down by province, I want to note that this is not just a western Canadian problem. It is highest at the moment among our members in Saskatchewan. Two-thirds of our members in Saskatchewan say they're struggling to find workers. The second-highest observation of that concern is in Newfoundland and Labrador. In Newfoundland and Labrador, 56% of our members say it is a concern. Quebec and Nova Scotia are right in the middle of the pack on that list. In New Brunswick, P.E.I., and even Ontario and B.C., there's a little bit less concern there, but it's still a top issue for many firms.

When we ask about labour shortages, what do small businesses need most? A lot of time and attention, particularly attention to the temporary foreign worker program and the programs for skilled immigrants, has focused on highly skilled individuals and bringing them to Canada to address skill shortages. But more than anything else our members tell us they are increasingly finding the toughest time in recruiting people for the national occupational classification categories C and D, those jobs that are more entry-level in orientation, jobs that perhaps require just on-the-job training or perhaps just a high school diploma or occupation-specific training. That has a lot to do, of course, with the fact that there are still a large number of small and medium-sized businesses in rural communities. A lot of rural communities have lost a great deal of their youth, and therefore the entry-level positions are going begging.

This is a key graph for us done prior to the recession, but chart number nine talks about the gap between the people who the immigration system and the temporary foreign worker program are bringing in relative to the needs of business. What it shows is that, generally speaking, the permanent immigration system brings in only those at the highest level on the skills, education, and job experience ladder, and yet the jobs that are in highest demand among small and medium-sized firms are actually at the entry level, at the semi-skilled level, and in the trades.

The permanent immigration system does a terrible job of matching the needs of Canadian small and medium-sized businesses. A much better job is done by the temporary foreign worker system in Canada, but even there a lot of the recent changes that are positive are applicable only to higher-skilled immigrants. For those in the service sector, such as the hoteliers, the restaurants, and often for those in the resource sector, the changes to the temporary foreign worker program that Minister Kenney has made—the very good changes he has made—do not apply, and it is something we would like to see happen.

The government has recently made a bunch of employment insurance changes. We're very optimistic about the changes directionally. On the comments of Minister Flaherty, the “no bad job” comment resonates extremely well with small and medium-sized businesses. It certainly is the language they're using themselves.

Again, the EI changes directionally are very positive. I want to note that 22% of our members tell us that they feel they are competing for workers against the employment insurance system, and 16% of our members say they have been asked by an employee to lay them off so they can collect employment insurance benefits. This is very disturbing information—things that freak us out as employers—and is one of the reasons why we need to make substantive changes to employment insurance.

The changes that have been proposed are very small. Directionally, they're headed the right way. They are certainly not draconian changes by any means whatsoever, but the real proof is on implementation, and this is where we are nervous. If, on EI right now—

[The Chair, Conservative, Ed Komarnicki]

Mr. Kelly, just so you know, we had a discussion in our previous panel, and I don't mean us to get into a study on proposed EI changes and so on. Obviously they will have some impact. To the extent that you want to make some general comments about how they may impact labour shortages either one way or the other—we heard the opposite argument earlier—I think we're okay with that, but I don't want this to get into a study of the proposed EI changes, which are not yet set out in the regulations, although they have been much talked about. That's not the essence of this study, so you can keep that in mind as you go forward.

[Daniel Kelly]

Very good—I'm happy to do that.

My last point about employment insurance is that EI policies right now suggest that you're not allowed to get benefits if you are fired or if you're laid off, but everybody knows that you go into the EI office with a good sob story about how the employer was mean to you and you'll have benefits reinstated in about two minutes. That's the real test for these changes.

The other main policy—

[The Chair, Conservative, Ed Komarnicki]

If you could get off EI and to the other—

[Daniel Kelly]

Yes. That was my last comment.

Moving on to some of the other major policy levers that the federal government has in its hands, there's the training side of the equation. We're very pleased with the EI hiring credit. We think it's a very good means of doing that.

One of the things that was most helpful to our members during the recession was the EI premium freeze, but we've made a number of other suggestions as to what the federal government can do to try to address skills and labour shortages. It's not an easy challenge. The main policies on labour, such as the temporary foreign worker program, the skilled immigrant program, employment insurance, and training tax credits of some nature, are some of the things that our members say will help them address the problem.

But it is an issue that is great and gripping for our members right now. It is being experienced across Canada. For small and medium-sized firms, it is the trades and the semi-skilled and often the entry-level positions that are most needed.

I'm happy to take any questions after this.

[The Chair, Conservative, Ed Komarnicki]

Thank you.

We'll go to Mr. Wilson. Go ahead.

[Mathew Wilson, Vice-President, National Policy, Canadian Manufacturers and Exporters]

Thank you very much, Mr. Chair. Thanks for the invitation to be here today.

As the CFIB and likely Perrin and the Chamber of Commerce will say, this is a critical issue for our members.

We believe we're at a critical point in our economic development. Employee skills and the ability of employers to attract and retain skilled workers will be central to our economic success over the next decade. CME has projected there could be more than 500 major projects across Canada, projects such as mining, oil and gas extraction, energy development, and shipbuilding, which represent over half a trillion dollars in new investments over the next decade. However, Canada must do more than simply extract and export these resources to take advantage of this opportunity. Canada's opportunity is to develop a world-class manufacturing, technology, and services supply chain for these natural resource projects and to export this expertise globally.

However, today there are already hundreds of thousands of unfilled jobs across Canada in all sectors of the economy. The inability of companies to match available jobs with available workers has a huge impact on their ability to innovate and improve competitiveness and to compete globally. Too often, applicants for available jobs do not have the necessary skill requirements, meaning jobs go unfilled, projects are not started, and Canada's economy suffers. As major projects continue to be developed, the need for skilled and unskilled workers will only intensify in those sectors as well as in related sectors in manufacturing and exporting.

To help better understand these challenges, CME is currently undergoing a survey of industry to determine the major concerns and priorities for companies today and in the near future. While the survey is still being conducted, the early results are very concerning. When asked about their primary concerns, businesses told us that the increased competition companies face in their primary markets was their top concern. Their second-largest concern was the availability of labour, both skilled and unskilled, and the impact that it will have on their operations. When asked how the labour market has changed over the past three years, half of all respondents said that it had worsened. Most concerning of all, 90% of respondents to date have indicated that they would have to consider moving their production to other jurisdictions in order to fill their labour needs.

There is no silver bullet to fix these labour challenges. We must all work together.

From an industry perspective, there are several actions being taken. Companies are increasing their training to improve the skills of existing workers and to better train and integrate new employees. They're also investing in technology in an effort to increase productivity and working with post-secondary institutions to ensure that graduates coming from these schools have the skills necessary to immediately enter the workforce. Where institutions do not exist, companies are actually creating these institutions to help with their training needs.

To support industry efforts, CME itself recently launched an industrial information and job-matching service called iCME.ca. In its first month of operation, we have had over 250 job postings and have matched dozens of qualified employees with existing jobs. Our goal is to strengthen this service by tying it into the EI system so that EI claimants have access to the available jobs in our network as well as into the immigration system so that foreign-trained workers can be pre-selected for available jobs and quickly enter the workforce.

While these are all positive steps, much more must be done. Canada must become a world leader in creating a truly global, flexible, and modern workforce that supports multinational businesses as well as local operations and smaller companies in all sectors of the economy.

Some of the recent changes announced by the government, including the changes to the temporary foreign worker program and the EI system, are a good start; however, we believe there should be much more done to create a modern workforce and supportive policy framework, including creating a partnership between the federal and provincial governments to introduce employee training tax credits. Tax credits exist to support new hires, but not to support upgrading skills of existing employees. We need an aboriginal workplace inclusion strategy. The foreign-worker credential system should be streamlined and simplified to maximize labour mobility, with the focus being placed on worker skills rather than academic credentials alone. Temporary foreign workers should be allowed to enter Canada with minimal paperwork and delay, and qualified companies should be provided waivers from the bureaucratic processes that delay entrance today. Employees should be able to move freely between Canadian provinces and between Canada and the United States. The pan-Canadian framework for the assessment and recognition of foreign qualifications should be expanded to include skills of those such as construction millwrights, industrial mechanics, structural metal fabricators, welders, and steamfitters. Finally, in the immigration system, changes must go further to be much more efficient in selecting qualified personnel and their family to meet industry needs and to streamline them into the immigration process itself.

We believe these policy changes will help create a much more flexible and responsive labour pool that will allow Canada's economy to grow with the economic opportunities before us.

Thank you very much. I look forward to the discussion.

[The Chair, Conservative, Ed Komarnicki]

Thank you very much, Mr. Wilson.

Now we'll hear from the Canadian Chamber of Commerce and Mr. Perrin Beatty himself. Go ahead, sir.

[Perrin Beatty, President and Chief Executive Officer, Canadian Chamber of Commerce]

Thank you very much, Mr. Chairman.

I'm very pleased to be here today. Your committee is tackling one of the single most pressing issues for members of the Canadian chamber and for businesses across the country, which is the skills and labour shortages that are affecting Canada's competitiveness.

Last year we went out to our network of 420 chambers and boards of trade across the country and asked members, as well as our corporate members, what is the single most important issue we should be focusing on in 2012? The issue of skills was the one that was named time after time.

This is a sprawling issue, and it's extremely complex. Canada will need a myriad of tools to address it. Today, given the tightness of time, l want to talk particularly about just one or two of those critical tools.

The most important message l have for you is this: as a country, Canada must be more aggressive in its immigration efforts, and we must move now.

Let me repeat that. Canada must be more aggressive in its immigration efforts. We must move now. We are in competition with many other countries in order to attract the most talented people in the world. We have very little time to deal with labour shortages and the lack of skilled workers. To tell you the truth, I wonder if we have not already missed the boat.

We must move forcefully and attract more of the world to help us build our country now.

Over the years immigration policy has been designed to give Canadians the advantage before immigrants, to avoid disrupting the Canadian workforce. Even today Ottawa wants more EI claimants to consider positions before they're offered to foreign workers. The government wants unemployed workers to be retrained, which is laudable but takes time. However, even if we do a better job of training and tapping into domestic workers, our aging society means we must also rely on immigration.

Chambers across the country are telling me that they're looking at immigration to help them solve the labour shortages. In Alberta recently the Red Deer Chamber of Commerce highlighted how they're turning to Irish immigrants and working with local businesses to recruit new workers. In Saskatchewan I heard a similar story from the Regina Chamber of Commerce. When committee members were in Halifax last month, you also heard that businesses are seeking more immigrants and higher immigration levels.

Time is not on our side. The fact is that Canadian businesses need more employees more quickly than in the past. Last month the government launched important changes to accelerate the processing of requests for temporary foreign workers. Now we need to ensure the right numbers of newcomers can be attracted across all programs. We need a renewed recruiting push by government and private industry. There has never been a better time to attract people to Canada, and businesses simply can't wait.

Training can and will also play a vital role, but we need a new mindset. In Canada when students graduate from high school, college, or university, people often feel that their training or education is done. This is not a sustainable approach for the jobs of the future. Continuous learning cannot be seen as a novelty; it must become part of everyone's career. The world has changed and we need to change with it.

In many businesses training is the last budget item—if it makes the budget—and is often the first item to be cut during tough times. However, training should be seen not as a cost but as an investment that brings significant returns. We need to boost tax supports and information-sharing to ensure continuous learning is part of working life.

The Canadian chamber is currently undertaking our largest consultation with our membership on this single issue. We've organized a dozen round tables with members and others across the country. We've mobilized our network to lead the conversation on how to address this challenge. We're asking for best practices, recommendations, and potential solutions. Later this fall we'll share what we've heard with our members and the public.

Canada's skills and labour shortages are endemic. They constitute a shared national challenge. None of us is solely responsible for this crisis, yet everyone shares the same ambition to address it. As a very first step we need to set goals, one of the first of which must be to open our doors wider to people willing to bring their ideas and talents to Canada to help us build a more prosperous country.

Thank you, Mr. Chairman.

[The Chair, Conservative, Ed Komarnicki]

Thank you, gentlemen, for those presentations.

We'll start the first round with Ms. Charlton.

[Chris Charlton, NDP, Hamilton Mountain, ON]

Thank you very much, Chair.

Thank you very much to all three of you for coming, and for making your presentations here today.

If you were here for the earlier session you probably noticed that the chair is very lenient with witnesses but not so much with committee members, so I'm going to ask all of my questions at the front end and I know he'll give you lots of time to answer, if that's all right.

My first question would be to you, Mr. Kelly. I am really struck by one of the slides in your deck in which you outlined the labour shortages, that it's jobs that require on-the-job training that actually have the highest vacancy rate, I suppose, if I can put it that way. So my question to you would be, do you know what the average wages are for jobs that require on-the-job training, either regionally or nationally?

Mr. Wilson, I really appreciated your comments about training and I wonder whether you could elaborate for me on what percentage of your members you think actually have apprenticeship programs that are currently running, if you know that.

You also made a really interesting comment about aboriginal participation. I wonder if you have some thoughts about specific suggestions to us, as a committee, about labour market participation by all kinds of under-represented groups in the workplace, and whether there is something you particularly want to highlight for us.

Mr. Beatty, I really appreciate your comments about the immigration policies and wonder whether you could just talk a little bit. To me, there is a big difference between bringing in temporary foreign workers and re-examining our immigration policy, because the latter, to me, also includes things like making sure that families have the ability to come over and that Canada becomes an attractive new home for people we want to attract as workers. I wonder whether you were using the two synonymously or not, when you talked about changes to the immigration policy.

Thank you very much.

[The Chair, Conservative, Ed Komarnicki]

There are a lot of questions there.

Who is going to start off? Mr. Kelly, and then we'll work our way through.

[Daniel Kelly]

On the question of whether there is an analysis of wage levels for those who are in that category where it's on-the-job training, we do have some data. I don't have it in this deck. I would have to do a little bit of investigation as to what it is, but I will say from the outset that wage levels in small and medium-sized businesses are certainly more modest than they are in the larger the firms. Any of the studies we've seen show that on most measures employees are more satisfied with their working lives on a lot of the soft measures that go into employment, but on the hard measures—the salaries and benefits—they are more modest at the smaller level within the wage category.

For those who are looking for entry-level workers, often those jobs do pay within 10% to 20% of minimum wage. The majority of members do not pay minimum wage, but many are not dramatically more when you are looking for that entry-level position. So wages, absolutely, play a role in this equation.

[Chris Charlton, NDP, Hamilton Mountain, ON]

Yes, that's exactly what I was wondering, whether the wages actually had a relationship to the shortage.

[Daniel Kelly]

They can, yes.

[Chris Charlton, NDP, Hamilton Mountain, ON]

Thank you.

Mr. Wilson.

[Mathew Wilson]

There are two parts to this. The first one I'll take on is training, and it's a big issue. There are two parts to the training. One is just overall training. Companies today.... From the questionnaire that we're doing of our members right now, over 60% of respondents spend in the neighbourhood of 3.5% to 5% of their annual sales right now on training. So it actually is a fairly significant portion to training. That could include everything from health and safety training to skills on the job, technical training, to language training. So it's a variety of training. But a lot of training does go on today.

In terms of the part of it on apprenticeships, a lot of companies—and most companies, especially in smaller communities outside of the major centres—are directly involved with community colleges to work on apprenticeship programs, so it's a big part of their ability to attract new workers into the workforce. The problem tends to be the length of time it takes to get an apprentice approved for on the job. It can be years in some cases. It's not good for the employee or the company itself, so I know there are some things that need to be done there to improve and streamline the apprenticeship programs.

On the last piece, on the aboriginal or other under-represented pools of labour being put in the labour force, the reason I mentioned the aboriginal population is because it has a fairly significant unemployment rate; in fact, it's quite a massive unemployment rate, especially in males between 18 and 35, which is really the hardest part of the workforce in order to attract people in.

Our organization in Manitoba, for example, runs an aboriginal inclusion program with the first nations community across Manitoba where they actually do educational information sessions to make sure that aboriginals are aware of the job opportunities in places like aerospace and bus manufacturing and some really high-tech things, and do everything they can to bring them in. It still is very difficult to bring enough of them in to fill the needs.

I can think of one member company that even sits in the middle of an aboriginal community that needs to build another plant to meet the demands of the oil sands; however, even with the 25% unemployment rate in the local aboriginal community, they still can't get enough skilled workers or workers period to be able to build. So it's a big problem, and a lot needs to be done in that area.

[The Chair, Conservative, Ed Komarnicki]

Thank you.

Now we'll have Mr. Beatty answer this question. The time is up, but we'll let you take your time and give your answer.

[Perrin Beatty]

Ms. Charlton, thank you very much for the question.

We see the temporary workers program and permanent immigration as two distinct but very important tools to try to address the skills needs in Canada. Obviously there are many instances when somebody may be needed for a specified period of time and where those skills are needed. If you look at temporary farm workers, for example, coming in to help with the harvest, that's an example of where it makes sense to take people for a specified period of time and allow them to go home afterward.

Increasingly, though, the concern among Canadian employers is that we are going to be facing a chronic shortage of skills in Canada and we should be looking at how we address that on a more permanent basis. How do we draw to Canada the best and the brightest in the world and have them help us build this country?

So yes, we consider temporary workers to be an important stopgap, but over the longer term we have to look at absolute levels of immigration and the nature of immigration that we have to Canada with a view to ensuring that we have the skills we need for the future.

[The Chair, Conservative, Ed Komarnicki]

Thank you very much.

Mr. Shory, go ahead.

[Devinder Shory, Conservative, Calgary Northeast, AB]

Thank you, Mr. Chair.

Thank you to the witnesses.

It was an excellent presentation. I don't think I could agree with you more. I'm from Alberta, from Calgary, and we have a shortage of skilled and general labour not only in the oil sands industry. Let me share with you that in my own law office, we have been trying to find someone who is able to help us with the skills we need, as an assistant even, and it's been months and months but we're not getting anyone.

As Ms. Charlton did, I will just throw out my questions and ask you to please help us and guide us as we deal with all these issues.

Number one, how do we meet the need for skilled labour for businesses? And how do we encourage workers to seek employment in areas where they are needed the most?

Then I would like to hear from you on whether, in your opinion, providing more timely and precise information to job seekers on the skills they need to find meaningful employment can help.

Also a concern is that we have been studying shortages, and on the other hand we are talking temporary foreign workers. Now, I have noticed that in some places we have a category of people filing EI claims in the same area that businesses are getting positive LMOs. How do we connect the dots in this gap?

[Daniel Kelly]

Since my light is on here, I'll go ahead. I'll address just a couple of the questions. I won't address them all; otherwise, there would be no time left.

On the information for job seekers, I struggle with this one a little bit, in that it is very hard for governments to know—it's very hard for businesses to know—what jobs they will need in the months and years ahead. We can tell what jobs are available now. We can give a sense of where things may head. But labour market information is very, very difficult to do, and government's ability to do it is terrible.

I'm not convinced that giant investments in improving this will accomplish a great deal, and I caution us in terms of viewing that as a solution. It's one of the reasons I'm a little troubled about one of the recommendations that the government looks like it's making with respect to pumping out information about available jobs when somebody's applying for a labour market opinion—which is bridging to your next question.

If we put in a bunch of additional processes for employers to take before an LMO is approved, I'm not convinced that this will necessarily accomplish very much. The folks in that community know where the jobs are. I don't really believe it is a struggle that we have these phantom jobs, and if employers or governments just did a better job of flagging them for those who claim they're looking for work, this would somehow be the miracle that is necessary. I do think we need to give a gentle push to get people back into the workforce who perhaps are on EI at the moment.

Papering the business community even more before they're approved to get a TFW is not, I'm hoping, the direction we go in. If it is, it would create trouble for us. One thing that I think needs to be addressed is that if there is somebody in the local community who is willing and able to work, and interested in that job, there is no way an employer is going say they'd rather have a temporary foreign worker and go through that hassle and process. It takes months, it takes money, and it is a struggle. There is an inherent bias towards locally available workers. We don't need extra steps to prevent that.

[The Chair, Conservative, Ed Komarnicki]

Thank you.

[Devinder Shory, Conservative, Calgary Northeast, AB]

Maybe Mr. Wilson and Mr. Beatty would also like to comment.