Human Resources Committee on Dec. 4th, 2012

[The Chair, Conservative, Ed Komarnicki]

Good morning, everyone. Thank you for attending.

We have three presenters this morning.

We have Mr. Andrew Sharpe, executive director of the Centre for the Study of Living Standards, and from Carleton University's Department of Economics, Dr. Patrick Coe, and Christopher Worswick, Professor.

Gentlemen, we'll have each of you present, and there will be questions from each of the committee members. We will be hearing the first panel for the first hour.

We'll start with Mr. Sharpe.

[Dr. Andrew Sharpe, Executive Director, Centre for the Study of Living Standards]

Thank you very much. It's a great pleasure to be here today.

I've been a student of the apprenticeship system for about 25 years, on and off. Certainly it's not my major area of research, but we've done quite a bit of work in that area, so I'm very pleased to give you my comments today.

First I thought I'd just give you an overview of the current status of the system and then list a number of challenges that are facing the system.

Twenty-five years ago I really wouldn't have believed the current state of the situation. It is really very strong actually. I'll just give you some data. There are two basic bits of information on apprenticeship systems that are important. One is the number of registrations; the other is the number of completions.

Fortunately, Statistics Canada produces excellent up-to-date data from 1991 to 2010 on these variables for the registered apprenticeship system.

In Canada currently there are 430,000 registered apprentices. That is up from about 200,000 in the year 2000. That is an increase of 116%. Basically registrations in apprenticeship systems are booming. In contrast, total employment is up by less than 15% over that 2000-2010 period. Why has that happened? There are a number of factors at play, some linked to the construction boom, because many trades are in construction. There are also some linked to public policy, which has been very supportive of the apprenticeship system in recent years.

Another factor is that there doesn't seem to be as much cyclicality. In the past, an apprentice needed an employer to register. Now, of course, it is still the case, but in the past, when there was a recession, there were no positions for apprentices. There's still a little bit of that. New registrations went down in the recession of 2009, but not as much as they had historically.

There are four trades that account for about half of apprentices. Three of them are in construction: carpenters, electricians, and plumbers and pipefitters. All three of those trades have experienced extremely above average growth in the 2000s, again linked to the very strong employment growth in the construction trades.

Completions are also up a lot. The number of apprenticeship completions in Canada in 2010 was 36,000. In 2000 it was 18,000. So basically there has been a 100% increase. There are double the number of completions.

However, there has been a lot of increased registration, so obviously if there are more people in the system, then there are more people leaving. But if you look at the ratio of completions to total registrations, which is not really a true completion rate, but it gives you a proxy of how many people every year are finishing the program compared to the overall stock, that's only about 8.4%. It's quite low. The good news is that it's up from 6.4% in 2006, even though it is down from 9.2%. So there has actually been a decline in the ratio of completions to total registrations since 2000.

There are two aspects of the apprenticeship system that I think are very important. One is the gender balance. The other is the provincial balance. In the past, women have not been very involved in the apprenticeship system, but I am pleased to report that is changing. There are currently 58,000 women registered as apprentices, and that's actually up from 17,000 in 2000. Basically, 13.4% of apprentices are women. It was only 4.3% in 1991 and 8.8% in 2000, so we are making progress in the number of women.

The women are largely concentrated in certain trades, like food services, childhood education, hair styling, and support technicians. There are not as many in the trades. Even in the trades, the traditional construction trades, the number of women is increasing, but it's still very small. I'll just give you a few examples. For electricians, it is now 3.2% and it used to be 1.1%. The number is around 3% or 4% in many of the trades, but that's up from 0.5% two decades ago. So there is some progress there, but many people argue that there's not enough progress. We need more women in the trades.

The final dimension of the apprenticeship system is the provincial dimension. We really don't have an apprenticeship system in Canada. We have 13 apprenticeship systems, because apprenticeship is under provincial jurisdiction. There are large variations in how the system is performing from province to province.

In recent years, where has the growth been? Well, not too surprisingly, it has been a lot in western Canada, because that's where there are a large number of construction projects. But Ontario has also had a very large increase in the number of apprentices in the last decade. On the other hand, Atlantic Canada has not done as well. Some provinces have a very slow rate, such as New Brunswick and Nova Scotia.

It's also interesting to look at the completion rate across provinces, which varies more than the completion rate across trades. Basically, the territories and western Canada are doing a little bit better than average. It is about a 10% ratio of completions to total registrations. Ontario is doing extremely badly; there is only a 5.7% ratio of completions to total registrations. There is a lot of variation across provinces. Certain provinces approach the apprenticeship system in a different manner.

What challenges do I recommend the committee investigate in its research? First off, there's the question of female representation. I mentioned that there was good news there, but maybe not enough. We want more women registered, particularly in the traditional trades. That's a key issue.

The other one is the low completion rate. It's still low, and there are a variety of reasons for that. I think one of my colleagues will be addressing that issue. It has been a source of concern for the government for decades. If you look at a true cohort analysis, it's well less than 50%. A lot of people drop out. In many cases, you don't need to complete to work in the trade, so there's less of an incentive.

The third key point I make is that there's a lot to learn by looking at the provincial variation. For example, why has Alberta done so well? It has about 20% of the apprentices in the country, even though it has only around 12% of the population. On the other hand, Nova Scotia has done extremely poorly. It has big construction projects coming up in shipbuilding, yet its apprenticeship system is not increasing the number of graduates.

There are two other issues. One is the link with community colleges. I think it's very important that there be greater integration between community colleges and the apprenticeship system. Many apprentices take their training in a community college, but they don't get a certificate. Often, if you don't finish the apprenticeship system, you really don't have anything formal in terms of qualifications, whereas if you had been going to community college and had a joint program, you'd actually get a diploma at the end. I think there's great potential to have the systems work more closely together.

The final point is the level of the apprentices. One reason many apprentices don't graduate is that they can't meet the formal requirements. The national apprenticeship survey that was run a few years ago found that many apprentices actually don't have high school. It's extremely hard, often, to pass those tests if you don't have the basic skills from high school. To the degree that the high school completion rate goes up, that will mean there will be more people with that training. That's an important area. We have to increase the basic skills of many in the apprenticeship program.

Mr. Chair, I think I'll stop there. I think my seven minutes are up.

Thank you.

[The Chair, Conservative, Ed Komarnicki]

Thanks for raising some very interesting challenges. In questioning, some may ask you perhaps for potential solutions or maybe opportunities to meet those challenges.

In any event, we'll now move to Mr. Coe. Please go ahead.

[Dr. Patrick Coe, Associate Professor of Economics, Carleton University]

Thank you.

I'm going to look at something that's much more specific. I'm interested in seeing if I can explain some of the variation in completion rates across provinces and trades over a period of around about 15 years.

The problem is motivated by a fair bit of media attention over the last 10 years about a perception that there's a shortage of skilled trades, often in construction.

Andrew mentioned quite a bit of this. Registrations are up. My numbers are a little bit more out of date than Andrew's, but the number of new registrations in apprenticeship programs went from 30,000 in the early 1990s to 80,000 in 2007. If you then look at completions, you just don't see increases of the same order of magnitude. So the obvious implication is that the completion rate has declined over that period. I have a number here from a paper of Andrew's in 2005 that talks about a fall from 64% in 1982 to 39% in 2002, although there has been some increase over the last few years, as Andrew mentioned.

When you look at the data at a less aggregate level, you see quite a bit of variation across trades and provinces. In the handout, I gave you some numbers for bricklayers in 2002: in Alberta the completion rate is around 50%; in B.C. the completion rate is around 14%. The number I'm looking at there is not completions over total registrations, but completions over new registrations, say four years previously when the program would have begun.

If you look at the requirements for apprenticeship programs across provinces and across trades, you also see variation. Again looking at bricklayers in 1999, to start an apprenticeship as a bricklayer in Alberta you would have needed a grade 9 education and then you would have been required to do about 5,500 hours of work experience; to enter the same program in B.C. would require a grade 12 education and then about 5,000 hours of work experience. There are similar variations in the amount of training you have to do and the format of that training across provinces for the same trades, and obviously, of course, there are differences in competencies across trades.

What I'm aiming to do is exploit that variation in the apprenticeship programs across provinces, to see if that's related to the variation in completion rates across provinces and to see if that will tell us something about an optimal way to design these apprenticeship programs in order to raise completion rates.

The ways in which these programs differ is whether or not certification is mandatory to work in a trade; the length of the work experience term, as I mentioned; the amount of formal training; the method of delivery of that training; and the level of education required to enter the program. So those are the features of the program I'm looking at.

I also look at the population of apprentices in these trades and provinces: the age structure of apprentices in each trade and province, and also the sex composition as well. I am asking whether those are related to completion rates.

Finally, it is often argued that employment instability is an important factor in apprenticeship completion rates, so I also look at unemployment rates across provinces and by aggregated trade indicators.

The data comes from a bunch of different sources, and I won't bore you with where the data is from. It is in the paper, if you are interested.

As a summary of results, the presence of mandatory certification is associated with about a 10% higher completion rate than in trades without mandatory certification. This is probably not surprising. If you need to complete the program to work in a trade, the incentive to complete the program is obviously much greater, and we would expect to see apprentices complete more often.

Does that mean that mandatory certification is the right policy? It may not be the case. If the issue is that there is a shortage of people working in this trade and non-certified workers are reasonable substitutes for certified workers, then mandatory certification may not help alleviate a trade shortage.

Looking at the length of programs, there is really no evidence that the length of program is related to completion rates at all. It's not the case that longer programs have lower completion rates, as you might expect. There are a number of reasons why that might be the case. Apprentices who choose those programs may be different from apprentices who do not choose those programs. So again, we're not randomly assigning length of programs to individuals. It may be that those who choose these programs understand fully that these are long programs.

The one thing my results don't speak to is whether this is a barrier to entry. It could be that long programs act as a barrier to entry. If you know it's going to take you five years to qualify as an electrician, you may never enter the program in the first place. So my results don't speak to that. It could be that shortening programs may have a positive effect. But again, the trade-off is that if you shorten the program, there's less training for the individual, and then whether or not they gain the competencies that the labour market requires could be an issue.

It's often argued that having technical training delivered by block release is a barrier to completion. I find no evidence of that at all. The provinces and trades with training delivered by block release have no lower completion rates than others.

There's a negative effect of average age on completion rates. Apprenticeship programs with younger apprentices typically have higher completion rates. We might expect that younger apprentices are less likely to have family commitments that are going to cause them to drop out of programs and so forth. This effect is fairly small, and similarly, a positive effect of the “percentage female” on completion rates again is a fairly modest size.

The one thing that does show up as important is unemployment rates. Trades for which there's a high unemployment rate over the period for which the apprentice will be taking the program typically have lower completion rates. We would expect that if you are having difficulty keeping a job, then you're not able to accumulate the hours of work experience you need to complete, so the completion rate is lower when there is a higher unemployment rate in that trade and province.

Thank you. I hope I didn't go over too much.

[The Chair, Conservative, Ed Komarnicki]

Thank you very much, Mr. Coe.

We'll now move to Mr. Worswick. Go ahead.

[Prof. Christopher Worswick, Professor, Department of Economics, Carleton University]

Thank you.

I'm going to talk a bit about the main results from a paper I completed with Ted McDonald, who is an economist at the University of New Brunswick. It was part of a major project done by the Canadian Labour Market and Skills Researcher Network funded by the federal government.

The title of our paper was “Intergenerational Effects of Immigration Policy on the Education Distribution: Apprenticeship Training in Canada”. Our background as labour economists is more in the area of immigration. The approach we took to this particular paper was to ask the question, what have past immigration policy and recent immigration policy done in terms of shaping the attitudes that young, Canadian-born individuals have towards different educational pathways—the skilled trades in general, apprenticeship in particular, versus different types of post-secondary education such as university degrees? There are two main policy changes related to our immigration policy that we wanted to explore.

First was the idea that there have been profound changes in source country in our immigrant intake over the past 40 years, movements away from northern European countries in particular and towards Asia, Africa, and Latin America. We were curious to see, just in a simple way, whether those movements led the children of immigrants, those born in Canada with immigrant fathers in particular, who may or may not have worked in the skilled trades or had an apprenticeship from their home country...whether that was associated with higher or lower probabilities of completing apprenticeships.

The other thing we were interested in looking at was the fact that, as you may well know, in the 1990s there was a big movement towards selecting immigrants based on university education, primarily, a big increase in educational requirements in general. We were curious to see whether there was really sort of an intergenerational echo, or intergenerational relationships, between the educational outcomes of the immigrants coming in and the educational choices and outcomes of their children.

In a nutshell, we find pretty strong evidence that these two changes in immigration are likely to have and are having effects on the next generation in terms of their attitudes towards working in the skilled trades in general and entering and completing an apprenticeship program in particular. The analysis is based on the master file, the confidential files of the 2006 Canadian census, where, for the first time, there was a specific question asked related to apprenticeship completion. We were able to look at the average characteristics of that variable—completing an apprenticeship—for immigrants themselves, those who arrived here as adults and those who arrived as children, and we also have detailed information on the place of birth of the parents. We focused on the father—trying to get relationships between young men and young women doing apprenticeships based on whether their fathers had done apprenticeships in the previous generation.

So in a nutshell, we do see big differences. For example, just in general, immigrant men are 11% more likely to have a higher university degree than either second-generation men, which are those with an immigrant parent, at 6%, or third-generation men, those with a Canadian-born parent, at 4%. We see big differences by source country. Even when we focus on Canadian-born men and women separately, we find that the source country of their immigrant parents, if they have an immigrant parent, matters. So first-generation Canadian-born men with a parent, with a father, born in the U.K., Ireland, Australia, or New Zealand have relatively high rates of apprenticeship credentials in Canada. These are again the Canadian-born outcomes.

In contrast, for Canadian-born men whose fathers were born in Asia in general, different regions of Asia, we see very low rates of completion of apprenticeship and much higher rates of going to university.

We're not saying this is a bad thing, by any stretch; higher educational attainment is a good thing. But it has implications, if we're planning ahead and trying to ensure that we have individuals who are going to take up employment in the skilled trades. If our immigration policy is pushing both the immigrants themselves towards university education and, through intergenerational mechanisms, pushing their children towards university education, then we see that as a challenge for public policy. Mainly, our paper is identifying the magnitude of those effects.

Maybe I'll stop here.

[The Chair, Conservative, Ed Komarnicki]

Thank you very much. We'll start with the first round of questioning.

Ms. Charlton, go ahead.

[Chris Charlton, NDP, Hamilton Mountain, ON]

Thank you very much, Chair.

Thank you very much for being here this morning. All three were interesting presentations.

We focus a lot in this committee, at least to date, on the barriers that employers face in offering more apprenticeship positions. I find it refreshing to think about it from the other perspective, to look at barriers for potential journeymen as well. I want to focus a little on that.

I think I'll just ramble all my questions out at once and then look to you for reply, because unfortunately I only have five minutes.

I was interested in all of your comments about the under-representation of women. I didn't hear you say very much about the under-representation of first nations, among whom unemployment is particularly high. I wonder whether there's a different lens through which we should look at our recommendations for that particular population. I would appreciate some comments on that.

I'm also interested in the discrepancy between the number of apprentices and the number of completions. I think both Mr. Sharpe and Mr. Coe spoke to that. Often we focus on tax credits for employers as the solution to all of these things, but it strikes me that there's a whole menu of things that, although we need to stay within federal jurisdiction, we might want to give some thought to. I'm going to list a few and would appreciate your comments, in terms of what you think might be effective and in particular what might be most effective.

It seems to me that changes to the EI system, for example, have become a disincentive, because the processing times are so long that people now don't get their EI money during their apprenticeship program, while they're not in the workplace anymore.

You mentioned basic skills training in your presentations as something on which we need to do much more work to get people ready for apprenticeships.

I would mention support for travel and accommodation for apprentices who, particularly in the building and construction trades, often have to travel a significant distance to the job site.

Employment stability is something I think you mentioned, Mr. Coe. It strikes me, when we have just gone through a period of having large infrastructure spending, that those were very limited timeframe investments. Some of those building projects had to be completed within 24 months, while the apprenticeship program is much longer than that. What happens to apprentices when the government support for infrastructure is constrained by time in that way?

Another thing I'm interested in is accurate labour market information to predict where the labour market shortages will actually be, not just currently, but a few years down the road. Sectoral committees used to play a really important role in that regard, and yet the government has cancelled its support for such committees. I wonder whether you have thoughts about what we need to do to get accurate labour market information.

I think that might be enough as a start. Thanks.

[The Chair, Conservative, Ed Komarnicki]

You have less than two and a half minutes. I'm not sure how you're going to approach this, but go ahead, give it your best try.

Mr. Sharpe, go ahead.

[Dr. Andrew Sharpe]

There were quite a few points raised.

Regarding the first nations, you're absolutely right. I don't have any up-to-date data on registrations by first nations. I don't think they code for that, at least not at the level that's publicly available.

There's a great fit there, because often first nations are in resource-based areas where there's demand for apprenticeship trades. A lot of work has been done in that area. I'm not an expert on the work, but there is an obvious fit between the two communities. I think that's an avenue for progress. While there has been a lot of work done, I really can't give you anything up to date on the situation.

You're right about the different incentives to get people into apprenticeship trades, but as I mentioned, in the year 2008, which was the cyclical peak, we had 98,000 new apprentices in Canada. Obviously the markets just aren't working in attracting people to these trades. Many of the trades are well-paying, so there's an incentive to get into the trades.

Certainly all those areas you mentioned are important: basic skills, the links to EI.

I want to mention, concerning the labour market projections, that it's extremely difficult to project where the demand will be by occupation. There is technological change going on all the time, and changes in wages, changes in major projects—it's very hard. We have the Canadian occupational projection system, which is done by Human Resources Canada; that's a starting point. But many people don't feel that it is very accurate, because it's so hard to predict the future. The Construction Sector Council did a lot of work on predicting demand for skilled trades in Alberta in the oil sands, and that was a really good project.

It is true that, as you point out, the government has cut back on sector councils. I think many of them will survive and hopefully will be more market-oriented and will be using the resources from the labour and business sectors to fund their activities more. That's the hope, but we will see what happens in that area.

I'll stop there.

[The Chair, Conservative, Ed Komarnicki]

Mr. Coe or Mr. Worswick, go ahead.

[Prof. Christopher Worswick]

I'll make a quick comment related to the first nations question.

We did a separate control, in a fairly basic way, in our analysis among Canadian-born first nations men and women. Within the context of our overall statistical analysis, there are many controls. For first nations men, we're finding a 13% to 16% lower probability of completing an apprenticeship, after we control for family background and parental education. For women, we're not seeing that. It's sort of a zero or very small difference.

That's a little bit of information.

[The Chair, Conservative, Ed Komarnicki]

Mr. Mayes.

[Colin Mayes, Conservative, Okanagan—Shuswap, BC]

Thank you, Mr. Chair, and thank you to the witnesses for being here today.

One of the comments that I picked up on was the fact that apprentice outcomes in Alberta are much better than the example of Nova Scotia. Do you think that's a reflection of the vibrant economy and the continuum of construction projects in that province?

In saying that, our government spends a lot of money providing scholarships for those who are going to university, to help them attain their education and degrees. What approach do you think there might be for the government to support trades, as far as helping either the employers financially, assisting trades training on the job, or assisting those who are in the trades, the apprentices themselves?

We had a witness here last week who said we always look at the big five apprenticeships. Actually, there are 72 skilled trades. I don't think we're doing a good enough job educating those young people about the opportunities in other various trades than those big five. Could you just comment on those two issues?

[Dr. Andrew Sharpe]

In terms of Alberta, you're right. Alberta is a model in many ways, and that's because of a number of factors. One is that there's a great demand for apprentices there. So the government is taking it seriously. I think the government programs are very effective in that area. Also, business and labour are working together, because for trades you want the labour market partners to work together, and they've been working effectively in Alberta, compared to other provinces.

On the incentives for apprentices, as we've already seen, there's been a massive number of increased registrations in recent years. I think these incentives are second order issues, though. Really, it's fundamentally the economy that's driving the apprenticeship system.

Now we have incentives for employers to hire apprentices. We have incentives for completion, but they're a thousand dollars here or there. I think it's just on the margin. I don't really think the government can really control the registrations into the apprenticeship system that closely. You're right—

[Colin Mayes, Conservative, Okanagan—Shuswap, BC]

I'll cut you off and maybe ask Mr. Coe—so I get a good cross-section.

[Dr. Patrick Coe]

One of the things that I think people have argued that would maybe be useful is going to the high schools. Some of the people argue that apprentices are maybe not an attractive option to the kids. They talk about high school guidance counsellors who have all been to university, and therefore they kind of have this natural bias toward recommending that to their students, particularly those who are the most capable. Maybe there's some argument for having people from trades visit high schools.

I'm guessing it's a fairly cheap way and a way to explain that these options exist. It is a way of promoting them by giving students some of the numbers as to what they might expect to earn in this profession versus what they might expect to earn with a university degree. Then let students make an informed choice, rather than naturally seeming to gravitate toward university.

As a university professor, I'm not sure how much I want to push that, but certainly making students aware.... I think markets work best when the individuals in those markets have as much information as possible. I think that would be a natural thing to do.

[Colin Mayes, Conservative, Okanagan—Shuswap, BC]

Do you have something to add, Mr. Worswick?

[Prof. Christopher Worswick]

I don't really have a lot to add. In general, we know that often access to credit is a major issue for people in educational programs. I'm not saying that's a big issue for apprenticeship, but a detailed look at what potential barriers there are for people might be something worth considering, and whether individuals feel they're giving up something by entering into the apprenticeship program. That might be a margin that the government could look at, but beyond that I don't have anything else to add.

[Colin Mayes, Conservative, Okanagan—Shuswap, BC]

How do you see the opportunity we might have as a federal government of trying to bring the provinces together on some common ground, as far as apprenticeships are concerned, and taking a leadership role to make sure there's labour mobility among the provinces and the same opportunities in each province?

Getting back a little bit to the question, my issue, as far as incentives go, is that in some provinces they get started in apprenticeships, but because of the cyclical swing of the economy, there may be fewer jobs in housing, or construction, or whatever. Is there some way we can bridge that so that there would be an incentive for the employer to keep an apprentice, to get those hours they need to finish their apprenticeship?

[The Chair, Conservative, Ed Komarnicki]

Who wishes to respond to that?

Mr. Sharpe.

[Dr. Andrew Sharpe]

I think the federal government has done quite a bit in recent years on apprenticeships. It created the Canadian Apprenticeship Forum, which you will probably be having a representative from. They were under the sector council program, so I'm not quite sure of their future.

Of course, the Red Seal program is very important, and that's for mobility across provinces. There are a very large number of apprentices who take the Red Seal exam.

In terms of basically having an employer not lay off an apprentice when there's a downturn, well, I guess the best thing would be to try to minimize the downturns through appropriate fiscal and monetary policy. I guess you could have some work-sharing types of agreements. We already have that in Canada. There are programs so that employers can keep their employees or their apprentices during the downturn. Maybe they should be expanded.

As I pointed out earlier, though, luckily, the last two recessions we've had in Canada have been a lot shallower than the large recession we had in the early 1980s and early 1990s, so that's been a very positive development. That explains why there hasn't been as much of a downturn in the apprenticeship registrations.

[The Chair, Conservative, Ed Komarnicki]

Mr. Coe, do you have a short comment?

[Dr. Patrick Coe]

No. I agree with Andrew on the Red Seal.

[The Chair, Conservative, Ed Komarnicki]

We'll move to Mr. Cleary.