Human Resources Committee on May 28th, 2013

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Oh, oh!

[The Chair, Conservative, Ed Komarnicki]

We've just started, so we'll see how we end. Let's end on the same note.

[Alexandre Boulerice, NDP, Rosemont—La Petite-Patrie, QC]

Thank you, Mr. Chair.

I want to thank our two witnesses. Their presentations were very insightful.

I would like to begin with a short comment, which will lead to a question. I will follow up on what Ms. Charlton said earlier. At times, I am under the impression that apples and oranges are being compared.

Population aging and the retention of older workers in the workforce constitute a broad issue. However, that issue covers very different realities. For a professional such as a notary, lawyer or chemist, working until the age of 70 or 75 without problems is not difficult to imagine. If you are an astrophysicist and your name is Hubert Reeves, it would appear that you can even keep working until the age of 178. However, it's a whole different story for garbage collectors, factory workers in an assembly line, construction workers or grocery store cashiers, who spend all day on their feet.

Moreover, 70% of Canadian workers have no supplementary pension fund. That means most of them are relying only on public funds, especially Old Age Security. I agree with letting people work longer, but don't you think that should be up to them? Don't you think that should be an opportunity to be seized. Wouldn't you agree that workers should not be forced to work longer only for financial reasons, such as not being able to afford food otherwise?

[Dr. Ali Béjaoui]

I can answer your question.

As of 2004, workers have been able to choose. The OECD recommendations, be it for Canada or for other countries, included two approaches—the carrot and the stick. The stick consists in forcing older workers to remain in the workforce longer by changing the mandatory age of retirement. The carrot consists in removing barriers. We have adopted the approach that calls for removing barriers, abolishing the mandatory age of retirement and allowing workers to combine work and retirement.

However, there is still a mismatch between jobs and retirements, as you say. There is no need to worry because, once barriers are removed in an economy of professional services, workers will remain in the workforce longer.

In the case of sectors where jobs are eliminated or destroyed, how can we ensure that labour flow without policies for upgrading skills and mobility? The problem in terms of market fluidity still exists. Once again, who will do what and how? Who will define the required skills? Where are the wanted jobs? Where are the eliminated jobs? How can that be ensured? I agree with you in saying that a role needs to be played. That role must come with the chosen approach.

[Alexandre Boulerice, NDP, Rosemont—La Petite-Patrie, QC]

Mr. Chaykowski, do you have anything to say?

[Dr. Richard Chaykowski]

Yes, thank you.

If we look back five or 10 years, when people like David Foot started to flag the enormity of the demographic challenge and what that meant for the labour force, I think one of the main motivating factors in worrying about aging from an economics viewpoint was the slowing growth in the labour force, which would slow economic growth as well.

That's a distinct effect from what was raised earlier, the question of pockets of high unemployment, an overall unemployment rate of 7% plus, which is layered on top of the demographic. At the personal level, there's just the issue of choice as an older worker, that someone is 69 years old, is still feeling pretty healthy and wants to top up their pension, or just doesn't want to sit at home. That's the individual choice part.

These are all distinct pieces, I think. They all work together—not always in the same direction, but they're all happening at the same time.

I've never put as much stock in the overall slowing in the growth of the labour force as others, for two reasons. One, I have a much stronger belief in the capacity of employers to substitute capital for labour, in other words technological change. We've all seen many examples of significantly reduced workforces. Employers will make the changes and adapt to the changes required in workforce levels. That being said, it doesn't mean that a macroeconomic problem wouldn't be involved with the slowing of the workforce. But individual employers have a pretty strong capacity to adapt, so I'm less worried about that.

Two, what we're experiencing today at the micro level, and what sometimes clouds the issue, is the idea that we have skills bottlenecks. We have pockets in Hamilton and other areas in eastern Canada or even western Canada. In certain occupations and trades in Alberta, we have high demand or high unemployment rates, depending on the circumstance. These bottlenecks are ongoing problems. We have a relatively high unemployment rate. That doesn't take away from the issue of having to address the needs of older workers in the labour force.

There is one further complication, which is the odds-on bet that we're in for a prolonged period of slow economic growth. This may translate into a prolonged period of relatively high unemployment compared to, say, the late nineties and 2000s. That being said that still doesn't take away from the need to address older workers in the labour force.

These layers from the macro down to the micro are all in play, and I think it can be a little confusing because sometimes they don't seem to be working in the same direction. I'll be very specific to finish. Simply saying we have a high unemployment rate doesn't necessarily mean that we shouldn't try to attract older workers into the labour force for longer, increase their participation rate, or encourage them to work longer in their careers. They're not mutually inconsistent.

One last point is that I would not advocate widespread or wholesale policy interventions. I think it's extremely important to identify the dysfunction in the labour market and then address the policy at those dysfunctions as opposed to broad-based policies.

[The Chair, Conservative, Ed Komarnicki]

Thank you for that, Mr. Chaykowski.

We'll now to move Mr. McColeman.

Go ahead.

[Phil McColeman, Conservative, Brant, ON]

Thank you, Chair.

Thank you, witnesses. This is a great discussion today. I really appreciate your what I would call straight talk and to-the-fact type of analysis.

Like Ms. Charlton, I come from a community where in the late 1980s or the early 1990s we had a 32% unemployment rate because of the demise of the farm implement manufacturing industry. If you were to take any lesson from what has happened since, because we're lower than the national average now—we're down to about 7.1%, I think, in the last statistics—it is that people are very adaptive at no matter what age.

I notice this in my community, especially with what a lot of people would call—and don't take it in a derogatory way—the blue-collar town that we were and in many ways still are. A lot of manufacturing is still on, but that adaptability and your discussion, Mr. Chaykowski, about fluidity, I really like.

I'm really cluing in on that word because rethinking the paradigms, rethinking the things that have been the social norms, is really important I think in advancing the health of Canadians, the health of all workers, and the opportunities that exist. Frankly, as an entrepreneur and business owner throughout my whole life, I think a lot of the responsibility lies at the foot of the employers. I think it does.

I think we have to get them rethinking. I think we have to get them rethinking about persons with disabilities, which has been one of my major passions. Also, obviously, you have senior workers who are getting into that same category of the double categorization—senior and disabilities—but I think it behooves governments and ourselves to know that when we do intervene, we're intervening on a strategic level that's going to be pragmatic and that's going to work, that's going to get to the essence of boots on the ground and is going to work.

One of the initiatives that we introduced and are rolling out right now is the Canada job grant. It offers employers opportunities. It offers government assistance no matter what age, no matter whether you're disabled or full-bodied. No matter what, it offers, in a non-biased way, opportunities. I think you're going to see employers step up to the plate on some of these fronts. I'm not saying it's the end-all and be-all. It may be just the beginning point. Like everything else, it's going to have supporters and detractors, but these kinds of things....

Mr. Béjaoui, in your original comments, your wrap-up statement was on the struggle for public policy. You said that there's this struggle for good public policy on these issues, and that's what we're trying to come to grips with.

I would ask maybe you, Mr. Chaykowski, to say a little more about that blueprint for fluidity. How do governments incorporate that into what is traditionally ideological thinking of the government and of the opposition, and the cut and thrust of politics? How does fluidity work in all of this?

[Dr. Richard Chaykowski]

I wish I had the answer to that. I have a couple of observations that I hope might help. I am trained as an economist, and we economist types do believe in the power and relevance of market-based solutions.

But I think it's equally important to recognize that markets are imperfect—that's number one—and that there are market failures. That's why I keep emphasizing trying to understand what the market failure is. What is it that the market is not doing? That is usually the impetus or argument for a government intervention by virtue of a policy.

The other thing is that there's no such thing as free markets. We might like to see free markets, but we don't have free markets. We have in some cases what are close to free markets if you go down to the market square and buy your vegetables and you haggle, but generally we have a playing field within which markets function.

We have a legal context, a very important legal context, or a legal infrastructure, if you will, and then we have a government legislative infrastructure. I say all this because there's no such thing as a market without a playing field. It's government that largely sets that playing field. That's important because employers respond to incentives.

So if there is a failure out there in the following sense, which is that the employers are not doing x, that they're not employing older workers and they're not training them, that they're not making that investment, it may be well in the interests of the individual employer not to do that, but it may not be in the social interest, and there may be huge social costs associated with that. It may be perfectly rational and reasonable for the individual employer not to engage in that behaviour, but if enough employers do that, you get some very, very negative social outcomes.

That would be an example of a market failure that would I think call for some kind of a government intervention. In that case, my own sense would be that the best approach is to have a policy that creates incentives: incentives for employers to behave differently.

[The Chair, Conservative, Ed Komarnicki]

Thank you, Mr. McColeman.

We'll now conclude with Mr. Cuzner, who is just chomping to get into this. I know he has something up his sleeve.

[Rodger Cuzner, Liberal, Cape Breton—Canso, NS]

I agree with Mr. McColeman that it's been worthwhile. He made a comment about employers wanting to use the jobs grant and step up to the plate. The problem is that they're probably going to be in the on-deck circle for two years at least.

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[Rodger Cuzner, Liberal, Cape Breton—Canso, NS]

You commented, Mr. Chaykowski, on training and technology and how technology changes. I understand that fully. Shepherding at one time was a noble job, but with fences, shepherds were no longer needed—although I know my colleague Ms. Charlton would argue that if they had been organized, they'd still have jobs.

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[Rodger Cuzner, Liberal, Cape Breton—Canso, NS]

But now their jobs would be watching the fences. I'd better put that right in the transcript. I'm only kidding.

Who's doing the training really well? In other studies we've undertaken, we've heard about Bombardier and some of the bigger corporations. It seems to be that the mom-and-pop businesses, the small and medium-sized enterprises, are the ones that aren't able to invest in the training to keep a highly skilled workforce. Are there companies out there that are doing it well that we can use as an example and that are able to train and keep their workforce into their later years?

[Dr. Richard Chaykowski]

There are any number of them, and I think you've put your finger on it. It often tends to be the larger corporations that have the resources and that are in highly internationally competitive markets. It's pretty clear that whether their workforce is, by normal standards, relatively small and lean or larger, a competitive market will dictate that their employee workforce be highly trained and highly productive. There's an individual incentive for these corporations to make that investment. You have to have the pockets with which to do that.

The classic problem in Canada has been underprovision of training at the firm level. The problem for small and medium-sized firms is partly one of resources to make the investment, but the other major problem, which people were talking about 30 years ago, is poaching. There's very little incentive to engage in significant investment if you think that your investment will be poached by the firm down the road. I remember being asked to talk about recruitment and retention in the oil patch in Alberta years ago. I went out there and I looked at the situation on the ground. The problem was in engineering. These people were all being poached. There is a certain amount you can do in terms of human resource management policies and worker-friendly policies, but at the end of the day, in fine style I guess, my recommendation was to keep paying them more. At the end of the day, the major market factor driving turnover was a very hot competitive external market.

In the meantime, if firms are investing in those workers, they're losing that investment—there's no question about that. It's very difficult to get around that. If you look at the very top, major corporations, whether Bombardier or Vale or any of those kinds of companies, such as PotashCorp, they're now in international markets, so it's not just a matter of losing people to a corporation down the road or in the next province; it's internationally. The nuclear industry is another great example of that. We have people coming in from all over the world to work in the nuclear industry and we have people going elsewhere in the nuclear industry. There is a little micro-example of the same thing in mining engineering.

So it true, I think, that the capacity for employer-based training is better in the large corporations, but the classic problem is poaching.

[Rodger Cuzner, Liberal, Cape Breton—Canso, NS]

I think we're running low on time here. I want you to elaborate a bit more. You said to stay away from broad-based policy changes. Could you expand on that a little bit and on why you recommend that?

[Dr. Richard Chaykowski]

By that I mean you should have a policy that is targeted. You can have a big policy or whatever label you want to put it under, but it should be targeting a specific market failure. If you can't identify the market failure and what the policy is supposed to do, then I would say, don't do it. I guess the analogue would be medicine. It's not clear that you should just be taking painkillers if you don't know what the source of the pain is. A painkiller has a generalized kind of treatment effect, if you will. What I'm saying is that if you can't identify the specific issue you're trying to address, you want to be very careful about intervening, because the chances are that you'll get unintended consequences. That's really what I mean by that. It can be a big policy as long as it's targeted at a big problem that is widespread. Otherwise, “targeted small” can be beautiful too.

[The Chair, Conservative, Ed Komarnicki]

Thank you very much for that exchange. We certainly appreciate your sharing with us and appearing before the committee.

With that, we'll adjourn.