Human Resources Committee on May 1st, 2014

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Oh, oh!

[The Chair, Conservative, Phil McColeman]

We'll take a brief recess and then come back for the second hour.

[The Chair, Conservative, Phil McColeman]

I bring the committee back to order for the second part of our meeting. I welcome everyone back.

We're now embarking on our committee's next study, the renewal of the labour market development agreements. To help the committee kick off our study, we're very pleased that Minister Kenney has offered to appear as our first witness to launch the study.

Thank you, Minister, for your interest and your responsiveness to the work of our committee.

Appearing along with the minister until the end of the meeting, at approximately 10:35, we have once again the deputy minister, Ian Shugart. Also joining us now we have Mr. Frank Vermaeten, assistant deputy minister from the skills and employment branch at ESDC.

Minister Kenney, would you proceed with the opening remarks, please.

[Jason Kenney, Conservative, Calgary Southeast, AB]

Thank you very much, Chairman. I'm pleased to be back. It hasn't been very long, has it?

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Oh, oh!

[Jason Kenney, Conservative, Calgary Southeast, AB]

I'm really delighted the committee has decided to take up a study of the renewal of the labour market development agreements. This is important stuff.

As we were finishing the last discussion, Ms. Sims was alluding to the broader skills agenda. We may not agree on all the details, but I think there's a pretty broad consensus from labour unions to businesses, from the NDP to the Conservative Party, and from academics to people on the street, that we have a big skills challenge, that we're not doing an adequate job. When I say we, I mean all levels in the public sector and the private sector are not doing an adequate job of preparing Canadians for the labour market of the future.

As a government, we are trying to go through all of the programs we have that deal with job training or skills development to try to get a better bang for the taxpayer's buck, better outcomes in terms of real jobs. Some of the principles that we think are useful include a greater participation of employers in the training process, trying to leverage increased employer investment in skills development and job training. When employers have skin in the game, they have an interest in training people for real specific jobs that the training will lead to, rather than just kind of training for its own sake.

I don't want to belabour the discussion on the Canada job fund, Canada job grant, labour market agreements because I already discussed that in the last session, except to say that the principles we got to there, such as, greater employer involvement, higher employer investment, training leading to real jobs, are the principles that we are trying to reflect across the whole array of federal skills development programs.

That includes the big daddy of those programs, the labour market development agreements. This is a $2 billion annual transfer that we make to provinces based on a formula that was worked out in these agreements 15 years ago. It's per capita with some flexibility that's sensitive to promises of higher levels of unemployment. Basically the result of that is that the per capita transfer to provinces like, for example, Newfoundland and Labrador, would be higher than it is to Alberta, given the variations in unemployment.

It's a $2 billion transfer based on these bilateral agreements we have with provinces. Most of the LMD agreements were signed back in the late 1990s. I want to acknowledge the good work of former minister Pierre Pettigrew at that time. I think this was a very good development of the former Liberal government, to give credit where it's due, to realize that it made more sense for provinces to deliver these programs where they are on the ground, sensitive to the local labour market realities, as opposed to know-it-all Ottawa delivering the programs.

We can all remember back in the 1970s the Manpower Canada offices. This is kind of the successor to that. That was the Ottawa cookie-cutter approach to job training. Thankfully, we've left that behind in the 1970s. We now basically take a portion of the funds that are raised through EI premiums, $2 billion, and then we transfer that to provinces and they agree to certain parameters in the labour market development agreement. But for all of the good progress that has been made, there has never actually been a full evaluation done of the LMDA. We've never sat down with provinces to discuss the outcomes and to discuss how we might get better results.

I've launched a process of consultations with interested Canadians, with my provincial counterparts. I would hope that this committee could give us some very good constructive ideas about how we could improve on the results from this significant spending being funded by workers and employers through their EI premiums.

As I say, I've raised this with my provincial counterparts. I've sent them two letters. I've raised it with the Forum of Labour Market Ministers that will be meeting in November. I anticipate I'll be meeting with them in July where we'll be discussing this at greater length. I've sent the provinces a series of questions that we want them to address, to kind of guide the discussion. I hope the outcome of this will be renewed agreements with the provinces and territories.

The questions I've asked are as follows: How do we connect training directly to employer demand? How can employers be more involved in identifying labour market needs and ensure LMDA funding goes to training that addresses those needs? How can we ensure the training leads to available jobs? How can we increase individual responsibility and investment in training? How can we increase employer responsibility and investment in training? How can we ensure the training meets employer demand, even if the demands are beyond local needs?

The second area of prospective reform is to support more effective returns to work. Should we formalize our collaboration projects that focus on earlier provincial and territorial targeting and referral of EI clients?

We're asking this because the data is pretty clear that when you engage people who have been unemployed with so-called active measures, when you get in touch with them right after they've been laid off and help them develop a plan to find new work, you get much better results.

We all know the situation. When people are unemployed for a long time, often they get a little bit depressed and discouraged. Their skills perhaps begin to get dated. They fall farther away from the labour market. You want to get in there as soon as you can with people.

We want to encourage provinces to not necessarily just serve whoever walks through the door first, but proactively to reach out to the people who have been recently unemployed. Get them into a program, whether that means upscaling, retraining, or job link services. Get them in as soon as they can.

When we hear about large-scale layoffs in certain companies, such as the Heinz factory in Leamington, or whatnot, we try to get in there with Service Canada with an early intervention. We just want to encourage provinces to be on the scene right away, helping those newly unemployed people with a work plan.

Also, are there additional efforts we can make to reach clients more effectively? That's the proactive part of this. As soon as someone signs up for us with EI, how can we share that information right away with the provincial department delivering the program so they don't just wait for the client to walk in, but rather reach out to the client and say, “We have a whole suite of services available for you. Why don't you come in? We've scheduled an interview with you.”

The third point is to ensure that eligibility is responsive to the evolving labour market. This is a big issue, and I give credit to the NDP for having.... The opposition in general, but particularly the NDP has been pointing out the changing nature of the Canadian labour market—more short-term work, more contract, and informal forms of work.

We have the problem of last hired, first fired. A lot of the young people who are at the margins of the labour market get into an employer and if there's a downturn or whatnot, they're the first to go. That often means they are not qualifying for EI, based on the criteria that have long existed. We need to recognize the evolving nature of the labour market, I think, in the EI eligibility criteria. We're open to a discussion about that.

We're asking provinces how they're using EI part two—that's what we're talking about here, the LMDA funds—to help employed workers. Can more be done to reduce the potential costs of employed workers at a higher risk of job loss? Should we expand eligibility for youth and other workers with insufficient hours to qualify? This is exactly the point I was raising. Should we expand eligibility for under-represented groups, such as the longer-term unemployed?

I talked in the last session about the labour market agreement clientele. These are the folks who, maybe, have never worked, or rarely worked. They're on income assistance. They are not eligible for EI-supported training. We don't want to leave them behind either, so how do we address them in this?

Next, to prove that the LMDA programming generates EI savings is an issue we've raised. Right now EI claimants are using about two-thirds of their part one benefits before returning to work. What more can be done to get people to return to work more quickly and thereby reduce net EI spending?

Really, what I'm raising here is the possibility of paying for results; that is to say, if provinces can reach out proactively to the recently unemployed, get them good programming and back into work right away, it will have the effect of reducing the payout of EI benefits to them.

Perhaps we should acknowledge that saving to the EI fund by giving a pay for performance bonus, as it were, to the province or the program delivering those results. We see pay for performance becoming a very interesting initiative in many countries and it seems to be producing pretty good results. Is there some way we can measure performance and perhaps compensate provinces that get the recently unemployed back to work faster? It's good for them, good for the country.

Finally, there's enhancing performance measurement. We're asking provinces how the annual planning process can be improved to ensure that the LMDA programming is more responsive to employer and client needs, and what the most meaningful performance indicators are to ensure that we can fully assess the costs and benefits of LMDA programs.

Basically, taxpayers deserve to know how these dollars are being spent, what results we're getting for them, and frankly, I think the accounting right now is insufficient. We don't want to burden the provinces with endless forms and reports, but we want to get some good metrics to tell us how we're doing on these programs. I know some of my colleagues—I won't name names; I'll let people speak for themselves. One of my colleagues on this side has often told me about a lot of the service delivery organizations funded by the province with these LMDA funds which basically just seem to produce resumés for people. Some people refer to them as resumé factories. As I say, they're well intentioned, but are they really getting results? Those are the kinds of things we need to know.

Mr. Chairman, I apologize for not having made a formal statement, but I simply wanted to give you a general picture of my ideas.

I am open to constructive ideas. I very much look forward to hearing the responses from provinces and territories as well as from the private sector, including unions and employers, but I am especially looking forward to hearing from you, members of Parliament.

Thank you very much.

[The Chair, Conservative, Phil McColeman]

Thank you very much, Minister, for those opening comments and for being very candid, frankly, about the process you'd like to see undertaken here.

We'll open it up to five-minute rounds again. I will just remind you that we will be breaking a little early to give ourselves about 10 minutes at the end of the meeting for some housekeeping things that the committee has to address today.

The first five-minute round goes to Ms. Sims.

[Jinny Sims, NDP, Newton—North Delta, BC]

First of all, let me put it on the record, Minister, that we absolutely did not include the seasonal agricultural worker program in our call for a moratorium. However, we do see all streams being part of the independent audit to make sure that Canadians always get first access to the jobs.

Getting back to the topic you're talking about right now, Kijiji has been mentioned in the House quite a bit recently. I'm not sure if your department or your office even advertises on Kijiji. Can you tell us whether you believe Kijiji is a reliable source of labour market information on which to design national policies.

[Jason Kenney, Conservative, Calgary Southeast, AB]

We rely on all of the data that's available. Obviously, primarily there's the general labour market information that Statistics Canada generates but there are also specific studies or data sets that they maintain funded by my department. Of course, there's a huge volume of labour market information. I will say this about it. I'll just repeat what I've been saying as long as I've been in this position. We have an inadequate system of labour market information. What we do know from it is that we do not have a general labour shortage in Canada. We do not have a general labour shortage in this country. If we did have a general labour shortage, it would be reflected in the price of labour. We would have seen faster increases in wages than we have since the downturn.

However, I think the aggregate national labour market information is not adequately identifying the skills gaps in particular regions and industries. Every business organization of employers in the country identifies skills gaps or skills shortages as their most important challenge.

[Jinny Sims, NDP, Newton—North Delta, BC]

Minister, I have a number of questions. Thank you for answering my question.

The government has repeatedly said that there were national skills shortages to justify the fact that we have to tell Canadians in what they should train to satisfy the needs of big business. The PBO has now told us there are no national skills shortages, and I think you just acknowledged that, but when you talk about temporary foreign workers, you are now saying that the market should do more to solve the skills shortages experience by employers.

Why trust the market to solve labour shortage experienced by employers when it comes to temporary foreign workers but not when it comes to training Canadians who have the right skill sets? Given that there are no national skills shortages, do you not trust that Canadians can make good decisions about which jobs they want to train for?

[Jason Kenney, Conservative, Calgary Southeast, AB]

I think I disagree with the premise of every one of those statements. I don't know where to begin.

First of all, I didn't say there were no national shortages. I said there is not a general labour shortage in Canada. For example, you just said implicitly you think we need an agricultural worker program, from which I infer you think there's a shortage of Canadians willing to work in the agricultural sector doing basic agriculture work.

[Jinny Sims, NDP, Newton—North Delta, BC]

I'm talking about skills.

[Jason Kenney, Conservative, Calgary Southeast, AB]

That is a certain kind of a skill that some people are not willing to undertake, right?

[Jinny Sims, NDP, Newton—North Delta, BC]

Minister—

[Jason Kenney, Conservative, Calgary Southeast, AB]

Perhaps I could try to answer the question.

I think the question you asked is, why should market forces be involved in helping people get the appropriate skills? It's because it's employers who, by definition, create the jobs and who know what skill level people need for those jobs, and because we see better labour market outcomes in countries with a higher level of employer involvement and investment in training, like in Germany, a country to which I recently led a study mission.

I think it's obvious from the data that we should all be trying to get employers more engaged in the training system.

[Jinny Sims, NDP, Newton—North Delta, BC]

Minister, to get back to that, are you saying under this new system we have here right now that it will cover training for people to enter into entry-level jobs?

[Jason Kenney, Conservative, Calgary Southeast, AB]

Well, in some cases it does.

[The Chair, Conservative, Phil McColeman]

That's really close. You have five seconds so I was going to cut it off at that point.

[Jason Kenney, Conservative, Calgary Southeast, AB]

Let's not be pejorative about entry-level jobs. Sometimes people need support to actually get those jobs, including being connected to them.

[Jinny Sims, NDP, Newton—North Delta, BC]

I'm not being pejorative. I just wanted to be clear that they could have access to the program you have described here.

[The Chair, Conservative, Phil McColeman]

Thank you, Ms. Sims.

Now we move to Ms. McLeod, for five minutes.

[Cathy McLeod, Conservative, Kamloops—Thompson—Cariboo, BC]

Thanks to the minister for being here to start the study. I think it's a really important study.

As I look at the labour market development agreements with the provinces, there's always the no ties attached, the provinces versus having what you talked about right now—there is this broad parameter—so I absolutely agree that some metrics and an evaluation process should be part of this.

Quickly, because I have a whole host of questions, what are the broad parameters right now in terms of the agreements, the LMDAs?

[Jason Kenney, Conservative, Calgary Southeast, AB]

Why don't I invite ADM Vermaeten to address this question?

[Frank Vermaeten, Assistant Deputy Minister, Skills and Employment Branch, Department of Human Resources and Skills Development]

Chair, I think you're talking about what guidance we give provinces and territories in delivering this. There's a framework that's set out in legislation and then set out in regulations and policy that provides broad parameters about what this funding is for.

We can basically put the funding in two pots. There is an allowance there to provide support measures. When we mean support measures, it's setting up those offices you see across the country that provide the counselling, the labour market information, the support in writing CVs, and that's one part of the framework. That's available to all Canadians, whether they are EI eligible or whether they are not EI eligible. So that's available.

[Cathy McLeod, Conservative, Kamloops—Thompson—Cariboo, BC]

I guess for the purposes of the committee those would be great documents we could have tabled so they form part of our study in terms of what the broad parameters would be. That would be great.

For, perhaps, Prince Edward Island we have a little bit higher unemployment rate than other areas. We know, for example, the Irving shipyards have a pretty significant contract coming up.

I know we don't mandate people to move, but to what degree do we envision these agreements perhaps supporting Irving in terms of where they are going to need to go with a resident on Prince Edward Island who needs a little bit of support to be job ready for when those opportunities arise?