Human Resources Committee on May 27th, 2014

[The Vice-Chair (Ms. Jinny Jogindera Sims (Newton—North Delta, NDP)), NDP, Jinny Sims]

I'd like to call the committee to order. We're meeting here for meeting number 25 on Tuesday, May 27, and pursuant to Standing Order 108(2), the orders of the day are the study of the renewal of the labour market development agreements. I believe we do have a brief business to be dealt with right at the beginning so I'm going to turn to Mr. Armstrong.

[Scott Armstrong, Conservative, Cumberland—Colchester—Musquodoboit Valley, NS]

Thank you, Madam Chair.

The budget motion I'm going to propose reads as follows:

That the proposed operational budget in the amount of a maximum of $37,500 for the Committee's study on the Renewal of the Labour Market Development Agreements (LMDA).

I have that in both official languages.

[The Vice-Chair (Ms. Jinny Jogindera Sims), NDP, Jinny Sims]

Thank you very much.

Did you want to make any eloquent speeches on that this morning?

[Scott Armstrong, Conservative, Cumberland—Colchester—Musquodoboit Valley, NS]

I think it's pretty plain the way it is. It's just the fact that this is an important study. The minister approached the committee. We appreciate the support of all committee members in supporting the study, and we're looking forward to a robust report at the end.

[The Vice-Chair (Ms. Jinny Jogindera Sims), NDP, Jinny Sims]

All those in favour?

(Motion agreed to)

[The Vice-Chair (Ms. Jinny Jogindera Sims), NDP, Jinny Sims]

It's one of the few times that we have unanimity, so that's great. Thank you very much.

Now I would like to welcome our two witnesses. From Enbridge Inc. we have Catherine Pennington, and from Canadian Manufacturers and Exporters we have Mathew Wilson.

Mr. Wilson, I believe you're going first.

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

Thank you very much, Madam Chair.

Good morning, members. Thank you for having me here today.

I'm pleased to be here on behalf of Canadian Manufacturers and Exporters and our 10,000 members to discuss Canada's labour market development agreements.

By way of background, more than 85% of CME members are small and medium-sized enterprises, representing every industrial sector, every export sector, and from all regions of the country. Our mandate is to promote the competitiveness of Canadian manufacturers and the success of goods and services exporters in markets around the world. CME is also chair of the Canadian Manufacturing Coalition, a collection of 55 business associations who speak together about the critical issues that affect the competitiveness of Canada's manufacturing economy.

Manufacturing remains the single-largest business sector in Canada. Canadian manufacturing sales reached nearly $600 billion last year, accounting for 13% of Canada's total economic output. Manufacturers also employ 1.8 million Canadians in highly productive, value-added, high-paying jobs. Their contribution is critical for the wealth generation that sustains the living standard of each and every Canadian.

In 2002, CME and our colleagues in the Canadian Manufacturing Coalition conducted a biannual management issue survey. This survey was focused on identifying the major challenges faced by companies and what was restricting their growth in Canada and abroad. While a broad range of issues affect competitiveness of companies, it was clear that the largest overall challenge faced by Canadian industry today is the strength of their labour force. The survey showed that nearly 50% of Canadian companies are facing skills shortages, and due to these shortages almost one-third of companies are considering moving operations to jurisdictions outside of Canada.

The economic consequences for Canada will be significant if these challenges are not addressed. Already today we know that labour shortages are causing billions of lost sales for manufacturers in Alberta and Saskatchewan. This is why CME and our members have been working closely with governments to strengthen the domestic labour pool to improve training programs, including the Canada job grant, reforms to the EI system, and apprenticeship training, to name just a few areas. We have also been working closely to help strengthen the quality and skill level of international labour to ensure it is matched with the needs of companies through reforms to the immigration system and to the temporary foreign worker program.

We are also closely working with ESDC on the delivery of a range of programs aimed at supporting the growth in advanced manufacturing, including creating national occupational standards for manufacturers, improving labour market information through regional consortia and linking foreign-trained engineers to Canadian manufacturers. In addition, we have partnered to create a skills lab, an online forum to discuss and exchange ideas and possible solutions to the skills challenges faced by industry today, including training and skills development.

While these reforms and actions are important, there is still so much Canada can and should do to address our labour shortages and we believe a major focus of attention needs to be on training and skills development of existing and new employees. LMDAs can and should play a much more important role in this regard.

Recently, I had an employer tell me that they reject nearly 80% of applicants to jobs because they don't have the basic comprehension skills to be employable. Basically, they would have been a danger to themselves and their co-workers in the workplace. I also routinely hear that new hires are only about 20% trained and companies must take the first year of employment to complete their training and bring them to basic industry standards before they are productive. While employers will and do support training of their employees, there's a significant amount of frustration with the current system, as well as concern the system is undermining their economic competitiveness.

We understand LMDAs will not address all the training and labour problems faced by industry across Canada; however, given the amount of funding contributed into the funds and spent on training, we believe it should be a far more important and effective tool in addressing industry training needs and closing some of the existing skills gaps. As a starting point, it is important to note that portions of the LMDA funding is being applied and used effectively by industry today. Despite what is often reported in the media, manufacturers and their related supply chains invest heavily in the training of their current and future employees. It is critical to their economic survival and success.

Companies are investing in on-the-job training to teach the advanced manufacturing skills necessary for a modern global industry, such as lean manufacturing, exporting, energy conservation, supply-chain efficiencies, workplace safety, and various apprenticeships. In some cases this training is being completed with the support of regional training programs delivered as part of the LMDA funding. This type of training is directly aligned to the needs of the employers and has direct economic benefits for Canada.

Some of the specific examples of benefits from our member companies from LMDA programs include doubling production output, 15% reduction in production costs, reducing lead time by up to 70%, and improved labour productivity by over 20%. However, while these are some positive results, it is nearly impossible to know the true impacts of the nearly $2 billion in annual LMDA training expenditures. The data available for the amount of money invested through LMDA is currently and has always been very vague.

This means it is nearly impossible to confirm positive economic and social outcomes associated with investing that nearly $2 billion a year.

Furthermore, it is equally uncertain as to the direct returns in EI funds that companies and their employees are heavily contributing to. Manufacturers and their employees pay roughly $2.1 billion in EI premiums annually with only $1.2 billion paid back in benefits, the majority of which are parental leave and other social supports. This leaves a gap of roughly $900 million in the manufacturing sector alone, which we believe should be available for training in the manufacturing sector through LMDAs or similar tools.

However, we actually do not know how much money is being returned to the sector in the form of training funds through LMDAs. With this level of funding available, we believe that more LMDA training funding should be available for new hires as well as upscaling existing employees to support industrial competitiveness and growth in Canada's manufacturing sector.

Finally, we believe that LMDA training funds should be leveraged and focused on the specific needs of industry and on closing the most-needed skills gaps to help them compete, grow, and employ Canadians. Specifically, LMDA funds should be invested into areas that are employer-driven and have specific economic outcomes like the examples outlined earlier, and similar to the way the Canada job grant is being established.

By focusing a significant portion of the LMDA investment on the skills and training that are most in demand by industry, we believe the money invested will have the benefit of leveraging significantly more private sector resources and creating better economic returns for Canada.

As an example, a program like this that used to be run under the old LMDA system in the 1990s was called On-Site. The program placed EI recipients at manufacturer facilities for up to 26 weeks, focusing on training and particular skill sets, including occupational health and safety, production, or environmental management. While on placement, the recipients continued to receive their EI benefits, but they got actual work experience while receiving it.

The companies got to see how these workers fit in, many of which were hired at the end of the project. Each participating employer paid $2,600—or $100 per week—to cover administrative costs and about 80% of the participants had full-time jobs at the of 26 weeks. This program was cancelled in the early 2000s with the switch to the LMDA. To us, this is a great example of using the funds that are focused on employer needs, and producing real and demonstrable results for the economy.

In conclusion, while CME supports elements of the existing LMDA program, where investments are economically measurable and beneficial to the individuals and companies involved, we believe that significant improvement can and should be made during this program review. We believe better data and transparency is essential as a starting point, given the money being invested through LMDAs is the money from the corporations and their employees themselves.

[The Vice-Chair (Ms. Jinny Jogindera Sims), NDP, Jinny Sims]

If I could just get you to finish up, please.

[Mathew Wilson]

By allowing companies to invest the money they contribute to the EI system into training new and existing hires, the program will leverage greater employee contributions, resonate better with the employers, and create better economic outcomes for Canada.

Thank you for inviting me to participate today. I look forward to the discussion.

[The Vice-Chair (Ms. Jinny Jogindera Sims), NDP, Jinny Sims]

Thank you very much.

Ms. Pennington, you have seven minutes.

[Catherine Pennington, Senior Manager, Community Benefits and Sustainability, Northern Gateway Pipeline, Enbridge Inc.]

Good morning.

To start off, I'd like to acknowledge the traditional territory of the Algonquin people we're gathered on today. As I was introduced, my name is Catherine and I lead the community benefits and sustainability team for Enbridge northern gateway.

I'd like to thank the committee members who are giving me the opportunity to appear before you today and certainly, would like to recognize my panel participant to my left and also the others who have come before me and will come after me.

I live and work in Prince George, B.C., and as a former social worker and actually an employment counsellor in B.C., I've had direct experience helping people access several of the labour market development programs and services that you are reviewing.

Also, as an aboriginal person I've directly benefited from these types of programs. In my case, it was the ARDA, which is now known as the ASETS agreement, so I understand the value of the programs that our federal government provides and our provinces deliver, and how they equip people across this country with the skills and supports to reach their own potential.

This morning I want to share with you my views from the perspective of someone who works with industry on the front lines of community building and skills training. This work is not always easy. Often it is done in very challenging circumstances in rural, remote, and aboriginal communities. But it's also extremely rewarding. If approved, the northern gateway will create more than 3,000 jobs during construction and more than 560 long-term jobs. We're absolutely determined to see Canadians along our proposed right-of-way fill those jobs, particularly in aboriginal communities, which we believe are an untapped resource with excellent potential.

As you'll appreciate, for many of these communities the road to opportunity is filled with basic obstacles and fundamental barriers that existing federal programs are not currently well equipped to address. In my opinion, there's an enormous gap between skills training and labour market programs traditionally offered by government and the on-the-ground realities in many of the communities where my team works. For example, some of the communities are many hours away from provincial job-training centres or institutions that would offer LMA programs and other important services.

In many cases, community employment counsellors who are working with clients have significant barriers to employment, while at the same time they don't themselves have the skills to fully assist those who need their support. Further, a first nation or aboriginal community may not have the capacity, time, or resources to complete a cumbersome application like the SPF for grants that they desperately need to provide supports to their own multi-barrier clients.

If the community or nation does undertake an SPF application, for example, the process can be so long that the employment opportunity window closes before the program can actually get off the ground. The bottom line is that far too often we're seeing young, dynamic people who could be a part of the solution to our national skills shortage remain isolated, in poverty, and living less than desirable outcomes.

What's the solution? In my opinion, we must find ways to support communities and help people get to the point where they have the skills and supports to take advantage of the federal and provincial programs that work so well in other parts of the country.

At northern gateway we've spent a great deal of time coming to terms with how to bridge that divide. This is where northern gateway is quite different from other projects that have come before. Since 2006, we've been working in northern communities on skills training and capacity development. We started this early, because we heard, directly from northern communities, that it would take significant time and energy to fully prepare and develop a local workforce. We heard concerns about lack of high school completion rates and about the barriers to employment, like lack of essential skills, illiteracy issues, and labour market isolation.

The reality is that many people in rural, remote, isolated, and northern communities need intensive programming before they can undertake any skills training employment programs. We also knew that we needed to start early if we were going to meet our targets, like 15% aboriginal inclusion in the construction phase of the project and 10% aboriginal inclusion in the long-term operations of the project. In all of this, the foundation of our work has been the belief that communities are the best stewards of their own future, that they know intimately the challenges they face and they know the types of programs that can be and have been successful.

My team in northern Alberta and northern British Columbia is working closely with service providers, elders and community leaders in what we call a model of shared responsibility. It's here where we gain a true understanding of the issues a specific community is facing, and how those are different from other communities we're working with across the north.

From these assessments, we work with communities to design strategies and programming that can generate real solutions. Often that means focusing on literacy, dealing with addiction issues, and tackling systemic issues related to poverty, because you simply cannot ignore those deeper issues and expect skills training programs and labour market programs to work. It's not realistic and it doesn't result in better employment outcomes.

In light of our experience, I would ask your committee to consider the following four points.

First, industry needs local people and those in aboriginal communities to have technical and workplace skills. Simply put, no matter how good our intentions, we cannot hire or include people in our projects who are not ready for the workplace.

Second, it's important to know that industry is willing to be a part of the solution. At northern gateway, we are eager to engage in innovative partnerships, and in fact we do, to help build the readiness of local communities. But we do need ready, willing, and available partners who are not restricted by the confines of programming.

Third, we believe that communities and organizations need to have easily accessible, flexible, and responsive funding for skills training that can lead to employment. Waiting for a call for proposals may jeopardize the window of employment opportunity.

Fourth, I believe it's important that you understand that the journey to employment can be longer and far more complex than current programs are able to support. That's why longer-term and essential-skills based programming is badly needed in many rural, remote, and isolated aboriginal communities before people can contemplate technical training.

In conclusion, let me say that despite the significant challenges I've outlined today, I'm very proud of the progress we are making. Northern gateway has invested more than $3 million in an education and training skills fund. More than 1,800 people have already benefited from our programming. What's important to note is that we're working with communities on skills training that may not result in the same individuals actually working at northern gateway. We like to say that we're not in it for northern gateway; we're developing skills for the north.

My hope is that the work we are doing will serve as a model for others, but everyone must be part of the solution. This isn't about Northern Gateway. It's about helping communities create a better future. It's about tapping our most important resource, the people in our communities. It's about providing realistic supports and taking into account the broad spectrum and the needs that exist across this country. At northern gateway, we're determined to build that lasting legacy, and we're determined to ensure that no matter where people begin, they still have the chance for a well-paid career.

I offer my thanks to the members of this committee and for your important work and the leadership that you are undertaking. I hope our experience at northern gateway will be helpful.

Thank you.

[The Vice-Chair (Ms. Jinny Jogindera Sims), NDP, Jinny Sims]

Thank you very much.

Now we're going to move on to our first round of questioning. I want to remind my colleagues that these are five-minute rounds.

Our first speaker is Madam Groguhé.

[Sadia Groguhé, NDP, Saint-Lambert, QC]

Thank you, Madam Chair.

I want to thank the witnesses for their input.

I'd like to begin with Mr. Wilson.

In January 2013, in the wake of the EI reforms announced by the minister, CME was concerned that they would lead to workers taking jobs that weren't in line with their training. As a result of the tighter eligibility requirements, an EI recipient would have to quickly accept a job in a field that wasn't related to their area of expertise. Of course, we were deeply troubled by these changes, especially since they affect benefit payments.

I want to come back to the relationship between training and available jobs. Take, for instance, someone who is required to hastily accept a job that doesn't match their skill set or that prevents them from completing a long-term training program. A situation like that would certainly be at odds with our discussion on the relationship between employment, training and the potential workers accepting those positions.

Mr. Wilson, I'd like to know whether you share that observation and those concerns about the EI reforms in your region of Quebec? What could you tell us or recommend to ensure that the changes don't undermine what we are all working for and discussing today?

[Mathew Wilson]

I'll have to apologize. I think there were some gaps in the translation. I'll try my best. I think he was having a hard time keeping up with you, but I'll try my best.

[Sadia Groguhé, NDP, Saint-Lambert, QC]

But I did speak slowly.

[Mathew Wilson]

I think I appeared before this committee a year and a half ago when those reforms were first announced. We supported the reforms in general. I know there are some specific elements of it that have caused people some problems. Some of our members have concerns over some of the reforms that were put in, in terms of seasonal employment and the ability to retain those workers year round. I know it's a big problem in parts of Quebec and northern Ontario, and into the east coast, in particular.

But, in general, we didn't really think the reforms that were announced by the minister at the time were over the top. We think trying to use the system to get people to train for the jobs of the future is a good way to invest money. To get people to travel...I think an hour is where the limit is. How exactly that works, I think, is still up in the air a little bit. You hear different stories in the media. But I think we generally have been fairly supportive of requiring those people to make that commitment to try to find employment.

Directly related back to the reforms to EI and what we're talking about here under the LMDAs, what concerns me and I think our organization the most, though, is what people are training in, and the careers of tomorrow often aren't related to actual jobs that exist. I don't know exactly how you make that match better, but people can go through training and retrain for new careers, but if there's no....

As an example, you could take someone, say, in New Brunswick and say, okay, they are unemployed. We're going to train them to be a welder. If there are no welding jobs in New Brunswick, what's the point in doing the training in the first place? I think one of the things that have been frustrating for employers is that people who are going through these retraining exercises aren't really even coming out with the skills that are needed in the local economy in a lot of cases.

The data available in terms of labour market data for what companies need is lacking in a lot of cases so employees can't make the right choices for training. Companies can't make the right choice on who they are going to hire because they don't know who is available locally. So it's a combination of problems here, and hopefully this can start to address it. But it's multi-faceted. It covers everything from EI to the Canada Job Bank, which I know is undergoing some reforms as well. So it's a big, interconnected problem.

I hope that answers your question.

[The Vice-Chair (Ms. Jinny Jogindera Sims), NDP, Jinny Sims]

You have 30 seconds.

[Sadia Groguhé, NDP, Saint-Lambert, QC]

How can the federal government anticipate which LMDA-funded training programs are the most likely to lead to employment? How should the government go about that?

[Mathew Wilson]

Shall I go with this one?

[The Vice-Chair (Ms. Jinny Jogindera Sims), NDP, Jinny Sims]

I'm going to say I want you to hold onto that thought because unfortunately we have run out of the five minutes.

The chair is going to be quite strict about the five minutes so everybody does get their time, and I'm going to ask people to be really succinct if they want to get more than one question in.

[Sadia Groguhé, NDP, Saint-Lambert, QC]

Madam Chair, I'd just like to point out that there was a problem with the simultaneous interpretation. I tried to speak slowly so I could be understood, and that, of course, used up more of my speaking time. I'm a bit frustrated here.

[The Vice-Chair (Ms. Jinny Jogindera Sims), NDP, Jinny Sims]

Thank you.

I think in light of that, a very brief answer, please, from one of you. Thank you for that.

[Mathew Wilson]

Since you didn't even hear the question, and I'm not even sure I remember it anymore.... I think it was how you ensure it's aligned better in terms of the training programs.

[Sadia Groguhé, NDP, Saint-Lambert, QC]

What would you recommend?

[Mathew Wilson]

I think you have to start with better data. That's fundamental in all this, as it were. Data is the underlining value here. Whether it's data on the labour market information or what the training dollars are going to be spent on, the good data just isn't available, so I think that has to be the starting point for us.