Good morning.
Thank you, Chair and committee members.
I appreciate the opportunity to appear before you today in my role as commissioner for employers at the Canada Employment Insurance Commission. You have in your kit some supporting material including a little document dealing with the role of the commission.
As you may know, the CEIC is coming up on 75 years of tripartite oversight of the EI system. Its mandate includes annually monitoring and assessing the EI program. The 17th such report, aptly named the Employment Insurance Monitoring and Assessment Report, or the MAR, was recently tabled before Parliament by ESDC Minister Kenney.
MAR chapter 3, which you will find in your kits, details what we know about labour market development agreement spending of over $2 billion drawn from employment insurance payroll taxes. Here I would like to emphasize that employers foot the bill for some $1.2 billion of EI part II training and related programming in Canada, which together with employee contributions of $0.8 billion adds up to what is said to be the Government of Canada's largest labour market investment.
Regrettably instead of being credited for their lion's share contribution to EI part II labour market development programming, employers take criticism from policy-makers and others who suggest that Canadian employers are not doing enough training compared to employers elsewhere. On this I would note that comparison studies on training effort very much depend on what training is included and how it is measured. Certainly on-the-job training that is done by Canada's small and medium-sized enterprises is not included, and that massive contribution is discounted.
As commissioner for employers, I am tasked with bringing the employer point of view on EI and labour market matters to the CEIC and the department. At my first employer forum in 2011, the employer associations that comprise my business liaison group gave me direction when they contributed to a set of guiding principles on EI from employers. That's in your kit. Bearing in mind who is shouldering LMDA costs, it should come as no surprise that one key principle business groups underscored in 2011 pertains directly to the committee's study of LMDAs.
Employers are also calling for better measurement of the back-to-work higher-skill outcomes of the part II training and development measures, thereby justifying the sum of $2 billion in annual expenditures by provincial and territorial transfer partners.
Shortage of qualified labour is an issue that employer groups emphasize with me. Typically a third to a half of the members of the business groups I deal with say they have shortages now and are also concerned about the demographic trend of population aging worsening their qualified labour problems. Employer groups are challenged in having the reality they face emerge in official labour market information and serve as the basis for good decision-making by all concerned.
Employers have a legitimate and keen interest in seeing that the programs they pay for actually do the job in training Canadians to have the necessary skills to meet labour market and employer needs, thereby allowing them to enlarge their businesses and, as a positive by-product, the economy too. Accordingly I welcome the interest the government has shown in making LMDAs perform optimally for the future. I believe it is important for all concerned, including your standing committee, to take a comprehensive look at them and see how they can answer the needs of employers while also helping Canadians to find jobs. In recent weeks I have heard perspectives from employer groups directly as well as from individual employers through various meetings and round table sessions around the country that are being hosted by your colleague, parliamentary secretary Scott Armstrong.
To date I have gleaned some important insights. Generally business representatives discuss their qualified labour shortages at all skill levels, current and anticipated future qualified labour needs, their efforts to tap into less-represented groups in the labour market, inadequacies of career guidance regarding academics versus trades being given to young people, and so on. Business groups typically have little direct knowledge of and engagement with LMDA-funded programs or provincial or territorial training programs generally—except unknowingly, I suspect—such as where their apprentices receive part II apprenticeship support.
At least one business association has worked hard to garner information about LMDA-funded programs for its members by visiting ESDC and provincial and territorial websites, writing to ministers involved, and consulting the monitoring and assessment report. Despite doing this, they have found it virtually impossible to get a concrete picture of what programs are offered using LMDA money that may apply in their industry, let alone how well that money is being spent. One reason for this difficulty is that the provinces and territories have opted for a client-facing approach. That is, they regard the unemployed individual as their client, and they charge the costs back to the appropriate program—EI-eligible, LMDA or other—by way of back-office allocations, subject to provincial or territorial audit.
Minister Kenney presented some areas for improvement of LMDAs when he appeared before this committee on May 1. He mentioned the importance of greater employer engagement in designing and delivering programs; reaching more people and reaching them sooner; working with provinces and territories to strengthen program accountability and effectiveness; and finally, focusing EI funds on the most successful programs and services. These ideas for transformation of LMDAs all seem to dovetail fairly well, with one possible exception, to what employers are saying in this consultation period. Judging by how little employers know about LMDA programs, employer engagement, both input and communication, could certainly be enhanced.
As well, I have heard business support for revisiting LMDAs to establish clear objectives on a solid accountability framework, including more detailed plans for and reporting on LMDA-funded training and support initiatives. From the business standpoint, it also makes good sense to focus money and effort on successful models and best practices.
The one possible idea employers generally wouldn't support is the idea of reaching more people, if that means a change in eligibility. Of course, employers would support intelligently targeting, on an earlier basis, more of the over one million EI-eligible unemployed in the country for quick referral to retraining to meet employer and labour market needs.
Before closing, I want to alert the committee to what I am not hearing on the topic. Regarding the over $2 billion LMDA transfer envelope, I have not heard any call from employers to enlarge that sum. Employers remain concerned about the level of the EI payroll taxes and about keeping all funds segregated and dedicated to EI purposes. They are looking forward to rate relief being delivered on schedule in 2017, based on the budget 2014 forecast, coincident with the move to a seven-year, break-even, rate-setting methodology. Some business groups continue to pursue an even employer-employee premium split, arguing government should return to paying a share in this tripartite system, which would be 40-40-20.
While everyone wants to help young people in the labour market, employers mostly argue that prompting business direct action through tax incentives—something like the previous new hires/youth hires program or a basic EI exemption similar to CPP or a training credit—would do more to help young people than sending them off on government training programs funded by LMDAs.
In due course, I look forward to seeing how proposed improvements to LMDAs will answer employer concerns and help build a stronger economy for Canadians.
Thank you.