EVIDENCE

[Recorded by Electronic Apparatus]

Wednesday, March 13, 1996

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[English]

The Chairman: I call the meeting to order. First of all, I would like to welcome you today for the opening of hearings on Bill C-12, an act respecting employment insurance. I would especially like to welcome our witnesses and members of the committee.

I'm quite excited, as chair, about the work the HRD committee will be undertaking during this session of Parliament. The committee has an historical opportunity to participate in the reforms and strengthening of one of Canada's most important social programs.

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As chair, four themes are uppermost in my mind: we need to help people get back to work, reinforce the social safety net by ensuring an adequate income for those most in need, reduce costs, and meet firm budget requirements.

Shortly before the last session of Parliament ended, the Minister of Human Resources Development appeared before this committee. Minister Young asked that we consider making changing to this legislation in three key areas.

The first area is gaps in earnings during the averaging period. There's a growing sense that proposed legislation may unfairly penalize people who are unable to obtain an unbroken stream of work during the period over which average earnings are calculated. Minister Young has said that we should find a mechanism to deal with this problem.

The second area is the magnitude of the divisor for length of the fixed period over which average earnings are calculated. One of the key concepts behind the proposed reforms is that we should provide more incentives for people to work beyond the minimum time required to qualify for benefits. Minister Young has asked us to review this provision with a view to making adjustments so that the incentives to accept available work remain. However, as I understand, he also wants us to see that this provision is not unduly harsh on individuals in regions where there are few opportunities of finding additional work.

The final area is the intensity rule. In the proposed legislation there is a modest effort to reduce benefits for those who use the system year after year. While this may seem perfectly reasonable to some people, there are those who have said that this aspect of the legislation unfairly punishes those working in seasonal industries, particularly those with very low incomes and few work opportunities. The minister has asked us to consider carefully this provision as well.

Those are the three areas we need to pay particular attention to in our work. There are obviously other very important issues that will be brought before us during the coming weeks, and I think we have to consider all those issues very carefully.

As members of the human resources development committee who participated in hundreds of hearings on social security review, we know beyond a shadow of a doubt that Canadians are not happy with the status quo. To Canadians the status quo is simply not an option. As a committee we will bear that in mind.

We need to ensure that this important component of our social safety net retains a high degree of acceptance throughout all parts of Canada. In particular, we need to strengthen work incentives and insurance principles, facilitate adjustment through reinvestment, ensure fairness for all Canadians, reduce and stabilize premiums, simplify administration for employers, and achieve $1.2 billion in net saving by the year 2001-02.

Canadians understand and have felt the impact of the structural changes that have occurred in our economy. They want us to achieve the structural objectives of the reform. The key elements of the plan for structural change include, among others, the following:

- Hours-based eligibility regime: this would appear to be a very positive change for part-time workers and multiple job holders.

- First-dollar coverage and a new simplified premium structure: these measures are intended to treat all workers more equally and remove the 15 hours per week job trap.

- Creation of a rainy-day reserve in the EI account: this would prevent large premium increases during recessions.

- During the last recession it is estimated that premium increases cost 200,000 jobs. Some reduction in premiums, of course, will stimulate employment opportunities for Canadians.

- Reinvestment of $800 million of savings in employment benefits: this would be a cornerstone of the reform in order to engage in a more active approach to re-employment.

Now I would like to say a few words about the process. Canadians are clearly thirsty for change. They want effective programs. Over the next few weeks, it is my hope that we can receive testimony and briefs from hundreds of Canadians from all walks of life. It is absolutely critical that we hear from a diverse cross-section of Canadians on such an important matter.

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In the course of these hearings, it is my hope that members of the committee will develop concrete proposals for addressing the three areas of concern outlined earlier or any other issue that may arise. Following the hearings, just before our clause-by-clause review of the legislation, I will invite the minister and his officials back to this committee to sound them out on our proposals. The ultimate goal of our committee is to improve the legislation before us and thus bring about positive change to the lives of Canadians.

Those are my introductory remarks before we move to the public hearing component.

Yes, Mr. Crête.

[Translation]

Mr. Crête (Kamouraska - Rivière-du-Loup): It is important not to forget that the bill was not debated on second reading. In the last session, it was sent directly to committee without debate on second reading and that Bill C-12 is now before this committee, although there has been no debate.

Therefore, even though we will have to pay special attention to the points you raised and which were identified by the Minister as being irritants which were already overcome, we must clearly understand that we are studying the principle of a bill, since it was not debated in second reading.

We must keep an open mind in studying the problems arising from the bill, and in looking at several issues which have not made the headlines yet, such as the question of insurability.

The bill before us will affect the lives of millions of people for several years, and it is very important that we spend as much time as is needed to study it in detail. It's not just a question of bringing in amendments to get the best possible bill. We must also ensure that the reform is carried out as intended. Everyone agrees that changes are needed, but there is no agreement as to the way to proceed and necessarily as to the way they were proposed.

I wanted to say this to make clear our approach. Let me say again that there never was any debate on the substance of the bill, and that's that the government wanted.

[English]

The Chairman: Mrs. Brown.

Mrs. Brown (Calgary Southeast): Thank you, Mr Chairman.

For the record and without a great deal of preamble, I would like to put a question to you and, through you, to the minister. We understand he will amend this bill in some fashion. My first question to you is about those amendments, or any amendment at all: in what fashion will they be taken, how will that be formulated in terms of the bill itself, and when indeed may we know that?

We are going to be meeting possibly up to 100 people or even more in the context of these committee hearings. It would seem to me not to be a good use of our time if we were rather adrift, shall we say, in terms of a particular focus to the bill if indeed the minister was going to be addressing an element of it that we would not necessarily have the occasion to focus on during the hearings with the interveners. Indeed, we may not be asking the right kinds of questions and we may not be focusing on the nature of the issues in a way that would really enhance our work here at the committee. I would ask you if indeed you had any timetable or any notion of a timetable within the process that you just laid out for us here.

Thank you.

The Chairman: If I recall correctly, when the minister appeared earlier on, he stated quite clearly to the committee members that he's looking forward to the ideas that he feels will be generated by the committee members themselves. Then, of course, the committee will be presenting it to the minister when he appears just prior to the clause-by-clause section of our hearings, and there he may in fact respond to whether or not these are issues it is possible to resolve within the spirit of the committee.

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However, vis-à-vis any other question related to the minister himself.... As you know, he does have a parliamentary secretary who speaks to him quite often. So perhaps I can defer to Mr. Nault to see if he has any insight on the matter just raised.

Mr. Nault (Kenora - Rainy River): Mr. Chairman, I have two points, one that Mr. Crête raised about just what we're doing here. Quite frankly, the rules of the House are very specific. We did not vote at second reading...which votes, of course, in principle for a particular piece of legislation; therefore it gives us more leeway. But it does not remove the objective of reviewing the bill that is presented to us and not straying from it to a point where we're talking about a whole series of events and social policy in general, as the committee did last year.

As relates to the minister, I think he has been very clear about the proposals. He's looking to us and the witnesses to make proposals on a few key areas that have been brought forward not only by him but by a lot of people - and of course the press has related that to us in their media broadcasts on a regular basis.

That being said, I think it's obvious to us that the indication we're getting from the minister is that every clause is on the table. If the opposition have proposals or of course, most importantly, if the witnesses have proposals, that's what we're here for, and at some point then we'll make those proposals to the minister. The opposition is asking us if we have already decided. Well, if that were the case, this would be all for nothing. I hope we will be looking at all aspects of the bill, and if we can improve on it we will. That's the intent of the minister, as I know it from the discussions I've had with him.

As for the timetable, when the minister will say this is in or this is out, it all depends on what you propose. So far what we've heard from the opposition is that we should pull the bill and start over. Quite frankly, that's not a proposal we're going to accept.

The proposal we will accept is changes to the clauses within the bill itself, and we're waiting, quite frankly, for the opposition, in good spirit, to bring forward some suggestions that will improve the bill. At least in the seven years I've been here that's what committees have been for. My colleagues have been told, through caucus, that they will be asked to bring forward proposals if they have any. We've said publicly to the opposition that the same thing applies to you. If you have proposals you'd like to see as far as changing the clauses goes, please bring them forward, and then the minister will review them and take them into consideration. Then when he comes to the committee he will tell you whether they're on or off the agenda.

The Chairman: Are there any further comments? Thank you very much, members.

We now will move to the first presentation, which is from the Canadian Construction Association. I believe the two interveners will be John DeVries, the senior director of human resources; and Michael Atkinson, the president of the Canadian Construction Association.

Welcome. You have the honour of being the first witnesses, and I'm sure you'll probably be addressing some of the points that I raised earlier in my opening remarks.

I just want you to know that you're talking to a chair whose father worked in the construction industry for approximately 30 years, so I'm quite sensitive. I don't know if there's a conflict of interest there.

Mr. Michael Atkinson (President, Canadian Construction Association): Maybe I should ask you right off the bat before we get going, Mr. Chairman, if that a good thing or a bad thing.

The Chairman: It's a wonderful thing.

Mr. Atkinson: Thank you very much, Mr. Chairman. It certainly is a pleasure for the Canadian Construction Association to be given this opportunity, and we thank you very much for this opportunity to appear before you and to discuss with you some of our concerns - the good and the bad, if you will - of the proposed employment insurance legislation.

As the chairman mentioned, my name is Michael Atkinson. I'm the full-time president of the Canadian Construction Association. With me is John DeVries, who is now our vice-president responsible for all human resources development issues within the association. John also sat on the business coalition that looked at unemployment insurance reform during the social security reform period, and John is also a member of the HRDC's underground economy task force.

I believe you have copies of our submission in front of you, so I'm not going to go through that particular submission in any great detail. What I propose to do is highlight some of our key issues, our key concerns, and then turn the floor over to John, who will go into a little more detail. Then hopefully we'll get into some questions and answers, some open dialogue, with committee members, which I think really is the point of this whole process.

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Very briefly, I'll give you some background information about our organization. The Canadian Construction Association represents some 20,000 construction firms from all regions of Canada who are active in the non-residential construction industry. Ninety-five percent of those firms are small businesses, by anyone's definition. Collectively, the construction industry is one of the largest employers, if not the largest employer, in Canada. The most recent Statistics Canada figures state that our industry currently directly employs some 730,000 Canadians. That is significantly below the peak of pre-recession levels of the late 1980s.

Notwithstanding a current industry seasonally adjusted unemployment rate of some 15.5%, which varies quite considerably across the country, needless to say, human resources development and employment policies as reflected in the proposed employment legislation are of extreme interest and importance to the construction industry and the members of our organization. Mr. Chairman, the Canadian Construction Association has long supported the need for a substantial overhaul of the unemployment insurance program for some of the reasons that you even cited in your introductory remarks.

In our view, the current system is overly generous, presents disincentives to employment and workforce mobility, and has greatly departed from its original intent. To the extent that the current proposed legislation begins to address some of those weaknesses, CCA is supportive, although we feel the reforms could have gone a lot further.

Before asking my colleague John DeVries to outline our specific concerns, I would like to summarize our major criticisms as follows, and essentially there are three.

I should preface my comments by saying that some two years ago, during the social security reform process, we undertook a bit of a dog and pony show ourselves in talking with our members in all regions of the country about what was good, bad and ugly, if you will, about unemployment insurance in particular, and asking them for their input - their comments, their views and their recommendations. These come, as I mentioned, from some 20,000 firms from across the country, from men and women who have to meet a payroll every two weeks or every week, who have to try to make their businesses continue. So these are not coming from some professional lobbyists or from somebody who has dreamed this up in an ivory tower somewhere.

First, the proposed employment insurance program is not the place to address regional disparities or other social policy objectives. Those should be addressed outside the program and financed by all taxpayers, not just employers and employees. That criticism goes to what I mentioned earlier about the unemployment insurance program - or now the employment insurance program - straying from its original intent. That is not to say that any of those programs that are financed under UI currently do not have lofty and good objectives, but simply they should not be part of that particular fund. They should be funded and financed by government outside a program that essentially requires employers and employees only to foot the bill.

The second point we will be talking about is that UI premiums are a payroll tax. Mr. Chairman, you referred to this yourself in your opening remarks. They are a tax on jobs. The Governor of the Bank of Canada and the Minister of Finance himself on many occasions have both stated that payroll taxes are the greatest impediment to job creation.

By government's own estimates, the UI fund will be in a surplus position of upwards of $5 billion by the end of 1996-97. However, government has shown no intention to significantly reduce those premiums, has shown no intention or even indication that this surplus will ever be returned to employees and employers. It's their money. This is a payroll tax. One of the best ways to stimulate employment in the marketplace is to give businesses tax relief and to put moneys back in the pockets of workers.

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The third area we are going to touch on today is this. When the federal government stopped financing the developmental uses portion of the UI fund some years ago and asked employers and employees to make up the difference in increased UI premiums, it was done under the pledge that government would use these funds for human resources development and training purposes. This included the funding of provincial apprenticeship programs in our industry - an essential cornerstone of our industry's training and ensuring a skilled workforce.

With the recent announcement that the federal government is withdrawing from the labour market training field and therefore withdrawing funding for certain aspects of training and apprenticeship, many employers and employees in our industry begin to ask, quite legitimately, when government is going to give their money back. The apprenticeship system is too important to our industry for such decisions to be made in isolation, without full consultation with the industry or without providing some kind of orderly transition.

I would now like to turn the floor over to my colleague John DeVries, who will explain in a little more detail our concerns. We hope there will be ample time for discussion.

Thank you.

Mr. John DeVries (Senior Director of Human Resources, Canadian Construction Association): Thank you, Mr. President.

Mr. Chairman, committee members, what I propose to do for the next ten minutes is walk through the brief. It's only seven pages long so it shouldn't take too much time; then I'll open it up for discussion.

There are a number of unique construction points that we want to raise with you. A lot of the issues we raise under the specific comments on Bill C-12 will probably be comments you hear from other business groups. However, I would like to spend some discussing specific comments on construction apprenticeship and income support for apprentices through UI.

With our brief, I am just going to start off with the priorities that motivate CCA to speak out on UI. There are four strong priorities that bring us to this table:

1. This industry being what it is, we have to serve a client. That client could be anywhere in Canada; we need a mobile construction workforce. The current unemployment system is perceived by our members to be just too generous in benefits and is skewed to favour the regions. As a result, we don't have true mobility or the best mobility we could have. I cite the case of the late 1980s. We had a construction boom in Ontario, and you couldn't fill thousands and thousands of bricklayer and carpentry jobs in Toronto, and yet there were over 100,000 unemployed skilled construction workers across Canada.

2. We are driven by our customers, and they only make investment decisions to buy construction when they believe they can compete globally in Canada. So we are very much dependent on their investment decisions. We are just delivering the message that public policy-makers must be cognizant that payroll taxes are one factor in the decision to invest in Canada. Certainly we have to be cognizant of the payroll burden in our country compared to that of the United States, our biggest partner.

3. The underground economy is having a tremendous effect on the amount of resources this government has at its disposal. It's probably no secret here that construction is one of the leading sectors where you'll find underground activity because of the service component in construction. We believe that unemployment insurance is a strong inducement when there is no enforcement. The key is that there is no enforcement. There is just no one checking up on whether or not people are looking for a job. So there is a strong inducement for people to take a cheque and participate in the underground economy.

4. Then there is the fairness aspect. Again, if you have a generous UI system that has been pulled over the years in different political and social directions to benefit one region over another or one individual over another, unfairness creeps into the system.

This is a concern because sectors like ours become big users through no fault of their own. If you have a system such as construction that is perfectly tailored to frequent spells of unemployment, you're going to have wide discrepancies between the amount of benefits taken out and the premiums coming in. A lot of sectors outside of ours point fingers at us for that very reason.

We are very worried that a pooled-risk insurance program like UI is in danger of losing support. I believe that Minister Axworthy, in his opening remarks to this committee, alluded to that unfairness in correcting some of those aspects of major repeat use.

Those are the priorities shaping our seven-page brief, and I will make specific comments on each of the parts.

Regarding part I, clauses 1 to 55, we do support the move to change the entitlement to an hours system rather than a weeks-based formula. We do not believe, however, that there should be any variation in entitlement based on regional employment rates. I know that's going to be a hot one, especially for all politicians east of Quebec, but we just don't believe there should be any variation at all.

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CCA recommends a standard 700-hour minimum requirement for benefit entitlement. That's translated on a 35-hour work week to a 20-week minimum.

We also support the move to change the benefit formula under section 14. Dividing earnings over a fixed period by a common divisor will be an incentive for individuals to seek additional weeks of employment. I can assure you that in the construction industry we've heard that from many of our contractors who work in the road-building sector, who shut down the road-building and then might get into other seasonal activities such as plowing. They just can't get their men to even pick up the phone to come out to work - they're afraid to disrupt their UI claim because of the formula. So that will be a positive.

We believe there should be a uniform divisor of 20 weeks with no regional variance at all. It's probably not the answer the minister is looking for when he says he wants to see some response on the magnitude of the divisor, which I believe is now 14 and 16, in the next few years.

We do support the reduction in benefits for repeat users under clause 15, recognizing that this will have an impact on our industry. The reduction is relatively minor, in CCA's view, and will serve as an incentive for repeat users to seek additional employment.

You have to bear in mind that in our industry, with such a high level of employment, we also have a high level of unemployment. A significant portion of our industry's employment is a very marginal attachment, and the UI system contributes to that marginal attachment - people who work only 12 weeks or less in a year.

The bill proposes under clause 16 to provide additional family benefits for claimants with low incomes. CCA believes that if government is prepared to adjust benefits upwards on the basis of family income, then it should be responsible and adjust benefits downward as well on the basis of family income, especially for frequent claimants. Statistics indicate that about 200,000 frequent claimants in 1991 had family incomes over $50,000.

Under part II, clause 56 to 65 deal with employment benefits. We don't especially have any comments to make about most of the packages. In CCA's view, wage subsidies and earning supplements are inappropriate as they serve to distort the efficiency of the labour market.

Our members are concerned that these benefits will be subject to abuse by employers and beneficiaries. In the absence of a decision not to proceed with these benefits, we are suggesting that the committee look at guidelines that limit the use of these benefits should they be considered by government. In other words, let's think about some repeat limits, because you'll have people coming back to the well over and over again.

Our view on self-employment job creation is that these programs should be eliminated.

The clause on skill grants and loans reflects the Prime Minister's announcement in early December that the federal government was backing out of the direct purchase of training in all provinces across the country. Now, it's our reading the skill grants and loans are being held out as somewhat of a replacement for the block purchase of training. As the president alluded to, apprenticeship training is included in that purchase of direct training.

We're very strongly concerned that we're not party to the discussions. We're really concerned that when the provinces are expected to shoulder the bill on this, they're going to do so in a vacuum, without construction labour and management. We want to be there to give advice on the best possible change for how apprentices - the young people in our industry - are going to be treated, because the worst fear we have is that everyone is going to slap a 100% user fee on young apprentices. I can tell you that they're not in any financial position to handle a 100% user fee. I think they'll fall through the system and just work without the credentials, or strive to work towards the credentials.

As for part III, clauses 66 to 80, on the premiums, you heard the president state our opposition to allowing the UI fund to accumulate to several billion dollars. We believe, with all the reforms that have been done in the last five years, there is just no need for a UI surplus fund of several billion dollars.

With the reforms that should go through with this package, we believe the commission, acting with the minister and the finance minister, could keep the UI fund easily within a band of a few billion dollars. Anything less would be perceived by our organization as a cash grab in the short term to keep the Canadian deficit on target.

Now, this is something you may not hear from too many other groups. The employer premium, as you are aware, is 1.4 times the employee premium. The employee premium is $3 per $100 of payroll; the employer pays $4.20. It's been that way for 25 years. We're saying that it may be about time we took a look at that and equalized the premium.

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If there's one way you can deliver an immediate premium reduction to employers and reduce payroll costs, and justifiably...I think you could argue the employer premiums could go down to $3 instead of $4.20. In the next two years, with the surplus growing at $5 billion a year, I think there's room right there.

I'd like now to turn to apprenticeship training and the UI income support for apprentices.

There are 140,000 apprentices in Canada. The large majority are in the construction industry: 55%. The decision by the federal government to withdraw from the direct purchase of training amounts to approximately $85 million of cuts. It's our perception right now that there are going to be some serious repercussions in certain provinces.

Certain provinces such as Quebec and Nova Scotia have different variations in apprenticeship training. They don't use alternate on-the-job training, back in college, on the job. They have different variations. So the impact is not going to be as great. But in many of the provinces they do have this rotating on-the-job, in-class...and the in-class portion is funded up to about 60% by the UI developmental uses funds, as well as consolidated revenue funds.

That withdrawal is going to be both immediate.... If it's consolidated revenue funds it's going to be effective April 1. It's a total of $31 million. The other portion, which is developmental use, is going to be phased out over three years. So right away, on April 1, we're going to see apprentices such as self-employed apprentices, drywall applicators, painters, people who work on a piece basis... They usually were covered for their apprenticeship in-school portion under consolidated revenue funds. Just because they weren't UI qualified, they're going to be cut off right away; and they're definitely not going to be going to school if they have to pick up the cost of....

This is assuming of course that the provinces don't jump in with the funds to pick up the bill - and that's what our worry is. We haven't seen the provincial response yet. There's a lot of confusion out there. But I raise this with the committee to keep an eye on this. You're going to hear from the building trades right after us. They share the same concerns as we do. In fact, you'll probably hear the exact same recommendations.

We are working with the building trades. I'm trying to work with national standards on income programs and on the costs of apprenticeship training right across the country. But with labour, we are committed to ensuring we have a high-quality apprenticeship system that includes an in-class theory component that's accessible to all apprentices. We want to be included in the discussions between the federal and provincial ministers of labour when they get to talking about skills grants and loans, because we feel if we're not there we're liable to be hurt by the outcome of those discussions.

Finally, for decades apprentices have gone to trade school...as I said, after maybe a year or two out in the field working, they go to school for eight or ten weeks. They learn their theory at trade school. While they're at trade school, they don't get paid. They pick up UI. For decades now they have been recognized as having a ``lay-off of convenience'' - I believe that is the terminology used in the department. They are laid off by employers. They go to school and the UI income system basically enables them to learn their trade.

This has been threatened right now by a policy review within the department. We've been advised by the senior officials that a decision will likely be made in the year.

We're worried, because we think the whole income support system for apprentices is very much threatened here. Because it's only in the hands of the bureaucracy, there is nothing in the legislation that permits this. This is all a policy decision. I guess it was 3 decades ago or 25 years ago that the policy was adopted internally by Employment and Immigration, or whatever it was called then, that they would agree to endorse their receipt of benefits while they're in school; it was never enshrined in the legislation.

We're recommending - and you can look at page 7 of our brief.... Clause 25 in the bill, paragraphs (a) and (b), provides for situations where individuals can collect UI and in reality they are not out there actively looking for work. So there are a few situations in the bill that allow people to collect UI, and they are situations usually with training. They're on special training programs, upgrading, what have you.

We're asking - and you'll probably hear the building trades unions, who are coming in right after us, support this - that a paragraph (c) be added so that registered apprentices, while attending the in-class training session as required by the provincial apprenticeship department, be allowed to collect UI benefits, that they be considered capable of and available for work during the period when they're at trade school.

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Those are basically the points I wanted to raise with this committee. There's lots of room for you to raise questions, and I'll turn it over to you now.

The Chairman: Thank you very much, Mr. DeVries and Mr. Atkinson. It's certainly an excellent start to our hearings.

We're going to move to the question and answer session. We will have one 15-minute round, which means we will start with 15 minutes from the opposition and then the government will also get 15 minutes.

Mr. Crête.

[Translation]

Mr. Crête: Mr. Chairman, I believe that the official opposition has 15 minutes, the Reform Party has 15 minutes and the government has 15 minutes. If a party is not represented, does its question period belong to the official opposition?

[English]

The Chairman: Ms Brown approached me during the presentation and stated that she had to leave. If you would like to go for 15 minutes, followed by 15 minutes from the government, I think that would be fair.

Let's get to the questions now.

[Translation]

Mr. Crête: Thank you for your presentation. From what I heard, I must conclude that you would like to have a purely economic unemployment insurance system, a purely financial one, indeed, basically an insurance system. If that's the case, the expression ``employment insurance" would not even apply. In your recommendations, I believe you object to any job creation reforms. You seem to want to turn the system into a private insurance system which could ultimately be managed by the private sector.

Before I go on, I would like to know where you live. Do you live in Ottawa?

Mr. Atkinson: In Nepean.

Mr. Crête: Let me tell you that other nice places to live are Shédiac, Paspédiac and Saint-Pascal-de-Kamouraska. Some families have been there for 100, 150 and even 200 years. These people want to work where they live. They are not machines which can be moved to construction sites in British Columbia or Alberta or James Bay on a week's notice. In any case, generally speaking, construction workers look for jobs wherever they're available. So the husband must travel and his family, particularly his wife, must stay at home.

So, it is very important that from the outset we treat people like human beings. If this cannot be done through the unemployment insurance system, we will have to do so another way.

You insist on the mobility of the labour force. I personally believe that we also have to insist on the fact that people have a right to live in their part of the country, since they were allowed to settle there in the first place. This must be maintained in the future.

I think something Mr. DeVries said took me aback. He said: "It will be difficult for politicians to agree to the changes we are asking for in our brief, specifically as it relates to Eastern Quebec and the Maritimes".

These changes won't be hard for politicians, but for the men and women who live in those areas. There's a big difference between the two. Last night, 5,000 people gathered in Matapédia, and certainly 4,800 or 4,900 of them were not politicians. These people lived in the Matapédia valley, and they were not all politicians. We have to remember this when we decide on the choices we will make.

I have some more specific questions. In your opinion, how will your two recommendations, which call for no change in eligibility criteria based on regional unemployment rates and the minimum 700-hour threshold to collect benefits, affect claimants? If these measures were adopted, what would be their economic and social impact?

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My second question concerns the self-employment assistance program, which is currently helping to foster a new generation of entrepreneurs, especially in small and micro-sized businesses. If the program is abolished, how would that affect the economic health of affected areas?

I also found interesting what you said about decreasing the surplus. You seem to think that the government's enjoys a $5 billion surplus which you consider too high. I'd like you to explain why. You are proposing a smaller fund. Why?

I have a final question, which is also a comment. We are quite surprised that you don't seem to trust provincial governments to reasonably manage manpower training if ever they have that responsibility. In Quebec, management, labour and the school system want the province to be solely responsible for manpower training.

I want to know why you obviously don't trust the provinces and why you make that argument.

In conclusion, if we agreed with your recommendations, do you believe the government should have a parallel program of adequate regional development? In keeping with your argument, since you don't want any particular job creation program or measure would you nevertheless recommend that the government look after regional development or do you think the market should rule?

[English]

Mr. Atkinson: Mr. Chairman, maybe I can start responding to those questions.

First of all, to start with the final question, I guess our point is that regional development programs have been around since Confederation. Certainly there is a role the federal government plays in addressing regional disparities. In fact, I think the phrase ``regional disparities'' is unique to Canada.

Our members, not just me and Mr. DeVries from Ottawa and Nepean but our members across this country, have been saying to us that those kinds of programs, no matter their merit, should not be part of an unemployment or employment insurance fund that is funded now solely by employers and workers in this country. If in fact Canadians want regional development programs, want some of the employment, social-type programs that are now part of the UI fund, then let Canadians - all Canadians, all Canadian taxpayers - bear the cost of those programs, not simply workers and employers.

As for provincial governments, it is not that we mistrust provincial governments any less or any more than the federal government; it is that we have some concern that if the industry most affected - both management and labour - is not involved in the discussions that will happen between the federal and provincial governments as part of the new skills and grants provisions in this legislation, rash decisions, not well-informed decisions, will be made. So our plea is to be included in those discussions.

Our concern if we aren't involved and decisions of a rash and ill-informed nature are made is that uniform standards, which are a goal of our industry in training and apprenticeship, will go by the wayside because of financial considerations, because of different approaches and responses by different provincial governments in how to pick up the slack, if you will, of the federal government withdrawing funding for those programs. So our concern is more about the impact those decisions may well have on apprenticeship across this country as a result of the industry that is most affected not being at the table with the provincial governments and the federal government when these discussions occur. Certainly it doesn't have anything to do with the fact that we somehow mistrust provincial responsibility for such matters.

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We believe the UI fund surplus should be smaller and should be returned to those employers and workers who, after all, are footing the bill. When one thinks about it.... I guess maybe I'm a little naive, but I thought UI premiums were used to finance the UI program. Maybe I'm naive. Maybe there's no such thing as taxes being raised for some kind of designated - I won't use the word ``dedicated'', Finance doesn't like that - purpose. If you have a fund, a program, that is sitting in a $5 billion to $6 billion surplus and climbing, one would expect that government wouldn't just come in and scoop it up and use it for whatever purpose they want. But then maybe I'm naive.

As for the self-employment enhancement programs and other programs under the current UI program, and the new measures and enhancements announced in this legislation, I'll repeat myself again. First of all, we don't feel those programs should be part of this particular package.

Secondly, we believe some of those programs are currently having a detrimental economic impact in some areas. We are concerned, for example, about how existing businesses that have to meet payrolls, that don't have the federal government as their banker, can compete and survive and thrive in a situation where individuals are opening new businesses whose banker is the federal government. So we have some concern that without some limitation or restriction, without some kind of monitoring process and some kind of accountability, those programs could in fact have a detrimental impact on the current economy and on our current members.

As for what we think is going to be the economic impact of going to 700 hours, first of all, going to an hours-based eligibility requirement system is going to be a very big benefit to our industry, particularly in the road-building and heavy side and in the real seasonally impacted part of our industry, where you have workers putting in 40-, 55-, 60- or 70-hour weeks who might not otherwise have been eligible for UI under the previous weeks entitlement, but certainly would be under an hours-based system.

As far as regional rates of unemployment and regional variations go, again repeating myself, we just do not feel that the employment insurance program is the place to deal with regional policy objectives.

As for turning the employment insurance program into a private system, we certainly are not suggesting that. We are not saying we should go to complete insurance principles only. I don't think you can do that with this particular program, and we are not promoting that.

What we are saying, though, is that the program should be going back to what its original intent was. Again, this refers to what the tax moneys, if you will, the payroll taxes and the taxes on workers in this country, are actually being used for. It seems the people who are actually picking up the tab, if you will, are not having an adequate say in where that money is being used, if in fact the fund can continue to grow and be used for whatever purpose, and have numbers of bells and whistles added to it as the program moves ahead.

Mr. DeVries, I don't know if you have anything to add.

Mr. DeVries: No. You can see why he's president; he has answered all the questions.

But I just want to comment on the regional aspect. I guess the whole controversy around UI reform is that if you reform it too much you're forcing people to move out of their area. I recognize that's an emotional issue, it's a tough one, and it's easy for us, as people who work for associations. But I can assure you we've been around the country, we've worked outside of Ottawa. I've worked in the construction industry. We have hearts too. But the fact is, can we afford, as a country, to keep people in areas of the country where there are only 10 weeks of work left?

We have overemployment in our industry - not overemployment but an oversupply of people - and too few jobs in certain regions. Yes, I guess it is a hard world, but people do have to move, and people are moving. People want to work in this country. But we don't need an instrument like UI skewing the labour force system.

So in response to the economic consequences of going to a 700-hour entry, it may be positive, sir, to have an efficient labour market.

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The Chairman: Mr. Crête, you have approximately 60 seconds left.

[Translation]

Mr. Crête: You believe that the 910-hour threshold for new entrants which the bill calls for should be dropped. Are you saying that there should be a 700-hour threshold for new entrants?

[English]

Mr. DeVries: We took the position that it should be a standard 700 hours for everyone, whether they're new or repeat, so in some ways we'd probably be dropping.... We're just saying 20 weeks is a minimum work attachment, 700 hours.

The Chairman: Thank you, Mr Crête.

Now we'll move to the government side, the Liberals. You also have 15 minutes, and the order will be Mr. Scott, followed by Mr. Regan and Mr. Easter.

Mr. Scott (Fredericton - York - Sunbury): Thank you very much, Mr Chairman.

I have a couple of questions. The first has to do with the divisor and your reference to the fixed period for calculating the level of benefits. I heard you say you thought that was a good idea because of the obvious incentive to find additional weeks that would be contained in that. I assume that's because of the difference between the number of weeks required for entry the system and the number of weeks around which the division would be made. Am I correct? Okay.

If the difference is the incentive, why would that incentive then not serve for everybody? As it stands now, if you enter the system with 12 weeks, which is the minimum, and you have a 20-week divisor, that incentive will be there only for people who enter after 12 weeks or 14 or 16 weeks, but if you enter the system with 20 weeks it doesn't serve that purpose. I need to know why there needs to be an incentive in some parts of the country and not others.

The second question has to do with the reference to the fact that the government is allowing the fund to build up a significant surplus. I think you would characterize that as a bit of a tax grab or something to deal with the deficit. Some years ago when the federal government went to the consolidated revenue fund to deal with the deficit in the program, were you also concerned about the fact that the government was creating that deficit at that time in order to finance a program that I think is helpful in terms of the economic stability of your industry?

Thank you.

Mr. Atkinson: Mr. Chairman, through you, maybe I can deal with the second question first.

We are sensitive to the idea that the government would like to have some kind of cushion for a rainy day so it doesn't get into the situation where it has to go out into the market and borrow money to make good a deficit in the UI fund. Our argument is, what is that appropriate cushion? If you look back to the high unemployment days at the height of the recession and hear the argument that you need $5 billion to $7 billion, depending on which number cruncher you're talking to, we just don't feel that washes, for a number of reasons.

Number one, we've had a number of amendments to the UI program since then, including the ones that are proposed in this particular bill, which would lead one to believe that even in that kind of worst-case scenario you're not going to have the same drain on the program. According to the chairman's own statements earlier on, the savings that are coming out of these reforms would lead one to believe that you're not going to need that kind of sizeable rainy-day cushion that you might have experienced in the past. From that point of view, we feel it's appropriate to start talking about that.

Second, I have heard no indication from anyone that there is going to be any relief in UI premiums regardless of the size of that surplus. Minister Martin, in response to a question we had in a meeting with him the other day, simply said, look, I need to meet my deficit targets, and if I reduce the premiums, where am I going to make up the difference? What can I cut? Our argument is that it's not government's money to scoop in the first place.

Mr. DeVries: As for your first question regarding the 20 weeks, I guess the formula is there because that's where the big problem is, as I perceive it, and the policy-makers probably wanted to address that. We haven't looked at that over the 20 weeks, whether some sort of incentive to keep them working or keep the formula going.... I can't cite all the statistics, but I know the repeat users with the low level of weeks of work and the long claim are the problem. I know from our experience with our contractors that they have trouble getting people working in the shoulder seasons, just because any earnings after that while they're on claim brings their earnings down.

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So that's why we support this transition, but I hadn't given any thought to those working after 20 weeks.

The Chairman: Mr. Regan, please.

Mr. Regan (Halifax West): Thank you, Mr. Chairman, and gentlemen, I'd like to thank you for coming today.

My first question relates to the benefit-contribution ratio. For your industry at the moment the ratio is that your industry receives $4 out of UI for every $1 it puts in. Under the proposed reform, that will move to a ratio of 3.5 to 1, so it seems you will still do very well as a result of this reform. I wonder what your comments are. In light of that, why aren't you supporting more of this reform?

The next question has to do with the issue of apprenticeship. It seems to me that your industry has had apprenticeship for a long time. In these days, with many new jobs being in the high-tech area and the new knowledge industries, we need to have apprenticeship across the board in all kinds of industries, not just the construction industry. So why should it be just your industry that gets a benefit from this?

Secondly, if in fact we work out with the provinces, who are insisting that we remove ourselves from their jurisdiction of education, programs that are satisfactory in terms of your concerns, do you really see any problem there in terms of apprenticeship?

Mr. DeVries: On the first point, about the subsidy, I noticed that in the papers this time it was 4 to 1. I've seen four studies over the last 15 years, and they range from 2.5 to 3 to 3.5, and there are some problems there of classifying who is in the construction industry. But let's say that we take out a big subsidy.

As I said earlier, we're concerned that we're perceived as draining the system. We've tracked a lot of marginal workers, so we naturally want the system tightened up so that we won't have a pooled insurance system falling to the wayside because people say we should privatize it or get rid of it. There's always going to be some sector like ours that pulls on the system like a car insurance system, but I don't have any comments as to what a respectable ratio should be.

Mr. Atkinson: It should be remembered, though, that our industry is a legitimately seasonal industry to a great degree. From that point of view, we try to control everything else, but we can't control the weather.

Mr. Regan: Do you support, for example, the Reform Party point of view that we should move toward strictly insurance principles, which might in your industry mean that it would be 1 to 1 and therefore you'd have to have much higher premiums?

Mr. Atkinson: No.

Mr. DeVries: If we could control the benefit structure, then I think the industry as a whole would be prepared to entertain that. But we're not the masters of our destiny, and I don't think any employer or labour group ever has been with UI.

Certainly, if you could control the benefits, we'd run it like any labour management benefit system in the country right now. We do it all the time in the private sector, with dental plans and health and welfare plans. That's probably not the answer you wanted to hear, but....

An hon. member: It's up to you. It's your answer.

Mr. DeVries: The other thing I wanted to say about the experience in our sector - and officials from the department can verify this - is that you'll have 25% of the construction industry actually paying in more than they pull out. It all depends on the sector. We're talking about 100 different specializations in construction: roofing, road-building, and so on. You can work in most provinces - Vancouver - for 12 months of the year with no problem, but in some areas up north you can't.

Mr. Regan: I asked about the apprenticeship question.

Mr. DeVries: Oh, I'm sorry. What was it again?

Mr. Regan: First, you're suggesting that we should get out of the area, for example, of self-employment assistance. But in fact our studies have shown that this is one of the most effective ways of getting people off the UI system and lowering the cost to the insurance aspects of this system. In fact, on average people not only end up being self-employed but also hire one additional person.

You're saying we should get out of that but stay in apprenticeship. It seems to me that is where we should stay, but I also asked, if in fact we address in negotiation with the provinces how they're going to use dollars we give them for apprenticeship or how that's going to work in each province, if you're satisfied about how that works, whether or not you feel that addresses your concerns about the fact that we're withdrawing from direct funding of those kinds of spaces.

Mr. DeVries: Let me comment on self-employment. You have to put that in context here.

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I think there's only about 12,000 or 14,000 participants in that program, and maybe $100 million or $120 million. We just have a philosophical problem with people receiving a UI cheque, with no questions asked, when they're out operating a business, probably in competition with small business people in the construction industry. This is a problem for our members.

Yes, we hear about studies that have come back; they have good employment things. But this program is really only a few years old, so the jury is still out, from our perspective.

On the whole apprenticeship issue, we've been working for years to try to get common standards. We've been working for years with labour. Our biggest frustration at the provincial level is that we don't get in the door or get decisions made on issues such as having a common carpenter or electrician training program right across this country, or on the problem of having to have five years' training for an electrician in Ontario versus four in Nova Scotia. We've always been on the outside looking in, and maybe that's our fault. We haven't banged on the door hard enough.

In some provinces we have excellent partnerships, but we're really concerned with the federal government's decision to pull out. We're concerned that more decisions are going to be made in a vacuum, without us there - decisions that may hurt recent initiatives to try to get national standards.

I think in the last few years the whole appetite of the ministries of labour across the country towards apprenticeship has changed. You commented that high-tech apprenticeship is the way to go. We see this in speeches all the time. So I'm worried that just as we may be turning a corner on apprenticeship, some of the basic infrastructure may be knocked out without our even having any leadership on alternatives. We'd like to be at the table with our labour partners.

The Chairman: Thank you, Mr. Regan. The final questioner for the government side isMr. Easter.

Mr. Easter (Malpeque): Thank you, Mr. Chairman. Welcome, gentlemen.

Just to follow up a little on Mr. Regan's point, I'm surprised at your position on self-employment and job creation. That's one of the areas that I'm actually enthused about; I think it has got people off unemployment, and not only have they created jobs for themselves in many cases but they have often hired other people.

So on that one, I'd like to know why you're concerned and what the impact is on the construction industry specifically. Secondly, in your priority three on page 2 you say ``a generous Unemployment Insurance system with minimal enforcement''. I'm wondering whether your emphasis is on ``generous'' or on ``minimal enforcement''. I'm an employer myself, and my experience has been the opposite in terms of abuse of the system. It's those people who actually receive very little benefit under UI who are out there, because they have to somehow put the food on the table; they're doing everything that they can to do that, and they work for cash or whatever.

I would ask you if you do not see it as necessary that UI, in terms of its benefit base, pay out at a level that meets the needs of people and families in the off-season.

Last, you mention adjusting benefits on the basis of income. I think you have a good point. We also need to look at adjusting benefits not just upward, but downward, on the basis of family income. How are you suggesting we do that? At what level? Are you suggesting clawbacks?

Mr. DeVries: Let me comment on family income. I know the committee debated this when they had the social security paper, and I think they did turn it down for a number of reasons. But we know that within the system there are so many secondary earners in the family; I think the statistics show there are 200,000 frequent claimants - and they're frequent, annual. It's like the education system.

The government even churns out the people they hire on contract through their tax assessing department; they're all employing part-time people. The educators have assistants in the classroom; they're all churned out for ten weeks. GM hires people for three or four weeks. We just feel it would be equitable to balance it off if you're going to do it for the whole system. I don't have a solution as to the criteria. I'll leave it up to the department to try to figure that out.

Mr. Atkinson: Mr. Chairman, through you, maybe I can address the first question, on the self-employment enhancement program. Again, to try to make myself clear, first of all, we question whether those programs should be funded under a UI or an employment insurance program. That's number one.

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If the programs are in fact showing that they are successful, that they are not disrupting or hurting businesses already in business, then perhaps those programs are good and worthwhile things. We are questioning whether they should be funded on the backs of only employers and workers in this country. That's first, because that's what's happening when you fund them under UI.

Secondly, I guess the nervousness of our members in the construction industry...because I will concede, as John has, that not enough of an experience of this program has been built up really to look at it, and in our industry I dare say there's been even less experience with that particular program...to take a look at it. But I think the concern, the nervousness, the uncertainty of our members are about other programs, similar programs that have been run in their areas, which essentially have some public agency or government bankrolling somebody into the business and in the end putting them and the pre-existing businesses out of business as a result of unlevel, uneven competition. If your banker is the federal government, I don't know how you compete with them.

The Chairman: Final question, very short, Mr. Nault.

Mr. Nault: I wanted to get back to an issue you raised about the surplus. Quite frankly, I'm surprised you would be opposed to that. Every business - and of course most of us have businesses of our own, in one form or another - has a form of capital put aside for bad times, so it doesn't end up going bankrupt. That's the whole objective.

In the last recession we raised your premiums because the fund was in a huge deficit, some 33%. The estimates suggested it cost the economy some 200,000 jobs because of our having to raise premiums just to keep it to a level. Why would you be opposed to good management of the fund by our having a large surplus in order to.... On the assumption that we are going to have another recession, which every economist we talk to suggests we are...we'd be prepared for it, and we wouldn't have to raise your premiums to the extent that occurred under the last government in the last recession.

Mr. DeVries: I guess we take issue with the magnitude of that surplus. The program has gone from, what, $19 billion a couple of years ago to $15 billion, to $13 billion. It's probably going to go down to $10 billion, $11 billion, maybe, in another year or two, with decreasing employment. Do we want to build up a fund that's exactly 100% of the total pay-out? Do you want to go 50%? In our brief we're suggesting a band, a narrow band, of $4 billion.

Mr. Nault: For you to make that comment, then...I think it would be fair for your organization to give us an analysis of what you think is a legitimate number. A very limited band, as you put it.... Does that mean $1 billion, $500 million? What does it mean?

Mr. DeVries: I think our brief says we are recommending that you could swing between minus $3 billion and plus $3 billion. You could do that.

Mr. Nault: I don't understand the minus $3 billion. You mean you want the government....

Mr. DeVries: Why shouldn't you run a deficit for one year?

Mr. Nault: So you want the government to carry the interest on the deficit, which is what we would do, on a program that is supposed to be self-supporting?

Mr. DeVries: It gets charged back right away.

The Chairman: Mr. Atkinson, Mr. DeVries, on behalf of the committee I would like to express our sincerest gratitude for your presentation. You've raised some very interesting points, and they have been duly noted by the committee. Perhaps as an agenda item on the homework you must do when you get back to your office...is to provide a more in-depth answer to Mr. Nault's question.

Mr. Atkinson: Thank you very much, Mr. Chairman. As usual, this committee has a very easy job.

The Chairman: I now would like to call upon the Building and Construction Trade Department representatives: Guy Dumoulin, Joe Maloney, Phil Benson, and Robert Belleville.

Welcome, gentlemen.

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Mr. Dumoulin, you will be starting.

Mr. Guy Dumoulin (Executive Secretary, Building and Construction Trade Department): Thank you, Mr. Chairman. We want to start by introducing ourselves.

Mr. Bob Belleville is Canadian director of the sheet metal workers and vice-president of the Building and Construction Trades Department. I myself am executive secretary of the Building and Construction Trades Department. Joe Maloney is the assistant secretary-treasurer. Phil Benson is also with the department. He is the director of research and legislative affairs.

The Building and Construction Trades Department is a labour organization that affiliates 15 international unions, representing over 400,000 highly skilled crafts-people working in the building and construction trades industry. This presentation is made on behalf of the Canadian executive board of the Building and Construction Trades Department. We thank the Standing Committee on Human Resources Development for the opportunity to make this submission.

The Building and Construction Trades Department actively sought positive reform to EI with its goal of making the program more effective and flexible for our members. Our message was very clear. We suggested an EI program where every hour worked and every dollar earned count, and the government has listened. This new hourly system is intended to be fairer to all workers than the current system. But the legislation before us will not accomplish the goal the government has suggested. This legislation, if made into law, will hurt many Canadians and drive more people into the underground economy.

We cannot understand why the government would want to cut and slash EI benefits drastically when at this time there is a surplus of about $1 billion in the account. Without any changes in the EI structure it is predicted that there will be about a $5 billion surplus at the end of this year.

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In our opinion, reform means to make better, not to slash and trash. We would like to get into more detail in the area we are concerned about.

At this point Brother Maloney will review the problem we see with the legislation and offer some positive suggestions that we hope the committee will consider in its deliberations.

Mr. Joseph Maloney, (Assistant Secretary-Treasurer, Canadian Office, Building and Construction Trades Department): Thank you, committee members, for this opportunity.

The immediate problems that we foresee are on the screen you see here.

The first is the benefits and entitlements. The maximum benefit an individual can claim gets dropped from $448 to $413. The maximum a person can file for a claim goes from 50 to 45 weeks.

The divisor rule, which for us is a very contentious item, is going to determine that when the person gets to the hourly threshold and files a claim, the legislation will look at their immediate past, 14 to 20 weeks. At the end of the legislation, it's going to settle in at from 16 to 20.

That sounds fine, but in construction we can work two weeks on, two weeks off, three weeks on, three weeks off through no fault of our own. We call these dead weeks. I believe the government refers to them as gaps. When we file a claim, that will bring the benefit rate down and that will harm us. I want to be very clear about that.

The point that a lot of people miss is that in construction the harder we work the faster we're out of a job and through no fault of our own we could be off work.

The other problem is the intensity rule. In the construction industry we are users of the UI system but we are not abusers of it. We use UI to bridge us from one job to the next, because that's the nature of our business. Under the intensity rule, for every 20 weeks of UI that's claimed, an individual will lose 1%, to a maximum of 5%.

The fourth item that is disturbing to us is the clawback. Right now the clawback threshold is at $63,570. As soon as this becomes law, that thing drops down to $48,750 at one time. Then, immediately after you claim twenty weeks of UI, that goes to $39,000. Then they will be clawed back anywhere from 30% to 100%.

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The final item is the entry. Re-entry requirements...since it's switching over to an hourly system, it's going to go up from 700 to 910 hours.

Those are the problems we see.

I want to explain in a little more detail how an individual will lose money under the system of the intensity and the divisor rule.

You have these charts in front of you. They have every province there. I have put a few up here so we can get on with it.

We've taken a situation here where an individual earns $23 an hour on a 40-hour week. The way the intensity rule would apply, the individual earning that kind of money would be entitled to the maximum benefit of $413, even though that's a reduction from the $448. That reduction, by the way, is frozen for 5 years.

So the individual would get $413. You can see how the money comes out of an individual's pocket as they lose 1% for every 20 weeks.

Now, if you go to the middle column, the divisor rule...these numbers for the UI table rate are from HRD numbers. If we take, for instance, the rest of New Brunswick, they're saying they have an unemployment rate of 10% to 11%. An individual there could work 15 weeks. By the legislation their divisor would be 16. With no dead weeks and no gaps in that employment, the individual would get the top rate of $413. If that individual happens to have two dead weeks in there, you see how money starts to leave their pocket right away - and it goes all the way down the line.

What happens in construction, since we are users of the program, and with some of the cyclical nature of our work, is we will get trapped into a scenario where the divisor and the intensity will both come to get us at the same time. If you look at that bottom column for New Brunswick, for instance, again, an individual could work 15 weeks. Their divisor would be 16. With 55% and no gaps or no dead weeks, an individual would get the top rate. But at 54% with 2 dead weeks, again the money starts to leave an individual's pocket very quickly.

That's what we want to bring to your attention. We think this is where the bulk of the savings would come in this UI reform that's on the table now, and we think this would be desperately unfair to people such as ourselves.

It goes all the way down the line. The next chart is for Quebec, for instance. The intensity rules would be all the same across the country, because we're basing them on the maximum benefit of $413 and the 1% loss. But the divisor rule changes from province to province depending on what their regional rates for unemployment are and what their divisor rule is. In Quebec, for instance, say the unemployment rate is 7% to 8%. If an individual worked 18 weeks, their divisor would be 20. With no dead weeks in there they would get the maximum benefit. But with 2 dead weeks they would lose money, and you see that all the way down the line.

The money does come out of an individual's pocket very quickly, because you have to get your threshold of hours in in a 52-week period. In construction it's not too often these days, because of the short-term, high-density nature of our work, that we can work 700 hours or 500 hours in a row. It's difficult. Sometimes we may get 40. Sometimes we may get 30. Sometimes we may get 20. Sometimes we may get zero. This divisor rule will take money out of those people's pockets.

I won't go through the rest. Ontario is there. British Columbia I have to show you. But you have every province in front of you there.

The next slide I want to put up is the re-entrants status. This is an equally disturbing one, because the way the legislation is written now, to be a new entrant into the UI program you must work 20 weeks to qualify. As a re-entrant into the UI program you must have 20 weeks. For every week you're on UI or worker compensation benefits or legitimate sick benefits you're classified as being in the workforce for one week. That's fine. But they're going to switch the eligibility from weekly to hourly, and it's going to go to 700: the calculation is 35 hours a week, and 20 times 35 is 700.

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Once this becomes law, they'll be moving the threshold for entrants, re-entrants from 700 hours to 910 hours.

From what we hear, the philosophy behind that is that in certain parts of the country students are quitting school at an early age, getting jobs and starting a life cycle on UI. It sounds great, but what happens under this legislation is if you're out of the workforce for 490 hours - and that means that you're not on workers' compensation benefits or UI, or you're not on legitimate sick benefits....

For instance, if an individual can't qualify for UI or has exhausted UI and is not injured or sick and they're living off their savings or they have to resort to welfare, they fall into this trap as a re-entrant. If they're out of the workforce for 490 hours and they happen to get another job, then they have to requalify into the UI system at 910 hours. Because we go through booms and busts in the construction industry, unfortunately a lot of our members will fall into that trap.

We think this is just an oversight, that the intention is not to kick people off UI, specifically people who have an attachment to the workplace. But right now, as it's written, that will happen.

What we're suggesting is that instead of looking at an individual's workplace attachment of 490 hours - this legislation has a phase-in period of five years - they should look at a five-year workplace attachment for an individual, not 490 hours, especially for a re-entrant.

The changes we're suggesting in these things are as follows.

One, the divisor should look only at the gross income of an individual over their hours worked. We know there has to be a divisor in the calculation, and that's fine. But if you live in a region where your divisor is 16, 18, or 20 and you meet the threshold of your hourly eligibility, then divide by that divisor, but don't include dead weeks. Include all live weeks; just make that calculation. I say this because you have to understand that you have already cut the benefit; the MIE has dropped down to $750 per week.

We feel that, in order properly to enhance a real hourly system of eligibility, there should be an hour-banking system or a carry-forward system to encourage Canadians to work every available hour that is out there.

For instance, if there is a cap of 1,200 or 1,500 hours a year and a person met that cap and kept working beyond it, they should be able to take those hours and bank them into next year, and if they need them next year, they should be able to bank on them. That would encourage people to work every available hour that is out there.

The intensity rule is just punitive. It's a punishment of frequent users. What we're saying is that in construction we are users of the program, but we are not abusers of it. We are frequent users, but the nature of our work has deemed us into that. As I said before, the harder we work the faster we're out of a job. That's just the nature of the business.

So we're asking for the intensity rule to be removed.

On the clawbacks, we don't know where you're coming from, but it goes from $63,000 down to $48,000, down to $39,000 - bang, bang. It's pretty harsh and pretty abrupt. They should be phased in from the current levels of $63,000.

On the entrant, re-entrant requirement, we're asking that there be a five-year examination of attachment to the workforce to determine the re-entrant status.

As far as family income testing is concerned, right now, the way the legislation is written, if poor or less well-off Canadians don't meet a certain threshold, they're going to top their MIE up to 80%. That sounds great, but that family income testing has no place in an unemployment insurance or employment insurance program. We agree to help those less well-off Canadians, but that should be done in the income tax area around child tax credits and so on.

Unemployment insurance or employment insurance is paid on an individual premium, and it should remain on an individual basis.

On number 7 on the chart, it wasn't very long ago that a local board of referees in any region of the country had some real authority. Over the years that authority has been stripped away from them. We're asking that the authority be restored to some degree, so when people go there and appeal they can make a decision there and give some responsibility back to the local board of referees.

The final problem we have will never go away. As you well know, employers and employees pay for the UI fund. We understand that the government must administer it, and we don't have a problem with that. But what we're asking is that a tripartite structure be set up to oversee the policy direction of the program on an ongoing basis.

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We're very mature people. We're big people. We run our union halls. We have multi-million-dollar pension plans. We know how to make decisions. The members we talk to out there on a day-to-day basis are fed up with coming to government every year or every couple of years and begging them not to cut the program and not to do this when they're saying it's their dollars. That's the message they've asked me to deliver...from the cross-country tour I've been going on over the last month or so.

In the last chart I want to show you here, basically what we're saying is we have a major underground economy problem in the construction industry in this country. The way it is right now, with that divisor rule, the intensity rule, the clawback rule, the re-entry rule, with no hour-banking system, that will be equal to no encouragement, no incentive. It will feed the underground economy activity in this country, because people will understand the system and they will go underground. They will not come above ground.

What we're suggesting - I will repeat myself - is we like hourly eligibility, but in the divisor rule we want to go by hours worked, with no dead weeks. We'd like to see the intensity rule removed. Modify the clawback. Redefine that re-entry rule. Create an hour-banking system. In our opinion, that will equal encouragement, incentive, and less underground economy activity.

Mr. Dumoulin: Our apprenticeship is the future of our industry. The construction industry represents about 6% of the labour force, yet we are responsible for over 55% of all apprentices.

The industry created a national industry standards committee. It's mandated to facilitate the creation of national standards for apprenticeship and training in the construction industry, to help take down the east-and-west mobility barrier. This is good for workers and the industry, and it should reduce the usage of EI.

The new method of funding training, when it is in place, must not be diverted to other purposes, and it must not be ill spent on unproven curricula or programs. It must not be used to displace existing workers.

Grant loans to individuals and third parties, or direct block funding to provinces for apprenticeship training for the construction industry, should be approached cautiously. The industry, through its national industry standards committee, must be given a major role to ensure the proper funding directions for apprenticeship training in the construction industry.

At this point we would be pleased to answer any questions the committee may have on our presentation.

The Chairman: Thank you very much, Mr. Dumoulin. I'd like to thank Mr. Maloney andMr. Benson also for your slide presentation.

As is tradition, we will move now for one fifteen-minute round, starting with Mr. Dubé from the Bloc Québécois.

[Translation]

Mr. Dubé (Lévis): I listened to your presentation with interest and because I'm from Quebec I know that the province's construction industry is opposed to these measures. You raised two issues in particular, and to my mind they are important, particularly as they relate to what you called dead weeks or gaps.

Do you have statistics as they apply to Canada as a whole? Do you have figures giving the average number of weeks worked per year in your industry? Do you have both numbers? I think that the public is under the impression that construction workers make good money. However, they do not realize that in the construction business, there are many dead periods and that the annual income for construction workers is not as high as people would think.

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What is the average unemployment rate in a year? I know that it's harder to find work during some periods in the year and I would like you to tell us about that. For instance, describe the extreme variations which occur in winter and in summer. Which building trades will be most affected by the reform? Will some trades be more affected than others or is everyone in the same boat?

Mr. Dumoulin: I cannot give you exact figures. I can, however, give you figures about the number of hours worked. On average, it is a thousand hours a year.

We have more specific figures for the province of Quebec. Unless I'm off by a few hours, according to the number of hours registered by the construction industry in Quebec, the average is 750 hours a year.

It's difficult to say which trades will be most affected. It all depends on the site. At one point, the general trades workers, that is, carpenters, painters and so on, will work on a site whereas the mechanical trades workers, that is the barrel makers, iron workers and electricians, won't. Once the general trades workers are gone, the mechanical trades workers come in.

So, it is relatively difficult to say which trade will be more affected. I think everyone will be impacted the same way. It all depends on the construction site. Today, some trades are getting enough work, whereas others are hardly getting anything at all.

Mr. Belleville, who is sitting next to me, has always lived in Ottawa. He could tell you that in the last 30 years the building industry as never been in such a bad state as it is today. It is unbelievable. He is a sheetmetal worker, and hardly anyone in his field can find work these days.

Sheetmetal workers can't wait for work to begin on the roofs of these buildings; that will help. Some people, namely roofers, who do the same kind of job, are already working.

Unfortunately, the public generally believes that a construction worker, who makes about $22, $23 or $24 an hour, works 2,000 hours per year. People believe that construction workers work 2,000 hours per year. That should be the case, but in reality it's quite different.

Mr. Dubé: You say that construction workers in Canada work in average 1,000 hours. That basically means that people are working half the time.

Mr. Dumoulin: Yes.

Mr. Dubé: They work half the year. Obviously, the average number of hours worked is misleading. Some people work full time, but others... The proposed changes would make it very hard for them to get unemployment insurance benefits.

Can you tell us how many workers would be affected if the proposed new measures were adopted as they now stand?

Figures provided by the Department of Natural Resources Development show that the construction business would be the second most affected industry.

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We often hear that the reform will specifically affect seasonal UI claimants in isolated regions like Gaspésie. In my opinion, construction takes place everywhere and people everywhere are looking for work. It won't affect every region. One of the characteristics of the construction industry is that it is not seasonal, but cyclical, work.

As for unemployment, as Mr. Maloney said, construction workers work two, three or four weeks, and then they don't have any work for two weeks. If I understood you correctly, this situation leads people to look to the underground economy during dead periods. You've raised a major problem.

I know you don't have all the statistics with you, but I would be interested to see them, as well as other committee members. At the moment, there isn't much money to be made in construction. However, it will be the second most impacted industry and I fear that if the trend continues, many people will get discouraged and look for work elsewhere. Unfortunately, in some areas, there is no other work.

In fact, I didn't really have a question, it was more of a comment. Thank you for your presentation. It was important to hear from you today.

Mr. Dumoulin: I would still like to respond to what you said regarding how the bill would affect the construction industry.

You have to work 14 weeks and a certain number of hours to be eligible. However, the 14 weeks are the ones which immediately precede your application for benefits.

If you worked in construction before the 14 week-period - this happens once in a while - those weeks don't count. But during the 14 weeks worked, there may be dead weeks. You may have worked on a relatively regular basis, but there may have been gaps. If those gaps occur during these 14 weeks in question, you are penalized.

Mr. Dubé: I'd like to focus on this issue for a moment. The construction worker is as honest as the next person. When the foreman tells a construction worker that there won't be anymore work on the site, and if the worker needs another 50 hours, it does not encourage him to work faster and be productive. Is it fair to say that the worker will not work faster than he has to because...

Mr. Dumoulin: A little earlier, Mr. Maloney said that the faster you work, the faster you are laid off. In the construction business, there is no seniority. It doesn't matter how long you've worked when there are layoffs. Just because I've been hired two months before Mr. Maloney doesn't mean I will stay and he will go. It might be the opposite. If you decide to become a construction worker, you know you will looking for work for the rest of your life.

In short, the faster you work on a site, the faster you will be laid off. So, you apply for unemployment insurance and start all over again. It's a never-ending cycle. It's not easy to accept, but you have to live with it. It is part and parcel of the construction industry.

[English]

The Chairman: Now we'll move to the government side. Ms Augustine.

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Ms Augustine (Etobicoke - Lakeshore): Thank you, gentlemen, for joining us for this very first series of consultation meetings that you will be involved with.

This legislation, it seems to me, is intended to be fair, to be progressive, and to meet needs. In your presentation, it seems to me you were against topping up any benefits for low-income families. Also, it seems you're opposing any reduction in benefits for people who already earn $40,000 and above. Could you please comment if the messages you were sending seem to be incorrect.

Mr. Maloney: First of all, we're not opposed to some of this legislation. We agree totally with the hourly concept of eligibility. But this legislation has some unintended consequences. First, it will drive people out of the industry, especially young people. It will not attract young people into the industry, and we will not be able to fulfil our apprenticeship commitments to the industry.

As for topping up people's benefits, we don't have a problem with that. But once you bring family income testing into the EI program.... Life goes on. There will be future ministers. There will be future governments. The precedent is set. It will spread through the entire program. If you want to help less well off Canadians - and we agree with that - there are other areas in which you can help them, especially the child tax credit in the income tax system. It doesn't belong in this program.

Premiums are paid by individuals. You shouldn't have to have a family income test to apply for benefits in this system. That's what we're saying.

Ms Augustine: Could we get away, then, from family income and talk about low-wage-earners? Could you speak to low-wage-earners?

Mr. Maloney: How do you want me to speak to them?

Ms Augustine: You've combined family income. Did you take -

Mr. Maloney: You're topping up the low-wage-earners to 80%. Your threshold, I believe, is $24,000, or something like that.

Ms Augustine: It's $26,000.

Mr. Maloney: That requires a family income test.

Mr. Phil Benson (Director of Research, Building and Construction Trades Department): We can put it in a way that makes it clearer. With the intensity rule, the divisor rule, and the dead weeks, a lot of the people there who are earning $23 an hour are going to be driven so low that you're going to have to top them up.

We're not at all opposed to helping people in the unemployment insurance program. What we're saying is.... The other day Minister Martin talked about increasing the child tax credit. Increase it more, but it should come from general revenue. This makes the program look like a welfare program. It's an insurance program - with some frills attached, we admit - but it's not a welfare program. It's not a program that's by entitlement. It's a program by working, from employers and employees. It's an insurance program. The intention is good. It's in the wrong place, that's all.

Ms Augustine: I want to have you comment on the opposition to the skills, loans, and grants, which are proposed as a replacement to the current federal funding for the apprenticeship system. Will you elaborate a bit on that, and on how you see that meeting the needs of your industry?

Mr. Maloney: We don't have a problem with transferring the authority of those things to the provinces. What we're concerned about.... A construction worker, being transient in nature.... Right now there are east-west mobility barriers for construction workers in this country. We're concerned about that money getting sent to the provinces with no strings attached. First, it could be the end of any national standards we're trying to build. Second, a province could start training people to do jobs we traditionally do.

I'll bring one up. There's that TAGS program, with the collapse of the fisheries. They were training fisher people in Newfoundland to be entry-level carpenters, and we had 400 or 500 carpenters on welfare. You might as well have trained the carpenters to be fisher people, because those jobs weren't there.

We have those kinds of concerns, that the dollars aren't going to go to where they're supposed to go. That's what our concern is about that. We don't have a problem with transferring that over. We have a problem with how it's being transferred over.

We've heard that originally the transfers were supposed to take place over the next three years. We've heard this is going to be expedited into the next several months. We're responsible for over 55% of indentured apprentices in this country and we're not at any of those tables when these discussions are taking place. That concerns us dearly. We have a very strong commitment to that and we'd like to know where that's going. That's all we're saying about that.

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The Chairman: I would like to move on to Mr. Scott now. Thank you very much,Ms Augustine.

Mr. Scott (Fredericton - York - Sunbury): Thank you very much, Mr. Chair.

I would prevail on someone, if they would... Invariably, when someone from New Brunswick sees New Brunswick on an overhead, our hearts go pitter pat - I think that is the reference.

I would like to walk you through a couple of questions using this. Obviously, if we look at the overhead, the divisor rule with dead weeks is the big problem. If you look at the numbers, with no dead weeks it's $413, with 10 dead weeks it's $158.

Generally speaking - relatively speaking - compared to the intensity rule, which with the best-case scenario is $415 and with the worst-case scenario is $375, the cost in terms of those two is not comparable. The intensity rule cost at worst-case scenario right there is $25 plus $13. The other one costs the difference between $413 and $158. Correct?

So we would agree, I think, that the divisor with dead weeks is the big problem in terms of the amount of benefits that could go back to the worker. Do we agree on that?

Mr. Maloney: It's one of the worst problems.

Mr. Dumoulin: We agreed it's the worst problem.

Mr. Maloney: Don't forget with the intensity rule, you're starting with a $35 cut right off the bat, because you go from $448 to $413. At the end of the day you're at $375, so you've just taken $60 out of an individual's pocket.

Mr. Dumoulin: We're just trying to figure out what to fix first.

Mr. Scott: So under the divisor with 10 dead weeks there's a significant cost, clearly.

Mr. Maloney: Oh yes.

Mr. Scott: So if we were to characterize the problems in some relative level of importance I think we have to agree that this is a big problem.

Now, you did accept the notion of the divisor in the context that you have to have a fixed period to divide. The problem is the gaps or the dead weeks. Consequently, if you apply a fixed period of time in order to calculate, and if you just use working weeks, there would be a problem if someone were offered a day of work in one week, because obviously it would draw down their benefits.

I think you know what I'm talking about here, the shoulders of the seasons.

Mr. Dumoulin: Yes.

Mr. Scott: Consequently, the notion of a divisor that is marginally greater than the minimum amount of weeks needed to get in is not a bad idea, because it would be a reason someone would want to take a small week - as long as it is a small divisor.

In other words, if I need 12 weeks to get in, the notion of dividing my benefits over 14 weeks would be a reason to take a small week in the middle of this exercise. No dead weeks - I'm not talking about dead weeks now; I'm talking about taking a small week. It's a problem. I think we recognize that.

So if you look at the chart you've provided us, if you couldn't find a couple of weeks - if the divisor were two weeks more, for instance - the cost would be the difference between $413 and $411.13, or roughly $2.

Consequently, we could fix the problem of having people for whom, right now, to take a low week is against their interest because it draws down their benefits. And we're all familiar with that experience. It's not anyone's fault - you can't ask people to make decisions that would affect their incomes and their families. But if you offer let's say a small divisor, like two weeks more than entry, you're talking about a $2 cost and you've got two weeks where people would in fact take a small week in order to build up the system. Would you agree with that as an analysis of this?

Mr. Dumoulin: You have to understand that we went through the whole exercise in regard to these changes in the UI. We've been working at this for a long time.

My impression was that every hour you work would be calculated in the 12-month period - a one-year period. I mean that was my impression when we got involved with this hours and weeks thing. We're not talking about the divisor rule and dead weeks. We're talking about a one-year period for calculation purposes.

.1730

The question of how many hours you work in the construction industry, as an average in the country, was raised. I might not have the exact number, but I can tell you that in Quebec it's 750 hours.

How many hours do you need in order to qualify for the maximum UI benefit under your proposed legislation?

Mr. Benson: It is 770.

Mr. Dumoulin: You seem to have some missing hours, and the average number of hours of work in one province is....

That is why we see this as being calculated within the last 52 weeks.

Mr. Scott: But my point is that by shifting from weeks to hours, basically you give benefit for all work, whether it's used for the calculation of benefits or not, because you get duration for all of those hours. For purposes of duration, they all count. So there's benefit for all the hours worked.

In calculating the level of benefits, right now the system allows for the dead weeks. Just say that we wanted to get rid of those dead weeks, because clearly that's the problem. In a less-than-perfect world, would you have difficulty with having a method of calculation that is slightly...? I suggest that two weeks might be appropriate, because it's only $2 on your chart.

My point is that if we had the calculation based over a period that was a couple of weeks longer than the week equivalent of the hours necessary to get in, you would then put workers in a position where it would be in their interest to take a small week. That's been a problem; I think we all know that. If they couldn't find it, then, according to your chart, the downside cost would be $2.

Mr. Maloney: That's right. On two dead weeks it's a couple of dollars. But you're at the maximum benefit here. You're talking about an individual getting $23 a hour or $40 an hour at 40 hours a week.

With two dead weeks, your scenario could probably be workable. But if an individual has to get 700 hours at that threshold within a 52-week period, they could literally have ten dead weeks.

Mr. Scott: I'm saying that if we could remove the dead weeks -

Mr. Maloney: Just limit it to two.

Mr. Scott: Limit it to weeks of work. There would be no zeros.

Of course the problem with that is that people wouldn't take a small week. So I'm saying that if you had a small divisor, a small increase in the number, then that would attract people into the workforce. That would be in addition to the minimums, but with no zeros, no dead weeks. We would go back to find weeks of work.

Mr. Dumoulin: Oh, full weeks.

Mr. Scott: Not weeks, but weeks of work.

Mr. Dumoulin: When we discussed the hours of work, within the construction industry sometimes you could have a call to go to work for a day or two. As you said, it's hard to find a person to do this, because it reduces the benefits.

Mr. Scott: It's not in their interest.

Mr. Dumoulin: It's not in their interest.

We were trying to find ways to encourage this person to do any types of hours. If it's five hours, or a day, or three hours, we feel that they should go and work for the time, and that would be calculated and it would also be used for the divisor rule in regard to their income.

Mr. Scott: But if we use just weeks of work and not weeks -

Mr. Dumoulin: But how far would you go with this?

Mr. Scott: What I'm suggesting is perhaps a couple of weeks more than the number necessary to get in, if you take the hours and make them equivalent weeks.

Mr. Maloney: We like the hourly concept so much because in construction, for instance, often jobs will come up for two days, three days -

Mr. Dumoulin: That's right.

Mr. Maloney: - this type of thing. It's very difficult.

In a lot of areas in the country, it has become a way of life. If you ask an individual to go to work for two days, the first thing he says is ``Hold it. Wait a minute. I'm on unemployment insurance. I'm going to lose a week here. I'm going to get screwed up here.'' They're not going to go.

So hourly eligibility, without the divisor calculation that is there now, is the best thing so anybody will go for eight hours or four hours, in order to get every available hour. That's what we're trying to encourage.

Your scenario might be fine in the way you're saying it, but as you get down the pay scale - to an apprentice, for instance, at $10 or $12 - I don't know what kind of impact that would have on how much they're going to lose on their benefit rate. I'd have to go back and calculate it.

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But I'm not opposed to what you're saying on the front of it, because there has to be some sort of divisor. We agree with that.

Ms Augustine: That's good.

The Chairman: Mr. Allmand.

Mr. Allmand (Notre-Dame-de-Grâce): I'm pleased to welcome the construction trades today.

Your recommendations about the divisor, the intensity rule, and the clawback are very clear. I understand those fully, so I won't ask any questions. But I did want to ask you about something that appears to me to be new. It's your suggestion for an hour-banking system for the following year. If I get the gist of it - and please correct me if I'm wrong - you're saying in a good year, when you may have a lot of hours of work and you go beyond the maximum, you would like to be able to bank those hours for the next year, which may be a very slow year. That would help you have reasonable unemployment insurance benefits in the year to follow or the year after that, if you were unemployed.

If I understand correctly, you're saying by doing this, by having this hour-banking system, you would discourage people from going into the underground economy when they get to the maximum, I suppose, because they might work not openly but underground, and it might even encourage people not to work at all. You're encouraging them to take work because they know they can bank it up.

Do I get this right? Would you like to explain a bit more what you mean by that?

Mr. Maloney: You're absolutely right in what you're saying. What we want to encourage in the construction industry is we want to work toward the elimination of underground economy activity. Right now it's widespread. Estimates range up to billions of dollars a year. Hundreds of thousands of workers are in the underground economy.

The way this is written right now, an individual who works in the underground economy and does that sort of thing will get nowhere near an earning of $39,000. They're not going to do it. They're going to get around $35,000 and then they're going to go underground. That's just the way.... They can do that in the industry.

What we want to do is encourage people to work every available hour that's out there, and do it legally. So if a system is set up where 1,200 or 1,400 hours is a yearly maximum, a yearly cap, and that individual worked beyond that, and they know next year is going to be a tough year, a recession is coming in, they could bank 100 hours or 200 hours, that could go next to their name, and if they need it next year they could draw on it.

In our opinion, that would encourage an individual to work every hour that's out there. It would also put more money in the government's.... Because you're going into a yearly bank. We think it would truly enhance an hourly eligibility system.

Mr. Allmand: Do you know anywhere in the world where this is done with unemployment insurance?

Mr. Maloney: No, I don't. I don't know anywhere in the world where they have an hourly system. All I know is that hour-banking enhances hourly eligibility. They go hand in hand.

The Chairman: Mr. Belleville, Mr. Dumoulin, Mr. Maloney, Mr. Benson, on behalf of the committee, we certainly would like to thank you.

I've taken special note of your points on the gap in the divisor and on the intensity rule.

Ms Augustine: Are they committed to the hourly?

The Chairman: Yes, they are.

Ms Augustine: You are committed to the change to hours?

Mr. Dumoulin: Yes.

The Chairman: Also, for members of the committee, members of Parliament, I stated at the last meeting of the committee that I'm looking for ideas on how to improve this legislation. If I may, I would like to ask Mr. Scott - I heard some germs of good ideas in reference to the divisor - for him to provide elaboration at some future time, because I think there's something to look into.

Thank you very much.

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Our next presentation is from the Conseil provincial des métiers de la construction du Québec. Maurice Pouliot is the general director and Francine Legault is the information officer.

You may start. You have half an hour. Perhaps you could take ten minutes for your presentation so we'll have twenty minutes left for questions and answers. Thank you very much.

[Translation]

Mr. Maurice Pouliot (Director General, Province of Quebec Building and Construction Trades Council (International)): Mr. Chairman, we apologize for not presenting our brief in English and in French. That's because we were invited at the last minute. This explains why our brief is only in French. However, we will be happy to answer your questions in English.

The Province of Quebec Building and Construction Trades Council represents 32,000 workers in Quebec's construction industry. We are also included in the 400,000 members of the Building and Construction Trades Department, whom you just heard from. They speak on our behalf at the national level.

We entirely support the recommendations of the Building and Construction Trades Department. We would like to specifically address the problems faced by Quebec's construction industry. Quebec's labour relations system is different from that of the other provinces, be it in terms of mandatory unionization, our five union associations or our various employer associations. Our system is completely different.

Several characteristics set the construction business apart from other sectors. These characteristics are: intermittent unemployment, the cyclical nature of the industry, peak activity periods during certain months of the year, the mobility of the labour force and a large reserve of manpower. In our view, Bill C-12 does not take into account the characteristics of the construction industry.

There's been a lot of talk about the hour-banking system. In Quebec, the Commission de la construction du Québec manages an hour-bank which was set up by the social benefits system. The bank encourages people to declare the number of hours they have worked, and it therefore curbs the underground economy, as it is called. Our brief experience shows, the higher the number of hours worked a worker registers, the more secure he feels.

Let me also add that 44% of construction workers in Quebec work less than 500 hours. The average number of hours worked is 713, which is less than 18 weeks, and the average Quebec salary is $18,000 in the case of journeymen. In Quebec, there are 25 trades and 40 occupations. I'm referring to qualified workers who have acquired certain skills.

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Apprentices work on average 559 hours and their average salary is $11,243. This is a far cry from other figures which you may have heard. A plumber in Quebec may earn $23,78 per hour, but if you add up the number of hours he has worked, you realize he doesn't make that much.

In our view, the problems faced by new entrants, by apprentices, have not been properly addressed. The bill says that an apprentice has to work 910 hours to be eligible under the new system. Needless to say, that would eliminate about 90% of new entrants. Because they would not be eligible for U.I. They are told to look for work in other sectors, but employment opportunities in other sectors are very limited in Quebec today. The recession obviously is Canada wide.

When the construction industry is going well, everything goes well. But that's not the case in Quebec today. We believe this must change. We decided to participate in the committee's deliberations. Obviously, we have some demands. We think important changes have to be made but they should not be made on the back of construction workers. In our opinion, the proposed measures are completely unacceptable.

We would like the eligibility threshold to be set at 20 weeks or 700 hours for new entrants or re-entrants. This is extremely important for Quebec's construction industry.

Regarding the issue of dead weeks or gaps, Quebec imposes mandatory vacation leave on its construction workers. Thus, during those weeks, if we're talking about the number of consecutive weeks worked, there is no work for a construction worker because construction sites in Quebec are closed down during the last two weeks of July, the first week of January and the last week of December.

We also have something called emergency work. A construction worker may have to work four or five hours during the week, but he would be penalized if the bill is adopted as it stands.

I think I have enough time left to discuss manpower training. We entirely support Quebec's demand to be solely responsible for this jurisdiction. However, we would like the construction industry to receive its share from the Quebec government. We want the money to be given directly to the Commission de la construction du Québec.

Some years ago, in 1986, the Quebec government entrusted the Commission de la construction du Quebec with manpower training. But the construction industry still has not received its fair share. We want our piece of the cake and we also want a committee to be created with representatives from those who pay unemployment insurance, namely employers and workers from every sector.

That, in brief, is what we say in our presentation. Mrs. Legault and I would be willing to answer any questions you may have.

[English]

The Chairman: Thank you. We'll have a ten-minute round. We'll start with Mr. Crête and then we'll go to the Liberals, Mr. Allmand.

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[Translation]

Mr. Crête: Thank you for your presentation. It was very clear and reflected the reality of construction workers in Quebec. Your presentation will be very useful to this committee.

I have a few questions. First, tell us a little about the people who are just finishing their training and who will enter the construction industry. If the unemployment insurance reform were adopted as proposed in the bill, what would you tell them about their future? What impact on the medium term will the bill have on the recruitment of a new generation of construction employees? How will the 910-hour threshold affect new entrants?

My second question concerns existing construction workers. From now on, they will have to look for a certain number of additional hours. What impact will this have on the regions? Will the race to work more hours encourage people to go underground?

Lastly, what, in your opinion, would have to be done to help construction workers increase the number of hours worked? Apart from the reform to the unemployment insurance system, what would the government have to do to promote an active job creation policy? What would such a policy entail?

Mr. Pouliot: First, as we said, the 910-hour threshold will make it virtually impossible for new entrants to be eligible for UI benefits, since the working conditions vary greatly from one employer to the next and from one construction site to the next. There basically aren't any two-year projects anymore.

Therefore, the Province of Quebec Building and Construction Trades Council flatly rejects this requirement for new entrants. We have to take into account the reality of the construction industry in terms of new entrants.

Mr. Crête: Do you think this will affect the recruitment of new blood?

Mr. Pouliot: There will certainly be repercussions. At the moment, the problem is that people who want to work in construction have to get their cards from the Department of Education when in fact there are no jobs.

Mr. Crête: There is no work.

Mr. Pouliot: There is no work and they need to be guaranteed 150 hours of work to receive their card from the Commission de la construction du Québec. So it's a major problem. You're obviously not going to encourage new people to work in this business if they have to work 910 hours to be eligible for unemployment insurance, when the average number of hours worked by apprentices is 559. These are official figures: they come from the Commission de la construction du Québec.

Regarding the hours worked in the regions, both problems will be solved when the construction business and investment in Quebec pick up again. The labour force is mobile in Quebec, and the province has even signed agreements with Ontario and with other provinces as well.

For example, in 1995, 65 million legally worked hours were registered with the Commission de la construction du Québec, whereas that figure was about 150 or 160 million during the 1980's, or in 1978. The number - 100,000 - of qualified card carrying construction workers, be they journeymen or apprentices, has not changed. We have to increase investment and focus on real economic growth. We will achieve this not by making empty promises, but by making a real effort to bolster the construction industry. We especially have to put an end to the underground economy.

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We believe this will help reduce the number of hours worked illegally in the construction business. The Sexton-Picard report stated that between 30 and 40 per cent of hours worked in Quebec's construction industry were in the underground economy. We agree with these figures.

Mr. Crête: On the change to hours instead of weeks.

Mr. Pouliot: Yes, the Sexton-Picard report - which we can send you - sets out work plans and the like. No government, neither at the federal nor provincial level, has had the political courage to plan its investments. There are months with 12 million hours and then it falls to 3 million hours. That is unrealistic. In our view, construction work should be planned out and then the industry could run 12 months a year.

Ms Francine Legault (Information Officer, province of Quebec Building and Construction Trades Council (International)): You mentioned the increase in the threshold to 910 hours for apprentices. I would like to add that barely 9 per cent of the apprentices in Quebec work 900 hours. That means that 90 per cent of them would not qualify. That would surely discourage young people from entering the construction industry in Quebec.

At present, we are grappling with an aging workforce. The average age in the construction industry in Quebec is roughly 40. If we don't bring in young people, we will have a problem in a few years. In trades, the average age is a lot higher. So we need to inject new blood into the workforce, and to do that, apprentices must be able to complete their apprenticeship, if not, they'll go elsewhere.

Mr. Crête: I would like to ask you a question that is a little bit more delicate. If you compare the present and the proposed systems, do you think there are people who will be less mobile, even within Quebec, because of the current system? Would the new system resolve this problem or is it not a solution? Is my question clear?

Some employers in the construction industry have told us: "There must be full mobility. There cannot be regional variations in the number of weeks". Do you think that the disappearance of these elements would have a real effect on mobility and habits?

Mr. Pouliot: At present in Quebec we have what is called a placement regulation for construction workers. But to answer your question more precisely, I don't think so. The purpose of the placement regulation is to promote mobility within the various regions.

Mr. Crête: I understand that it is not necessarily the system that keeps people in their part of the country, because there is not necessarily work elsewhere.

Ms Legault: In Quebec, the busiest month is September, when there are peak periods with 60,000 workers on the construction sites, while there are 93,000 who are registered, skilled and available. So there is always a surplus of manpower. That is one of the problems.

Mr. Crête: I have one last question. You talked about the period of mandatory holidays in the summer. Are you saying that these weeks must not be considered dead weeks if the bill is adopted as is, so that people are not penalized in calculating their weeks?

Mr. Pouliot: It's a change with respect to the consecutive weeks. If we talked about X number of weeks, that causes problems, as the building and construction trades department mentions, because there are dead weeks. For us, in the construction industry, the construction holidays are four dead weeks. So workers may be penalized because the mandatory holidays in the Quebec construction industry represents dead weeks.

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[English]

The Chairman: Mr. Allmand.

[Translation]

Mr. Allmand: In your brief, you say that since January you have changed your insurance plan to set up a bank of unused hours. On the next page, you recommend this type of bank for unemployment insurance. Can you tell us about this insurance plan?

Mr. Pouliot: We are talking about health and wage loss insurance for workers in the construction industry. In Quebec, there is a plan administered by the CCQ which applies to all construction workers. Previously, it was a global insurance plan which was not based on the number of hours.

So the plan was changed. If you have 300 registered hours, you have plan D. If you register 450 hours, you have plan C and if you have 600 hours, you have plan B. Obviously, the big plan is 750 hours. This compels employers and workers to report their hours to the CCQ, which has an hour bank.

If you have more than 750 hours, these hours are credited to you for the next period. This encourages the elimination of work done underground, and the results obtained since this plan came into force show that more hours are now declared to the CCQ than under the previous plan. I'm referring here to the Commission de la construction du Québec plan.

Mr. Allmand: Is it only for the construction industry or does it apply to other trades as well?

Mr. Pouliot: It's for the entire construction industry in the province of Quebec.

Mr. Allmand: As you know, the last union that appeared here recommended that type of system for unemployment insurance, with a reserve for next year. If I've understood correctly, you have already done that for another insurance plan in Quebec, but it's very recent. It has only been in force for a month. In the past, if I've understood correctly, there was no such reserve.

Mr. Pouliot: There was no such reserve. That is precisely why we... You know, when the health and wage loss insurance plan was adopted in Quebec, the government's intentions with respect to Bill C-111 or C-12 were unknown. It takes months and months to amend a Quebec government regulation, because you must bear in mind that insurance issues in Quebec are determined by workers and employers in the construction industry and that decisions must be published and adopted by Cabinet.

Mr. Allmand: Is it a decree?

Mr. Pouliot: It is not the construction decree, but the benefits decree which is part of the construction decree.

Mr. Allmand: I see.

Mr. Pouliot: It is just one aspect of social benefits, like the retirement plan which is part of the construction decree, but it is administered by the Commission de la construction du Québec. The principle of hour banks or reserves has been adopted in Quebec, and in our view, it works very well. We agree that it should also apply to unemployment insurance.

Mr. Allmand: Ms Legault, do you have something to add?

Ms Legault: Yes, regarding the hour banks. The construction industry is a very cyclical one. The hour banking system enables people to accumulate hours during busy periods so that they can deal with the less busy periods which the construction industry regularly experiences. People use the peak periods to accumulate benefits which will help them get through the slower periods.

[English]

The Chairman: Mr. Easter.

Mr. Easter: About the 910 hours for new entrants, you indicated possibly as high as 90% of those in apprenticeship wouldn't qualify. Do you have any idea how that compares with the rest of the country? Also, what are the average hours worked by apprentices versus the average numbers worked by full-fledged construction workers?

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My concern here is that with moving training to the provinces we don't want to find ourselves in a situation such that we're training too many people in certain industries and in fact there won't be enough jobs for them, so that we have a huge surplus of workers.

How does that compare with the rest of the country, and what are the hours worked on average by full-fledged construction workers?

Mr. Pouliot: This a very hard question to answer. We have all the documents from the CCQ. They give us the reports that give us exactly the number of construction workers we have, and this is the average we have. We come in with 559 hours.

If we're talking about British Columbia or Newfoundland, then we don't know exactly the average number of hours. It could be about the same, but, as Brother Dumoulin mentioned before, I cannot officially give you exactly the average. It's about the same.

If you were talking about the province of Ontario, then the average could be higher than that in the province of Quebec.

We do not have the same situation, so it's very hard for me to answer for the other provinces in Canada.

We have all the documents regarding the province of Quebec and we can give them to you, but it also depends on which year you're talking about. If you're talking about 1995, maybe some other provinces had a boom. If you're talking about the 1980s, when Alberta had a boom and had big jobs....

It's very hard for us to answer this question.

Mr. Easter: You indicated that you were concerned about getting your share in the construction industry. What is your view on the employment benefits, the self-employment program, the wage subsidies, grants, and skills, which also are in this legislation? What's your view on those kinds of programs that are encompassed in the legislation?

We've had previous witnesses, some opposed and some for.

Mr. Pouliot: We're not in agreement with that. We're thinking that unemployment insurance should go for unemployment, and that if there are some other programs, they should go some other place where the money can come from. So we're not in agreement with the idea that unemployment insurance should give candy to everybody. We'd like to see unemployment insurance take care of unemployment.

If we're talking about qualifications - this is in our brief - we're saying that it should be part of some other thing, and we want to have the piece of the cake belong to the province of Quebec regarding the construction industry. This is our request.

We want to have a word to say on the committee about the administration of the money that's coming from unemployment insurance, because we're thinking that it's the contractors and the workers who have to pay for the unemployment insurance system.

[Translation]

Mrs. Terrana (Vancouver East): You talked about hour banking to make up for inactive periods. How many hours must be accumulated and for how long? Do you have this data?

Ms Legault: No, we do not. The hours should be banked over a certain period of time to unable workers to deal with economic slowdowns. But we have not done any projections.

Mr. Pouliot: In its brief, the Building and Construction Trades Department mentions building trades, in English. We agree with the position presented by that Department.

Mrs. Terrana: They gave it to us when they came. I thank you just the same.

Mr. Pouliot: We said at the beginning of our brief that we were totally in favour of this.

Mrs. Terrana: Fine.

The Chairman: Thank you very much, Mr. Pouliot and Ms Legault, for your presentation and for your contribution to improving the bill. I hope our committee will be able to meet your requests. Thank you.

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[English]

I want the attention of the members for one second. Members, tomorrow morning the first witnesses will be from the Association of Canadian Community Colleges. We will sit until noon. In the afternoon there will be two presentations, from 3:30 to 5:30.

Mr. Allmand: The colleges in the morning?

The Chairman: No, I have two others,

[Translation]

the Network of CFDCs of Quebec and the Fédération des femmes du Québec.

[English]

from 9 to 12 a.m.

Mrs. Terrana: Could we have the agenda for tomorrow?

The Chairman: This is something I would like to clear up with the clerk. The members would like to receive the schedule as soon as it is available. The clerk tells me the schedule is available in your computers.

At what time?

The Clerk of the Committee: Around 8:30 a.m.

Mr. Regan: Mr. Chairman, it would be ideal if we could have a chance to review the briefs ahead of time.

The Chairman: Yes, this is a point we've already talked about.

Mr. Regan: We already have some briefs on this. If we know a couple of days in advance, or at least a day in advance, who's coming.... Maybe that will be easier as it goes along.

The Chairman: We've already had that discussion.

I call the meeting adjourned until the call of the chair.

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