HUMA Committee Report

It is generally recognized that investments in human capital are essential to improving productivity, competitiveness and the overall welfare of Canadians. The members of the Committee, along with many others, believe that these investments will become increasingly important as Canada’s labour force ages and employers become more reliant on the skills embodied in workers already in the workplace. The faster workers can acquire skills in demand, the faster they will be able to enter more productive employment and thereby contribute to increased output.

Clearly productivity is related to a number of factors. The key ones are the quality of your workforce: the human resources skills they possess, the education they have, the amount of capital they have to work with — and that seems to be the main reason Canada is levelling off. Worker productivity per se didn't fall; workers had less capital to work with in this country, relative to the U.S. […] Because investment is picking up in this country, you're starting to see productivity pick up in 2005 […][63]

Mr. Philip Cross
Statistics Canada

We conducted a survey that determined that last year there were 3,500 long-term vacant positions [more than four months] in this province […] So with the highest unemployment rate in the country […] [i]t's fair to say the shortage of qualified labour is a significant issue for small-business owners in this province. What's deeply disturbing is how small and medium-sized business owners are trying to solve these hiring difficulties. 59% of our members tell us they are hiring underqualified people, and 39% are passing responsibilities on to other employees. It doesn't do much for productivity in our workplaces when this is what they have to do. 38% are ignoring new business opportunities.[64]

Mr. Bradley George, Newfoundland and Labrador
Canadian Federation of Independent Business

The Committee was told that, within the next decade, roughly 70% of new and replacement jobs will demand post-secondary credentials, whereas only 45% of Canadians currently possess this level of education. To ensure that Canada has the quantity and quality of human capital required to compete and prosper in the years to come, several witnesses called for a pan-Canadian framework or strategy for achieving this goal. As indicated in the introduction of our report, we believe that the required strategy entails more than a pan-Canadian education strategy, even though education and training are indispensable components of a comprehensive employability strategy.

The needs of adult learners for more flexible, affordable, and responsive methods of accessing PSE are not adequately met. Access to and benefits of PSE are unequally distributed among Canadians. This jurisdictional context of education in Canada I don't think is or should be a barrier to planning, goal setting, and progress. Indeed, individual provinces are far more likely to achieve their objectives with a pan-Canadian framework than without. Why is that so? Because workers, capital, students, professionals, and even institutions are now mobile. So issues of quality, access, transfer of credits, recognition of prior learning, health care, human resource planning, research, development, innovation, to name but a few, are all areas that cannot be adequately addressed in a fragmented manner. They require a plan. We think if Canada is serious about stimulating economic growth, ensuring that our citizens have access to rewarding employment opportunities, increasing Canada's international competitiveness, and supporting strong communities, we must develop appropriate tools for this task. Currently Canada lacks mechanisms to ensure coherence, coordination, and comparability for PSE. These are issues being addressed in most other developed countries.[65]

Dr. Paul Cappon
Canadian Council on Learning

We believe that to accommodate rapid skill acquisition and labour market adjustments more meaningful progress must be made to develop continuous learning in workplaces and educational institutions across the country. To ensure that this happens, students, workers, employers and governments must continue to invest in higher education and training. Furthermore, federal, provincial and territorial governments must continue to work together to ensure that Canada’s education and training systems are coordinated and effective in delivering the skills needed in the Canadian workplace.

WORKPLACE TRAINING

Workplace skills training can be provided formally or informally. In the case of formal training, learning is structured, takes place in a classroom or on the job, may or may not be financed by employers, and is usually assessed or evaluated once the training ends. In informal training, learning is often incidental; skills, usually specific to the firm in which the worker is employed, are acquired in an unstructured fashion, usually on the job. According to a recent report on workplace learning, workers learn about 70% of what they know about their jobs informally.[66]

The Committee was told that employers in Canada do not provide enough training. Several witnesses mentioned that employers’ investments in workplace training in this country are relatively lower than many of our competitors. We note, however, that international comparisons of employer-sponsored training typically exclude the cost of informal learning, as these investments are difficult to measure.

We have a whole lack of a culture of training in Canada. In OECD surveys that come out, we're usually somewhere between 23 and 26 among developed countries in what we invest in training our workers. Many employers have a perception that their workers are supposed to arrive completely trained and ready to do the job. Who's supposed to supply that training remains a question. So that's another shift we need to make.[67]

Ms. Karen Lior, Toronto Training Board,
Ontario Institute for Studies in Education, University of Toronto

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According to the results of the 2003 Adult Education and Training Survey, between 1997 and 2002 the proportion of employed individuals aged 25 to 64 participating in formal job-related training (courses or programs related to a worker’s current or future job) increased from 28.5% to 34.7%.[68] Despite the upward trend in formal job-related training, the increase in similarly aged workers in employer-sponsored training was considerably more modest, rising from 22.4% in 1997 to 25% in 2002.[69] In other words, the proportion of workers aged 25 to 64 who participated in formal job-related training and whose training was supported by their employer declined during this period. Although the overall participation rate in formal job-related training increased between 1997 and 2002, the average amount of time spent in training declined from 156 hours in 1997 to 150 hours in 2002.[70]

In 2002, the incidence of formal job-related training was higher among younger workers (41.5% among 25-34 year olds) than older ones (22.9% among 55-64 year olds). The highest proportion (51.7%) of workers participating in job-related training had completed university, while the lowest proportion (17.9%) had completed high school or a lower level of education. In 2002, the highest regional participation rates in formal job-related training were found in British Columbia (38.8%), Manitoba (38.6%) and Nova Scotia (38.1%), although it should be noted that Quebec and New Brunswick experienced the largest increases in the incidence of formal job-related training between 1997 and 2002.[71]

With respect to unmet training needs, 28% of working adults aged 25 to 64 years reported that they wanted or needed training that they did not receive in 2002. Somewhat surprisingly, a higher proportion (36%) of working adults who had participated in job-related training reported that they had unmet training needs, as compared with 23% of those who did not participate in training.[72] Inadequate financial resources and a lack of time were cited most often as reasons for workers’ unmet training needs.

From an employer’s perspective, the Committee was told that employer-sponsored training costs are too high. Assuming that employers are unable to pass the costs of general training on to workers, we concur with this view. The reason for this is that employees who receive this type of training can sell their newly acquired skills to other employers once their training is completed (sometimes referred to as “poaching”); in doing so, they remove any benefit to the employers who incurred the training costs. The challenge is to find ways to minimize employers’ general training costs.

Witnesses proposed several tax measures to stimulate workplace training. For example, some proposed a payroll training tax similar to that adopted in Quebec, which requires employers to remit some portion of their payroll costs if they cannot validate that a similar expenditure was incurred on workers’ training.[73] Aside from the economic issues related to such a measure, we suspect that there are constitutional issues associated with a federal payroll training tax levied on employers outside the purview of EI. Nevertheless, a majority of Committee members believe that the federal government should further examine this policy option.

Some witnesses also suggested that a general reduction in business taxes would make more funds available to employers to train workers, but without specific conditions we are unsure that this approach would achieve the stated policy objective. It was also suggested that tax credits be used to bolster workplace learning, although some felt that this approach was most beneficial to larger companies. Despite this caveat, the federal government’s recent tax credit for apprenticeship training was widely supported. A reduction in employers’ EI contributions was also suggested as a way to stimulate workplace training, especially among older workers, a measure that has been used in the past to promote youth employment (i.e., the New Hires Program).

Quebec has a very successful payroll tax; if employers do not invest in their workers, then they're taxed, and that money is being used to invest in workers. We call upon you to look at that as a way of strengthening our involvement in meeting the needs of those workers.[74]

Mr. Leo Cheverie
PEI, Canadian Union of Public Employees

[W]e've been working closely with the B.C. government on a training tax credit. They dedicated $90 million over a three-year period to employee training. This is a very difficult thing for small business. Training tax credits, generally speaking, are only accessible by large firms because they have the resources to apply for the credit and track the training that is associated with it, and our members, generally speaking, train informally, which doesn't often get recognized by government agencies. That is a major challenge when we are designing solutions to this problem, but we are working with the B.C. government on that issue. We'd be pleased, of course, to work with the federal government, perhaps using the EI program as a step to try to address the skill shortages facing our members.[75]

Mr. Dan Kelly, Western Canada
Canadian Federation of Independent Business

Much of the testimony we received pertaining to workplace training focused on apprenticeship training and workplace literacy training, both of which are afforded separate discussions below.

A. Apprenticeship Training

As previously mentioned, more than 300 apprenticeship training programs are administered and regulated under provincial and territorial legislation. Apprenticeship training is probably the best-known type of employer-sponsored training in Canada. Typically, training consists of a combination of on-the-job and classroom (technical) training that leads to certification in a skilled trade.[76] Apprenticeship wages are usually regulated and increase with years of training. The classroom portion of training is subsidized under EI.

In view of the concerns expressed by many witnesses regarding current and anticipated skilled trade shortages, members of the Committee are pleased to note that the number of apprenticeship registrations has increased in recent years, as illustrated in Chart 2.1. According to Statistics Canada, a robust construction sector nationwide played a major role in pushing apprenticeship registrations to an all-time high in 2005 — the tenth consecutive year of growth in apprenticeship registrations. However, despite the increase in both the stock of registered apprentices and new registrations, the number of apprenticeship training completions has remained flat for some time, as illustrated in Chart 2.1. The average age of all apprentices in Canada was 30.1 in 2003, up from 29.4 in 1993.[77]

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The high cost of apprenticeship training is thought to be a barrier to a much-needed expansion in trades-related training. The Committee was told that employers pay between 75% and 90% of the cost of apprenticeship training.[78] In recognition of these costs, the federal government introduced an apprenticeship training tax credit (and an Apprenticeship Incentive Grant paid to apprentices) in the 2006 Budget.[79] This measure was well received during our hearings, although the Committee was told that it should be broadened to include all apprenticeships (it is currently available only to employers and apprentices involved in training in Red Seal trades) and that at least some of this support should be used to encourage the completion of apprenticeship training. We recognize that, in many instances, employers have little control over apprentices’ decisions to complete their training. However, employers do control layoff decisions, a factor that is thought to be contributing to the low apprenticeship training completion rate. During periods of economic slowdown, apprentices are often laid off first.[80]

Number one [recommendation] is that the federal tax credit for employers hiring apprentices be amended so that the credit is increased for each completed apprenticeship. Right now, there's no incentive for the employer to keep his or her apprentices moving through the system to completion, only to hire them. We believe a modest expansion of the tax credit would have a major positive impact on apprenticeship training completion.[81]

Mr. Pat Byrne, District Council 38
International Union of Painters and Allied Trades

Another factor that is thought to contribute to the low completion rate in apprenticeship training is that the skills acquired in some apprenticeship training programs, especially in the construction trades, are recognized and rewarded in the labour market before the training has been completed. This reality creates a major incentive for apprentices, many of whom are older and have family responsibilities, to leave training before completion and, where applicable, certification.

[T]he existing issue with the trades program and the apprenticeship program is that is geared in the end to the non-residential construction industry. So people go through a process of three or four or five years of in-class training and on-the-job training, and the only time they get a certificate of qualification is when they've finished all that. If somebody finishes when they have acquired the skills to work in the residential construction industry, they leave the apprenticeship program and go to work in the industry with no qualifications.[82]

Mr. Paul Gravel
Canadian Home Builders' Association

Although differing views were expressed by witnesses regarding existing certification standards, members of the Committee are open to the idea that there may be some benefit in moving the apprenticeship training system away from its current time-based orientation to one based on training modules. One of the major benefits of a modular approach is that training can be broken down into competency-based components, and thus facilitate a progressive recognition of credentials.[83] It is also thought that a modular system would foster better linkages with the formal education system which, we were told, are virtually non-existent. Many members of the Committee think that apprenticeship training would become considerably more attractive if apprentices could obtain academic recognition for their training before its completion. However, it should be noted that this approach could have the unintended consequence of further reducing the proportion of apprentices who complete their training.

Also there has to be better laddering between the apprenticeship system and the community colleges. In other words, you would do one year of apprenticing and then work in community colleges, and you'd get credit for your work as an apprentice. Right now you don't get credit for apprenticeship unless you complete the program. So there'd be certain types of modules that would be developed. That kind of thing can also have positive effects on the apprenticeship system.[84]

Dr. Andrew Sharpe
Centre for the Study of Living Standards

Although apprenticeship training is the responsibility of the provinces and territories, the federal government, as previously noted, helps to increase the supply of apprentices through measures delivered primarily through Human Resources and Social Development Canada. These include direct financial incentives (i.e., apprenticeship grant and tax credit, and EI), the enhancement of mobility through the Red Seal Program, and the promotion of apprenticeship, primarily through the Canadian Apprenticeship Forum (CAF). The apprenticeship community is well represented in the CAF and includes, among others, the Canadian Council of Directors of Apprenticeship (CCDA). The CCDA, comprised of provincial and territorial directors of apprenticeship and representatives from Human Resources and Social Development Canada, is an important contributor to the development of apprenticeship policy across the country. One of the CCDA’s objectives is “to promote interprovincial standards in occupational training, examinations and certification among jurisdictions.”[85]

Given the federal government’s limited role in the development of apprenticeship training, discussions about institutional reforms and the development of stronger linkages between apprenticeship programs and post-secondary educational institutions is best left to provincial and territorial governments. However, we do believe that these discussions are vital and should be encouraged and facilitated by the federal government.

Recommendation 2.1

The Committee recommends that the federal government consider expanding and restructuring the Apprenticeship Job Creation Tax Credit and the Apprenticeship Incentive Grant to encourage growth in apprenticeships and the completion of apprenticeship training generally.

Recommendation 2.2

The Committee recommends that the federal government examine and evaluate, in coordination with the provinces that do not already have a similar program, a federal training fund based on the Quebec model, into which all employers with payrolls over $1 million are required to invest the equivalent of 1% of their payroll, minus the amount they verifiably spend on workplace literacy and other training.

Recommendation 2.3

The Committee recommends that the Forum of Labour Market Ministers and the Council of Ministers of Education, Canada work together to examine and implement ways to better integrate apprenticeship training and post-secondary education across the country. It is thought that a more integrated system would increase the attractiveness of apprenticeship training and accommodate the movement of individuals between both systems.

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B. Workplace Literacy

As the Canadian economy continues to shift toward knowledge-based growth, the skill content of jobs will continue to rise. However, the acquisition of new skills and the application of new knowledge in the workplace demand solid literacy and other essential skills. Unfortunately, too many workers in the Canadian labour market lack basic skills, as evidenced by the results of the most recent survey on adult literacy.

The 2003 International Adult Literacy and Skills Survey (IALSS) “measured proficiencies in literacy, numeracy and problem solving of the Canadian population” and provided valuable information pertaining to the need for workplace literacy programs.^[86] It must be noted that there are significant differences between the provinces and territories in terms of the proportion of individuals who have low literacy, numeracy and problem-solving skills^[87], and that literacy proficiency varies among different groups.

Overall, the survey showed that 48% of the Canadian population aged 16 and over (42% of those aged 16 to 65) performed below level 3 on the prose and document literacy scales; a level of “proficiency considered to be the ‘desired level’ of competence for coping with increasing skill demands of the emerging knowledge and information economy.”^[88] On the numeracy scale, 55% of respondents aged 16 and over scored below level 3. As can be expected, those who scored at levels 1 and 2 are more likely than high scorers to be outside the labour force, to be unemployed, and to have low-paying jobs.

The survey confirmed that in Canada, as in all countries surveyed, there is a skills deficit “as measured by the difference between observed skills and the extent to which those skills are required at work.”^[89] Fourteen per cent of the Canadian labour force aged 16 to 65 showed a skills deficit related to their prose literacy skills and writing engagement at work; 14.7% had a skills deficit related to their document literacy skills and reading engagement at work; 17.5% had numeracy skills below those required at work; and 28.1% did not have the problem-solving skills needed to match the combined reading, writing and numeracy engagement at work.^[90]

In 2005 CARS began an essential skills project to build essential skill profiles for key occupations. We also developed an assessment tool and benchmarked essential skill levels for workers, apprentices, and students in these occupations. Each participant was assessed for current skill levels in reading, numeracy, and document use. The overall results and the profiles developed showed that one industry worker out of three needs to improve his or her essential skills to function well in their industry occupation.[91]

Ms. Jennifer Steeves
Canadian Automotive Repair and Service

According to the IALSS, 42% of individuals aged 16 to 65 in Canada had low literacy skills (i.e., levels 1 and 2),[92] unchanged from 1994. Moreover, 22.1% of individuals aged 16 to 65 with literacy level 1 received education and training during the year preceding the survey, as compared to 68.6% of those with a literacy level 4/5.[93] One of the reasons why low-skilled workers participate less in training than their higher-educated counterparts is that they often lack basic learning skills. The survey also found that individuals aged 16 to 65 with low numeracy skills were roughly 2.5 times more likely than those with high numeracy skills to be out of the labour force for six months or more.[94]

I was looking at some statistics last night, and Canada ranks tenth in the recent adult literacy survey of workplace literacy initiatives. So we're not doing a good job of training people in the workplace. Even though there are a lot of really good programs out there, we're still only tenth, and we can do a lot better than that — whether it's an adult basic skills program, whether it's a higher skills program — in doing some of the work that people have talked about here.[95]

Ms. Elaine Cairns
Literacy Alberta

People with lower levels of literacy are more likely to be unemployed. That's a no-brainer, but it's a major factor in determining employability. They're more likely to lose their jobs and less likely to find new employment. Adults with low literacy skills have only a 50% chance of finding another job, even after 52 weeks of unemployment. Strong literacy skills are needed for job-related training and advancement. Again, it's a stepping stone; you can't get to employment if you haven't had job specific training, and literacy is a prerequisite for that.[96]

Mrs. Wendy DesBrisay
Movement for Canadian Literacy

Employability is a huge issue, and literacy is the most fundamental issue affecting it. We need to take some steps to support literacy — not just on the ground in the communities but also in the workforce. There will always be a lot of individuals at levels one and two who are unemployed, but we were staggered to find that many people in these categories are actually employed, and this hampers them from going into a lot of the traditional literacy programs.[97]

Ms. Kimberley Gillard
Literacy Newfoundland and Labrador

The Committee received a considerable amount of testimony regarding literacy in general, and workplace literacy in particular. Many witnesses expressed concern about Canada’s ability to meet future skills needs, given our low literacy levels. Several witnesses indicated that we need to develop a pan-Canadian literacy strategy, referring to work done by this Committee in the 37^th Parliament and a report entitled Towards a Fully Literate Canada: Achieving National Goals through a Comprehensive Pan-Canadian Literacy Strategy prepared by the Advisory Committee on Literacy and Essential Skills for the Minister of State for Human Resources Development in 2005. Opposition was also expressed regarding the government’s recent decision to reduce spending on literacy.

It's unclear to us whether the cuts will affect the workplace education partnerships in place in several provinces, such as Nova Scotia, which we just heard about, and examples like Manitoba and the NWT, where employers, labour, and provincial governments work together to promote and deliver workplace literacy programs. Nor is it clear to us what the effect will be on provincial and territorial federations of labour. Federations have been successful partners in workplace literacy partnerships. Their work provides successful examples of provincial partnerships and should be strengthened and enhanced, not cut.[98]

Ms. Sue Folinsbee
National Adult Literacy Database Inc.

Members of the Committee realize that literacy skills are more than an essential component of a labour market policy geared to meeting Canada’s future skills needs. Raising literacy skills in the workplace also contributes to higher literacy within families and our communities. And this outcome, we were reminded, benefits all of us.

I also made reference to the connection between literacy skills and other matters that are of concern to you as parliamentarians: the connection between literacy and health, which I referred to; literacy and access to justice in our courtrooms; and literacy and democracy, in terms of being able to read and understand the print material that each of you gives to your constituents, that each of your parties prepares in your platforms. So literacy is a key feature of our democratic system.[99]

Mr. John O'Leary
Frontier College

The workplace is the easiest venue for providing literacy and essential skills training […] As we know, literacy is a transferable skill, so upgrading in the workplace also helps the worker at home and in the community.[100]

Mr. Larry Hubich
Saskatchewan Federation of Labour

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Poor literacy skills constitute a barrier to rapid and necessary labour market adjustments. Workers with high literacy levels allow employers to introduce necessary changes in the workplace. They also facilitate the rapid acquisition of skills that employers need to remain competitive and profitable. High literacy levels are also associated with safer workplaces, reduced waste in production and increased profitability.[101] However, despite these bottom-line benefits, relatively few employers invest in basic skills training. We suspect that the under-investment in workplace literacy training is due, in part, to high training costs and uncertainty about whether the benefits of that training will be realized.

Statistics Canada describes the direct link to productivity. A 1% increase in literacy rate would increase productivity by 2.5% and gross domestic product by 1.5%. This rising gross domestic product translates into $18 billion for Canada every year.[102]

Ms. Elaine Cairns
Literacy Alberta

When we look at why businesses aren't investing in training, I still think you need to look at your community. For example, in Nova Scotia, many of our businesses are made up of very small organizations of five or six employees. They're mom-and-pop operations and they make up a good portion of Nova Scotia. They're not always eligible for programs, nor do they have the resources to do it […] I'll give you an example. I work with a group of small business owners. They're one-owner companies. They're on their own. They may have one or two staff people. We've taken an innovative approach. We've brought them together within our community, so we actually have the numbers we require to put together a program, and we're delivering essential skills for small business owners. We've had a huge impact. I've been working with them now for three years, and their businesses have grown because we've developed the essential skills and worked it into the customized workplace — what is it that they need in their workplace. It's become a very powerful story and a very powerful picture.[103]

Ms. Margan Dawson
Association of Workplace Educators of Nova Scotia

As practitioners working in the field of workplace education, we have observed that many employers are not taking advantage of workplace education programs, and we really question why. The benefits of investing in workers' essential skills and workplace literacy are undeniable, but they are not always clear or known to management, supervisors, or workers. As well, about 75% of Nova Scotia businesses have too few employees to make implementing a workplace education program on their own feasible.[104]

Ms. Leslie Childs
Association of Workplace Educators of Nova Scotia

On April 1, 2006, HRSDC’s National Literacy Program, the Office of Learning Technologies and the Learning Initiatives Program were consolidated under the Adult Learning, Literacy and Essential Skills Program (ALLESP).^[105] The objectives of the ALLESP are to promote lifelong learning and to facilitate the creation of opportunities to acquire literacy and other essential skills.[106] On September 25, 2006, the federal government announced that it would reduce spending on adult literacy and learning by $17.7 million over the next two years. A majority of members of the Committee disagreed with this initiative, and on October 5, 2006 the Committee tabled its Fourth Report in the House of Commons. This report states “[t]hat, in consideration of the funding cuts to the Department of Human Resources and Social Development announced September 25, 2006, that the Standing Committee on Human Resources, Social Development and the Status of Persons with Disabilities recommend that the government continue funding the Adult Learning and Literacy Program at the 2005-2006 level and that the chair report the adoption of this motion to the House forthwith.”[107] Given that literacy skills have a significant influence on all aspects of Canadian society, a majority of members maintain that it is time for governments across the country to take concerted action to further address this serious issue.

Recommendation 2.4

The Committee recommends that the federal government encourage employers to provide workplace literacy training by permitting them to deduct some multiple of literacy training-related expenses that are incurred relative to some predetermined period or base year.

Recommendation 2.5

The Committee recommends that the federal government, in collaboration with provincial and territorial governments, set concrete national targets in the short, medium and long terms to raise Canada’s literacy rates based on the International Adult Literacy and Skills Survey. The Committee recommends that the federal government begin as soon as possible to develop and implement a ten-year plan with adequate funding to achieve these targets through a coherent national adult learning strategy, including bilateral accords with each province and territory.

Recommendation 2.6

The Committee recommends that the federal government, in collaboration with provincial and territorial governments, commit to adequate, long-term, stable, transparent, core funding for national, provincial, territorial and regional literacy coalitions, and other education and training-based organizations, including funding for public awareness and learner outreach projects; financial and logistical access and support for learners; professional development; family literacy approaches; and partnerships between levels of government, and between employers and labour.

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POST-SECONDARY EDUCATION

Canada’s population is one of the most highly educated in the world. Among OECD countries, Canada has the second highest proportion of post-secondary education graduates (45%). With respect to university graduates, Canada ranks 5^th (22% and tied with Australia), trailing the United States (30%), Norway and Israel (29%) and Demark (25%). Roughly 22% of working-age Canadians have attained a college or vocational education, a proportion second only to the Russian Federation.[108]

Historically, Canada ranks among the top OECD countries in spending on education. In 2000, the most recent year for which data are available, Canada ranked 2^nd among G7 countries (4^th among OECD countries) in terms of expenditures per student (US$14,983) at the college and university level, well below the United States (US$20,358).[109]

It is estimated that roughly 1.7 million individuals in Canada were enrolled in university and college programs in 2002-2003, the latest year for which aggregate data are available.[110] In 2004-2005, an estimated 756,987 full-time and 257,499 part-time students were enrolled in university, an increase of some 19% above total enrolment in 2000-2001.[111]

Education, like literacy, is a major determinant of employability. The positive relationship between education and labour market outcomes is clear: a significantly greater proportion of highly educated individuals in Canada are employed compared with their less educated counterparts. In 2006, 76.9% of individuals 15 years of age and over with a university degree were employed, compared to 21.5% of those with zero to eight years of schooling and 45% of those with some high school education. In the same year, the average unemployment rate for a university graduate was 4%, compared with 12.5% of those with between zero and eight years of grade school and 12.3% of those with some high school education.[112]

A. Access to Post-Secondary Education

Despite the fact that Canada has one of the most highly educated populations in the OECD, witnesses spoke of the need to facilitate greater access to post-secondary education, especially for Aboriginal people and persons with disabilities (both of which are afforded separate treatment in the next chapter of our report), individuals from low-income families and individuals from rural Canada.[113]

We were told that access to post-secondary education and training is not consistent among urban, rural, northern and remote communities. According to research published by Statistics Canada, distance has an impact on participation in university. After controlling for several variables known to influence decisions to participate in post-secondary education, it is estimated that students living beyond 40 km from a university are only 63% as likely to attend compared with those who live within 40 km. Students who live beyond 80 km are only 58% as likely to attend as students living within 40 km of a university.[114] To help offset the costs associated with relocation, witnesses suggested that Canada Access Grants, which the federal government currently provides to students from low-income families and students with disabilities, be expanded to include students living in rural areas of the country.

There are a lot of barriers. One of them is that fewer rural kids go to university, to start with. All those who go to university have already spent a lot of money coming from the outside. If you come from another part of Newfoundland, you have to pay more to go to university in St. John's than if you were from St. John's. Rural families are poorer than urban families, so again they are at a financial disadvantage. This is why rural access scholarships would help to allay that disadvantage. Students coming into medical school now are very concerned about the high cost of medical education, and that is a barrier.[115]

Dr. James Rourke, Memorial University of Newfoundland,
Society of Rural Physicians of Canada

The Committee was also told that offering non-repayable financial assistance to students who pursue specific areas of study might help alleviate skills shortages in key occupations and areas of the country. It was noted, for example, that scholarships targeted at students from rural Canada who study medicine might help alleviate doctor shortages in rural areas because these students are considerably more likely to choose a rural practice than their urban-based counterparts.

The rate of university attendance is more than two times greater among young people (i.e., 18 to 24 years of age) from high-income families (i.e., over $100,000), than among their counterparts from low-income families (i.e., less than $25,000). It is interesting to note that the gap in university attendance between these two groups remained fairly stable throughout the period 1993 to 2001,[116] despite an increase of more than 50% in average undergraduate tuition fees (in constant dollars) during this period. Although students from low-income families are more likely to experience financial barriers to post-secondary education than students from high-income families, non-financial barriers also help to explain the gap in university attendance. According to Statistics Canada, the gap in university attendance is also strongly related to weaker academic performance among students from low-income families as well as to several parental influences (e.g., low levels of education and lower education expectations).[117]

One of the reasons why financial constraints do not appear to be a major factor in determining access to post-secondary education is the substantial level of publicly funded support provided to students who can demonstrate financial need. Each year, the federal government spends roughly two billion dollars on non-repayable and repayable direct financial support for students. Despite several improvements to the Canada Student Loans Program (CSLP) in recent years, evidence suggests that there is room for improvement. According to the results of a recent survey of in-study CSLP borrowers, a significant number of students are taking on additional private debt to finance their studies. Almost two out of every three CSLP borrowers assume private debt during their studies. At the end of their schooling, these students expect to have an average private debt load of $15,928 (more than one-half the average level of indebtedness to publicly funded programs).[118] Members of the Committee support the commitment in Budget 2008 to spend $123 million, between 2009-2010 to 2012-2013, to streamline and modernize the CSLP.[119] In this context, many members of the Committee would like the federal government to examine a wide range of changes to the CSLP during its consultations with the provinces and territories over the next year to implement the new measures outlined in Budget 2008.

While higher tuition fees do not appear to have had a discernable impact on university participation, there is no question that real debt among students has increased over the years. Moreover, there is some concern that debt aversion may have a negative impact on access to post-secondary education. According to research conducted on behalf of the Canada Millennium Scholarship Foundation (CMSF), 59% of undergraduate students graduated in 2006 with an average debt level of $24,047, more than double the real student debt level in 1990.[120]

We represent workers who work in post-secondary education, and it's becoming less affordable and less accessible. Our studies have shown that more and more students don't access post-secondary education because of the expense; they are left with huge student debt. So we certainly want to endorse those accessibilities.[121]

Mr. Leo Cheverie
Canadian Union of Public Employees

The Committee was told that the federal government could adopt several measures to assist students who need more help managing their student debt, including providing greater access to grants and to debt repayment assistance. Regarding the former, it should be noted that the support provided through the CMSF also serves to lower the borrowing costs of eligible students and thus their overall level of debt. The CMSF currently distributes annually about $340 million in bursaries and scholarships across the country.[122] This support will end after the 2008-2009 academic year. Budget 2008 announced that the CMSF will be replaced by a new consolidated Canada Student Grant Program to take effect in the fall of 2009.

Human capital can also be strengthened by improving access to post-secondary education through improved student loans. Dental hygienists are educated during two- to four-year programs of study at a college or university. Many students are battling the high cost of this education, which can cost up to $40,000. The elimination of grant programs in most provinces puts a further strain on students.[123]

Ms. Bonnie Blank
Canadian Dental Hygienists Association

Through you, Mr. Chair, yes, there are two very specific things [to reduce student debt]. One is to look at forgiving Canada student loans until such time as doctors have finished their clinical training, i.e. their residency training. Right now they have to start repaying their loans. Two, open up the terms and conditions for the loans in terms of making them more accessible, particularly to those with limited means.[124]

Mr. William Tholl
Canadian Medical Association

The federal government currently provides support, most of which is needs-based, to help individuals repay their Canada Student Loans and manage their student debt. Assistance includes a tax credit on interest payments as well as income-tested interest relief and debt reduction for individuals experiencing difficulty repaying their student loans.

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Recommendation 2.7

The Committee recommends that the federal government continue to monitor the impact of the Canada Student Loans Program on students from low-income families, students from immigrant communities, students from rural and remote parts of Canada, Aboriginal students and students with disabilities, to ensure that these students have equitable access to student financial assistance programs. The federal government should monitor debt levels associated with student loans and ensure, through non-repayable financial support, that borrowing costs do not constrain access to a post-secondary education.

Recommendation 2.8

The Committee recommends that the federal government consider the following changes to the student loan system in its discussions with provincial and territorial governments pursuant to the proposals in Budget 2008 and issue a response to the Committee:

1. Significantly reduce or eliminate the federal student loan interest rate;
    
2. Create a federal Student Loan Ombudsperson to help students navigate the loan system, objectively resolve problems and ensure that students are treated with fairness and respect;
    
3. Provide better relief during repayment of student loans, including expanding eligibility for permanent disability benefits, interest relief and debt reduction;
    
4. Create enforceable federal standards governing the conduct of government and private student loan collection agents, subject to the policy objective of helping students find ways to repay their loan;
    
5. Ensure that student borrowers are made aware of the total cost of their loan and receive regular, clear, accurate statements of account;
    
6. Amend the “lifetime limit” on student loans such that they are not repayable until six months after the completion of full-time studies, including doctoral programs and medical residency;
    
7. Reduce the discriminatory ban on bankruptcy protection for student loans to two years;
    
8. Work with the provinces and territories to ensure that each Canadian student loan borrower can integrate all federal and provincial/territorial loans into one single loan for simpler repayment; and
    
9. Reinstate the six-month interest-free grace period.

Recommendation 2.9

The Committee recommends that the federal government review Canada Student Loan repayment policies and practices to ensure that students who incur high levels of debt under the Canada Student Loans Program have sufficient flexibility to repay their loans. Consideration should be given to specifying conditions for extending the period at which loan repayment begins, as well as the period at which interest on loans begins to accrue. This additional flexibility is particularly important for individuals, such as medical school graduates and other post-graduate students, who currently cannot defer repayment despite ongoing training.

B. Federal Transfers and Post-Secondary Institutional Capacity

1. Canada Social Transfer

The Canada Social Transfer (CST) was created in April 2004 when the federal government decided to split the Canada Health and Social Transfer (CHST) into two components: health payments and social payments. The latter component became the CST, a transfer payment intended to assist provinces and territories finance post-secondary education, social assistance, social services and child care. When the CST was created, its value was based on provincial and territorial spending on those areas supported by the CHST. In other words, the CST was equal to 38% of the CHST. The CST (consisting of cash and tax points) provides equal per capita support across the country.

In 2006-2007, CST cash payments and tax points were worth $16.1 billion, of which $8.5 billion was cash. As there is no specific amount directed at post-secondary education, the Department of Finance estimates the notional amount of post-secondary education cash transfers to be in the neighborhood of $2 billion.[125] Although the share of these notional cash transfers for post-secondary education have declined in relation to total federal spending on post-secondary education, it is thought that total federal post-secondary education spending (both direct and indirect) as a proportion of total spending by post-secondary institutions has remained relatively constant over time at about 25%.[126]

Given the interchangeable nature of CST spending, some witnesses recommended that this transfer be split into two dedicated transfers: one for post-secondary education, and one for social assistance and services. It is thought that this disaggregation would increase accountability in relation to federal indirect social spending.

Within this overall context and specific employability issues, the council supports the federal government using its leverage in the reform of the Canada social transfer. This transfer provides billions of dollars for post-secondary education, social assistance, and other services, and it could be used to secure needed changes.[127]

Mrs. Sheila Regehr
National Council of Welfare

Splitting that transfer [CST] and earmarking the portion of the contribution that goes to postsecondary education would make it possible to achieve three extremely positive objectives. The first is to identify the federal government's contribution to postsecondary education and that of the provincial governments. The second is to respect the jurisdictions of the provinces, because education is a provincial jurisdiction, and transferring the money would make that possible. The third is to maintain accountability. At present, since the money is included in a transfer for very general social programs, the provinces can afford to use those amounts for purposes other than postsecondary education.[128]

Mr. Phillippe-Olivier Giroux
Quebec Federation of University Students

The federal government does not appear to be pursuing a policy that would split the CST into two real transfers. Budget 2007 announced the government’s intention to increase the portion of the CST that is intended for post-secondary education as well as identify federal support for the transfer’s other priority areas (social programs and support for children) based on provincial and territorial spending patterns in these areas. In 2007-2008, the CST cash payment will increase by $687 million. In 2008-2009, an additional $800 million will be transferred for post-secondary education, at which point the notional CST transfer for post-secondary education will total some $3.2 billion. Furthermore, CST funding will be extended to 2013-2014.

Members of the Committee encourage the federal government to continue consultations with provincial and territorial governments regarding the establishment of CST objectives for post-secondary education and the reporting of results. We support the pursuit of long-term, predictable funding and some members of the Committee think that a funding mechanism that provides incentives for provincial and territorial governments to invest more in education and training would contribute to the overall expansion of our investments in learning.

Recommendation 2.10

The Committee recommends that the federal government provide long-term, stable funding in a dedicated post-secondary education transfer, in continuing collaboration with the provinces and territories.

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2. Post-Secondary Institutional Capacity

A necessary, although not sufficient, condition for meeting Canada’s skill needs in the years to come is that post-secondary educational institutions have the capacity to educate and train individuals who have yet to enter the world of work and those who are already in the labour market. According to demographic projections, Canada’s post-secondary education institutions will face considerable enrolment pressures over the next decade. It is unclear whether they will have the institutional capacity to meet anticipated enrolment growth during this period.[129] In fact, in some instances institutional capacity is already strained.

[I] think this is an area the federal government could look at. If we can get some federal funding, and maybe some capacity within the system, the sort of thing my colleague here referred to, then I think we could get more than 400 [foreign medical graduates] per year, fully trained and qualified in the short term, to get in the system, to help areas like your own.[130]

Dr. Colin McMillan
Canadian Medical Association

The other issue is education system capacity. Frankly, we think the federal government has to contribute to this, as do the provinces. We need to increase enrolments for health professions and health disciplines. We also need to supply extra funds for the infrastructure developments needed to accommodate these increased enrolments. We can't forget about that.[131]

Ms. Sharon Sholzberg-Gray
Canadian Healthcare Association

[T]he federal government must act now to reinvest in essential components of prosperity: the quality, capacity and access to Canada's publicly funded post-secondary and skills systems. Canadian colleges and institutes represent a master key able to open the door to skills development for a diverse range of learners in all regions of our country.[132]

Mr. Gerald Brown
Association of Canadian Community Colleges

Capacity building in Canada’s post-secondary institutions has been a preoccupation of the federal government over the past decade. Every federal budget since 1997 has contained spending initiatives designed to augment teaching capacity, retain and develop new expertise, and renew research infrastructure in the post-secondary system. Most recently, in addition to increased spending on specific research priorities that serve to strengthen Canada’s universities and colleges, Budget 2006 set aside $1 billion for a post-secondary infrastructure trust to help the provinces and territories modernize libraries, laboratories, classrooms and other infrastructure projects. Funding is allocated to the provinces and territories over the fiscal years 2006-2007 and 2007-2008 on an equal per capita basis.

Budget 2007 also contained commitments to increase spending on granting councils, the Indirect Costs of Research Program, the Networks of Centres of Excellence, the College and Community Innovation Program and a number of other targeted research priorities.

Recommendation 2.11

The Committee recommends that, subject to provincial and territorial agreement, the federal government continue to fund capacity-building initiatives in Canada’s post-secondary education system and that consideration be given to providing ongoing funding for post-secondary infrastructure.

CONTINUOUS LEARNING

As evidenced by the discussion above, many working-age individuals in Canada participate in adult learning, while many more do not. If we intend to meet the skill challenges that lie ahead, the rate of participation in adult learning must increase.

[A]n additional component to the future prosperity of the Maritimes is going to be productivity. We have a diminishing population; we have lower birth rates. We have an aging population […] Each individual Nova Scotian, each individual Canadian, will need to be more productive and will need to undertake lifelong learning to continue to improve and adapt, because the world is changing very quickly, and it's changing very quickly right here at home.[133]

Mr. Keith Messenger, Skills and Learning Branch
Nova Scotia Department of Education

One avenue that the federal government has pursued in the past to facilitate greater access to continuous learning is to help adult learners overcome financial barriers to participation. As previously noted, inadequate finances was cited as a primary reason for unmet training needs among respondents to the 2003 Adult Education and Training Survey.

In 1998, the federal government introduced the Lifelong Learning Plan, a measure that allows individuals to withdraw up to $10,000 in a calendar year from their Registered Retirement Savings Plan (RRSP) to finance learning. The maximum amount that may be withdrawn at any point in time is $20,000. Withdrawals for lifelong learning must be returned to the RRSP over a period not exceeding ten years.

Members of the Committee were told that in addition to the favourable tax treatment afforded Lifelong Learning Plans, modifications to section 118.6 of the Income Tax Act could encourage more adults to participate in lifelong learning. Specific suggestions included broadening the definitions of “designated educational institution,” “specified educational program” and “qualifying education program” to permit more adult learners to claim education and tuition fee expenses.

We call on the federal government to expand several definitions in the Income Tax Act to enable health professionals to obtain deductions for a broader range of continuing education activities, including conferences and online courses. The definitions in the Income Tax Act that require revision include the following: designated educational institution, certified educational institution, and qualifying education program. Definition revisions should allow individuals to claim expenses related to continuing education events. Income tax deductions for an expanded number of continuing education activities would provide an additional incentive to Canadians to increase their knowledge and skills. It would result in investment in lifelong learning and it would increase productivity.[134]

Ms. Bonnie Blank
Canadian Dental Hygienists Association

Although this point was not raised during our hearings, we note that the current tax credit for interest paid on student loans applies only to interest paid on loans received under the Canada Student Loans Act, the Canada Student Financial Assistance Act or similar provincial or territorial laws for post-secondary education.[135] We recognize that this provision is intended to support those who qualify for needs-based student financing, but its limited application is both inequitable and a potential impediment to investments in lifelong learning among those who are not eligible for public financing. As previously noted, many students who pay interest on a Canada Student Loan also pay interest on private loans. It is unclear why the tax treatment on a loan for an investment in learning should be treated any differently from that afforded any other loan for “investment” purposes.

Adult learners who do not have access to an RRSP may apply for assistance under the Canada Student Loans Program, although it has been noted that eligibility for this assistance is primarily designed to assist students who are leaving high school, not adult learners. The needs-based criteria applied to full-time student loans may be incongruous given the financial status and obligations of older students, and this limitation could serve to deter adults from securing the necessary finances to pursue lifelong learning.[136] In terms of part-time student loans, individuals are allowed to borrow only a cumulative amount of $4,000 (interest plus principal) at any point in time. Moreover, there is no in-study interest subsidy associated with part-time student loans, as borrowers are required to repay the loan while they are in school.

Finally, the Committee was told that Canada should make greater use of technology to make lifelong learning more accessible. In this context, we think that distance education or “e-learning” is a cost-effective means of fostering greater access to lifelong learning, especially among learners who reside in rural and remote parts of the country. We acknowledge that some federal support has been provided for this purpose through the Office of Learning Technology, a program that, as previously mentioned, was incorporated under the Adult Learning, Literacy and Essential Skills Program in March 2006. We support cost-shared projects that make use of technologies to expand lifelong learning opportunities.

I think the recommendation we would like to leave you with is to find ways to use technology to support continuous learning. People can't leave their job sites in order to go to school. So how can we use technology to encourage lifelong learning and make accessible ways for people to continue to grow their skills, grow their careers, and make transitions?[137]

Ms. Linda Lucas
The Logistics Institute

Recommendation 2.12

The Committee recommends that the federal government continue to monitor the borrowing needs of part-time learners, including mature students, to ensure that they have adequate access to publicly funded, needs-based financing.

Recommendation 2.13

The Committee recommends that the federal government review the Income Tax Act with a view to broadening the applicability of tuition and education tax credits, as well as the tax credit for interest paid on student loans, to provide more financial incentives to adults to engage in lifelong learning.

Recommendation 2.14

The Committee recommends that the federal government ensure that funding is provided to finance cost-shared projects that make use of technologies to expand lifelong learning opportunities, particularly projects that address the learning needs of workers in geographical areas where access to Canada’s post-secondary education system is limited.

Recommendation 2.15

The Committee recommends that the federal government establish assistance measures for workers, especially low-income workers, to allow them to participate in lifelong learning.

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LABOUR MARKET ADJUSTMENT AND EMPLOYMENT INSURANCE

The federal government provides a range of labour market support to assist individuals, mainly those who are unemployed, find a job and/or acquire new skills that will help them find or maintain employment. The lion’s share of this support is provided under the Employment Insurance Act, a key piece of federal labour market legislation that received considerable attention during our hearings. Since many witnesses discussed the employability and labour market adjustment needs of specific groups in the workplace, separate treatment is provided in the next chapter of our report to older workers, workers with disabilities, low-income workers, Aboriginal workers and workers in seasonal employment.

Given the wide-ranging objectives of Employment Insurance (EI) and the significant costs associated with this program, it is not surprising that strong and usually opposing views are presented whenever this program is on the Committee’s agenda. This was certainly the case throughout our hearings on employability. Many witnesses were critical of EI’s current configuration, but for different reasons. Some witnesses, mainly those representing employers, expressed the view that EI’s regionally differentiated qualification and benefit structure weakens attachments to work and thus has a negative effect on employability. In addition, EI delivers a range of support that extends well beyond that originally intended, yet employers continue to bear almost 60% of total EI costs. Proponents of this view seek EI reforms that are based more on insurance principles and that result in a more equitable sharing of program costs.

This brings us to the elimination of regionally differentiated EI … Political opposition is going to be much more muted as the labour shortages spread across the country. It is no longer necessary to leave Mabou or Bathurst for Toronto and Calgary. It may be quite sufficient to go to Moncton or Halifax. In fact, Halifax needs this rural-urban move today. In 2005, Halifax's employment rate was higher than Toronto's, Vancouver's, and Montreal's. It was one thing when people had some sympathy, when we had the argument that there were no jobs, but in an era of massive labour shortages, the moral and economic arguments coincide. There is no case on either score for continuing to pay people not to work or to try to create artificial employment at the cost of higher taxes when genuine, sustainable business has to shelve development plans for lack of workers.[138]

Mr. Stephen Kymlicka
Atlantic Institute for Market Studies

EI has moved from a pure insurance program to a multi-social-policy payroll tax program. Half of the premiums paid are for things that have nothing to do with regular benefits to compensate for job loss. So while we're all concerned about EI, we need to see how that money is being spent and who is in fact benefiting.[139]

Ms. Diane Brisebois
Retail Council of Canada

Others, primarily those representing workers and/or unemployed individuals, maintain that, relative to its predecessor, EI is inaccessible to too many people and fails to provide sufficient wage replacement protection. Supporters of this view proposed a variety of reforms, such as an extension of EI coverage to more workers (including self-employed workers), an increase in benefit entitlements and modifications to the waiting period.

We also recommend comprehensive reforms to employment insurance to address the significant decline in coverage of the unemployed and the related decline in access to employment supports and training. Previous changes to the EI program have disproportionately impacted part-time and other non-standard workers, typically women, youth, visible minorities, immigrants, and low-income workers. Reforms should include a decrease in the number of hours required to qualify, the reintroduction of eligibility for workers who quit voluntarily or are dismissed with cause, and a process for the growing self-employed workers to contribute to and be eligible for EI benefits.[140]

Ms. Ramona Johnston
Vibrant Communities Calgary

One of the most difficult employability issues faced by artists and cultural workers who are self-employed is that in addition to having low and fluctuating incomes, they don't have a social safety net to support them. This includes the access to compassionate leave, parental leave, and sick leave that is enjoyed by most Canadians, as well as access to training programs and, of course, employment insurance.[141]

Ms. Susan Annis
Cultural Human Resources Council

[J]ust last year we had consultations with women in precarious and seasonal work in our province. The number one issue they had was the employment insurance program. This is big, given that there are many problems with that program. The two-week waiting period contributes to your poverty for that period because you spend so much time trying to catch up afterwards. It's often six or eight weeks before you get a benefit cheque. One of the solutions they came up with was to be allowed to serve the waiting period at the end of the benefit period, if the government is so concerned about serving a waiting period.[142]

Ms. Lana Payne
Fish, Food and Allied Workers Union

Despite these divergent views, most witnesses recognize that EI is an important labour market instrument that helps individuals make the necessary adjustments to secure a job, accept employment or lengthen the duration of employment. Some of EI’s support to effect these labour market adjustments is provided under Part II of the Employment Insurance Act and delivered via federal/provincial-territorial Labour Market Development Agreements (LMDAs). The support delivered under these agreements is collectively referred to as Employment Benefits and Support Measures (EBSMs). These include interventions to facilitate training (Skills Development), provide on-the-job work experience (Targeted Wage Subsidies and Job Creation Partnerships), encourage self-employment (Self-Employment), and deliver employment services to individuals and employers (Employment Assistance Services, Labour Market Partnerships, and Research and Innovation).

Many witnesses told the Committee that the eligibility rules governing access to most EBSMs exclude many unemployed individuals who require adjustment assistance to become employed; similar criticisms were raised in previous EI studies undertaken by our Committee. Eligibility for EBSMs requires unemployed individuals to be receiving regular EI benefits, to have received regular benefits in the past three years, or to have received maternity or parental benefits in the past five years. Witnesses argued that because many unemployed individuals cannot qualify for EI they are unable to participate in EBSMs. The Committee was told that eligibility for EBSMs should be broadened to enhance the job prospects of unemployed individuals, especially those with marginal attachments to employment. Some witnesses mentioned that an alternative approach would be to establish labour market partnership agreements with the provinces and territories, a measure that was proposed in the November 2005 Economic and Fiscal Update.[143] These agreements were supposed to complement EBSMs by providing support to those ineligible for EI employment benefits.

In the area of training, a number of existing EI-based programs are available only to EI recipients. If we look at our community as being as unemployed as statistics tell you we are, a lot of us have not participated in work to the extent that we become EI recipients, so we're doubly penalized. We didn't get to work, and now we can't qualify for retraining and other programs that are available to those who have had those traditional advantages, advantages we have never had.[144]

Mr. John Rae
Alliance for Equality of Blind Canadians

Employment insurance used to be one of the really valuable routes into getting the kind of training that people needed. It wasn't just income replacement, but it allowed access to a whole range of other services that guaranteed that when you were out of a job you got the assistance you needed to help get back in and have those needs identified. And there was some regularity to that across the country. Now without that, with so few people qualifying for employment insurance, they don't get into other programs either. It's so easy to fall into welfare, and once you're there, it's so hard to get access to anything else, from literacy to skills upgrading to post-secondary education for your lifetime.[145]

Mrs. Sheila Regehr
National Council of Welfare

As the committee knows, labour market participation by people with disabilities is significantly lower than that by the mainstream population. Because the most effective federal government employment support programs are tied directly to people's attachment to the labour market and the EI system, many people with disabilities are ineligible and are therefore underserved.[146]

Mr. Bob Wilson,
Social and Enterprise Development Innovations — SEDI

[W]e see the federal government's role as greatly aiding the province in the deployment of its programs by taking a new approach to the labour market development agreement, the LMDA, by devolving responsibility to the province and by implementing a labour market partnership agreement, an LMPA, to allow flexibility to use funding for employees at risk, underemployed and underutilized groups, and other non-EI-eligible clients.[147]

Mr. Keith Messenger, Skills and Learning Branch
Nova Scotia Department of Education

The labour market development agreements, as has been pointed out here, systematically exclude people who have histories that haven't involved a lot of attachment to the labour force, which would include many people with intellectual disabilities. That system is actually pretty well funded. There's a lot of potential for it to be more inclusive, to provide wider access to training for people who are currently excluded in large numbers.[148]

Mr. Cameron Crawford
Canadian Association for Community Living

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One of the most obvious ways to address skill shortages is to ensure that unemployed workers have opportunities to acquire the skills that employers need. We have stated elsewhere in our report that we expect labour market adjustments to become increasingly important as the labour force ages. It follows that EI’s role in facilitating these labour market adjustments must evolve accordingly. Several suggestions were offered in this regard, including a benefit structure that encourages stronger attachments to work, EI contribution rebates for employers who provide authorized labour market support,[149] mobility incentives to lengthen employment spells (see Chapter 3, Workers in Seasonal Employment) and a training benefit similar to other benefit entitlements under EI.

There needs to be a fundamental shift in the EI and the social assistance programs. They need to become top-up systems rather than clawback systems. Rather than penalizing workers for getting back into the workforce, or changing from a higher-paying job to a lower-paying job, if we change the system so we are topping up their wages rather than clawing them back, that would make a huge difference.[150]

Ms. Janis Cousyn
Calories Restaurants

Why not help small business take that risk? Why not reduce the contributions to employment insurance for businesses that hire people 50 years old and over? Why not help them take that risk? It is like helping banks take risks with immigrants. It’s the same thing. We have to help them take a risk.[151]

Ms. Andreea Bourgeois, New Brunswick and Prince Edward Island
Canadian Federation of Independent Business

A. Building on Labour Market Training Arrangements

In November 1995, the Prime Minister announced that the federal government would withdraw from labour market training. A formal offer was extended to the provinces and territories on 30 May 1996, thus setting the stage for the Labour Market Development Agreements (LMDAs) that exist today. All LMDAs are delivered pursuant to sections 57 and 63 of the Employment Insurance Act.

Currently, there are two types of LMDAs — co-managed and transfer agreements — both of which are intended to enhance the skills that individuals require to prepare for, find and maintain employment.[152] Under co-managed agreements, the federal government and a province/territory share responsibility for the design, planning and evaluation of EBSMs, while the federal government (Service Canada) is solely responsible for the management and delivery of these measures.

Under transfer LMDAs, the design and delivery of EBSMs or similar measures are the sole responsibility of the province/territory. These agreements also involve the transfer of federal personnel. In all cases, except Quebec, provinces and territories jointly evaluate EBSMs or similar measures with the federal government. Quebec conducts its own evaluations.

Under all LMDAs, the federal government retains the responsibility for delivering pan-Canadian labour market support (e.g., labour mobility, national sectoral partnerships, Aboriginal programming), an outcome opposed by Quebec from the outset. This arrangement may change in the near term, however, as the federal government announced in Budget 2007 its intent to: (1) negotiate transfer LMDAs with all jurisdictions that have co-managed agreements; (2) establish a new labour market program ($500 million per year), to be delivered under bilateral agreements with the provinces and territories, for those who do not qualify for EI Part II benefits; and (3) examine the possibility of transferring, via bilateral agreements with the provinces and territories, funding and responsibility for labour market programming directed at specific under-represented groups (e.g., youth, persons with disabilities, older workers).[153]

Members of the Committee are pleased that the federal government has announced its intention to transfer more responsibility for labour market support, especially training, to the provinces and territories. We are also pleased that action will be taken to address a longstanding inequity in the delivery of federal labour market support to individuals who cannot meet the definition of “insured participant” and therefore are ineligible for Employment Benefits under the Employment Insurance Act. We support an annual allocation of $500 million for labour market adjustment support (e.g., literacy and basic skills upgrading, wage assistance and on-the-job training) for underserved segments of the Canadian labour market.

Part of the evolution of EI’s labour market adjustment support in the coming years must also include steps to ensure that spending on EBSMs and other transfers is effective and provides unemployed workers with marketable skills and durable employment. Over the past several years HRSDC has completed summative evaluations of EBSMs, the results of which suggest that there is room for improvement. According to general evaluation findings, EBSMs provide at best modest results in terms of improved employment and earnings. According to these findings, more positive results seem to be apparent for an active EI client (i.e., someone who has established a benefit period) as opposed to a former EI client (i.e., someone who has received regular benefits in the past three years or maternity/parental benefits in the past five years). It should be noted that these general results also apply to individuals participating in Skills Development, the intervention that accounts for the largest share of spending on EBSMs and the measure best suited to address the problem of skills shortages.[154] According to the evaluation results of the Canada-British Columbia LMDA, it was found that average annual employment among former claimants who participated in Skills Development declined by an estimated 235 hours after participating in this intervention.[155]

In recent years, the Standing Committee on Human Resources, Social Development and the Status of Persons with Disabilities has devoted considerable attention to EI issues. Most recently, on May 31, 2006 the Committee re-tabled in the House of Commons its 2005 report entitled Restoring Financial Governance and Accessibility in the Employment Insurance Program. The report contains many recommendations to enhance EI accessibility and support, and to further EI’s role in providing active labour market assistance. In response to the report, the government indicated that “it is also committed to ensuring that its programs evolve and respond to the realities of the Canadian labour market. In this regard, it is important that these program changes, including those to the EI program, be founded on sound analysis of the evidence and that careful consideration be given to labour market impacts and the costs of individual measures.”[156] In our opinion, pilot projects offer the best opportunity to assess the effectiveness of new approaches for using EI funds to enhance employability among Canada’s labour force participants. In this context, we support the testing of measures to strengthen incentives to work, lengthen employment spells and provide more opportunities for individuals to access workplace-based training.

Recommendation 2.16

The Committee recommends that the federal government continue to work with the provinces and territories to improve the effectiveness of measures delivered under Labour Market Development Agreements. Primary consideration should be given to improving the effectiveness of Employment Benefits and Support Measures in addressing Canada’s growing skills shortages.

Recommendation 2.17

The Committee recommends that the federal government review the definition of “insured participant” under section 58 of the Employment Insurance Act with the intent of broadening eligibility for Employment Benefits and Support Measures.

Recommendation 2.18

The Committee recommends that, pursuant to Part V of the Employment Insurance Act, the federal government develop and implement pilot projects to:

1. Assess the impact and effectiveness of various qualification requirements and coverage conditions to identify program reforms that would strengthen work incentives, enhance employability and better address the needs of self-employed workers; and
    
2. Assess the effectiveness of EI contribution rebates for employers who: provide training to enhance the employability of workers in seasonal employment, older workers, Aboriginal workers and workers with disabilities; alleviate specific skill shortages; and enhance the basic skills of individuals with low levels of literacy.

Pilot project costs associated with this recommendation should not be included as part of the expenditure limit contained in section 78 of the Employment Insurance Act.

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B. At-Risk Youth

Although the high school dropout rate in Canada has declined over the years, many young people today do not graduate from high school. In 2001, Canada’s secondary school graduation rate (i.e., all graduates in a given period expressed as a percentage of the population at the typical age of graduation) was, at 75%, seven percentage points below the OECD average.[157] Obtaining a high school diploma is not only a necessary step in pursuing a post-secondary education, but is also important in terms of engaging in the skill upgrading that we think will become necessary for many of those who are entering the labour market today.

The Committee was told that many early school dropouts do not get a second chance to acquire a high school diploma. Moreover, we can reasonably assume that it becomes increasingly difficult to obtain a high school diploma as time away from school grows longer. Hence, prevention may be the best way to address this problem. During our hearings, we were informed of some of the initiatives that are being delivered to discourage at-risk youth from dropping out of high school and to help them make a more successful transition into the workplace.

[W]e have created a set of learning outcomes for grades 11 and 12. We have been working with six provinces at this time to give them the knowledge and experience of what the IT sector is all about through changing the curriculum that is delivered by the provincial ministry of education. So we're already doing that. It's been very successful in British Columbia. Our first delivery of it involved 100 students who were all at risk. They were students who they were afraid were not going to complete grade 11, let alone grade 12 […] Only two of those students got jobs out of high school; the other 98 went on to post-secondary education. We think that's a very successful program. We're now working with Alberta. The Toronto District School Board has implemented it in Toronto to try to attack their 42% drop-out rate, I believe it is. So we're implementing that in a couple of the inner-city schools to be able to give them this opportunity.[158]

Mr. Paul Swinwood
Software Human Resource Council Inc.

We have had some successful initiatives with the United Way across Canada, specifically in Ontario and Quebec, with a program called the Gateway Cafe. It was funded also by HRSDC to offer sales associate training and job internships to youth at risk. This is an incredibly successful program, which is helping a lot of youth who are disenfranchised come into the workforce and become good workers.[159]

Ms. Diane Brisebois
Retail Council of Canada

Currently, Service Canada delivers assistance under an initiative called Skills Link, a component of the federal government’s Youth Employment Strategy. This measure is designed to assist youth who are at greater risk of not making a successful transition to employment. One factor that is considered in determining whether an applicant is at risk is high school non-completion. However, in order to participate in this program, individuals must be out of school. By virtue of this criterion, at-risk youth who are destined to drop out of school are denied assistance under Skills Link unless they leave school — one of the outcomes that policy-makers are trying to prevent. Although members of the Committee recognize the need to support out-of-school youth who face difficulties making the transition into the workplace, we also think that support should be made available to prevent youth who are in school from leaving before graduation. Of course, the provision of this support would be subject to an agreement with provincial and territorial governments.

Recommendation 2.19

The Committee recommends that, subject to cost-shared funding arrangements and agreements with the provinces and territories, the federal government provide financial assistance to support measures that reduce the high school dropout rate.