HUMA Committee Report
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Mr. Phil McColeman I am pleased to respond, on behalf of the Government of Canada (GoC), to the Report of the Standing Committee on Human Resources, Skills and Social Development and the Status of Persons with Disabilities, entitled Renewal of the Labour Market Development Agreements. I would like to offer my thanks to the Committee members for their work on this study. I would also like to thank the many witnesses who appeared before the Committee and whose testimonies contributed greatly to the Report’s valuable observations. I would like to mention that several of the witness testimonies at your committees’ study also echo what was heard during Employment and Social Development Canada (ESDC)-led consultations with stakeholders between April and November 2014. The final report of the ESDC consultations is available at: http://www.esdc.gc.ca/eng/consultations/various/retooling_lmda.shtml. Retooling of the LMDAs The GoC’s top priorities are creating jobs, economic growth and long-term prosperity. In Economic Action Plan (EAP) 2013, the GoC announced its intention to strengthen the labour market agreements with provinces and territories to ensure that the skills-training system better meets the demands of employers and the labour market. This commitment was reiterated in EAP 2014 and EAP 2015. Included under these statements is the commitment to renegotiate the LMDAs with provinces and territories (P/Ts) to reorient training towards labour market demand. This work represents the first significant review of LMDA objectives and design since their inception in the mid-1990s. Together, our findings and your committee’s recommendations reinforce the GoC’s proposal for retooling LMDAs with P/Ts and other initiatives currently underway. Discussions with P/Ts began in February 2014 and are ongoing. Exploring ways to make training more demand-driven through better involvement of employers We agree that employers need to play a more direct role in making training demand driven and in informing how LMDA dollars are spent. The flexibility provided to P/Ts to use up to $300 million in LMDA funding to source the employer‑driven Canada Job Grant is an important first step in making LMDA programming more responsive to the labour market. Under retooled LMDAs, employer demand will be at the center of decision making and priority setting. Using improved labour market information (LMI) such as Job Bank and Employment Insurance (EI) data, P/Ts will be positioned to target their training supports to connect unemployed Canadians to actual jobs. Consistent with EAP 2015, the GoC will work with P/Ts to ensure that individuals willing to move are not excluded from EI training opportunities across the country. This way, eligible EI clients who are looking to train for jobs will be allowed to do so. Also, we want to get employers involved in training by ensuring that P/Ts engage them and reflect what they hear from employers in their priorities. It is critical that employers be more involved in the design and delivery of training programs to ensure that LMDA funding goes to training that addresses labour market demand and that unemployed Canadians are prepared for available jobs. Supporting more effective returns to work Generally, the longer individuals are out of work, the harder it is for them to find a new job. Approximately 24% of LMDA clients are not connecting with LMDA programs and supports until six months or more into their EI claim. A new approach is needed to ensure unemployed Canadians ready for employment are quickly matched with available jobs. In new LMDAs, the GoC is seeking a commitment from P/Ts to act quickly to target clients and refer them to job-related training and provide them with the information they need. To support this, the GoC has developed a new client targeting system that P/Ts will be able to use to ensure clients get help to prepare for and find a job as soon as possible. Maximizing the reach of LMDAs to ensure responsiveness to the evolving labour market P/Ts have called for broader eligibility for training to ensure they have the flexibility to address their local labour market challenges. At recent ESDC-led consultations, employers also validated this request, as long as it does not affect EI premiums. To enable P/Ts to serve a broader range of EI clients (e.g. youth, new immigrants, longer-term unemployed) and address local employer demand, the GoC is planning to extend access to LMDA training and employment benefits. Broader eligibility for LMDA-funded training will help unemployed Canadians get back to work as soon as possible. Exploring ways to generate savings to the EI Operating Account The objective of programming under Part II of the Employment Insurance Act, including LMDA programming, is to help ensure the sustainability of the EI system. Each year, the GoC reports to Parliament on ‘unpaid benefits’, which is our current measure of savings generated to the EI Operating Account as a result of LMDA programming. However, internal analysis and the former Auditor General of Canada identified weaknesses with this approach, emphasizing that it is not a true measurement of EI savings. Further, P/Ts have had limited incentive to generate additional savings on an ongoing basis. LMDA retooling provides an opportunity to improve the measurement of savings and incent P/Ts to increase their savings annually. The GoC will work with P/Ts on exploring an incentive system that focuses on measuring savings to the EI Operating Account with, subject to necessary approvals, the potential to share a portion of savings with P/Ts on an annual basis. Reinvesting a portion of P/Ts’ proven, incremental savings into the training system will help ensure a greater number of eligible Canadians get the training they need to connect with real jobs. Enhancing the LMDA accountability framework LMDA programs are funded by EI premium payers, so all governments have an interest in demonstrating that these premiums are spent to achieve the best results for Canadians. Transparent reporting is required to ensure premium payers and all Canadians fully understand where LMDA dollars are spent and the results being generated. To this end, the GoC commits to making performance information more visible for premium payers and continues to work with P/Ts to determine the best suite of performance indicators that allows for a thorough assessment of programming while managing the administrative burden involved. A common set of comparable indicators will help all levels of government to identify effective practices, share relevant information, and create opportunities for program innovation and inform premium payers on the results of LMDA programming. Providing Labour Market Information to Canadians The Government agrees with the Report’s finding that job-seekers and employers need relevant, timely and easily accessible information in order to make good training and job decisions. Improved LMI is critical to minimizing skills mismatches and helping labour markets function more efficiently. LMI can lead to better education and training investments and improved job outcomes for Canadian job-seekers and immigrants, and help youth and students make better learning and career choices. It also helps employers develop human resource strategies and better connect with qualified job-seekers. The GoC continues to work with partners to explore how LMI can be enhanced to keep up with both the increasing expectations of users and the expanding opportunities that result from advances in technology. Ministers of the Forum of Labour Market Ministers agreed in November 2014 to work together and engage stakeholders to provide Canadians with better access to a wide variety of LMI, including surveys and endorsed a Framework for Labour Market Information for Canada that commits governments to jointly set priorities and continue to improve how they work together on LMI. As a first step and as announced in EAP 2015, the GoC is proposing to reallocate $4 million over two years to support the launch of a new one-stop national labour market information portal. Also, the GoC is currently working in collaboration with P/T governments through the FLMM to explore possible governance approaches to improve LMI in Canada. FLMM Ministers have tasked officials to develop recommendations to be presented at their next meeting, scheduled for July 2015. Current efforts to strengthen LMI include the recent improvements to Job Bank including the recently launched Job Alerts feature that provides real-time information to job seekers to connect them to new jobs in their regions, as well as the upcoming Job Match system that will better connect job seekers directly with employers from across Canada. Supporting Apprenticeship The GoC helps young people pursue careers in the skilled trades through tax credits, grants, training programs and the new Canada Apprentice Loan. These new measures complement the GoC’s existing incentives to apprentices and employers to encourage apprenticeship training and stimulate employment in the skilled trades. The federal apprenticeship grants, such as the Apprenticeship Incentive Grant and the Apprenticeship Completion Grant, are designed to encourage more Canadians to pursue and complete apprenticeship programs in the Red Seal trades. Over 547,000 Apprenticeship Grants have been issued since program inception in 2007 – a total investment of $690 million. The Apprenticeship Job Creation Tax Credit, introduced in Budget 2006, encourages employers to hire new apprentices in eligible trades by providing a tax credit of 10 percent of the wages payable to eligible apprentices in the first two years of their apprenticeship program (up to a maximum credit of $2,000 per apprentice, per year). More than 11,700 businesses benefitted from the credit in 2013. Since the introduction of the Apprenticeship Job Creation Tax Credit in 2006, it is estimated that this incentive has provided over $630 million in support to employers of apprentices. To reduce barriers to accreditation in the skilled trades, EAP 2013 indicated that the GoC would work with P/Ts to harmonize requirements for apprentices in targeted skilled trades, and EAP 2014 reiterated this commitment. These statements recognize that harmonization would improve the efficiency of the apprenticeship system overall, including the provision of technical training, as well as facilitate mobility and support more apprentices to complete their training. Most recently, EAP 2015 proposes to extend further support to P/Ts for implementing recommendations made by the Canadian Council of Directors of Apprenticeship to harmonize apprenticeship training and certification requirements in targeted Red Seal trades. It also proposes to provide $1 million over five years to promote the adoption of the Blue Seal Certification program across Canada, which is designed to encourage journeypersons in skilled trades to improve their business skills. Supporting Employers through the Tax System and Employment Insurance In recognition of the importance of continuing education in today’s economy, the GoC is working to support Canadian businesses to train their employees. For example, an employer may deduct expenses incurred in respect of an employee’s training, which represents a favourable tax treatment since the employer may deduct expenses in the year that they are incurred but the training is likely to provide benefits to the employer over a number of years. The GoC has been actively working to keep EI premiums low for all Canadians, particularly for employers, having frozen premiums from 2014 to 2016. Beginning with the 2017 rate, EI premium rates will be set at a seven-year break-even rate. Premiums will be no higher than needed to cover the projected costs of the EI program during the seven-year period, including any cumulative balance of the EI Operating Account at the start of this period. The premium rate is projected to fall by 21% upon the introduction of the seven-year break-even mechanism in 2017. These measures will reduce the burden on EI premium payers and ensure the EI program is on a sound financial footing. Taken together, retooled LMDAs and other skills agenda successes will transform training in Canada. LMDA-funded programming underpins the P/T training system and retooled agreements will ensure the foundation is in place to address both current and future labour market challenges. Retooled LMDAs will result in the relationship between the GoC and P/Ts being re-structured and based on continued accountability for premium payers. Retooled agreements will also result in employers being partners in the training system, as they will be placed at the center of training-related decisions. Ultimately, job seekers will be better connected to available jobs through enhanced access to timely information on opportunities and the ability to access other training supports such as the new Canada Apprentice Loan. The GoC is committed to working with the provincial and territorial governments to ensure that LMDAs reflect the needs of the labour market. Yours sincerely, Hon. Pierre Poilievre, PC, MP |