Proceedings of the Standing Senate Committee on
National Finance
Issue 21 - Evidence - June 5, 2012 (afternoon meeting)
OTTAWA, Tuesday, June 5, 2012
The Standing Senate Committee on National Finance met this day at 2:30 p.m. to study the subject matter of Bill C- 38, An Act to implement certain provisions of the budget tabled in Parliament on March 29, 2012 and other measures, introduced in the House of Commons on April 26, 2012.
Senator Joseph A. Day (Chair) in the chair.
[Translation]
The Chair: Honourable senators, today we resume our study of the subject matter of Bill C-38, An Act to implement certain provisions of the budget tabled in Parliament on March 29, 2012 and other measures.
[English]
Honourable senators, as you are aware, we have been given an order of reference by the Senate to study the subject matter of Bill C-38. This is our eleventh meeting, and today we will be hearing from witnesses with respect to the proposed amendments to the Employment Insurance Act. There is one amendment that appears in Division 6, Part 4 of the bill, and the major amendments appear in Division 43, Part 4 of the bill.
This afternoon, we welcome Andrew Jackson, Chief Economist at the Canadian Labour Congress; Corrine Pohlmann, Vice President of National Affairs, Canadian Federation of Independent Business; Matthew Wilson, Vice President, National Policy, Canadian Manufacturers and Exporters; and Josh Hjartarson, who is Policy Director, Mowat Centre, School of Public Policy and Governance at the University of Toronto.
I understand that each of you have a brief opening statement, which we very much appreciate. Give us your opinion and, when you can, the opinion of the group that you are representing, and then we will go into a discussion on the points that you have made.
We have about an hour and a half set aside, unless the bells start ringing, in which case we will have to adjourn and report to our mother base in the Senate.
Mr. Jackson, please proceed.
Andrew Jackson, Chief Economist, Canadian Labour Congress: Thank you, Mr. Chair. Through the clerk, I will get some written comments to you tomorrow. I was not able to get that together for you today. We will get that translated.
I want to briefly flag our major concerns with the Employment Insurance provisions in the bill. First, a word on process. We regret the fact that labour and, I believe, employers' organizations were not consulted closely in advance of this bill. It is a program paid for by worker and employer premiums, and I think there is an ownership stake in it and direct involvement in the current EI appeal process.
We regret the lack of consultation. We also regret the fact that there is not really a clear policy rationale for the changes that are being proposed, and we are forced to address them within a large omnibus bill.
Second, from our point of view, the budget does not address some very real and concerning issues on Employment Insurance. One is the lack of fit between the program as it exists today and the changing labour market. Less than 40 per cent of unemployed workers in Canada today actually qualify for EI, which is a record low ratio, much lower than even before the recession.
We also regret that the budget did not contain any provisions to increase skills training for unemployed workers, which we see as a much more positive way to deal with potential skill shortages moving forward than the measures in the budget itself.
I would flag an important difference of perspective. It seems from statements by ministers that the belief is that Canada faces labour shortages at the present moment. In fact, Statistics Canada's job vacancy survey shows that there are six unemployed workers for every job vacancy reported by employers. This bill will have a particular impact on unemployed workers in the high unemployment regions of the country where we believe there are far more unemployed workers than there are available jobs.
We certainly agree that we do face some skill shortages, moving forward, that we need to respond to, but that is not the situation here and now.
I will speak now to the key provisions. I think it is important to look at these in tandem. The bill imposes new job search requirements on unemployed workers and the requirement that workers must take jobs at a significantly lower wage. I am sure that members are aware that that is differentiated by different groups of unemployed, but there are certainly more expectations being made of unemployed workers through the bill, in terms of the jobs they will accept. At the same time, the bill changes the current appeal process against administrative decisions. We find that very concerning. On the one hand we have a change in the set of rules — and these are rules that are set out in the current EI bill but that will now be set by regulations — a change from legislative standards to standards that can be set by regulation combined with a change in the appeal process.
With regard to the expectations of unemployed workers, the current expectation is basically that unemployed workers should have a reasonable period in which to search for a job that suits their skills and capacities in previous earnings. After that, the current legislation provides that unemployed workers should take a job at wages and standards offered by "a good employer. " Those provisions, which are fairly vague and general, are removed from the act, and there will be a requirement for workers to take jobs at lower wages in some points in their claim.
I have not seen an evidence-based analysis for the proposal that is made. Frankly, it would be our view that, particularly as they get towards the end of their claim, the great majority of unemployed workers will accept available job offers even if that involves taking a cut in pay. If we look at the aftermath of the great recession in Canada, many laid off industrial workers did take jobs at significantly lower wages. Part of me is tempted to say that the government is identifying a problem that does not really exist, a problem of workers deliberately remaning on EI for an extended period of time.
To the degree that the changes do have a significant impact, they will work to lower wages by forcing workers to take lower paid jobs than they previously had, and those impacts will be mainly felt in the high unemployment regions where wages are lowest to begin with. We should not forget that EI recipients, as a group, are much lower paid workers on average, so there is concern that we will create much more intense competition, at the low end of the job market, for low paid jobs.
There is a real concern that with the new provisions there will be a ratcheting down effect. A claimant who takes a job at 80 per cent of the previous wage will be obliged, next time they come up on a claim, to perhaps take a 20 per cent wage cut from an already reduced wage.
I am probably taking too long. I will briefly talk about the new EI appeal process. In our view — and I would be interested in hearing the views of colleagues here — the current system works quite well. As people will know, there are approximately 1,000 people working part time in EI panels established in every region of the country. There is an independent, government-appointed chair, a labour person and an employer person. My understanding is that, in the great majority of cases, the panel agrees. We do not have split panel decisions very often. That process is supposed to give workers a fair hearing — due process — by people who are knowledgeable about local labour market conditions and who bring those employer/worker perspectives to bear.
There is something in the order of 25,000 appeals a year. In fact, there are about 50,000 a year, of which about half are resolved before they reach an appeal, usually administrative mistakes by HRSDC.
The bill proposes replacing that system with 39 full-time persons who will act as single person panels. It is our understanding that they will not be appointed for each of the regions. The intent is to use much more technology as part of the process, so one imagines hearings by video conference or perhaps phone calls. It is a very real concern about whether that will achieve the same fair outcomes as the current process, where a worker gets a fair hearing, the amount of information and how the new rules will interact with the new appeal process.
There are some changes to the rules for high unemployment regions. I can come back to those in questions.
In closing, I want to flag a rather minor concern that is not in the bill. I would hope that it is one that this committee could engage with. At the same time as these changes are being made, HRSDC is no longer providing to Statistics Canada key data about the program. There is no longer available from Statistics Canada any current information with regard to the EI claims in terms of their dollar value. We will no longer be able to track the average claim in terms of dollars per week. We will no longer be able to track the amount of dollars going to each province, but we will probably get a report every two years in the EI monitoring and assessment report.
As the changes are rolled out, unless that changes, we will get no real time information of the impact on the ground. The series on the StatsCan website has been suspended because the data is no longer being provided. Surely I would hope that we could all agree that we need meaningful data to look at the benefits and impacts of EI on these changes moving forward.
Corinne Pohlmann, Vice President of National Affairs, Canadian Federation of Independent Business: Thank you for the opportunity to be here today and speak to the provisions of the budget bill that address EI. I represent CFIB, which has 109,000 small- and medium-sized businesses, all of which are independently owned and operated Canadian companies that collectively employ more than 1.5 million Canadians. They are in every region of the country and every sector of the economy. While my remarks do not directly address all the aspects of the EI changes proposed in Bill C-38, I want to share why we think some of these changes are so important to small business and why the changes to the EI system are needed. Before getting into that, I want to talk a little about the economy from a small business perspective. You should all have a slide deck before you that I will walk you through over the next few minutes.
Slide 2 shows our latest Business Barometer, which is a measure of business confidence. Our index is the blue line mapped against GDP, which is the red line. As you can see, there was a bit of setback last summer when the European crisis hit. Small businesses have been gaining confidence gradually since then with April showing a slight downturn from the previous month. Having said that, an index between 60 and 70 indicates a growing economy, and the current number sits at 66.4. We expect the economy to continue to grow.
In that same Business Barometer survey, we also asked a series of other questions, including their main business constraints. Slide 3 shows that in April about one third cited shortage of skilled labour as a main business constraint, which was exceeded only by insufficient domestic demand. In addition, another 16 per cent cited shortage of un/semi- skilled labour as well.
In fact, while insufficient domestic demand has been coming down as a main business constraint over the last few years, concern over the shortage of skilled labour is starting to creep upwards, as you can see on slide 4. This is really not a surprise as we see hiring plans of small firms starting to increase.
On slide 5, you can see that in April, 21 per cent of business owners planned to increase full-time staffing levels in the next three or four months — the blue line — while only 12 per cent plan to cut back — the red line. In fact, since the beginning of this year, we have seen many more firms wanting to hire than firms looking to let go of employees.
The next two slides I will refer to come from another data source and show the increasing importance of labour and skills shortages among smaller firms. This is an ongoing survey done face to face with our members, asking them about the highest priorities for their business. In the first three months of 2012, almost half cited shortage of qualified labour as a top concern. In fact, in some parts of the country, as you can see in slide 7, it is becoming an important priority. In places like Saskatchewan, Newfoundland and Labrador, and Alberta, it is already an issue for more than half of our members. Also, in places like Quebec and Nova Scotia, more than half are struggling with this issue, and it is growing.
Many factors go into the shortage of labour. While there is no single solution, there are many different areas that governments can address to help alleviate it. This could be changes to immigration, Temporary Foreign Worker Programs and Red Seal trades training. Also important is the impact of EI. Canadian employers and employees who pay the premiums that fund the program want a system that is fair to the unemployed with minimal abuse. This can be a hard balance to strike. Making the EI system more generous makes finding jobs less attractive. Making EI less generous can make life more challenging for those looking for a job. However, the current system is far from perfect. As you can see, slide 8 shows the findings of a CFIB survey, which found that 22 per cent of small employers believe that they have difficulty hiring because potential workers would rather stay on Employment Insurance.
On slide 9, you will see another troubling finding in which 16 per cent of small business owners say that they experienced an employee asking to be laid off so they could collect EI benefits. This actually varied between 12 per cent in Saskatchewan and a high of 30 per cent in P.E.I. Given these findings, we believe that change to EI is needed.
As you know, among the EI changes in Bill C-38 is to take the definition of "suitable employment " out of the legislation and put it into the regulations. We have since learned that this means, among other measures, that those collecting benefits will be required to spend time on their job searches every day. Recipients will be classified into three different groups depending how frequently they access the system. The rules around how broad the search has to be for those three categories will depend on how long they have been collecting it and how frequently they access the system. The strictest standards will apply to those who are EI frequent users.
To be clear, we support the intent of these changes, which is to encourage more people to take available work in their area and make it a little easier for small business owners to find employees. However, some concern has been expressed about whether the changes will address the problems without creating some new ones, for some seasonal employers for example. As you can see on slide 10, about 35 per cent of small business owners employ seasonal workers, and this varies across the country.
With almost half the business owners concerned about labour shortages, it makes sense to strengthen incentives in the EI system to encourage people to actively look for work. It also makes sense to ensure that any tweaks do not inadvertently compound the labour shortage challenge for some employers. We are going to try to find a balance here. We will survey our members further on this front and share their views with government. We hope to identify some ways to get to these problems without creating new ones. Finally, I will touch on the proposed changes to the EI premium rate setting process, which is also incorporated into Bill C-38.
Slide 11 shows that payroll taxes tend to have the most significant impact on the growth of a business as it directly taxes employment. This is why we are very focused on minimizing increases in payroll taxes, especially during periods of economic instability. In fact, implementing EI premium for use was regarded by small business owners as well as those that we call "growth oriented enterprises, " as one the most important government measures to help them get through the difficult years of the recession, as you can see on slide 12.
It was through this process that we came to understand how important it is to have stable EI rates in the longer term for smaller businesses. That is why we support limiting EI increases to no more than 5 cents for employees and 7 cents for employers, or ideally keeping them at the current rate, until the EI account is balanced; and then focusing on setting those rates over a seven-year period to help foster longer term stability in the EI rates. We think this will help to prevent the accumulation of significant surpluses and build a reserve beyond what is required to get through more difficult times going forward.
I will stop there because I am running out of time. I would be happy to try to answer any questions on this or other EI measures contained in the bill.
Mathew Wilson, Vice President, National Policy, Canadian Manufacturers and Exporters: Thank you for having me here today. For those who do not know about the CME, we are Canada's largest trade and industry association, representing about 10,000 manufacturing and exporting companies across the country. We have offices in every jurisdiction, every province, every region and every sector of the economy across Canada. Over the last several weeks, since the announcements of the EI changes, we have had a lot of feedback from the regions, offices and directly from our member companies on what the impacts to the proposals would be on their businesses. That feedback and information is based on the information today. Unfortunately, there is a lot of information that is still missing as to how specifically the changes would impact.
The primary feedback and interest we received from our members suggests the need to upgrade the skills of current employees, expand the available pool of labour both domestically and from international sources, and the ability of companies to match available jobs with the skills of available workers, which has a huge impact on their ability to innovate and improve competitiveness globally.
Too often, job vacancies are going unfilled, projects are not being started and Canada's economy is suffering as a result. As major projects, such as natural resource development, hydro-electric and nuclear energy, and shipbuilding are expanded over the coming years, the need for skilled workers and unskilled workers will only intensify in those sectors as well as in related sectors in manufacturing and exporting. Furthermore, as Canada's demographics continue to change, so does the workforce, leaving a larger gap in qualified and available workers for Canadian industry.
CME is currently undergoing a survey of industry across Canada to determine the major concerns and priorities for companies moving forward. While the survey is still being conducted, the early results are very concerning. Nearly 60 per cent of respondents today are concerned about the availability of labour and the direct impact it will have on their operations moving forward. When asked how the labour market has changed over the past three to five years, 50 per cent of all respondents said it has worsened. Most concerning of all, 90 per cent of respondents to date have said that they would have to consider moving production to other jurisdictions outside of Canada due to labour shortages.
While there is no silver bullet to fix the labour challenges that we now face, if we are going to take full advantage of the economic opportunities provided by major projects through the development of manufacturing services and technology supply chains that feed the primary investment, Canada must do everything it can to better develop the availability and supply of domestic talent as well as access the best skilled workforce from around the world. This includes reforming the EI system to encourage more Canadians to actively and productively participate in the labour force.
The need to create a larger, more skilled and more mobile workforce is why CME has supported government initiatives such as immigration reform, changes to the temporary foreign worker program, labour market opinion system and why we have supported so far the changes to the EI system. We view the changes to EI as being part of solving the labour market challenges that Canada faces. The focus of the changes to EI, that being, to reduce or eliminate abusers of the system, is necessary and long overdue, in our opinion.
However, repeat users of the system are not necessarily abusers of the system. There is a big difference between those who work for the minimum hours each year and then ask to be laid off and collect EI as a lifestyle choice and those individuals who are working part of the year at a facility where the employment ends because the facility closes down and there are no other local jobs or similar jobs to enter into.
As an example, logging operations in northern Ontario and northern Quebec would rely on loggers throughout the winter months to bring enough supply to local mills for processing to operate year round, or a house manufacturer would employ labourers in a variety of skills, including carpenters, electricians and welders, for 10 months of the year but is forced to close in winter months due to weight limits on local roads. In both cases, these are highly skilled professions that cannot be replaced. The workers also cannot find other local employment because there is none because of the remote regions they work in, or because other employers know that they are only temporary for a few months before they would return to their primary professions. Removing these workers permanently by cutting EI benefits and forcing relocation would damage the long-term economic health of the regions and of Canada as a whole.
However, this does not mean that change cannot happen. It means that change must occur in a manner that reflects the regional realities of Canada's economy and be applied appropriately.
Other proposed changes to the EI system, including providing better job matching services for job searchers, are supported by CME, and we are working aggressively with HRSDC to support these changes. In April, CME launched an industrial information and job matching service called iCME. Our goal is to strengthen this service by tying it into the EI system so that EI claimants have access to the available jobs and our network, as well as tie it into the immigration system so that foreign-trained workers can be preselected for available jobs and then quickly enter the workforce in jobs that match their skill sets.
What is most concerning about the proposed changes to the EI system, however, is what was not included. CME has long advocated for the reduction in payroll taxes for employees and for companies so that they have more money to invest in their products, processes and people. Despite the ultimate EI reform objective to reduce the number of people on the system, there was no discussion or contemplation of reduction of EI premiums. In fact, they are continued to schedule to increase over the next several years. If this is an insurance program, rates should be set based on expected use both nationally as well as potentially in each region or sector.
Furthermore, the changes do not address support for employee training. If training is to be maintained as part of the EI system, then a program should be implemented that will allow companies to offset EI premiums against the training of new and existing employees. However, even if all the people on EI found work, the half million extra workers, which includes those on maternity leave, while welcomed into the workforce, would not come close to addressing the skills shortages facing Canadian industry today and going forward.
While these actions taken by government on EI and others, including the immigration reforms as mentioned earlier, are all positive, we must do more, and we must do it in a collaborative, national effort if we are going to capitalize on the economic opportunities before us. Canada must become a world leader in creating a truly global, flexible and modern workforce that supports business growth in all sectors of the economy. The government must look beyond these reforms and work with industry and labour to address these issues and others, such as Aboriginal inclusion, improving basic skills of domestically trained workers, increasing participation in youth in skilled jobs, foreign worker credentials and the movement of business professionals and skilled workers across Canada and internationally. These policy changes we believe will help create a much more flexible and responsive labour pool of domestic and foreign- trained workers that will allow Canada to fully capitalize on the economic opportunities before us.
Thank you, and I look forward to the discussion.
Josh Hjartarson, Policy Director, Mowat Centre, School of Public Policy and Governance, University of Toronto: Thank you for the opportunity to present to you today. The Mowat Centre is a non-partisan, public policy think tank based at the University of Toronto.
As you may know, the Mowat Centre convened the Employment Insurance Task Force in 2011 to examine Canada's support system for the unemployed and to propose a blueprint for a strengthened national system. The task force was independent, non-partisan and research driven. We commissioned 13 research papers by Canada's foremost academic experts. We consulted workers, employers and governments on how the system is performing and how it can be improved. Our research confirmed the current system is inequitable, opaque, not client-centred and is poorly placed to meet our human capital and labour market needs. There are too many gaps, leaving most of our vulnerable workers without any protection.
The task force final report is right here. I think there are copies available through the clerk. I know they were circulated around the Finance Committee for the house.
The task force final report released in November 2011 makes 18 recommendations. Our 18 recommendations are intended to make the EI program more equitable, more transparent and more consistent with the contemporary labour market. The measures proposed in the federal budget do not appear to bring the program closer to these three objectives, and I will speak to why that is.
Some of the proposed changes are aimed in the right direction but miss the mark. Interpretations of what constitutes suitable work, for example, are currently idiosyncratic and inconsistently applied across the country. A clear definition could help create a more nationally consistent system. However, the proposed changes around suitable work are overly complex, create more differentiation between workers and are unlikely, in our view, to result in the desired outcomes. Those most affected may end up being in urban areas rather that the centres of frequent EI use. If these regulations are stringent and heavily enforced, the system is likely to encourage many first-time claimants, who are disproportionately young and/or new Canadians, to shorten their job searches and take jobs well below their skill level, robbing them and their communities of the investment we made in their human capital. A downward pressure on wages at the lower end of the labour market is certainly a possibility.
There are other smaller changes that are positive. Providing more information about available jobs to EI recipients is positive. Trying to connect employers seeking temporary foreign workers with unemployed Canadians is similarly laudable. We are concerned, however, that the changes do not deal with the real problems in the system. They do not eliminate regional inequities and do not create a truly national system. The task force recommended a single entry requirement and benefit duration for all workers across Canada, including new entrants and returning entrants to the labour force. This would reduce both region and industry specific subsidies that occur in EI, increase transparency and restore fairness to the system.
The task force made a number of other recommendations on how to improve the system's responsiveness, fairness and overall effectiveness. For example, we proposed the creation of the temporary unemployment system, a very affordable form of repayable assistance to those workers who need help but do not qualify for EI. These are workers mostly found in urban areas, and disproportionately in Ontario and the West. We calculate the cost of this program at around $900 million.
We also propose removing Labour Market Development Agreement transfers, which provide the largest pool of funds for training, from EI. We propose to allocate those funds to provinces, based on their share of Canada's unemployed, and to eliminate the precondition that workers must qualify for EI to access this large pool of support, the largest pool of support for training in the country. This would give the provinces the capacity to tailor training programs to local conditions and to enable the underemployed and those outside the EI system the opportunity to benefit from this pool of funds. Research indicates that this would actually be the most efficient and effective allocation of these training dollars.
I would be happy to discuss this, as well as our other recommendations, and to elaborate on our critique of the proposed EI changes. Thank you for the opportunity to speak.
The Chair: Thank you very much. We look forward to having a chance to review those recommendations.
Mr. Jackson indicated that he was disappointed that his group, the Canadian Labour Congress, had not been consulted with respect to these initiatives in this bill. Could the rest of you indicate whether you have been involved in providing advice to the government leading to these amendments?
Ms. Pohlmann: We certainly have been talking to the government for a while about some of our concerns when it comes to EI and the challenges that small businesses face in terms of sometimes feeling that they are competing. We have been pushing the government to perhaps make changes in this area. I do not think that they did a big consultation process with us or with other groups, but we have been actively urging the government to make changes.
Mr. Wilson: We are in the same boat. We have been working with government on this for a while but were not specifically consulted on these proposed changes.
Mr. Hjartarson: We were not consulted, which is surprising given that this is the single largest, most comprehensive study on Employment Insurance undertaken in at least two decades.
Senator Finley: I have so many questions that probably could use up everybody's time, which I will not do, of course. I would like to ask some questions first, if I may, of CFIB, with regard to the charts and graphs that you presented, particularly, or at least initially, slide 3.
Now, I realize that these are not cumulative. In other words, 34 plus 16 plus 27 does not necessarily means that 77 per cent of respondents had labour shortages, but it is a significant number. Is there a definition in CFIB, as they do these surveys, as to what represents skilled labour as opposed to unskilled or semi-skilled?
Ms. Pohlmann: In this particular survey, we do not necessarily define it. We have in other surveys. Generally speaking though, we leave it to the respondent to decipher what they think is skilled, unskilled or semi-skilled. Generally, when we do define it, it is people who have some type of post-secondary training, whether it is apprenticeships, college, university or anything along those lines.
Senator Finley: Would this include, for example, sociologists or librarians? I could think of dozens of people who have very credible courses or post-secondary education, but are they included in your survey? Would that be part of it?
Ms. Pohlmann: They would fall under the definition of skilled, but from other research that we have done and from trying to determine the kinds of skills that people are seeking, it would primarily be skilled trades people, as well as folks who have a bit of post-secondary, which could be technicians of various types. Those are more the types of skills that we know it tends to be from other research.
Senator Finley: That would appear to be of greatest concern among any group?
Ms. Pohlmann: Correct.
Senator Finley: Unskilled just means what — labourers?
Ms. Pohlmann: Yes, labourers, people with a high school education or less. It tends to be folks who would have on- the-job training, but that could be very broad and also include a lot of skilled employees as well.
Senator Finley: Management skill is a key thing that we are short of, but it is really that skilled shortage.
In CFIB's opinion or research, does our education system or education process lend itself to producing a sufficient ratio or quantity of what you would refer to as skilled workers? I am not trying, in any way, to put down sociologists or psychiatrists or anything else, but, in terms of your constituency, does the education process serve us well in this respect?
Ms. Pohlmann: We have done research asking our members about their satisfaction with various types of training versus college, universities, et cetera. Generally speaking, no, it does not address it. There are certain segments that do a good job. Co-op type programs are very much admired by small business owners, but they often feel that they are not necessarily the group that is contacted when colleges or universities put forward new programs.
My answer is that they are not totally satisfied with the types of skills coming out of the post-secondary education system or even out of the high school system for that matter. In fact, I would say that small business employers often feel disappointed that they have to do a whole slew of education of new employees who come out of high school to make sure them understand what it means to have a job. There is a feeling that things could be much better in terms of preparing people for the workforce.
Senator Finley: This seems to me to be somewhat anecdotal; I do not know how to determine this, but on chart 8 you have the heading "Difficulties hiring due to worker preferring to stay on EI. " Is that anecdotal or is there actual research evidence within CFIB that supports this? This is a fairly large sample, 9,200 responses.
Ms. Pohlmann: It is a perception. We will not pretend that it is not. The question is, "Do you feel that you had difficulty hiring these people because they would rather stay on EI? " However, that perception is reality for a lot of small business owners who do see that they get applications from employees who they know are not really interested in getting the job. They are doing it simply to access EI benefits. We have a lot of anecdotal information — individual stories heard from individual employers — but this is based on a perception question. I do not want to mislead you in that respect.
Senator Finley: I think it was Mr. Wilson who mentioned a percentage of people who could, were thinking of or would consider moving geographically because of labour shortages. What was that percentage?
Mr. Wilson: It was 90 per cent.
Senator Finley: Is that a primary cause or a contributory cause?
Mr. Wilson: It probably depends on the company, in a lot of cases. I have heard from companies across the country that need to expand operations. They are looking at where they are today and where their customer base is going. To supply their customers going forward, they know that they need additional capacity, but they are having such a difficult time today with skilled and unskilled workers — and the definition probably varies by company never mind by industry —that they know that their ability to operate going forward, regardless of all of the other factors, will rely on people; they just do not have access to enough people.
It gets worse. It is okay to some degree in some of the larger urban centres but, if you move outside Toronto — the GTA, Montreal or Vancouver, it gets pretty difficult to attract people to Winnipeg, Regina or Charlottetown to maintain and expand operations. We are hearing it as a primary issue that they are facing.
Senator Finley: I have a particular question for Mr. Jackson in a second. It almost sounds to me that EI is a symptom as opposed to a cause of things like skilled labour shortages. We know we have issues with Aboriginal pickup, we have regional differences and we have seasonal differences, which are facts of life. I am trying to get my head around whether EI is just a Band-Aid for this or is there something genuinely productive coming out of EI as opposed to what we are seeing it as or what people keep telling us it is?
Mr. Hjartarson: The problem with the current system is that it is built on a 1970's labour market logic. I will give you one example that partially answers your question. In order to access the largest pool of training dollars, you need to qualify for EI; but by the time you are on EI, you are already unemployed. If you got rid of the requirement beyond EI in order to qualify for the training dollars, for example if it were available to underemployed people, that would be one mechanism by which you could resolve some of these problems. It is a very simple fix.
Senator Finley: What do you mean by "underemployed? "
Mr. Hjartarson: For example, they are new immigrants who have skills but for some reason do not meet Canadian requirements. That is a good example. They could get some training, maybe part time, or meet that requirement and voila; but I am not saying it is that simple. Another pool that is largely outside the EI system are those with multiple jobs. That is the way modern labour works. Those with multiple jobs are up 150 per cent since the last time EI was reformed. If you lose one job, you do not qualify for the pool of training dollars; but you might need training and have the time for it. Nonetheless, the rules around how training is allocated and how you qualify could be an easy fix. However, my sense is that it would go some distance toward responding to the challenge you point out.
[Translation]
Senator Hervieux-Payette: My first question is for Mr. Jackson, and it concerns foreign workers. Are they treated the same way everywhere? I come from an agricultural region, and my family hires foreign workers. I have never heard my family talk about lowering wages. They have even built a very comfortable house for the workers who come from Mexico. They have CSST and health insurance coverage and are provided with housing. I am trying to understand the origin of this idea that they should work for lower wages than Canadian employees and that they apparently do not have the same privileges in the other provinces. Are we unique in this area?
[English]
Mr. Jackson: As I am sure the senator is aware, the current requirement is that temporary workers coming to Canada be paid the prevailing wage in their occupation and region. The principle is that temporary foreign workers should not be undercutting the wages and conditions of Canadian workers.
I have a colleague who has been more closely involved than I, but there are problems with the operations of that. For example, temporary foreign workers in construction in the oil sands of Alberta resource developments probably would be paid the hourly wage of Canadian workers. However, the benefits that unionized construction workers get would add quite a bit to the wage cost, which would not necessarily go to temporary foreign workers. Over time, provisions would not apply. We have had discussions with the government about what that comparable standard should be. In parallel with the budget, we understand that the regulations are being changed and employers can pay up to 15 per cent below the prevailing wage, so that would be a change moving forward.
There is an interesting question to get into, and I pose it without knowing the answer. Clearly, the intent of government is that workers who are now drawing EI benefits have some sort of access to jobs being filled by temporary foreign workers. I do not think we have any objection to Canadian workers being informed that those job opportunities exist. That is probably a good change. I would question whether employers really want current EI recipients with their skill sets in the jobs that are now being filled by temporary foreign workers. I doubt that many farms employing workers under the Seasonal Agricultural Worker Program really want to hire 50-year old unemployed Canadians for the jobs. How much there is a real fit between the jobs being filled by temporary foreign workers and those of unemployed Canadians is probably open to question.
[Translation]
Senator Hervieux-Payette: As we speak, a case is before the Quebec courts concerning the Canadian Charter of Rights and Freedoms, which provides that workers in Canada have the same rights as Canadians. So I find it somewhat odd that this kind of clause could be authorized and be valid.
One thing is certain: workers who come and work in farming work seven days a week. They come for a specified period and they agree — this is obviously part of the work contract — to a suspension of the minimum working conditions in Quebec.
I do not know the situation in the rest of Canada, but I am trying to understand how we could have a system across the country in which people would work even more hours a week and be paid lower wages. I am trying to imagine why.
Can Ms. Pohlmann give me the answer? Was it small and medium-sized businesses that requested this potential cut in wages?
[English]
Ms. Pohlmann: I suspect you are speaking of the Accelerated Labour Market Opinion and some of the changes coming out of the budget on that front. One key factor is that they will allow employers to pay up to 50 per cent less of the prevailing wage. One reason we actually support that provision is that we were finding in places like Alberta, the prevailing wage is really an amalgamation or average wage of all the businesses in that particular occupation. In a place like Alberta, where you have large oil companies and construction companies competing alongside smaller firms, they drive the wages up. Many smaller firms using temporary foreign workers were finding that they were paying their temporary foreign workers more than they were paying Canadian employees. That was becoming difficult for them to manage and understand because they were obviously on the lower end of the pay scale. They really just wanted to be able to pay the same as they were paying their Canadian employees.
The rule, from what I understand, is that they can pay up to 15 per cent less as long as they are paying them the same as they are paying their Canadian employees. In fact, if they are paying their Canadian employees under 50 per cent of the prevailing wage, they still have to pay temporary foreign workers 50 per cent below the prevailing wage. That was something we actually were encouraging them to consider to allow more flexibility in the temporary foreign worker program for smaller firms to access these particular workers to compete with the larger companies in places like Alberta where the wages tend to be driven up by these large corporations.
[Translation]
Senator Hervieux-Payette: Then I understand it may not be the same in agriculture.
Have the questions in the document containing the statistics that you cited been sent to your members? Is there an explanation of those questions?
When you give us percentages in any one of the tables, are those questions put to your members, and do your members ultimately give an answer from 1 to 10? Is the question already prepared in advance? How do you prepare the questionnaires so as to get those answers?
[English]
Ms. Pohlmann: We are a survey and research-based organization, so all of our policy issues are based on survey feedback through our membership. We have been doing this for 40 years. We have a sophisticated team and process that we use. We try to make sure it is as credible and fair and balanced in the approach we can take.
On a practical basis, we will use different types of survey vehicles throughout the year. Some will be paper based, so they will get a piece of paper and they will fill it out, and they have time to reflect and think about the questions and then respond as they see fit. Others do it online. It is the same idea. They can go to it, think about it and come back to it when they want to. Our systems are such that we know each individual member who is responding to a survey, so they cannot respond more than once, because we do not want any one member to have an undue influence on our policy outcomes. We know each individual person that has responded to the survey. We do follow up and provide feedback to tell them after the fact, "These are the results; this is what we found. " We make it clear to our members when they join that this is how we set policy, and if they want to be part of that process and to participate in the process, the positions we take are based on the feedback we get. Even if our members may not necessarily be on the same side as the majority of members, they understand that process and how we go about gathering this information.
[Translation]
Senator Hervieux-Payette: What percentage of the total number of SMEs in Canada surveyed every year does your membership represent?
[English]
Ms. Pohlmann: Approximately, we have 109,000 members, and there are approximately 1 million businesses with employees in Canada, all of all sizes, and about 2 million when you include people who are self-employed.
[Translation]
Senator Hervieux-Payette: I would like to ask a question about training.
The Chair: I am going to put your name down for that in the second round.
[English]
Senator Runciman: Mr. Jackson, you were saying the legislation addresses a problem that does not really exist. I see a clip in actually today's media about a fish plant in Newfoundland looking to Thailand to fill jobs. They hire about 450 people, and they do cook and package frozen shrimp and crab. The province of Newfoundland has a 13 per cent unemployment rate. The company conducted an extensive advertizing campaign in just about every regional paper and magazine but still could not fill their labour needs. Do you not see that as a problem this legislation is attempting to address or ameliorate to some degree? That was in today's edition of the National Post.
Mr. Jackson: I cannot speak to the specific situation, senator. It is my impression that if you look at rural Newfoundland, where there are still high rates of unemployment, a lot of younger people have left those communities in search of jobs elsewhere. There was a study by the Mowat Centre that just came out as part of their background showing that the EI system was not a significant barrier to people moving out. I think it is a lack of fit between the people left in the local communities and what the employer is looking for. I would be curious to know what the wage is that is being offered. Unless you have a handle on that aspect as well, it is just —
Senator Runciman: They do not say people were not able to, and this does not sound like highly physical work, but they say too few local people applied. That was the comment in the paper.
We talked about the shortage of tradespeople, and this has been a long-standing problem across the country. Mr. Wilson referenced that we need a collaborative national effort, and I believe it was in that direction. What is happening with respect to the national picture? I look at, for example, what role the provinces are playing here with respect to addressing this issue as well, because I know, for example, in Ontario, where we only have a ratio allowed of one tradesman to one apprentice, some people suggest that is to keep the labour rates at a high level rather than addressing the real problems and challenges facing the province and facing us nationally. Do you have any comments with respect to the attitude and response to this challenge by the provincial governments?
Mr. Wilson: I think there is a problem generally with labour mobility, and specifically skilled labour and the ability of an electrician or a welder to move from one province or another and then their ability to get qualified when they are in that jurisdiction. The provincial jurisdictions all operate separately and independently for most of the skilled professions. There is a broader, pan-Canadian framework on skills certification that was supposed to identify and address some of these issues, but it really looks at other skills, some of the sectors you were talking about before around accounting or some of the other ones, but not the hard skills like carpenters and electricians and things like that. That needs to be done on a national basis because, in most cases, the provincial jurisdictions are the ones holding up certification. There are poor linkages and training opportunities coming out of the colleges. The colleges are not working with industry. It is a problem all the way across. It is not any one jurisdiction. It is not a government. It is a systemic problem that was built up, and Mr. Hjartarson mentioned it was built on the 1970s. I am not sure when this model was built, but it is a problem now in today's economy.
Senator Runciman: There was supposed to be recognition across provinces with respect to tradespeople moving from one jurisdiction to another. They are putting impediments in place to make that not work as well or anywhere near where it should be.
Mr. Wilson: The feedback we get from our members is that they have a difficult time with getting people certified up to the right levels when they move, regardless of where they were qualified before. It could be Ontario or it could be the U.K. They still have the problems that they are facing in the same regard in getting the qualifications and getting the apprenticeships done and everything.
Mr. Hjartarson: It is a complex question, and I think that we cannot forget the role of employers as well. It is easy to point to government. This is my academic and not institutional affiliation hat talking. We do know that employers in Canada spend the lowest per capita on training themselves. That is a problem, and whether or not government has a role in encouraging employers to participate in that respect is an open question. I would point to some of the inefficiencies that are built into our training system writ large. I have spoken to one, and I think it is the most important, and that is the condition around federal training dollars that flow to the provinces and how those are allocated. Giving the provinces the ability to use that money in a way that makes sense for that province, in particular, it is a win-win. However, I think that we see classic Canadian jurisdictional issues and credit taking and so on, but that is a problem. If you put nine experts in a room, eight of them would say it is a real problem.
Senator Runciman: I think you have to have some kind of standardization with respect to the provinces. You will put money in there, and the province itself is doing things to limit the ability to grow the numbers in terms of skilled trades. That will cause hesitancy on the part of the funders.
Ms. Pohlmann, you talked about your concern about these changes and the impacts on seasonal workers. In my own area, most of them are from Mexico and the Caribbean, and mostly in the farming sector. You implied some measures because employers are concerned about the impacts. How do you see that being addressed going forward?
Ms. Pohlmann: At this point, we are trying to understand what they believe the impacts will be. We believe that the changes being proposed in those communities that tend to have primarily seasonal work will have little impact. Essentially, if you have to go more than an hour from that community, then these particular provisions will not apply to you. Those particular seasonal types of industry are probably okay. Where we have been getting some commentary from our members is mostly in the more urban settings, and we are sort of asking them why they think it will impact them.
We have received calls from golf courses, landscaping businesses and that kind of thing. They almost all believe that some change is needed in the EI system, but there is concern about how this will impact their ability to bring back the same people every year. We want to understand a little better why they see these impacts and what they believe some solutions might be, and we want to do a little more broad-based research over the course of the next few months in order to respond to the government on what we can do to ensure that this does not have unintended consequences.
Senator Ringuette: My major concern is with regard to seasonal industries such as construction, fisheries, agriculture and tourism. Due to our geography, Canada has to deal with the reality of its seasons.
In the last month I have talked with many employers in northern New Brunswick, and they are beginning to have major concerns about the seasonal employees whom they have trained over the years. They want to be sure that these people will be available for the next season of their industry.
Almost 20 per cent of Canada's economy is based on seasonal industries, so we must pay attention to those needs. We must ensure that seasonal employers have their seasonal employees available.
Senator Runciman spoke about a seafood plant in Newfoundland in a community of 400 people. You cannot complain because you cannot have seasonal employees when you have a federal program the only purpose of which is to stop people from being only seasonally employed. This is a major dilemma.
Unfortunately, we did not have a white paper with full discussion and analysis of data to learn what is required for our economy.
Ms. Pohlmann, how many independent businesses do you have as members?
Ms. Pohlmann: We have 109,000.
Senator Ringuette: When you survey 9,242 members, that is only 10 per cent of your membership, and from the 10 per cent of your membership you got these answers that you said earlier were based on perception only.
Ms. Pohlmann: That is just for that one question. Some are based on their experience.
Senator Ringuette: How many of your members have seasonal operations?
Ms. Pohlmann: That is on slide 10, which asks them if they have seasonal workers in their employ. This does not mean that they are 100 per cent seasonal. It could be that they have more employees at certain times of the year and less at others. Thirty-five per cent nationally do hire seasonal workers, and that goes up in the Atlantic provinces, so I am not surprised that you are getting the feedback you are in New Brunswick.
Senator Ringuette: Yes, because our economy is based on forestry, fisheries and agriculture.
Ms. Pohlmann: It is a much more rural-based economy than other parts of the country.
Senator Ringuette: Absolutely.
I have some data that says that of the entire labour force in 2010-11, there were 443,000 seasonal workers in Canada, representing 22.8 per cent of the temporary workforce.
Mr. Hjartarson, do you agree with this data?
Mr. Hjartarson: I do not have data in front of me that would enable me to say yes or no. I can get back to you on that. I am happy to comment on your suggestions around seasonal workers.
Senator Ringuette: Please do, but I have another specific question for you with regard to your comment, with which I agree, with regard to how much money the Canadian business community invests in training their own employees compared to other countries.
Mr. Hjartarson: There are studies that have produced that data, but the nature of our labour market is very different. For example, in Germany, once you get hired by a company, chances are that is where you will retire. It does not work like that in our economy, especially this modern labour market with the youth we have today. They do not necessarily stay in the same job for a long period of time, so there is a disincentive to invest in training employees who might leave shortly thereafter. There are structural explanations for that phenomenon; I merely stated a fact.
There is probably a larger role for government to play in this type of economy where people do not stay in the same jobs in the way they do in European countries, for example.
Ms. Pohlmann: I want to talk about the training issue. We have done our own research because we get a little frustrated with small businesses being targeted as not training enough. We believe that is partly because we are not necessarily measuring the informal aspects of training very well.
In small businesses, it is the informal aspects of training that are the most powerful and the most relevant to ensuring that people are prepared for the job they do. There is nothing better than having a mentor or on-the-job training or having someone show you the ropes through that system, and that is not always captured in the studies that are done.
We have tried to capture that in our work, and I can share that research with the committee if you would like. We calculated that Canadian small businesses were spending about $18 billion a year on training their employees. That included time invested in trying to train someone. It also included formal training, which, interestingly enough, we found they were doing as much of if not more than larger companies. That would be classroom training and the type of things that you can measure because there are actual costs associated with it.
I would be happy to provide our research in this area, because we take this very seriously. We believe that training is a key component of ensuring that our labour force is prepared for the economy of tomorrow.
Mr. Jackson: On the training issue, I would echo several things that Mr. Wilson said earlier. One area in which our system falls down is for people who leave the school system and enter the workforce early. They will not go very far in today's job market with just a high school education, or perhaps even less. We do not provide any avenue for those people to have what I would call a second chance.
We have talked about the possibility of people like that being able to access EI to support a training leave. That could be with the employer giving them the opportunity to do that and to return to a job.
The worker would be taking a significant cut in income to move from a job to EI, but it might allow someone to go to college for a year. Similarly, when we went through the recent recession, the work sharing program that we ramped up was a very successful way of dealing with the downturn in many ways. We could think of work share programs where instead of people just being laid off the job and getting the income supports, there could be work sharing with an educational training component built in. The day or two days a week that people were getting off, they could have been training that would have minimized the chances of people going on a long unemployment spell later.
There are positive ways in which we could be using EI to support training. As senators may be aware, apprentices now in the classroom portion of apprenticeship training get income support from the EI system to support that period. It is supporting employer investment in apprenticeship training as well. There is real room for exploration of how we use EI to improve skills.
Mr. Hjartarson: I want to respond, if I may, to the commentary around seasonal workers. What is lost in the discussion around seasonal work is the fact that Employment Insurance is a regressive tax. That means people with low incomes pay a larger portion of their pay towards the EI system and that inadvertently is being used to subsidize seasonal workers in other parts of Canada.
In our report we say bluntly that we support a single national standard, a single national benefit formula. That might have an impact on seasonal workers, but our point is if you want to subsidize those industries, do so through other means and not necessarily with a regressive tax. There is nothing in our recommendations against seasonal workers. If you are going to support those industries do so through direct means and transparently.
Senator Ringuette: Mr. Hjartarson, from my knowledge the employees and the employer pay an EI premium based on $100. It is not based on whether you are earning $500 or $1,000 a week. I do not really understand what you are saying. Everyone is paying the same amount of premium.
Mr. Hjartarson: No, that is to a point. Actually it maxes out and at a fairly low level as well, so if you earn $100,000, you are paying a smaller portion of your income than someone who earns $44,000. You are hardly ever accessing the program, but the reality is in a way it is a form of regressive taxation.
[Translation]
Senator Chaput: Mr. Chair, my questions have been asked.
The Chair: Do you have any other questions?
Senator Chaput: No, I have no more.
[English]
Senator Campbell: I do not sit on this committee full time, so you will pardon me if I am not right up to speed on this. I have a couple of questions.
First, you call this a regressive tax. Do you know from your study how many Canadians actually pay into this and never access unemployment insurance?
Mr. Hjartarson: There are a lot.
Senator Campbell: "A lot " is not very scientific.
Mr. Hjartarson: I know, but you are asking me a hard number. We know that only about 40 per cent of the unemployed actually receive Employment Insurance. There are large portions — and I do not have the data right in front of me — of people who pay into the system who either do not access it or do not qualify.
Senator Campbell: Everyone pays into the system.
Mr. Hjartarson: Not necessarily; people who are self-employed and people working on contract are a much larger portion.
Senator Campbell: What is the percentage of workers? You are saying that only 40 per cent get EI.
Mr. Hjartarson: Yes.
Senator Campbell: What is the percentage of workers who pay into EI?
Mr. Hjartarson: I have to get back to you with that.
Mr. Jackson: One hundred per cent of employees.
Mr. Hjartarson: Yes, 100 per cent of employees.
Senator Campbell: I am missing you here. You just told me that if I take out all these different sectors of the economy then we do not know the number, and now you are saying 100 per cent. I have been paying unemployment insurance since Robbie's Pizza in 1963.
Mr. Jackson: I do not have the number at hand, but in round numbers last year there were 1.5 million EI claims for regular benefits.
Senator Campbell: Are you telling me we do not know how many people pay into this?
Mr. Jackson: That would be 1.5 million out of the workforce.
Senator Campbell: What about those who do not go to it? What about all of the millions of Canadians who do not claim?
Mr. Jackson: That would be a lot who pay in who would never collect. There were 1.5 million claims last year and two thirds were not frequent claimants.
Senator Campbell: What is the size of the Canadian workforce?
Mr. Jackson: There are a lot of people who pay in who do collect benefits at some time, say over a 10-year period. It would not be a trivial percentage of the total workforce.
Senator Campbell: What is our total workforce?
Mr. Wilson: It is about 17 million or 18 million.
Senator Campbell: Is it correct that 1.5 million access the unemployment insurance?
Mr. Wilson: Apparently.
Mr. Jackson: In real round numbers, if you double the unemployment rate you are probably at the percentage of the workforce who would file a claim at some point. The average person is unemployed for six months.
Mr. Wilson: An average of over the last year has been about 550,000 on EI at any given time, but that does not track over the course of a year. On a monthly basis it is about 550,000 who are on the system at any given time, but that includes maternity and a bunch of other things.
Senator Campbell: For some reason I keep getting the sense that everyone seems upset at the 16 per cent of people who ask to be laid off. Then we learn that we are not really sure it is 16 per cent because it is sort of anecdotal. We have no numbers here. We have nothing; we have anecdotal that it is 16 per cent. We are not sure how many people are paying into this. We know how many come out of it and now we are trying to plan ahead for the future with no numbers. That is what disturbs me.
While I do not think we could match the scientific test, I think it is actually a fairly accurate reading. I am not pooh- poohing your numbers, I am just saying we do not have any of those numbers and we are moving toward into an area where, as you said, kids do not think like people thought in the 1970s. How do we deal with that? How do we deal with the training?
We are all concerned about unemployment insurance. I am not concerned about Employment Insurance at all. In fact, I am not concerned about the number of people who are using the program. I am concerned about the number of people who are under-qualified because they went to university because mom and dad said that is what they should do, or because they did not do anything, but mom and dad keep them in their basement. That is what I am concerned about because we are losing trained employees. Employment Insurance might help a little if it went towards training.
What will we do about that? Obviously bringing in workers from outside Canada is not a new thing. However, the numbers that we bring in are increasing; is that correct?
Mr. Wilson: Yes.
Senator Campbell: Is that not what we should be concerned about within this bill?
As an aside, I have a farm and I grow apples. When they are ripe, they need to be picked. In the Okanagan in Canada we pick seven days a week. Everyone picks seven days a week. It is not like you have a holiday off. We are not talking reality here; we are saying maybe this could happen and maybe it could not.
Is EI our biggest problem? Is that what we should be dealing with, or should we be dealing with the future? How are we going to get Canadians employed at levels that they want to be employed at? Not everyone wants to be the boss. How do we do that?
Do you want to respond to that, Mr. Wilson?
Mr. Wilson: Sure.
Senator Campbell: That is the Larry Campbell shotgun approach.
Mr. Wilson: No, thank you, senator.
The Chair: We brought you here to talk about Bill C-38 and Employment Insurance changes.
Mr. Wilson: I know, but his comments were similar to my comments in my opening remarks, so that is why I figured I would jump in and talk about this a little bit.
I think we have a huge problem. It is training, education and a whole bunch of things. If you look at Alberta as an example, there is now a huge population of people in their twenties who dropped out of school when they were 16 because they could chase $80,000 a year jobs and are incredibly unqualified to do anything else. They can barely keep the jobs they have today, and, despite the training efforts of the companies, they are having a hard time keeping up with technology and the needs of employers today. That is a huge problem. Keeping kids in school and giving them the right tools when they come out are very important. We run programs, for example across Manitoba and across Quebec, through our regional offices, that bring high school kids into local companies so that they can see what actually happens and see that a manufacturing facility is not a steel plant from 100 years ago; it is very high tech, clean, modern and global. These kids in Quebec will go into a Bombardier plant and see an aircraft being built. Kids in Winnipeg will see a bus being built at New Flyer Industries. These types of programs linking kids into real business, not talking about what is going on but actually showing them the inside of a plant, giving them the experience and letting them be in there for a week or so, will show people that there really is a future in these types of industries and will get them engaged. It does not mean that everyone has to go to school to be an astrophysicist or a sociologist or whatever; it means that there are a variety of skills that these kids need to be taught through the education system. Almost universally, when I talk to my members, whether in Newfoundland or British Columbia, they tell me that the kids coming out of high school are failing them in terms of their ability to learn. As a result, as they get into colleges and universities, they are turning out exactly the same thing, kids who do not have the skills that the companies need.
In most cases, kids coming out of university and college are having a hard time reading and writing up to the industry standard levels, never mind being able to perform high level, technical jobs expected of them. There is a fundamental disconnect, and that is why I jumped in here; I, too, believe that change is necessary in the EI system — no one would say it is perfect; one can always improve a system — but this is only one piece of puzzle. A couple hundred thousand people re-entering the workforce likely do not have the skills necessary that people need today. We can put all of those people back in the workforce, but it will not change the reality that we have a general labour shortage but that, in specific occupations, specific skills and specific regions, we have bigger problems that our system is not filling the needs of. We have to look beyond what we are doing today.
The Chair: We are running out of time. We are going to round two. Senator Campbell did you want to go on round two?
Senator Campbell: No, I am usually only good for one round.
The Chair: This is a short, snappy questions and quick, crisp answers round. I would recommend that you try to get your questions in. You have about two minutes per person.
[Translation]
Senator Hervieux-Payette: My question is for Mr. Hjartarson. I would like you to give us a little more of an explanation of the provinces' role in manpower training.
Quebec has signed an agreement with the federal government. Vocational training for the labour force in Quebec is done entirely by the Province of Quebec, and employers must contribute 1 per cent of their payroll to training for their employees. Is this the kind of approach you are suggesting so that we can achieve our training objectives?
I would also like to tell a brief anecdote. In one business that has quite skilled employees who have been trained through these programs, there are employers who come and hire those employees away from those who have trained them, but the hiring employers do not train them. So can we also have a system that will be fair for employers, to ensure that this kind of piracy does not undermine training for those who do their duty by making use of the programs to train people up to higher levels?
[English]
Mr. Hjartarson: That is a great question. The way we envision training working is to remove it from the EI system altogether, to fund it out of general revenue and to then transfer that to the provinces to run their own training programs as they see fit. We think that that is the best solution. It would address some of the concerns that I think you raised. We see training as a net societal benefit. We do necessarily see the appropriate role for workers and employers as funding training through the EI system.
Mr. Wilson: No one would support expanding the one per cent Quebec tax anywhere else. It is an inefficient tax. For the most part, companies are spending more than 1 per cent anyway, so the government has basically created a bureaucracy. The money would be far better spent on the training itself.
Senator Runciman: Do you have any comments on the Working While On Claim Pilot Project? Mr. Wilson referenced logging in your opening statement. When I am looking at these reforms, I do not see any impact on workers in remote areas, areas that do not have employment beyond seasonal jobs. Do you agree with that assessment?
Mr. Wilson: I will tackle the first question, and Ms. Pohlmann may want to jump in on the second one.
I mentioned logging. You may be right. I specifically asked the minister's office about that, and they said it would not be impacted. The problem has been the level of detail available on how it will functionally play out once it is rolled out. This has been some of the misunderstanding and one of the things that needs to be improved in communications, but there are other areas. I mentioned homebuilders, who are seasonal as well and who may be impacted directly, but the details are just not available at this time.
Ms. Pohlmann: I will just comment on Working While On Claim. We support the Working While On Claim changes because we believe that allowing people to earn more money while they are on EI will give them more of an attachment to the workforce. We have actually gone to our membership, asked them this question and showed them the pros and cons, and our membership supported it as well. We are on side on that front.
Mr. Jackson: I agree. It is a really positive change. There were real reasons for unemployed workers to decline short- term job opportunities because they would end up poorer as a result, which is crazy. There is a slight wrinkle in it; the changes proposed in the budget still have a disincentive effect in the very high unemployment regions. They are basically taking what they used to do in the high unemployment regions and rolling it out nationally, which is a good thing, but it becomes somewhat less of an incentive in the very high unemployment regions. This is a wrinkle that should be looked at.
Senator Ringuette: The more I look at this, the more I find that it is a nonissue that suddenly has become an issue. For the life of me, I still do not see why we would make these kinds of changes before looking at the entire picture.
For the last 15 years, I have seen most of you come in and say that we have a labour shortage and need more skilled workers. I understand that HRSDC has put together different task forces or councils in regard to making sure that we have Canadians who are trained, being trained or have access to training in order to meet those skills shortages.
Ladies and gentlemen, what have you done? What have you performed in the last 15 years with regard to ensuring that those shortages, through all your discussions and consultations with the federal government, have been addressed? Still today, you tell us that we are facing shortages of skills.
Ms. Pohlmann: Part of the issue of course is our demographics in Canada. Aging demographics are a reality, and unfortunately as we move forward, there will be fewer working-age people simply because of the demographics of this country. That will contribute to the ongoing pressures we have on the shortage of qualified labour.
Senator Ringuette: The highest unemployed group of Canadians is our youth.
Ms. Pohlmann: From our perspective, a lot of the issue is around training and making sure that there is a better connection between the needs of the employers and the actual skills being produced. That disconnect still exists, and we need to a better job of finding a way to connect that again.
The Chair: Thank you very much for being here this afternoon. We very much appreciate your point of view. We are working away on changing the appeal structure and doing away with referees in that program. We are also trying to understand the proposed changes in the act. The information that you brought to us today will be very helpful in our analysis of that.
Honourable senators, the Library of Parliament has been researching while we are here. There are approximately 17.3 million people paying into the program. Last year, 848,900 people had claims — about 1 million from 17 million, in rough figures.
Tomorrow, we will meet in this room again. We will start at 2 p.m. because the Senate starts at 1:30 p.m. We will deal with the amendments in relation to charities. Tomorrow evening, we will be back to Supplementary Estimates (A).
Mr. Jackson: I think that in any average month, there were about 850,000 beneficiaries. Over the course of a year, you would find that there were about 1.5 million new claims filed.
The Chair: Thank you.
Thursday afternoon, we will deal with amendments to Old Age Security. We have quite a bit of work ahead of for the rest of this week.
(The committee adjourned.)