THE STANDING SENATE COMMITTEE ON BANKING, TRADE AND COMMERCE
EVIDENCE
OTTAWA, Wednesday, March 30, 2022
The Standing Senate Committee on Banking, Trade and Commerce met with videoconference this day at 6:30 p.m. [ET] to study matters relating to banking, trade and commerce generally, as described in rule 12-7(8).
Senator Pamela Wallin (Chair) in the chair.
[English]
The Chair: Good evening, everyone. I am Pamela Wallin, and I am the chair of the Standing Senate Committee on Banking, Trade and Commerce. Welcome to you all.
Before we begin continuing the formal part of our study on labour markets, I would like to remind senators and witnesses to please keep your microphones muted at all times unless recognized by the chair.
I would also like to remind the senators and witnesses to please keep your interventions, questions and answers, as brief as you can to ensure that we can get as many questions and answers in our session as possible. It seems to be a very short time.
Let me introduce the members of the committee participating in today’s proceeding: Deputy Chair Senator C. Deacon (Nova Scotia), Senator Bellemare, Senator Gignac, Senator Loffreda, Senator Marshall, Senator Massicotte, Senator Ringuette, Senator Smith, Senator Woo and Senator Yussuff.
Today, our meeting will focus on the Canadian labour market. For our first panel, we have the pleasure of welcoming Leah Nord, Senior Director, Workforce Strategies and Inclusive Growth at the Canadian Chamber of Commerce; and Bea Bruske, President, Canadian Labour Congress, who is accompanied this evening by Chris Roberts, Director, Social and Economic Policy.
Welcome to you all. Thank you for joining us. We will start with an opening statement from Ms. Nord, to be followed by Ms. Bruske.
Leah Nord, Senior Director, Workforce Strategies and Inclusive Growth, Canadian Chamber of Commerce: Good evening, Madam Chair, deputy chair and committee members. Thank you for the opportunity to make an appearance here today.
I am speaking from Ottawa, the traditional unceded territory of the Algonquin Anishinaabe peoples. I use the pronouns she/her/elle. Today I am wearing a black striped shirt, an aubergine jacket and purple glasses, and I am coming to you from my home basement office, with a white painting in the background.
I am speaking on behalf of the Canadian Chamber of Commerce, which is the voice of Canadian business. We represent 200,000 businesses across the country, across sectors and across sizes, including our network of 450 local chambers and boards of trade from coast to coast to coast.
We are all well aware of the labour shortage crisis in this country. There are currently close to one million unfilled job vacancies in Canada, which is unprecedented. Vacancies in health care, construction, manufacturing, accommodation and food services, along with retail trade, are currently leading the way, yet we have shortages across sectors, communities and regions that are affecting every size of business. You will hear in your next session from BDC that businesses, including small businesses, are citing labour shortages as one and often their most significant barrier to economic growth.
As we head into recovery, the focus should not be on the ebbs and flows of the labour market that we previously experienced through the COVID‑19 crisis but instead with the fact that we are exactly in the same position as before the pandemic started — a structural deficit in our labour market with no singular or easy fix. Any hope of economic recovery from the impacts of the pandemic will depend on us addressing the systemic labour market gaps. If Canadian businesses can’t find the talent they need to sustain or grow their operations, our economy will stagnate at a time when growth is necessary.
Unfortunately, there is no silver bullet to address this structural gap, but fortunately, there is a series of recommendations that, combined, will facilitate an inclusive recovery. The situation isn’t either/or, and it is not even both/and. What is needed is a comprehensive, multi‑faceted solution of “both/and/and/and.” Think of it as a recipe where all the ingredients are essential for success.
For us at the Canadian Chamber, these ingredients are recommendations that fall into three categories. The first is demand‑side labour market information and workforce planning. It lays the foundations for all the other recommendations. It’s not very appealing. It’s the dough, if you will. It’s not appetizing on its own, but it is the key ingredient for the rest of the meal. We talk a lot about greening the economy and green jobs. What are these jobs? How many are needed now and in the future? Where are they needed, and what are the skills and competencies required? The same applies for all sectors, be it agriculture, mining, the blue economy, cybersecurity, construction, electrification or the care economy. Additionally, we need data and planning not only by sector but also by a geographical lens. Where are these jobs needed — provincially, territorially, regionally, by CMA and by community? Then, as I mentioned, we need to focus on job specifications from a skills- and competency‑based approach.
This proactively sets the groundwork for our next set of recommendations, which is around education, training and skills development. There is so much that can be said here, and I will focus my comments on three main areas. The first is to improve the navigation of existing training education programs, portals and databases, and incentives for both individuals and businesses. The second is to focus on flexible learning pathways in a variety of formats for all workers along the employment continuum to have access to upskilling and reskilling. The third is to identify key human and durable skill sets and competencies needed in the workplace of the future to build a closer alignment between business needs, the labour market, education and training.
Before I move on, I have two additional comments. First, to address these structural and pervasive labour shortages and to ensure an inclusive recovery, we need an “everybody in” attitude. In addition to focusing on new grads, productivity, automation, DEI initiatives, upskilling and so on, we also need to focus on keeping mature workers in the workforce longer, integrating veterans into the workforce, labour market integration for those with disabilities, addressing the challenges of the long‑term unemployed and exploring innovative options for youth at risk. Second — and I hope we can explore this more in the question and answer session — we need to ensure that current government consultations on the EI reform program are truly comprehensive. This includes a focus on Part II, which is known as active measures of the program, which has a budget of over $2 billion annually and includes transfers to the provinces and territories for training, support programs and governance.
My third set of recommendations falls into the bucket of immigration. There is a lot to say, but I will focus on three main recommendations, acknowledging that immigrants play an important role in inclusive growth and diversity of Canadian workforces and communities. First, empower decision‑making closer to the needs of businesses and continue to decentralize the immigration selection process and support local solutions built by communities for communities to address local community workforce needs. Second, modernize the Temporary Foreign Worker Program, with a focus on implementing a trusted employer program and pathways to permanent residency. Third, the Government of Canada needs to facilitate integration of foreign‑trained workers into the labour force, maximizing their potential, and demonstrate national leadership through expediting and reducing the complexity of foreign qualification recognition.
Thank you. I look forward to answering any questions.
The Chair: Thank you very much, Ms. Nord. We will turn now to Ms. Bruske.
Bea Bruske, President, Canadian Labour Congress: Good evening, Madam Chair and committee members. Thank you for the opportunity to speak with you this evening. I am Bea Bruske, and I am president of the Canadian Labour Congress.
I am coming in from Treaty 1 territory, home of the Anishinaabe, the Cree, the Oji‑Cree, Dene and Dakota people, and homeland of the Métis Nation.
The Canadian Labour Congress, or CLC, is Canada’s largest central labour body, and it speaks on issues of national importance to 3 million unionized workers in Canada. I am pleased to discuss the CLC’s broad priorities for labour market policy. They are addressing job market inequality, job precarity and job quality; investing in care work and the care economy; Just Transition and the transition to a net‑zero economy; and investing in training and lifelong learning to support workers in the changing world of work.
On the issues of inequality, job precarity and job quality, we know that in Canada, precarious non‑standard jobs have been growing rapidly. Workers in precarious jobs struggle with low pay, few benefits, little control over scheduling or work, no union and little job security. We know there’s a higher risk of physical and mental hazards at work and fewer opportunities for development and advancement. Workers in precarious jobs tend to be people with low levels of education, recent newcomers to Canada, women, youth and workers of colour.
The COVID‑19 pandemic shone a light on the vulnerability of workers in precarious jobs. The government’s response showed that practical steps can significantly reduce precarity and insecurity. The Canada Emergency Response Benefit, Canada Recovery Benefit and the temporary Employment Insurance, or EI, measures that supported vulnerable workers who were unable to access or to survive on EI during normal times covered them at a time they most needed it. Disadvantaged workers were able to access emergency sickness and caregiving supports. As a consequence, we saw poverty fall sharply in the midst of a job crisis.
Attention now must turn to systematically improving job quality and building on the lessons of the pandemic. By itself, a strengthening labour market will not improve job quality. For this reason, labour standards reform and improvements to labour law are essential. The federal government should systematically combat employee misclassification. It has to remove all barriers to workers who want to join a union, actively promote collective bargaining and strengthen employee voices in the workplace. The federal government should implement these and other recommendations of the Report of the Expert Panel on Modern Federal Labour Standards. It should also establish an accessible employment insurance program with adequate benefits.
In the care economy and for care work, one of the most important steps to reduce inequality has been the progress toward providing affordable, accessible, high‑quality childcare for families across Canada. We know that this has the potential to significantly improve women’s labour market participation and reduce women’s employment and earnings penalties that come from an unequal distribution of care work. However, workforce planning and investments are needed to ensure that high‑quality, skilled childhood educators and childcare workers are available for the needs of tomorrow’s families. The high value of this work must be recognized with decent pay and working conditions.
The same thing can be said for care work in general. Care work is often associated with health care, but also includes social work and education services, including childcare, domestic work, personal care, social work and mental health services. Jobs in care occupations make up nearly one in five jobs in Canada, and all of these jobs are dominated by women. Canada needs a strategy for increased investments in care services and supports that people and families need. Comprehensive care policies yield positive health, economic and gender equality outcomes, benefiting children, parents, older persons and people with disabilities.
The CLC is calling on the federal government to form a care economy commission to study, design and implement a care strategy for Canada. A care economy commission would be responsible for implementing the International Labour Organization’s 5R Framework for Decent Care Work, which outlines its objectives as being to recognize, reduce and redistribute unpaid care work, to reward paid care workers by promoting more and decent work for care workers and to guarantee care workers’ representation, social dialogue and collective bargaining.
On the issue of Just Transition, we need to shift our attention to Just Transition and climate change because we can’t meet our climate ambitions without significant and meaningful investment in working people. Workers must see their own future reflected in a vision of a net‑zero Canada. To be successful, the transition must benefit workers instead of occurring at their expense. Otherwise, uncertainty, resentment and opposition will continue to frustrate the accelerated transition needed to meet our climate goals. Meaningful Just Transition measures that emphasize good, green jobs, training and upskilling opportunities and a path to financial security and retirement for older workers are essential. Workers and unions must play a role in the decisions made about their futures and the economic futures of their communities. We are eagerly looking forward to a Just Transition act that enshrines these principles.
On the issue of the changing Canadian workforce and the shifting world of work, what we have to contribute is the fact that only a minority of employers invest significantly in on‑the‑job training. According to the Conference Board of Canada, Canadian employers’ per‑employee investment in learning and skills development peaked in 1993 with a spending of $1,409 — these are constant 2022 dollars — before falling to $889 in the 2016–17 reporting year. Employers that do invest in training tend to provide training opportunities to employees who already have high levels of education. Lower skilled workers with lower levels of formal education are at the greatest risk from automation, digitalization and technological change. Yet, these workers are the least likely to receive training opportunities. Canada’s public spending on training and active labour market programming tends to be lower than other comparators. We have more to do on this score.
I believe my time is up, but I welcome any questions you may have.
The Chair: Thank you for the presentations. We will go to questions and see if we can keep it moving along.
Senator C. Deacon: Thank you, Ms. Bruske and Ms. Nord, for your presentations.
I will have you cite, if you could, best practices that you have seen in Canada and elsewhere in terms of upskilling workers between sectors. I think of customer service folks who can often be turned into sales people but not in the same industry. What are the best programs you have seen within Canada and around the world that could be scaled up?
Ms. Bruske: Thank you for that important question.
The best programs that I have seen are those negotiated between employers and unions when it comes to training trust funds that provide training opportunities for existing employees within a place of employment to upskill their skills and abilities to be able to bid into higher job classifications. There are also many unions doing significant amounts of work dealing with individuals living with disability to provide training programs working with employers based on collective agreement language negotiated between the parties.
Senator C. Deacon: Specifically, if you are changing between industries, you may lose that one union connection, so I would like you to speak about some specific programs. You have given a principle, and that’s good and I gladly accept that, but I want to know about some specific programs or specific examples of best practices.
Ms. Bruske: I don’t have a specific example I can give you right now, senator, but we can certainly provide you with some.
The Chair: Please forward that to the clerk. That would be helpful.
Ms. Nord: Across the landscape in Canada at the federal, provincial and municipal levels, there has been funding for small innovative projects in and across sectors, even through the pandemic, in those hardest hit sectors for upskilling and reskilling to others. The issue we have in this country is that they are small and disparate, and they respond to local needs, which is great, but our next challenge will be scaling them in a meaningful way.
I can cite examples. I work for the Canadian Chamber of Commerce. I work closely with my colleagues from the U.S. Chamber of Commerce, and they have a program that’s been active in 33 states since 2016 that focuses on demand‑side labour force planning and building talent‑pipeline management. It has had a great deal of success not only in upskilling and reskilling but also in Diversity, Equity, and Inclusion, or DEI, initiatives. Through the pandemic, for example, in Florida, there was a statewide manufacturing collaborative. They didn’t want to lose workers out of the sector during the pandemic because they knew they would want them back after the temporary furlough, so they worked on a process where — please understand that these are often big competitors — they were cross‑walking and board‑walking employees to ensure they would stay employed and not go elsewhere. I can share further information on that program.
The Chair: If you have a couple of specifics, just send them on to us.
Senator C. Deacon: If you could both think about programs for precarious workers and those not represented by unions — the bulk of the population is not — any examples will be useful.
Senator Gignac: Thank you to our witnesses for joining us for this important session on labour markets.
My question is for Ms. Nord. You refer to keeping senior workers in the workforce much longer. Is this a call to businesses to show more flexibility and offer more part‑time, or four days a week rather than five, or is this a call to the government to have incentives on the fiscal side for people to stay working, or this a call to postpone retirement age? I am curious. Could you elaborate and provide some solutions to the important suggestions you have made?
Ms. Nord: Thank you, senator, for the question.
My response would be both/and. There is a little from all the columns. For example, within the business community, we have to get a lot more innovative. Nurses, for example, do a great job of keeping senior or experienced nurses on in mentoring roles for younger nurses. There is a lot to be learned and a lot of ways to get creative. A lot has to change around financials and pensions. I’m not sure about the retirement age per se, but I think it has to allow flexibility where you can continue to work and draw on a pension without being penalized. So again, it is both/and. It is an important question to address because we need an “everyone in and everyone continuing” attitude to address these labour shortages. The mentoring as well is beneficial to all involved, and it goes both ways, by the way.
Senator Bellemare: Thank you very much for being here.
You both stressed the fact that training and education have to adapt to answer the shortages. Provinces have the powers, and federal government has the money. A lot of what you said is very complex to accomplish. Do you have an idea of how we can make this transition and settle our problem in the labour market?
Ms. Bruske: For us, it means the federal government needs to identify the priorities and put strings to the money that’s being spent in terms of how it needs to be spent, whether it is going to existing infrastructure, colleges, universities or going to workplace employment projects. There has to be a comprehensive approach taken across Canada. That money needs to be provided with some very clear guidelines on how that needs to be allocated, taking into consideration what the community, business and labour needs are in that particular part of the country.
Ms. Nord: I’m echoing my colleague’s comments. We were talking about this even before the pandemic.
It’s a culture of lifelong learning. That is a journey that involves us all. I think it’s important to note — and it was noted by my colleague from the Canadian Labour Congress — that we need to incentivize those who are least likely to learn. So many times the choir is already learning and that proverbial choir can and will continue to learn. That is my first comment.
Again, it’s a very complicated issue with any of these stakeholders — federal, provincial, training institutions, communities, business and labour — but because it’s difficult doesn’t mean we shouldn’t address it. I know of the Quebec model and different tables that bring a lot of players together. We can learn from that. It is key moving forward that everyone is there discussing and addressing principles and moving forward on those efforts. I’ve seen those tables with multi‑stakeholders move a long way in that sort of approach.
Senator Loffreda: Thank you to our panellists for being here.
Since the Second World War, the return on capital has been up here and the return on labour has been way lower. Do you feel we are at the beginning of a new era where the return on labour will catch up with the return of capital? We are in an era of rising costs and inflation. I think these costs will be passed on to the consumer. How will that affect the economy and inflation? It will have an effect on the labour market, I assume. I would like to hear your thoughts on that. Thank you.
Ms. Bruske: I will ask my colleague to provide a more comprehensive answer.
Chris Roberts, Director, Social and Economic Policy, Canadian Labour Congress: Very quickly, I think you’re absolutely right, senator, that the returns to capital are much higher than labour, and taxes on labour tend to be higher than taxes on automation and robots and capital. That is definitely a problem.
I think our general argument is that demographics or tighter labour markets because of demographic shifts are not in themselves going to address the imbalances and inequities that have been building over the previous decades. We have to address the institutional sources of the maldistribution of gains from productivity growth and the like, and that means the labour standards improvements and the amendments to labour law reform that we talked about.
With respect to inflation, I would add that the sources of inflation we see today are very different than they were in the 1970s, for instance, when you had robust labour movements struggling with companies that were marking up prices and you had something on the order of a spiral effect from wages chasing after price increases. Today, the sources of inflation are much newer and novel and difficult to identify — disruption, supply chain challenges and the like.
I’m not sure that what we’re seeing now is necessarily going to be indicative or emblematic of what we will see going forward as opposed to transitory, but that’s just my view.
Ms. Nord: I will open with I’m not an economist by training. Inflation pressures and wage pressures are going hand in hand, and there are concerns. It’s not that we just don’t have to increase in certain areas, but there are artificial pressures.
I would like to address that return on investment comment. I think we have to start in the business community and have a return of investment. I know that is not very attractive outside the business community, but as far as training and return on investment of employees, if we start with that language, that is more palatable to the business community. A return on investment means better retention and better onboarding. That all results in savings. By starting to use that language, I think we can move the needle in this area.
Senator Woo: Thank you, witnesses.
Can you tell me if the structural problems you describe in the labour market today are different from the ones that you observed before COVID? To put it differently, did COVID change anything structurally about labour markets in Canada? Should we, as a result of that, think differently about the types of solutions that are needed for the future?
Ms. Bruske: I don’t know that COVID necessarily changed anything structurally. I think it highlighted the existing concerns and issues we had in the labour market for a very long time, and that is that we no longer have full‑time jobs ready and available for individuals graduating from university, for example. There are structural problems in the sense that we have more and more part‑time and precarious jobs and there is less desire by workers to stay in those jobs long term, but they are lacking in opportunity to move out of those jobs. That’s something we collectively need to be able to address.
Ms. Nord: I will say no — and I said that in my comments — the pandemic actually didn’t change anything. We still have the same structural gap. I would lean in on different things. The first thing is that even around EI, this was a blip. It was a pandemic. The responses we had to EI were necessary and important, and temporary as well. I think we have to be careful moving forward that we don’t use this as a panacea going forward. It was a pandemic, and we have to be resilient and pandemic‑ready going forward, but the whole point is that the pandemic didn’t change the structural changes. We need to address those structural changes. They’re getting exposed; they’re getting worse. For economic growth and inclusive recovery of this country, we need to start addressing them in a systematic way.
Senator Ringuette: I have two questions. From your databank, what will be the net impact of the affordable childcare program on having women return to work? We say women, but there are fathers who are taking care of their children. That’s my first question.
My other question is more of a comment. A few years ago, we gave a billion dollars to the Future of Work Lab, a billion dollars, to do a study on the workforce, which we already had. It was already ongoing at different think tanks and universities and so forth. If we had taken those billion dollars and provided incentives for the business community to provide short‑term training or up‑scaling or rescaling for their employees, what would have been the impact?
Ms. Bruske: I’ll ask Chris to give us the information on the childcare aspect, first and foremost.
Mr. Roberts: Yes. What would be the impact? I think we have some evidence from Quebec. When it introduced its childcare system, they saw that the increased economic activity, longer hours of paid work undertaken by women, by young mothers, paid off in terms of higher earnings but also higher revenues to government. There were generally improvements in the gap between women’s and men’s earnings. I think it would be reasonable to anticipate some of the same overall gains for Canada, outside Quebec, in future.
Ms. Bruske: Senator, I think you were looking for a number, though, and we will make sure we get you that number in terms of what the studies show.
Ms. Nord: I’d like to say unequivocally that the Canadian Chamber of Commerce and our Council for Women’s Advocacy came out in favour of national leadership on childcare. It is an economic issue, not a women’s issue. The data and time will tell. However, we’re cautiously optimistic. For female entrepreneurs, their number‑one issue continues to be — we’ve surveyed them — childcare, but they need non‑traditional hours. They don’t have regular, set schedules. We’ll have to see how this plays out jurisdictionally as well. There are a number of jurisdictions where a number of daycares run by these female entrepreneurs, these women who have set up businesses over the years, are running into trouble as well. We’re cautiously optimistic, but we’ll have to watch.
When you talk about the work, what I will say in that investment is that a number of good projects are going on. I would invite you to ask those involved who run that and have been involved in that to speak to you; that would be better. As my comments belied, it’s both/and. I comment here again that so much of this focuses on the supply side of the work, the labour force and the market place, but I opened with the comment that we really do have to focus on the demand side numbers and the demand side planning. That’s the missing piece of the workforce puzzle, here in Canada, that will complete the picture.
Senator Ringuette: I guess my comment was that it’s nice to have data and numbers and studies, but at one point we need to have public policy and action to deliver on solutions to those gaps that you both have identified.
The Chair: Is that just a statement, Senator Ringuette?
Senator Ringuette: Yes, it is.
Senator Massicotte: Thank you to the two guests for joining us this evening.
When I heard your speeches, I must say I sensed a long list of things to do, and it gets complicated for me. Maybe that’s a personal problem. Be that as it may, I think you have to focus your message and concentrate on maybe two or three things.
The most significant challenge we have is probably with the oil and gas sector, where there has to be a significant dislocation, if you will, of those people to other sectors. In a simple one‑or‑two‑step fashion, what do we have to do? Because that is real. If you look at the program that came out yesterday on climate change, a very dramatic cut is expected of 30% of the workforce. What do we do? What’s the focus?
Ms. Bruske: We absolutely are welcoming, hopefully, Just Transition legislation later this year. For us, that means that there has to be a recommendation to, first of all, develop a plan, a program, that has to be communicated and implemented and monitored and evaluated as we move through it. Any kind of a program to phase out of coal or fossil fuel needs to involve having all the parties at the table, meaning employers, unions, as well as, of course, the communities, to find out how we can move away from those fossil fuels to green jobs and to see what’s possible within those communities. It will take an “all hands on deck” type of approach, including the provincial and municipal governments, in order to ensure that nobody is left behind. We think those discussions need to happen sooner rather than later. We need to make sure that those established programs and plans are fulsome and that they provide not just new jobs coming in but also bridging programs for employees who may not be able to move into those new roles. There’s a lot of work that needs to be done, but it’s very clear to us that all parties need to be at the table when having those discussions.
Ms. Nord: I’ll start with ditto, absolutely, and would like to reinforce that message.
The other piece — and I opened with this, and it’s not very attractive or sexy or anything like that — is demand‑side workforce planning. Where are those green jobs? What is needed now? What is needed in the future? What are the skills and competencies required for that, so that those transitioning from within oil and gas, or coming in from other sectors, know what they have and what they need? Then they can do those bridging programs on how to get there. Bridging programs are not good in the absence of anything else. We need to know, and we need to build sustained talent pipelines. That takes planning.
The Chair: But who convenes the meeting? These things are, in some senses, self‑evident. We know that if we’re going to transition, we have to have programs, but who’s in charge?
Ms. Bruske: In my mind, there needs to be a Just Transition task force that’s established and continues to operate, as we go through the next number of years, to oversee these various different programs and to pull the individuals together.
Senator Massicotte: In real life, usually you need to be focused on two or three things. I know we have to meet, and I know we have to develop a plan, but what is the success factor? What must we do to make sure that, five years from now, we can say, “We did it well?” What are those two or three things?
Ms. Nord: Absolutely. Unless you have defined success, how do you measure it? How many jobs are needed? How many jobs have been filled? For a business, it would be jobs, recruitment, retainment and promotion within the sector. That is how we would measure it from our point of view.
Ms. Bruske: I would add that you can’t just measure it by whether or not those individuals have new jobs but what is the quality of the new jobs that they’re going to have.
Senator Yussuff: Thank you, witnesses, for being here tonight.
As I read through your presentations, I see a lot of commonalities in regard to the things that you’re talking about. They are very similar but maybe a different approach as to how you get there. Given that our objective is to look at the policy challenges we’re faced with, what are the things we can do? We’re having this conversation with you here tonight, but when do you have these conversations with government about recommendation and stay at the table in regard to the challenges? This is something that has been there on the table for quite some time. So what policy tools do we need from the federal government that can bring you, employers and workers together, and government, to talk about how we find the solutions? And, more importantly, how do we continue to inform them as to how we’re doing moving forward?
That’s my first question, and then I have a quick follow‑up.
Ms. Bruske: I’m not sure what structural things we need from government to actually force employers and unions to work together. I think all employers and all unions need to take an “all hands on deck” approach to the changing labour market that we have, and we see that at bargaining tables. But we need to do that in a more structured kind of sectorial review type of way. I’m not sure what could be put into place to foster those kinds of discussions, but my ask would be that workers always be at those tables because they are on the front lines of those changing and evolving jobs and evolving job markets in the various different communities.
Ms. Nord: I think that the federal government, the federal level, has a very important role vis‑à‑vis showing national leadership. I know it gets frustrating. There are lots of levels, lots of players and lots of tables. Pulling us all together is a very important role that the federal government would play.
Quickly, I’ll give you an example. Sometimes it doesn’t break. You know, it’s not all‑encompassing. We’ve talked often with colleagues here even about breaking it down by sector. If you look at the care sector and look at the care economy, and let’s take childcare and daycare workers, there’s no national table right now. There is no provincial table, for example. If you want to talk about wages, that’s not in the sandbox of federal jurisdiction, but discussions around competencies and entry to practice are. On these sorts of things, the federal government could pull unions, daycare workers themselves and businesses together to have a structured, national and filtered out jurisdictionally skills- and competency‑based approach that then will drive appropriate wages and credentialing.
Senator Yussuff: As a quick follow-up on the issue of immigration, both of you spoke to it in some form. We’ve got thousands — it depends on whose data you want to look at, hundreds of thousands — of workers in the economy that do not have status. Would it be one of the things we should address as a national government and say why don’t we just grant an amnesty to these workers so they can actually have status? More importantly, employers are struggling to find workers in the economy right now. These people are already here and, more importantly, they could contribute. Is there something that would be of value here given the challenge we face on finding skilled workers in the country right now?
Ms. Bruske: Yes, 100%. There’s already been some trial aspects of this that are happening right now in the Toronto area with LiUNA, with that particular union, with regard to non‑status workers and finding pathways to be able to have those workers actually employed and stay within Canada and become individuals with status. Expanding on that would be helpful, because we know that there are many workers in Canada that are here and could be part of the actual labour market but are not technically right now, so we need to expand that type of a program. We need to look at other ways that we can find pathways to citizenship as well for temporary foreign workers and to maybe scale up that particular aspect as well.
Ms. Nord: Senator, thank you for the question.
I’m actually not aware of numbers and couldn’t speak to that, but it is part of that both/and/and approach even within immigration, right? We have those that are here — permanent residents, international students, temporary foreign workers, non‑status among them. So there’s the and/and/and within those who are here. There are those who are abroad as well. That’s both economic immigrants and refugees as well. It needs to be and/and/and, not one at the behest of another or not one prioritized over another. We need to have a comprehensive approach, everybody in, but we also need to provide the resources to the ministry and others in order to be able to process and consider those things properly.
Senator Smith: I’d like to talk a little bit more about immigration and the stories you hear about people who are surgeons in other countries. They come over here — Senator Yussuff, you raised this — but their qualifications are never recognized. They have to go back to school to become nurses, and it takes them perhaps 10 years to re‑establish themselves with credentials. In their countries, they are chief of surgery or someone with tremendous expertise in terms of management, but as soon as they come to our country, they’re not recognized. I’m just wondering in what practical way the government could play a role with business in trying to set up a qualification recognition so that we can get people up to speed, especially if we look at technology and hi‑tech. We need engineers to build that type of business up. How can we do that?
Ms. Nord: Senator, thank you for the question.
Among my three highest priority recommendations from the Canadian chamber vis‑à‑vis immigration was foreign credential recognition. We’ve been talking about this for a long time, and I would say over time we have even regressed. To be honest, it’s not just government and business who have a role in this. Sometimes, especially at the federal level, we’re the least involved, but where we can play a role is leadership and pulling the players together as needed, methodically, and incentivizing them as well, not piecemeal. I think we have to do this, and do this right. If nothing else, this pandemic is full of opportunity, and this is one of them.
There’s been some good pilots, particularly in the Toronto region, around some health care providers. Let’s learn from that and amplify it. Again, I don’t have a role and you don’t have a role in regulating these professions, but we can bring together the players that do to come to meaningful ways forward. We have to. We have no other choice.
Senator Smith: If I can interject for a moment with a short question, the federal government jointly administers the Provincial Nominee Program with provinces and territories. This is a program that issued about 5,000 invitations for applications in February 2022. Many smaller provinces rely on this also. I’m wondering about the role that the feds can play with the provinces so that we don’t get caught up with jurisdictional domain and who is responsible for what. How can we set up a basic, simple approach between the federal government and the provinces to address some of the key issues that you’ve outlined?
Ms. Nord: Absolutely. I think it’s necessary, and we actually even think that there should be further devolution within the process. There are plenty of examples through the Atlantic Immigration Program, and now through many of those rural and northern immigration pilots. Again, because it’s for communities by communities, it doesn’t necessarily and overnight crack the regulated professions juggernaut, but it allows communities to determine who they need and how they need them, and that will facilitate in large amount the process along.
The Chair: We’ve got just over 10 minutes left, and I’ve got six people on my list. Let’s try to do this as quickly as we can.
Senator Loffreda: I’ll take it the other way around. When I look at the unemployment rates in 2021, I look at the category 15 to 24 years old and the relatively high numbers compared to the national unemployment rate. You discussed recruitment, retention, promotion as being so important. One word which is key is “development.” How would you explain that we have such a labour shortage, but when we look at the unemployment rates in that age category, it is relatively high? I don’t want to dump numbers here, but it’s above 10%. Could we tie it into the gig workers? Could we tie it into the fact that I’ve said the return on capital was up here and the return on labour is down here and they’re younger? I would like to have your impressions on that, and what policies really correct that and correct the labour market?
Ms. Bruske: For me, it’s the quality of jobs that are available out there, and when we’re looking at the gig economy, that is problematic for workers. You’re asking workers to agree to do a gig job, to put themselves in a situation where they have a precarious work/life balance in terms of not knowing how many hours a week they’re going to be receiving from their employer, whether it is 40 hours one week or 10 hours the next. It’s very hard to maintain employment in that kind of a capacity. Many employees are having to manage two or three different types of jobs in order to actually cobble together what they need in order to live on. We need better labour legislation in terms of requirements for employees and not misclassifying employees so that they are, in fact, designated employees and have rights like vacation pay and access to employment standards coverage in their gig jobs and have some protections in terms of being let go.
Senator Bellemare: There are a lot of countries — even in Europe — that have adopted national qualification frameworks for skills and competency to identify the skills that are needed and the skills that other people have. Confederations such as Australia have that, too. What do you think about those national skills frameworks? Would you be willing, as partners in the labour market, to participate in such an elaboration with the provincial and federal governments?
Ms. Nord: I think we have a lot to learn from those structures, even if you take a look at the European Union structures that have jurisdictions. They’re sovereign countries. If you look at us having jurisdictions that are provinces and territories, it’s the same. Australia is an even better model — senator, thank you for that example — because it does feed up. It’s different there in who has the constitutional or jurisdictional overall responsibility, but I think we can learn a lot from that and really move the needle forward.
Ms. Bruske: We would agree, of course. Labour would always want to be at that table.
Senator Woo: I will build on Senator Bellemare’s question. This gets to the issue of labour force demand site planning, right? Is it correct that we’ve never done this before? To the extent we’ve done some of it — which Ms. Nord has alluded to — can you tell us what level of aggregation has been successful and how difficult it will be to scale up from the level of, say, oil and gas workers in Northern Alberta to the oil and gas industry writ large to the energy industry writ large? I guess I’m asking you to give us a roadmap.
Ms. Nord: Absolutely. It’s not to say that it hasn’t been done in Canada. There are different individual businesses and companies, sometimes at a sector level as well, that have done this. Historically, we’ve had sector councils both nationally and jurisdictionally. What works is a process, and it depends, senator. I’ll lean on my colleagues that have implemented a process called talent management. In the U.S., it is active in 33 states. It’s been active at the community level both urban and rural, at regional levels and at state levels. It’s been active across borders, if you think of an Ottawa‑Gatineau or a Thunder Bay‑Manitoba or even Battlefords — right across our jurisdictions. It responds to community needs, and you determine your catchment area — the best sort of area. It’s even where you can do it on an Alberta and divide it into four areas as well. It’s a process that meets the needs. The needs get determined. So it is quite possible to scale up and to scale down. Again, there have been pockets here in Canada where it’s happened. I’m not saying it hasn’t, but the next step, as you say, is the scalability of this in a meaningful way that can go across sectors, sizes or businesses.
What I will say, in conclusion, is that it’s key to bring employers together on what we call “collaboratives” — especially the small- and medium‑sized businesses, because they don’t have HR or other capacity to be doing this. If you provide a concierge service and you provide it with other employers, you not only have a bigger voice, you have a capacity. That is enabling to those small businesses.
Senator Woo: Is the concierge the federal government?
Ms. Nord: No, the concierge is usually, in our experience, either a chamber of commerce, a local economic developer or a sector council that comes from the business community and that pulls “by business for business” and speaks the business language and then meets our other partners. That’s key as well. The other partners come and it’s a bigger table, but it’s us getting our proverbial ducks in order before we approach the bigger problem as well.
Senator Yussuff: Today the labour market is more than half women. If you look at the EI program and what it has historically served in terms of needs — and, of course, what we’ve seen evolve in the labour market since then — and given that the government is saying that they’re going to look at some reform to the labour market, how would we reform the EI program to ensure it represents this reality that is upon us? Half the workforce today are women, and this program was never designed to take women’s needs into consideration.
Ms. Bruske: There are a number of points we have on employment insurance reform. Reviewing the benefit coverage, the benefit levels, is the number one priority in terms of whether it still actually meets the needs of workers. We would argue that it does not and that the benefit levels need to increase. The rung, in terms of actually being able to qualify and apply, needs to be reviewed as well. Also, of course, managing the gaps that people may have in their employment based on taking parental leave, childcare leave or any kind of leave like that needs to be addressed as well. We also want to address the issue of what happens when workers are actually denied benefits and how they may go about appealing those kinds of decisions. There needs to be a revamp of workers who are being impacted in that particular way.
There’s a whole litany of proposals that we’ve made, and I’ll ask Chris to weigh in on some of the other priorities for us.
Mr. Roberts: Women, of course, are more likely to work part‑time and short weeks and do non‑standard work. The entrance requirements in the EI program discriminate against those workers, we would argue. It’s structurally biased against women who are disproportionately represented in those forms of work. That has to be addressed. There are some basic immediate changes that can be made to what penalizes women currently. The inability to combine unemployment benefits and special benefits has to be addressed. You’re absolutely right, senator, that there are baked‑in disadvantages for women in the program that it’s high time to address.
Ms. Nord: I’ll actually come from a different angle — not applying to all women but some women who aren’t able to work. You’re either on parental or maternity leave or you’re not. There’s no grey area. It doesn’t allow for any flexibility. There’s an issue around self‑employed as a female entrepreneur, but you’re either in or you’re out — you can’t be both. It’s a line drawn in the sand. There needs to be more flexibility and choice. If you want to be off, great. If you don’t or if you want a little bit — we’ve got to become more flexible in that area to respond to largely women but also parental needs during those times.
The Chair: I’d like to thank you all very much for these comments today. We’re taking a look at the labour market in the context of what’s also going on in the other parts of the economy, so this is very helpful. If you would all forward those specific examples or any other things that come to your mind, it would help us, in terms of preparing a report, to be specific so that we can ask those that are decision‑makers to look at that.
Our thanks to Leah Nord, who is the Senior Director of Workforce Strategies and Inclusive Growth at the Canadian Chamber of Commerce; Bea Bruske, President of the Canadian Labour Congress; and Chris Roberts, Director of Social and Economic Policy at the Canadian Labour Congress. Thank you all very much for being with us today.
In our second panel as we take a look at labour force and labour market issues, we are pleased to welcome Pierre Cléroux, Vice President, Research and Chief Economist at the Business Development Bank of Canada, BDC. Also with us this evening is Tony Bonen, Acting Executive Director of the Labour Market Information Council. Thank you both. We will start with an opening statement from Mr. Cléroux, followed by Mr. Bonen.
Pierre Cléroux, Vice President, Research and Chief Economist, Business Development Bank of Canada: Good evening, everybody. Thank you for the opportunity to be here.
[Translation]
There is no need for a long overview of the Business Development Bank of Canada, BDC, which has 75 years of experience and whose visibility has increased since the pandemic began. However, let’s not forget that BDC is the only bank dedicated exclusively to entrepreneurs.
We are a Crown corporation, reporting to Parliament through the Minister of Small Business, Export Promotion and International Trade. We carry out our lender and investor activities at arm's‑length from government. In that sense, we are a complement to private sector lenders rather than a competitor. This means that we take more risks than other financial institutions and that, when the economy weakens, we intervene.
During the pandemic, we provided direct financial support of $2.8 billion, as well as indirect support of over $4 billion in collaboration with financial institutions from across the country. We also provide venture capital and advisory services.
[English]
It is in that latter context that I am here today. My economic research team supports not only internal planning within BDC but also our clients through regular publication of free reports and analysis to help them understand the economic context in which SMEs operate. These reports are framed as high‑level observations about economic and market trends, coupled with practical advice for the entrepreneurs.
This labour shortage study builds on a similar study we did in 2018. Some of the key observations, starting with demographic trends, are well known but worth repeating.
The proportion of people in Canada aged 65 or more has increased from 13% in 2000 to 19% in 2021; baby boomers are leaving the workplace while the working‑age population is growing at a slower pace; from 2000 to 2012, the labour force increased by 12% but is only expected to grow by 3.8% in the current decade and could be even less. In other words, labour shortages are here to stay, especially in light of the expected demand for workers.
Layered on top of these long‑term trends, the pandemic has amplified the issue. Without COVID, there would be 440,000 more people in Canada. Immigration declined by half in 2020 and 2021 because of COVID restrictions. This situation should improve in 2022.
Further, 20% of workers who lost their job during the pandemic changed fields of employment. As a result, the number of job vacancies in Canada more than doubled since 2015, with the gap particularly felt in accommodation and food services as well as manufacturing.
These shortages have an impact on entrepreneurs, and they are taking action.
There are implications for limited growth, pressures on existing employees, compensation expectations and ability to meet orders. The impacts are across the country with businesses having difficulty hiring, ranging from 29% in the Prairies to 67% in Ontario.
Entrepreneurs have already adopted approaches to mitigate these pressures, including 37% of entrepreneurs in Canada having adopted flexible work arrangements, 35% providing more internal training, and 26% recruiting younger workers.
In addition to these tactics, our advice is that the following four proven strategies can help the most in recognition that labour shortages are a problem here to stay: Use a formal hiring process; offer a more competitive compensation package; expand your hiring pool; and finally, and perhaps most importantly, given the long‑term nature of the shortages, invest in technology and automation.
Our study is showing that technology adoption is the best strategy against the shortage of labour. Canadian businesses using automation are performing better and growing faster. Technology is now available for all sectors, including services and retail.
In that context, I want to highlight that BDC is pleased to contribute our efforts to the Canada Digital Adoption Program, which was announced a few weeks ago. As part of stream 2 of CDAP, Budget 2021 announced $2.6 billion for the BDC to help SMEs finance the implementation of their technology adoption plan. BDC will offer 0% interest loans to improve productivity, better serve customers and become more competitive.
Thank you for your attention. I hope this will set the table for a great discussion.
The Chair: Thank you. One of our witnesses last week, Mr. Paul Desmarais, said to bring in as many Ukrainians as we possibly can. All of those people, we need everyone there. Thank you for your presentation.
We’ll now ask for some comments from Mr. Bonen.
[Translation]
Tony Bonen, Acting Executive Director, Labour Market Information Council: Good evening. I thank the committee members and the chair for welcoming me today. It is a great honour to talk to you about the most pressing challenges of Canadian labour markets and to look at labour market information.
I represent the Labour Market Information Council, or LMIC. We are an independent organization, but we were founded by the federal, provincial and territorial governments.
[English]
Specifically, we are supported by the labour market ministries from across Canada as well as Statistics Canada. Our mission is to ensure Canadians have access to high‑quality, relevant labour market information to support their decision‑making. I suspect that “labour market information” is not part of your daily vocabulary, as it is mine, so I will start explaining a little bit of what I mean by that.
First and foremost, labour market information is the data we use to track labour market developments and outcomes. In addition, labour market information concerns the concepts, categories, taxonomies and the way we think about, measure and track labour market trends — for example, how we group similar jobs together into occupations or how we classify skills and track in‑demand skills emerging.
Why does labour market information matter? Ms. Nord in the previous panel referred to it as the dough, but is also the piece that helps us tell the story of what is happening in the world of work. It enables us to get beyond anecdotes and conjecture into quantitative and data‑driven assessments of current reality and a more accurate picture of what to expect in the future. It allows us to communicate consistently and coherently so that we have a common language across policy, advocacy and research. We need labour market information to support a shared understanding of what is happening and to drive informed data‑driven policies.
Let me now turn to some of the key emerging trends and challenges facing Canadian labour markets. Many of the topics have been already addressed by my esteemed co‑panellists today, so I will discuss two critical challenges and the role that labour market information can play in addressing those.
The first challenge was mentioned previously and relates to the global competition for talent and our inability to measure objectively talent shortages — where they are, how severe they are and what interventions can and should be used to address them. Shortages are a hot topic. No doubt, many businesses and organizations are struggling to find the right people to support their endeavours, but the labour market information here — there is no standardized way to measure shortages. It’s not even commonly agreed upon as a concept at a practical level. Does a job vacancy necessarily mean a shortage, does a job need to be vacant for a certain period of time or is it only a shortage if the employer has first tried to increase the offered wage? Questions like this are important for us to answer so we can target our policy and programs for businesses and sectors facing shortages. That means objectively assessing the existence and severity of labour market shortages.
The second major challenge on the horizon is structural shifts in employment across sectors. By that, I mean our ability to forecast employment changes in sectors due to drivers like the green economy, changes we’ve seen as a result of COVID‑19 and technological change due to automation, artificial intelligence and so on. We need to be looking ahead and planning for that future to, as they say, future‑proof the workforce with programs to support retraining and to start that process before sectors are severely disrupted. To do that, we need to work ahead of the curve and forecast disruptions so that when changes do occur, people aren’t left out in the cold. More accurate forecasts require more accurate data and more detailed inputs, and that is more local and granular labour market information.
To solve for these and many other related issues, Canada needs a truly innovative labour market information system that delivers timely, local and granular data. That means overhauling how we use administrative data in Canada. Currently, Canada’s labour market information is based almost exclusively on surveys, the main vehicle being the monthly Labour Force Survey. Essentially, all labour market forecasts rely on this source of information to some degree — a survey of about 60,000 households. As far as surveys go, the Labour Force Survey is the gold standard in Canada, but it is severely limited precisely because it is a survey.
We at LMIC have worked with Statistics Canada to extract the most localized and granular data possible from this and other surveys, but it is not enough for our provincial and territorial partners. Canada’s provinces and territories are responsible for implementing the vast majority of labour market support and training programs, and these are funded largely by the federal government through the Labour Market Transfer Agreements. The provinces have consistently called for more local and granular labour market data to support the development of targeted and impactful programs, but surveys are costly and burdensome.
That is where administrative data comes in. We are already collecting a huge amount of labour market information below the radar, almost accidentally, which is not being used to support data‑driven policy solutions, and it needs to be. What do I mean by administrative data? I mean the data that employers and individuals collect and report to government through systems like EI, CPP transfers and annual taxes. There is critical information about people in Canada existing in administrative data, but it is not being used to inform policy. That includes how long people have worked at a particular business, the location of their work, their specific job title, their current salary or wage, and when and why they lost their job. That information exists in administrative datasets, but it’s not being leveraged.
Countries with the most innovative and useful labour market information systems are using that administrative data, but Canada is not there yet. Finland and other Nordic countries, for example, use administrative data extensively. Today, I was googling around a bit and found out that in Finland, only 4% of CEOs at public companies are women. That kind of data exists in Canada, but you can’t find it simply and pull it up. It is not tracked year over year to see trends and how things are improving.
Imagine if we could gather that kind of detail without costly and burdensome surveys. If we could, then we would avoid situations such as we saw during COVID‑19 when response rates to the Labour Force Survey dropped precipitously. In places such as Nunavut, only 10% of households responded to that mandatory survey. With administrative data, we don’t need to rely on individuals or businesses to give us information. It is absorbed automatically through existing systems. It would be a big undertaking to gather these disparate sources of administrative data.
An additional challenge for the longer term, and a change that would bring about even more useful labour market information, would be to allow administrative agencies, such as the Canada Revenue Agency, to collect information that serves and supports other policy areas like labour market programs. At present, the Canada Revenue Agency is only mandated to collect information required to calculate tax rates. That means tax files do not include information about your occupation, your job title, your tenure or your salary. Adding a few questions like that when tax files are collected, as part of a process that already exists, would be a minor change to a system but would make a huge difference in terms of the volume, accuracy and localness of the labour market information we have. It would speak to many of the issues that we’re raising and addressing today.
The Chair: If you could wrap up as quickly as you can. Thank you.
Mr. Bonen: Yes. There are many privacy considerations here with moving down this line. I don’t want to minimize that, but I think there are a lot of things we can do to move forward on this front. Thank you.
The Chair: That’s wonderful. I’m sure more will come out in the course of our questioning.
Senator C. Deacon: Thank you to our witnesses.
Mr. Cléroux, I want to dig into the one point that was made by you that the most competitive firms can afford to pay the most money. I think probably the reverse is true. Canada has had a pretty poor productivity growth history of late, and the OECD suggests it’s not getting better over the next four decades. When you look at business investment per worker, the United States is double what we have.
Looking at those issues, I would like you to speak to competitiveness and productivity as an important factor in dealing with our labour shortages and issues. Some of the best countries have some of the best wages, and they sure have great jobs. Could the two of you speak to that?
Mr. Cléroux: Thank you for the question.
You’re right. In our research, we find that companies that are investing in technology are improving their productivity and they are performing better than others. Not only are they growing faster, but they are making more profit, in terms of their sales, than other companies. We believe that investing in technology and automation is not only a solution for facing this labour shortage, but it’s also a great way to increase efficiency and productivity.
As we know, productivity is the number one reason for a company’s success. In a previous study, we looked at the firms in Canada with the most growth. The ones with the most growth were the ones that were the most productive. Today, if you look at two companies and compare their productivity, you will know which one is going to have success in 10 years. It is the one that has the highest level of productivity. Productivity is key, and we believe it goes along with the current situation. Improving productivity is one of the solutions for the shortage of labour.
Senator C. Deacon: Mr. Bonen, can I have you dig in on this issue? It seems that tech adoption and automation have gone from being a threat to labour to being an asset to labour. Do you see any trends in terms of investment in training in those more productive firms?
Mr. Bonen: It’s a great question. That data is not being collected right now. Someone referred to the Conference Board’s numbers dating back to 2016. That’s the latest survey that was collected on specific dollar amounts. I believe someone else referenced the fact that many businesses are now investing more, based on survey questions asking, “Are you investing? Yes or no?” But it did not ask the specific amount. It’s a project we have ongoing to try to address this and start gathering that information.
Senator C. Deacon: Any data that either of you could share with us would be helpful. It could be sent to the clerk.
The Chair: That is a good suggestion. We could then incorporate any of that data into our report.
[Translation]
Senator Gignac: Welcome to our witnesses. My question is for my former colleague, a chief economist. Mr. Cléroux, in your December report, you said that 55% of businesses were struggling to hire skilled workers. Since you give talks across the country and meet entrepreneurs, do you have a program in mind, in a specific province, that you think would be a model to replicate across Canada? Instead of overlapping, how could the federal government support such a program that exists in one of the provinces to find a solution to this issue?
Mr. Cléroux: Thank you, Clément. We can be informal with each other, as we have known each other for a long time. There is a program that is not directly related to skilled workers, but that has always impressed me a great deal. As you probably know, the unemployment rate for immigrants in Canada is higher than for Canadian–born people, with the exception of one province, Nova Scotia. That province launched a program a few years ago not only to help immigrants find a job, but also to make connections with local businesses. The program has been very successful. That is the only province where the unemployment rate is just as low for immigrants as for non‑immigrants. It is a nice example of the kind of support that can be provided to help not only immigrants, but also the labour market.
Senator Gignac: Thank you.
Senator Bellemare: My question is for both witnesses and concerns labour market information. Mr. Cléroux, you are suggesting automation as a solution. Normally, that solution addresses shortages in the manufacturing industry, but there are also many shortages in the services sector. Mr. Bonen, you are talking about a very granular level of information we need.
Don’t you think labour market information must also help workers transition from one sector to another? Wouldn’t it be an important project for Canada to have information that helps recognize workers’ skills and identify the desired skills?
[English]
In other words, don’t you think that a national standards skills framework, which is used everywhere in the world, would answer shortages in the service economy and give us concrete information on the needs in the labour market?
Mr. Cléroux: The question is more for Mr. Bonen than for me, but I want to say that the labour market has been very dynamic. Our research is showing that of the 3 million people who lost their jobs at the beginning of the pandemic, 20% moved to another sector. It’s because they understood that there were other opportunities in other sectors, better opportunities. Most of these people left the retail and accommodation and food services to go to other sectors where there were opportunities and probably a better situation. You don’t have to work on weekends, for example, or the salaries were better. I agree with you that information is key, but the information is already pretty much there. We can see that people already made decisions on the new reality of the workforce.
The Chair: This is your wheelhouse, Mr. Bonen.
Mr. Bonen: Thank you for the question.
I completely agree, as you might suspect. On net, Canada has a very positive outlook in terms of economic growth and labour market growth, but there will be pockets of contraction. Certain sectors will not do very well. Those people who will suffer the effects of disruption need to be transitioning. Indeed, there is a big movement right now toward skill‑based hiring, as you were mentioning, moving away from traditional credentials. The skills‑demand data is available, and we can track that with, for example, online job postings. It’s not perfect, but it gives some good information. I think the big gap we’re facing right now is, if I know I need to move from this job where I have this set of skills into that job, where do I get the skills I am missing? Where is the training program, the education program? If you think of all the different micro‑credentials and college programs and what have you that are out there, linking those to the skills that can be developed, in a robust way, will be critical for this transition.
Senator Loffreda: Thank you to our panellists for being here.
I would like to return to the annual unemployment rates and our youth. Youth are so important. Youth empowerment is so important for labour, for productivity and for more. We can look at the statistics. Mr. Bonen did mention accurate data. I would like your insights on this. We can look at the labour statistics for those 24 years old and younger. Their unemployment rate is close to 15%, where the national unemployment rate is closer to 5%.
We discussed that there was a transition from many industries, such as hospitality, but I believe there is more than that to the problem. What is the problem? Why is the youth unemployment so high? We talked about recruitment, retention and promotion, but there is development. If it is high because of the transitioning, what can we do? What policies can be put in place to develop our youth and get them into industries and be more productive and to increase Canada’s productivity?
[Translation]
Mr. Cléroux, I would also like to hear your analysis. You have the benefit of seeing the economy through a number of industries. I have spoken with executives from the financial sector who told me that their sector is extremely understaffed. Yet we are seeing our youth and seeing that the unemployment late rate is very high.
[English]
Mr. Bonen: Youth unemployment, historically, long before the pandemic, was more elevated than core age, people 25 to 54 typically. That is how we call that. Youth are overrepresented. Youth in those service sectors that are still struggling. Employment, for example, is down 10% in those client‑facing sectors, as you mentioned. But there is more to it than that, such as having training systems and programs. If somebody loses a job — because young people are more likely to be in precarious occupations where they might lose their jobs more regularly than others — do they have somewhere to go? Do they have a training program or something so they don’t miss out during those spells of unemployment? Those types of supports could be very helpful.
Mr. Cléroux: I think the situation will change a little bit. We are seeing that businesses are hiring more and more younger people with no experience. It’s very difficult to hire people with experience, so businesses have been increasing the hiring of younger people. They offer more training in‑house as well. Sometimes, because it’s so difficult to recruit, they will take younger people inside their organization and train them to grow them inside the organization. The shortage of labour is actually going to benefit people with less experience. That’s what we are seeing now. More and more companies are hiring younger people. They train them inside the company.
Senator Loffreda: Thank you. That’s great to hear.
The Chair: On the flip side, we had a witness, David Dodge, the former governor of the Bank of Canada, last week, who mentioned a couple of times that we can’t ignore the aging seniors in our population who have been pushed out of the labour market because of mandatory retirement or other such things. They are there and they are anxious. If they are back working, they will also be contributing. Mr. Bonen, start on that, if you will.
Mr. Bonen: The share of older workers who are employed is much lower than in other advanced economies, so there is a lot that can be done around mandatory retirement. I think they can help transfer some of the skills, knowledge, wisdom that they gained over the years to the young people who are necessarily coming as Mr. Cléroux said as well, which I think is quite right.
Mr. Cléroux: I agree with Mr. Bonen, but the percentage of Canadians over 55 who are working is increasing, and I think that’s good news. Also, we see businesses offering more flexible working arrangements that will benefit people who maybe want to stay, want to work, but not five days a week because they are over 60 or 65. This is the kind of arrangement we see more and more in the business community.
The Chair: Thank you.
Senator Ringuette: Mr. Cléroux, it is nice to see you again. It is always very interesting. BDC does good work.
I have two questions for you. You mentioned that, during the pandemic, you almost invested $6.8 billion in Canadian businesses. Can you tell us how much of that was invested in micro training, upskilling, taking advantage of some of the downtime to upskill the workforce of these businesses?
Mr. Cléroux: Unfortunately, I don’t have the answer. We had $2.8 billion in terms of direct loans and also $4 billion in indirect loans with other financial institutions. The loans were to be used by businesses to go through this pandemic, so we didn’t have any rules about how they can use the money. The idea was to help them go through this pandemic, especially in 2020 when the demand for products and services dropped significantly. A lot of businesses needed more money to improve their cash flow to get through the crisis. I don’t think there is data on how specifically these investments have been spent.
Senator Ringuette: I can understand your comments. However, I’ve looked carefully at the new program that was announced a few weeks ago in regard to technology adoption for businesses, and there’s nothing in the program criteria that includes any kind of upskilling or reskilling for the current employees of these businesses in order for them to transition. We talk about the oil sector and that they will have to transition, but there’s also micro‑transitions in regard to technology adoption and AI. That needs to be included as part of the cost of putting forward these investments for the business community.
I’m sure you understand where I’m coming from. We can talk about labour shortages, but if every time we have public policy and incentive programs that finance the technology but not the upskilling and the transition that is needed for these employees to maintain these jobs and stay in the workforce, then we’re missing, I say, 50% of the vote.
Mr. Cléroux: I agree with you that this program is not targeted at doing that. This program focuses on digital adoption, and that was the goal. It was not designed by the Business Development Bank of Canada. It was designed by Innovation, Science and Economic Development Canada, or ISED, but we are going to loan the money. Maybe you need a different program to target what you’re looking for. This program is specifically targeted at helping digital adoption, because in Canada, we are lagging compared to other developed economies, especially with our biggest trade partner, which is the U.S. What we are trying to do with this program is to help smaller businesses have a plan and invest the right way to improve their adoption of technology.
The Chair: Did you have a comment, Mr. Bonen, on that issue?
Mr. Bonen: Only to say simply that I agree with the comments about the design of that program, but as I understand it, this program is targeting youth entering the workforce in the tech sector. They will develop lots of training, but indeed, it’s for new employees, not existing ones.
Senator Woo: Mr. Bonen, what are the procedural, regulatory and, most importantly, legislative obstacles to developing the kind of high‑quality labour market information that you seek? I focus on legislative because it’s what we have the most control over. Can you be as specific as possible about what kind of ambitions we should have in the Senate to make it possible for you to get the labour market information you need?
Mr. Bonen: I will try to be specific, but I’m not as familiar with the set of privacy laws that is out there, and that’s the fundamental tension we’re facing. There’s this call for more local, granular data, but there are legitimate concerns for people about having the government collect so much specific data and making that available. The starting point will be the Privacy Act and the Statistics Act, where the rules about what can be shared under what conditions and to whom are stated. I don’t have the details in those acts that would necessarily lead to change. That’s the legislative side.
On the administrative side, it’s about collaboration with federal, provincial and territorial government partners. There’s an enormous amount of data stored in everything from highly sophisticated databases to filing cabinet drawers, in some cases, in some ministries, I’ve heard. We need to be bringing those folks to the table, having the support for that and breaking down barriers in some cases. As a quick example, I know some provinces have strict rules on sharing their data between jurisdictions, and that makes this extremely difficult. For them, the challenges are their internal rules and regulations, so the federal government doesn’t have a role here, but encouraging sharing across jurisdictional lines is also an important step that we can take here.
Senator Woo: Who is the quarterback that can make this happen? Is there one quarterback or a number of different quarterbacks? Are you him?
Mr. Bonen: We’re a small organization at the Labour Market Information Council, or LMIC, but we’re a convener of system players, so we would like to support that. Unfortunately, we’re not empowered as an independent agency to make the necessary changes, but we have a role in encouraging people and showing them the value of sharing that data and making those changes.
The Chair: Mr. Cléroux, do you have a comment on the privacy issue? Everybody is reacting to that. How much more do you need to know, or can you mine what’s there already without asking us more? Any comment on that?
Mr. Cléroux: No, thank you.
Senator Yussuff: Thank you, witnesses, for being with us here tonight.
Mr. Cléroux, you made the suggestion that we need to make significantly more investments in technology. As you know, the federal government has had very generous tax writeoffs for investment in new equipment, but despite many years and the successive governments, we’ve seen poor uptake of this policy initiative to get companies to do the right thing. Other than cajoling them to say here is what you should do, how do we change the dichotomy that we’re in that hasn’t changed significantly in almost two decades?
Mr. Cléroux: That’s a very good question.
As a financial institution, we do a lot of research to understand how businesses are investing and why they’re not investing more than they do. In the last two decades, we have had a lot of workers in Canada. Most long‑term growth depends on productivity and the supply of labour, and over the last 20 years, we had enough supply of labour to assume our growth. Now, it’s changing. The situation is different now. We know that with all these baby boomers retiring, we don’t have — or we won’t have — the supply of labour in the next decade that we did in the past. We are seeing, on the business side, a change in mindset. People are investing more. They realize that not only is it difficult to find workers but it’s also much more expensive. They have to increase salary and other types of compensation.
I think this is going to be the trigger point where we see more technology investment in Canada than we have seen in the past. If you want to continue to grow your business and to continue to export, you need to change the model you’ve been using so far. I have the privilege to talk to a lot of entrepreneurs because of my job, and what I hear a lot is people saying they are investing more. They’re planning to invest because they realize the cost of labour and the difficulty in finding labour is much greater. We believe that this is going to change the game in Canada. We hope we’ll see more investment in the next five years.
The Chair: Any other comment, Mr. Bonen?
Mr. Bonen: No, I think Mr. Cléroux said it just right.
Senator Smith: Thank you, gentlemen, for participating with us tonight.
One of the things we hear about is that in the last five to ten years, we’ve had a decline in outside foreign investment in our country. Our conditions have changed. The world conditions have changed. With the war and what’s going on in the United States, it seems that all the concepts of trading relationships and partnerships seem to be — I’m not sure if they’re waning or if they’re less important than they were in the past — but I’m wondering with the sort of new world order, how does that affect a country like Canada in our strive to being more productive? Mr. Cléroux, you talk about the key to success being productivity, but you’re also talking about education. I’m trying to understand, with the changing global dynamics, all the geopolitical activity going on, for a country like Canada, how do we compete against the U.S. and some of the big economies in the world so that we can maintain or at least grow our position competitively with other countries such as the big players?
Mr. Cléroux: It’s a complex question.
I think the new order, as they say, might benefit Canada, because we produce a lot of natural resources.
As the world economy continues to grow, the demand for natural resources has been increasing. It was increasing before the war, and even more during the war. A lot of people, as you said, believe that the world order will change, and I think Canada, in terms of our national resources, is going to benefit from that.
For the rest of the economy, we have a situation that has been really changing over the last 20 years. We no longer produce products that are high value‑added. Our cost structure in Canada is such that where we can compete is to produce complex products where there’s a lot of value‑added, a lot of technology. Our level of education in Canada is very high, and our salaries correspond to other developed economies, much higher than developing economies. This is where we can compete. We can continue to compete where we invest in technology and we use technology to produce complex products. I think that’s the future for the country.
Senator Smith: If I could ask one more question, the second part of that question is, with the move toward the green economy and the change in the direction of where our oil and gas are going, the opportunities that now exist in Europe and in other world countries for Canada, do you see some form of a political shift that will recognize the fact that the world will need these key resources moving forward? It could be another opportunity for us to develop strategic relationships. Another pipeline in the U.S. was cancelled a year and a half ago. How do you view some of the changes that could occur, the opportunities that we could have, and how do you balance that with the climate change challenge that we face? It’s a pretty big question, but I think it is out there.
Mr. Cléroux: I think, in the long term, the goal is very clear. We want to reduce our carbon footprint. That’s the long‑term goal, and a lot of countries share this goal. In order to get there, it’s going to be quite a bumpy ride. I think Canada can definitely help the rest of the world in that way. I think the long‑term goal is the same. We want to invest more in technology and not go away from this goal that we have to reduce our carbon footprint.
The Chair: I want to follow that for a moment, though, Mr. Cléroux. Can we rev up to answer the demands where you are seeing them from everywhere, from Europe to Brazil? They want resources, potash and food, given what’s happening in Ukraine and Russia. And then gear it back down. I’m trying to get at what Senator Smith was saying here. Can we really do two things at once?
Mr. Cléroux: I think we can. I think in the long run, we can provide more agriculture products, for example, fish and seafood, which we produce a lot. Russia is a big provider of that. In a lot of these resources, I think we can be part of the solution. Something we learned over the last two years of the pandemic is that it’s not easy to increase the supply very rapidly. We learned that supply chains have been disrupted over the last few years because it’s not easy to shift. So my answer is in the mid‑term and long‑term, I think Canada can be a solution for a lot of these natural resources, but in the short‑term it will be difficult.
Senator Smith: Timing? Our government says 2030, but is it 2030 or is it 2040? How long until we can potentially compete and manage the evolution to our green economy?
Mr. Cléroux: I think we are very well positioned. I had a chance to work outside the country. I realize that we have a very highly educated population here in Canada. Our education system is very good compared to other countries. We have the manpower. We have the technology. We have the capital to really make innovation for this turn that we want to do with a green economy.
As I said, to me as an economist, the future lies in technology in Canada. We cannot compete on producing low value‑added products or even services. Where we compete is where we are the best, which is having very well‑developed technology.
I’m going to finish this question on this: There’s now a half‑million people in Canada working in tech. We are one of the hubs in tech in North America. Toronto, Montreal, Vancouver are part of the 12 hubs of technology in North America. This is a sector that is growing rapidly and represents the future of our economy.
Senator C. Deacon: This is a really interesting conversation.
I want to build on Senator Smith’s comments about the value‑added economy and how we enable jobs that are better paying, where people are better trained and move up the pay scale. One of the challenges we have in Canada, and I’ll speak to agri‑food — farm to fork, seafood, you name the industry — is that we have a lot of command‑and‑control regulations that define the process that limit changes in the sector to add value, limit innovation because of how we regulate. In the cannabis industry, we define specifically that you cannot use any automated devices for distributing cannabis so, in rural areas, the black market continues to dominate. I want to know if you’ve got any research that looks at how regulations allow for innovation which allows businesses to grow or not? I’m quite concerned that that is one of our rate‑limiting factors in this country as it relates to a lot of sectors. Either one of you can speak to that in terms of how regulations should be changed.
The Chair: Mr. Bonen, do you want to start?
Mr. Bonen: No. I can’t comment on that specifically, only at a high level.
The Chair: Go ahead, Mr. Cléroux.
Mr. Cléroux: I’m not familiar with the cannabis sector, but I see a lot of innovation in many sectors of our economy. I don’t see regulation stopping that.
I will give you a very specific example. A client that I visited a few years ago was in the lobster transformation business. When the management took over — the owner sold because he was 70 years old — they invested $5 million to robotize every process inside this lobster transformation. You have a live lobster at the beginning of the chain. You have a frozen lobster in the box that is going to China at the end of the chain. They kept their 400 people but they tripled their sales. This is the power of technology and innovation. This is possible in every sector of our economy. It is a good example. Food processing sometimes is considered a low‑technology sector, which it’s not. The example I just gave is a good example of where you can transform a sector or a plant just by investing the right way.
[Translation]
Senator Bellemare: I would like to know whether you are seeing a correlation between investment in automation and investment in workforce training in businesses. Isn’t there a connection whereby businesses invest both in equipment and in workforce training, and vice versa?
Mr. Cléroux: Exactly, we are increasingly seeing that connection. In the past, businesses would buy equipment to increase their productivity.
When businesses buy equipment today, there is a technological aspect to it, and there is a process and training, as the equipment is much more sophisticated. So businesses must absolutely train their employees to enable them to use and maximize the use of the new equipment.
We at the Business Development Bank of Canada provide funding and advisory services. We help businesses plan those types of purchases, and worker training is always part of our plan because it is an integral part of the process. Buying equipment is good and well, but, to be able to maximize its use, worker training is just as much a part of the process.
[English]
The Chair: Thank you.
Mr. Bonen, go ahead on your relationship with Statistics Canada.
Mr. Bonen: Statistics Canada, of course, is the national statistical agency. It collects all the official data. We have access to it, as any other independent organization might, similar to what the provinces and territories have access to. We do our best to work very closely with our colleagues there to provide insight into what is needed and what are the top priorities for provincial and territorial governments from across the country.
We work with our own data, though, that is outside of the official domain. That is primarily with online job postings, skills information that can be extracted from that, making sense of it, identifying risks and opportunities that can be done, and we do things like track labour market shortages with online job posting data and other innovative sources of high‑frequency data. This is outside of the official domain, so we work with this and try to bring clarity, structure and organization to it. Hopefully, in the future that can feed into improved formal products that everybody has access to, not just from us.
[Translation]
Senator Gignac: My question is once again for my former colleague.
Mr. Cléroux, I think we have three problems, two of which have been brought up — the labour shortage in businesses and underinvestment. It seems to me that inflation is now becoming a third problem.
The Minister of Finance consults you regularly, and we know a budget will soon be tabled. What would you recommend? Should the government continue to support businesses through the COVID‑19 pandemic or should it rather be restrictive, so as to get finances in order to avoid fuelling inflation?
Mr. Cléroux: Yes, inflation is increasingly becoming an issue. About 60% of businesses have seen the price of their inputs go up. So this is really an issue that began in 2021. The situation has continued with the war in Ukraine, and it will probably continue for a while.
However, we feel that the economy has now normalized further, except in some sectors. What we have proposed to the government is to limit the programs available to those sectors because, for the majority of our economic sectors, we have returned to the pre‑pandemic situation. Difficulties have persisted in the tourism, restaurant, and arts and entertainment industries. Those sectors are the most affected by the restrictions and the lack of international tourism. However, the natural resources, manufacturing and professional services industries have returned to the pre‑pandemic situation. They are even selling more than they used to before the pandemic.
[English]
The Chair: Thank you.
Senator Loffreda: My question is on remote work and the future of remote work and the impact on both the economy and the labour market. For two years, many Canadians have been working from home, and some would argue they’ve been enjoying a better work/life balance. Many would also argue that Canadians are as productive, if not more, at home than in the office. Although recent studies show that work productivity might be increasing in the short‑term, long‑term productivity may have negative effects on collaboration, innovation and output. Regardless where you stand on the issue, I think it’s clear that hybrid or remote workplace arrangements are here to stay.
Here is my question: One harmful impact of remote work is that people are not going to the office, not shopping downtown, not spending money, and I’ve always said that the motor of every economy is the consumer. In many cities, businesses are struggling. I wonder if you can share your thoughts on the future of remote or hybrid work arrangements. Do you think businesses, given that it’s safe, should prioritize a progressive back‑to‑work program to reinvigorate our business cores and help businesses and the economy?
The Chair: We are running short of time here, Mr. Cléroux.
Mr. Cléroux: Very quickly, I think remote work is here to stay because the reception on the business side has really changed. There was no appetite before the pandemic for remote work. Two things have changed. First, a lot of businesses have invested in technology to allow the workers to work from home. Second, they realize that productivity has been as high for people working from home. I think remote work is here to stay, but there’s going to be more of a hybrid model. I think there’s a recognition inside businesses that you need to go to the office at least one or two days a week to maintain the culture and to maintain the link between employees and everything. Definitely the job market will be different now. We won’t go back to the pre‑pandemic situation.
[Translation]
Senator Massicotte: Mr. Cléroux, I have a question for you.
We are facing many challenges and conflicts, and that is being added to a geopolitical conflict in which more and more businesses and governments are deciding to control supply on their territory. That goes against free trade, which may affect our economy and even our jobs.
What is your view of this going forward, once you add that element to all the other challenges or uncertainties we are facing?
Mr. Cléroux: We are seeing that it is increasingly complex to manage a business. Although the demand has returned to normal and most businesses are experiencing a strong demand, things have become very complicated on the supply side. We have labour shortage and procurement issues and a great deal of uncertainty. So managing a business is complicated. However, since the demand is good, that is already good news. It is easier for businesses to manage the supply issue than to manage the demand issue. However, you are right, complexity is being added. I have recently met with a lot of entrepreneurs. I did not see people who were depressed or wanted to invest less; on the contrary, they are adjusting to this new reality. We are seeing it when it comes to adjustments on the labour market, but also when it comes to international events. I think that, going forward, entrepreneurs will have to adjust even more quickly than in the past.
Senator Massicotte: Thank you.
[English]
The Chair: We’re down to the end of our session, but I’d like to give Mr. Bonen a final comment, especially on whether you’ve gathered any statistical evidence yet on return to work and how people are reacting to that.
Mr. Bonen: Thank you very much. I wanted to comment on this.
Indeed, remote work is here to stay, and I agree with the previous comments that hybrid work situations are the most likely. What will happen to downtown cores is that they will adjust over the medium- and long‑term. It will be a difficult transition, but consumers will be consuming elsewhere in their cities and regions, so over time, that will spread out and be part of an adjustment process. Even now, people can go back to the office, and approximately a quarter of people in Canada continue to work from home. That will continue to be the case for the foreseeable future.
The Chair: Gentlemen, thank you both very much. Pierre Cléroux, Vice‑President, Research and Chief Economist, Business Development Bank of Canada, BDC, and Tony Bonen, Acting Executive Director, Labour Market Information Council, you’ve put a lot of information out there for us.
We look forward to gathering next week, senators, as we continue our study of housing, labour markets and cryptocurrency. We have a long list. See you all then. Thank you again.
(The committee adjourned.)