(Green Party of Canada platform background paper – 24/06/2015)
Change is the only constant in the modern Canadian workplace. Technology and global economic patterns are transforming job markets. To survive in today’s employment environment, workers must develop their skills and gain practical experience. Most disturbingly, more and more Canadians are ending up in lower-paying, precarious, part-time jobs. Labour unions must play an important role in advancing protections for the growing ranks of non-standard workers. In addition to facilitating job creation, governments should ensure that education and training are accessible to those who need them and encourage employers to provide paid on-the-job experience. Our Employment Insurance (EI) system should be both accessible and reliable. It should also help workers manage non-standard unemployment. Instead it serves up red tape and unequal treatment to fewer and fewer eligible workers. Long-term thinking and a thorough overhaul of the EI system are essential in order to restore efficiency, fairness, and a balance between the needs of workers and the needs of employers.
Gone are the days when working for a successful company could last a lifetime. Extraordinary technological change has made the employment of millions of Canadians increasingly precarious. Canada, like other mature nations, is seeing valuable jobs decline as billions of low-wage workers flood into the global economy. In 2014 the ranks of self-employed in Canada increased four times faster than those in salaried jobs, and part-time jobs accounted for 80% of net job creation. A great many people today, especially in low- and moderate-income households are trying to get by on a varied combination of jobs, juggling several precarious income sources.
Remarkably, Canada now has the highest rate of individuals with post-secondary-education certificates among member countries of the Organisation for Economic Co-operation and Development (OECD). (This includes all tertiary degrees, not just those given by universities.) However, at the same time Canada has the highest proportion of people with post-secondary certificates who make less than half of the median income.
This means that Canada is not doing too badly in producing well-educated and trained individuals. Unfortunately we are failing to create enough appropriate jobs for those who are qualified. It is especially hard to find jobs when two to four years of practical experience are required. Today’s employers are now more concerned about the work experience of their prospective employees than with their educational background.
We must improve Canada’s poor record of on-the-job training. Our productivity growth rate, our ability to “work smart,” and our level of innovation in the workplace have fallen below those of our competitors. We need to provide incentives for employers to train workers and to invest in productivity improvements for the long term in order to maintain our competitiveness. We also need to provide sufficient income support to enable workers to manage their cost of living while in training. The Green Party’s proposed GLI will help. (Note that a very small federal Apprentice Incentive and Completion Grant did increase the number of persons enrolled in apprenticeship training by an average of 7.2% a year between 2000 and 2011, but only half of those enrolled actually completed their course.) As a further challenge to on-the-job training, most apprenticeships occur in small- or medium-sized businesses and are vulnerable to economic downturn when apprentices are the first people to be laid off.
Germany’s extensive apprenticeship system and similar initiatives in the Nordic countries, Austria, Italy, the Netherlands, France, and Switzerland have helped to shield these nations from the job shortages associated with the European economic crisis. Apprenticeships are integrated into formal education and students receive a wide range of vocational training in high school. On-the-job training is blended with classroom training. These countries all provide tax credits for enterprises that increase training year-over-year. For example, France has added a pay-back clause that requires employees to reimburse the employer for the cost of their training if they leave the employer within a certain time period after that training is complete. This was done to offset employers’ fear of losing their investment in their employees.
Canada, regrettably, lacks the kind of social solidarity that exists in many of these European countries, a stability which is based on close collaborative relations between employers and workers, and on a strong consensus in favour of government participation in apprenticeship and training. Citizens in these countries agree on the value of paid apprenticeships and internships, and they are committed to avoiding the outrageous disparities between the pay levels of CEOs and the wages of those on the shop floor that afflict the U.S., the U.K., and, increasingly, Canada.
The one exception in Canada is Quebec where Emplois-Québec is an integrated agency to provide skills training and employment programs for all clients receiving EI or social assistance. Quebec also requires all employers to invest at least 1% of annual payroll in training or pay a levy of an equivalent amount. Government, employers and labour cooperate through the mechanism of the Labour Markets’ Partners’ Commission to design training programs.
The evidence is clear that the companies which invest in their workers and in productivity improvements are the most successful. Too many Canadian employers are unwilling to invest in long-term internships and apprenticeships. These companies fear that they will lack the ability to protect themselves against attempts by their competitors to poach their interns and apprentices.
The Green Party supports adopting a requirement, as in Quebec, that businesses above a certain size invest at least 1% of their annual payroll in training or pay a levy of the equivalent amount. And, as in France, we could include a pay-back clause that requires employees to reimburse their employers for the cost of training if they leave the employer within a certain time period after their training is completed.
The Green Party also believes that a worthwhile model for encouraging investment in workers is the Workplace Development Board system used in the U.S. These regional boards lead sector-by-sector collaboration across businesses, industry, labour unions, educational institutions (usually community colleges because of the emphasis on vocational skills), community and residents’ organizations, community-based employment services, and governments. They can vastly expand on-the-job training by achieving economies of scale. Such coordination is a very labour-intensive process that involves consultation, deliberation, and alignment of various individual interests, but it can also deliver great results, especially in identifying employers who are committed to investing in their workers and those who need support for ongoing training and career advancement.
In this era of growing non-standard and precarious work, the Green Party believes that labour unions should play a particularly important role in advancing protections for workers. Sadly, in Canada, a mere 16% of Canadian private sector workers belong to unions. We also lack an established culture of management-labour negotiations. We have been seduced by the idea that the only way to compete in an economy oriented to low consumer prices is through reduction in labour costs, but this only leads to lower wages, lower productivity, and poor job quality. Higher-value-added goods and services call for a skilled and engaged workforce, yet we have accepted uncritically that corporate decision-making is best driven by shareholder value. We have not recognized that companies become more successful by investing in their workers.
What can the federal government do to turn this situation around? In labour relations, Ottawa has limited direct jurisdiction over employees working for employers regulated by the federal government. It could lead by example by playing a more constructive role in the process of balancing the concerns of employers and employees in labour disputes, and by encouraging the organization of more workers, including the growing ranks of non-standard workers.
In addition, the Green Party supports the implementation of a higher minimum wage that better reflects what would be considered a decent wage, by increasing the current federal minimum wage level to $15 an hour as soon as practicable. The Green Party acknowledges the evidence that a minimum wage increase may have a modest negative impact on the job market; some employers may hire fewer employees if they face paying higher wages. However, on balance, the positive benefits of such action outweigh the negative: higher minimum wages reduce wage inequality. There is even clearer evidence that not only do higher minimum wages improve job retention, they also create an incentive for employers to train lower-paid workers to generate productivity increases that can counter the increased cost of labour, particularly at the bottom end of the wage distribution scale. (See Tom Zizys’ “Better Work: The path to good jobs is through employers” prepared for the Metcalf Charitable Foundation, October 2014).
To provide more relevant and practical workforce development strategies and systems, the federal government must bring coherence and cohesion to the fragmented, uncoordinated transfers of some $3.2 billion each year to the provinces and territories for labour market development. The almost 50 assorted bilateral federal-provincial-territorial agreements are currently grouped under four federal-provincial labour market programs broadly devoted to helping various categories of unemployed people get back to work. These are the Labour Market Development Agreement (LMDA), the Labour Market Agreement, the Labour Market Agreement for Persons with Disabilities, and the Targeted Initiative for Older Workers. Most revenues flow through the LMDA, which is funded by employment insurance premiums, so they serve only those eligible for EI, but a far larger group of Canadians need skills development, on-the-job training, and other employment initiatives.
The Green Party believes that serious consideration should be given to the sensible suggestion that these federal programs be collapsed into a single transfer system to the provinces, territories and aboriginal governments – one funded from general revenues and allocated according to the provincial or territorial share of unemployed workers in Canada, with a single set of administrative requirements. Provinces and territories would not be allowed to impose residency requirements for individual eligibility, and they would have to report publicly on program results. Under this type of system, workers would not have to qualify for EI to use the programs, and EI premiums for both workers and businesses would be lowered.
The proposed Council of Canadian Governments would be the appropriate body to consider and ensure the implementation of any fundamental changes to existing employment initiatives. In any event, the Council should initiate and complete federally-led comprehensive reforms to the Employment Insurance program to ensure that it operates with greater fairness and efficiency across the country. Once again EI must become an essential element of social security accessible to millions of Canadians who need it. During the 2008-09 Recession, fewer than half of Canada’s unemployed received EI benefits. Currently, in 2015, the percentage of people eligible for EI has dropped to a disturbingly low 36.6%. Not only is this unacceptably low, but it also means any programs which depend on EI eligibility, such as the recently enhanced compassionate care benefits introduced in Budget 2015, and maternity and parental benefits, have very limited impact.
While we need some regional differentiation of EI access based on local conditions, there is an unmistakable element of unfairness inherent in the complex system of 58 different economic EI zones across the country. Laid-off workers in some parts of the country not only receive less EI, but their payments also differ even from the benefits provided to workers in similar circumstances who live close by.
It is absurd that our federal government has failed to implement even the most basic EI reforms, despite extensive debate and a wide consensus among employers and employees about the many changes that are necessary. Instead of well-considered reforms, the Conservative administration has only brought in ad hoc amendments to EI that lack equity and fairness and, most importantly, informative public debate. For example, the omnibus legislation implemented in the 2012 budget included significant changes to the EI benefits for seasonal workers. These changes hurt seasonal industries and employers as well as workers.
Given the inequality and ineffectiveness of the current system, it is critical to undertake a comprehensive overhaul of EI and reverse Stephen Harper’s damaging ad hoc changes. We must establish coherent and expanded eligibility standards while addressing seasonal workers more fairly, encouraging more EI-sponsored work-sharing during economic slumps, and adjusting the availability of training funds to benefit the many workers who are not eligible for EI.
Other credible proposals would create a system of temporary unemployment assistance as an alternative for those workers who did not qualify for EI, including part-timers, immigrants, young workers, and those who were self-employed. Whatever form such changes might take, the Green Party supports the significant expansion of eligibility to allow new applicants better access to EI and training.
The time has come to look at new models for EI funding and delivery, given that the majority of today’s workers are in non-standard jobs and are not even eligible for EI in its current form. One innovative step would be to eliminate the EI premiums payable by employers and employees, and for the federal government to fund a modernized efficient program available to all who are unemployed. The EI contribution is a very regressive tax: unlike the deductions for Canada Pension Plan (CPP) contributions, there is no relation between contribution and the assured future benefits. Elimination of EI premiums would simultaneously remove what employers call a tax on jobs and boost job creation. It would also ensure that all Canadians could obtain the transitional support and training they needed to find new work.
This kind of reform would require a significant reallocation of federal resources as well as careful innovative planning. For example, we could consider implementing a two-tier structure of benefits. The first tier would be earnings-related, so it would be similar to employment insurance and would apply for a limited period of time. The second tier would be needs-related and would apply to the longer-term unemployed. Benefits in the second tier would be lower than those paid in the first tier, and they would only be provided for a fixed time limit. Persons who exhausted their payments from both tiers would move onto welfare or to the Green Party’s proposed GLI. The EI and welfare administrations would coordinate closely to ensure a smooth transition.
The Green Party believes that another key improvement to existing income security measures would be a system of wage insurance like those used in Germany and Denmark. These initiatives encourage workers to take available lower-paid jobs by topping up the starting wages. Such programs help workers to adjust to lower-wage non-standard employment and ensure that they do not drop out of the job market altogether.
Particular attention to younger Canadians is essential. Another suggestion put forward by the group “Generation Squeeze”, led by Dr. Paul Kershaw of the University of British Columbia’s School of Population and Public Health, is to encourage employers to hire more employees to work shorter or flexible hours. (Gensqueeze has completed some useful analysis of public expenditures and has determined that federal and provincial governments collectively spend between 2.9 to 3.9 times more per person age 65 plus, than per person under age 45.) For example, EI premiums could be set at a lower rate if the employer hired a worker for a 35-hour week instead of a 40-hour one. Overtime would kick in after 35 hours and overtime premiums would be paid either as cash or as earned time away from work. The aim of these initiatives would be to create more jobs with flexible work time, especially for younger Canadians.
Another Gensqueeze EI reform recommendation to ensure more equity for younger Canadians is to transfer the uneven access to parental leave available under EI into a separate parental benefit program that does not depend on the nature of a parent’s attachment to the labour market. The new benefit would include the self-employed and dual- or single-earner households, and would enable one parent to stay home with their newborn for the first 18 months. The Green Party is open to considering this and other innovative and thoughtful suggestions to facilitate more and better jobs for younger Canadians and to improve the quality of life for young families.
The Green Party also supports the creation of a Youth Community and Environment Service Corps that will provide federal minimum wage employment for 40,000 youth aged 18-25 every year for four years for a total of 160,000 youth positions. At the successful completion of each year-long program, there will be a $4,000 tuition credit awarded to each participant that can be applied to further education and training. Youth Service teams will vary in size depending on the projects undertaken, and will be given opportunities for career counseling and employment skills training during the course of the program. The Youth Community and Environmental Service Corps projects should be developed in close partnership with municipalities and based on local priorities. They can include numerous measures to minimize damage and injury from future climate change impacts, many different types of environmental protection and rehabilitation projects, specially-focused teams that provide social stimulation to institutionalized elderly through arts and music, assistance to low income households for energy efficiency upgrades, recreation programs for children at risk, capacity building for local food systems, etc. This initiative will employ 160,000 youth over its 4-year life and is budgeted at $1.25 billion dollars a year for a combined total of $5 billion.
There is no longer such a thing as lifetime employment, but workers should have a fair chance to find a decent job with reasonable pay. Our economy and our society will be stronger if governments help to promote a dynamic national labour market. To bring this about, economist Don Drummond points out the critical need for better Labour Market Information (LMI). In 2009, embarrassingly, Canada was able to compile information on less than half of the indicators used by the Organisation for Economic Co-operation and Development (OECD) for international reporting and comparisons. The Green Party strongly supports Mr. Drummond’s recommendation that we establish as soon as possible a pan-Canadian body for the coordination of LMI using the Forum of Labour Market Ministers (FLMM).