(Policy papers 2012-2013)

Change is the only constant in the modern Canadian workplace. Technology and global economic patterns are transforming job markets, and workers must develop their skills and get practical experience to keep up. Governments play an important role: ensuring that education and training are accessible, and encouraging employers to provide on-the-job experience. Our employment insurance system should also be helping workers to adjust, but instead it serves up red tape and unequal treatment. Long-term thinking and a thorough overhaul of EI are essential to restore efficiency, fairness, and a balance between the needs of workers and the needs of employers.

La seule constante dans le monde du travail canadien moderne est le changement. Des modèles technologiques et économiques transforment les marchés du travail, et les travailleurs doivent, pour s’adapter, développer leurs compétences et acquérir de l’expérience pratique. Les gouvernements jouent là un rôle important : ils s’assurent que l’éducation et la formation sont accessibles, et ils encouragent les employeurs à offrir des expériences en cours d’emploi. Notre système d’assurance emploi devrait aussi aider les travailleurs à s’adapter, mais en réalité, il regorge de paperasserie et de traitements inégaux. Pour rétablir l’efficacité, la justice et un bon équilibre entre les besoins des travailleurs et ceux des employeurs, il faut une réflexion sur le long-terme et une restructuration profonde de l’assurance emploi.

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Gone are the days when just getting a job — even a good one — meant financial security. Extraordinary technological change has made the employment of millions of Canadians increasingly precarious. Canada, like other mature nations, is seeing valuable jobs drained away as billions of low-wage workers flood into the global economy.

Most Canadians are neither very rich nor very poor and work at jobs of average status such as lower- and middle-end retail and service jobs or skilled manual work; they are unionized and non-unionized, part-time and full-time, and some are self-employed. To get better-paid jobs — including thousands of positions that are vacant because we don’t have enough trained drillers, plumbers, geologists, and nurses — workers must get higher skills and keep upgrading them.

Remarkably, Canada has the second-highest rate of persons with post-secondary-education certificates among member countries of the Organisation for Economic Co-operation and Development (this includes all tertiary degrees, not just universities). But at the same time Canada has the highest proportion of persons with post-secondary certificates who make less than half of the median income.

This means that Canada is not doing too badly on the supply of well-educated and trained individuals. But we are failing at finding enough paying jobs for these educated persons, especially the jobs needed to acquire the two to four years of practical experience that many employers are demanding. Employers are now more concerned about the actual experience of their prospective employees than about their educational attainment.

We must improve Canada’s poor ranking in 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 that maintain our competitiveness. Germany’s extensive apprenticeship system and similar structures in the Nordic countries have helped to shield these countries from the European economic crisis.

Canada lacks the kind of social solidarity that exists in Germany, Denmark, and France, which is based on close collaborative relations between employers and workers. People in these countries agree on the value of paid apprenticeships and internships, and they are committed to avoiding the outrageous disparities between the pay of CEOs and the wages of those on the shop floor that afflict the U.S., the U.K., and increasingly Canada.

The evidence is clear that companies that invest in their workers and in productivity improvements do much better. But too many Canadian employers are unwilling to invest in long-term internships and apprenticeships without substantial flexibility and the ability to protect themselves against attempts by their competitors to poach their interns and apprentices.

A useful model in the U.S. is the Workplace Development Board. These regional boards lead sector-by-sector collaboration across businesses or industry organizations, 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 achieve economies of scale and vastly expand on-the-job training. Such coordination is a very labour-intensive process that involves consultation, deliberation, and alignment of various siloed interests, but it can deliver great results, especially in identifying employers who are committed to investing in their workers and need support for ongoing training and career advancement.

Unfortunately, in Canada, only 29% of Canadian workers belong to unions; we do not have an established culture of management-labour negotiations. We have been caught up in the idea that the only way to compete in an economy oriented to low consumer prices is on labour costs, which 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 it is possible for companies to compete while investing in their workers.

What can the national government do to turn this situation around? In labour relations, Ottawa does have limited direct jurisdiction over employees working for employers regulated by the federal government. It could lead by example by taking a more constructive tone in the process of balancing the concerns of employers and employees in labour disputes.

To expand more relevant and practical workforce development strategies and systems, the federal government could bring more coherence and a broader purpose to the fragmented, uncoordinated transfers of some $3.2 billion each year to the provinces and territories under almost 50 bilateral federal-provincial-territorial agreements. The assorted agreements are currently grouped under four federal-provincial labour market programs broadly devoted to helping various categories of unemployed people get back to work: the Labour Market Development Agreement (LDMA), the Labour Market Agreement, the Labour Market Agreement for Persons with Disabilities, and the Targeted Initiative for Older Workers. Most funds flow through the LDMA, 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.

Many analysts, including the Mowat Centre Employment Insurance Task Force, have made the sensible suggestion that the federal programs be collapsed into a single transfer to the provinces, funded from general revenues, and allocated according to the provincial share of unemployed workers in Canada. Provinces would not be allowed to impose residency requirements and would have to report publicly on program results. Workers would not have to qualify for EI to use the programs, and EI premiums for workers and businesses would be lowered.

The Council of Canadian Governments[2] is the appropriate body to initiate and carry out these fundamental reforms. The Council should also manage federally led comprehensive reforms to the employment insurance program to ensure greater fairness and efficiency across the country. EI is an essential element of social security, accessed by millions of Canadians. But anyone who has dealt with the EI bureaucracy knows that it is not easy to navigate. Indeed, during the 2008-09 recession, fewer than half of Canada’s unemployed were receiving EI benefits. Recent reports indicate that bureaucratic logjams have not got better and may have become worse. By the end of 2011, Ottawa was unable even to deliver EI cheques on time.

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 also get payments that differ even from the benefits for workers in similar circumstances who live close by.

It’s absurd that our national government has failed to implement even the most basic EI reforms, despite extensive debate and a wide consensus among employers and employees about many changes. These include establishing a single national eligibility standard, expanding 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 outside EI for workers who do not now qualify, including part-timers, immigrants, young workers, and self-employed people.

The time has undoubtedly come to look at new models for EI funding and delivery in recognition that the majority of workers are in non-standard work and not even eligible for EI in its current form. One innovative step would be to eliminate the EI premiums payable by employers and use general revenues to fund a modernized efficient program available to all unemployed.   This would simultaneously eliminate what employers call a tax on jobs and boost job creation, as well as ensure that all Canadians can get the transitional support and training they need to find new work.

Another key improvement that could ease the difficult circumstances of long-tenured workers who lose their jobs is a system of wage insurance that is used in Germany and Denmark. It encourages workers to take available lower-paid jobs by topping up the new wages. The program helps in the adjustment to lower-wage employment and ensures that workers do not drop out of the job market altogether.

Instead of well-considered reforms, the national government has brought in ad hoc amendments to EI that lack equity and fairness and, most importantly, informative public debate. For example, the omnibus legislation implementing the 2012 budget includes significant changes to the EI benefits for seasonal workers. These changes might make the EI system somewhat more efficient but at the very least should not come into effect until governments are able to introduce other measures to deal with the challenge of seasonal industries. The abolition of the Youth Employment Centres and the transfer of their operations online is also misguided. Face-to-face contact with employment counsellors is indispensable for harder-to-serve youth.

There’s no such thing as a steady job now, but workers should have a fair chance to get a decent one, with decent pay. Our economy and our society will be stronger if governments help to promote a dynamic national labour market.