Provinces must join training effort

Thursday’s budget delivered on the promise of addressing Canada’s growing labour and skills shortage. The government’s intentions are laudable. About a third of businesses are reporting shortages of labour while unemployment rates for young and long-term unemployed remain obstinately high. These facts point to a mismatch of people’s skills and available jobs.

However, the budget measures will not amount to much without getting provinces on side, as provincial-level labourmarket policies are major contributors to the skills mismatch problem.

In Thursday’s budget, the government announced reforms to the roughly $2.5billion that the federal government has been handing over to provinces each year as part of federal-provincial labour market agreements. The federal government had, rightly, complained about the lack of evidence that these programs are helping the unemployed actually get retrained and get jobs, rather than simply get job counselling or other services.

The budget aims to re-shuffle money toward a new Canada Job Grant that would be implemented following a renegotiation of the labour market agreements with the provinces when they expire in 2014. A worthwhile aspect of this new grant is that it will be based on the immediate needs of employers, who will be asked to match government contributions. Firms tend to underinvest in training because the benefits of doing so are gone if employees leave. The devil is of course in the details — we’ll be looking for strong accountability measures to make sure the money is well spent. In particular, to make sure these grants go to those who would not have otherwise sought retraining.

The federal government is also proposing measures aimed at promoting the use of apprentices by reducing barriers to accreditation in the skilled trades. This is a positive announcement, but it’s just a wish so far. Meanwhile, the government already shoves a lot of money at promoting this goal. The largest single program related to federal-provincial agreements — the Skills Development program, which received over $1.2-billion in 2010-11 — already has a clientele that is about 40% composed of apprentices.

But wait, there’s more. Various tax credits and grants for apprentices and trades workers totalled about $185-million in 2011. On top of that, apprentices can claim Employment Insurance benefits while they are in class and not working.

But efforts to boost apprenticeship levels are being frustrated by provincial regulations on apprenticeship. Many provinces set limits on the number of new apprentices a firm can take on, depending on the number of certified trade workers on its payroll. In some of the most restrictive cases — such as for electricians in Ontario or boilermakers in Saskatchewan — firms must have three and five certified trades workers, respectively, for any additional

Should ease rules on apprentices, crack down on professional bodies

apprentice they bring on.

Until the provinces amend these restrictive hiring regulations, federal funding for apprentices will amount to pushing on a string, in particular for smaller businesses that do not have multiple certified trades workers.

If at least part of the problem stems from provincial regulation, and given that education falls within provincial jurisdiction, one wonders why the federal government is involved at all in addressing skills shortages. That question aside, if the federal government wants to address one of the roots of the problem, it should consider requiring that provinces amend apprentice restrictions in order to access federal funds for skills development after 2014.

Similarly, provinces have the authority to regulate professionals, such as accountants, lawyers, nurses or engineers. However, some provinces may be enabling anti-competitive conduct by sanctioning self-regulating professional bodies that are harming consumers and potentially making it overly difficult for job seekers to work in these fields, particularly if they’re coming from another province, or from abroad.

Normally such anti-competitive actions would be subject to Competition Bureau scrutiny. However, common law doctrine enables firms in regulated sectors to cite direction from legislation or regulators as a defence, or exemption, when pursuing anti-competitive behaviour that likely would be otherwise illegal.

The interim Competition Commissioner has set these self-regulating bodies within his sights, and the federal government should support the Bureau as an advocate of competition in regulated sectors. The government should also consider reforms to the Competition Act to limit how provincial legislation can shield potentially anti-competitive actions from the scrutiny of the Competition Bureau.

There are other cost-effective measures the federal government can take. It should, along with its provincial counterparts, improve data and information on Canada’s labour market. Better data can help match people and jobs, and help analysts identify where the problems are. Better education data for instance can help establish links between programs of study and employment subsequently obtained and the development of more labour-demand driven educational programs.

Budget 2013 commits to better connecting employers with job seekers. The success of these measures will depend on the provinces stepping up.