Good morning, ladies and gentlemen. Welcome to meeting number 20 of the Standing Committee on Human Resources, Skills and Social Development and the Status of Persons with Disabilities. Today is Thursday, May 1, 2014.
I will quickly mention that we have set aside some time at the end of today's meeting to deal with some housekeeping issues.
Joining us for the first hour of our study on the main estimates, we have the Honourable Jason Kenney, Minister of Employment and Social Development, along with the Honourable Candice Bergen, Minister of State for Social Development. Welcome. Thank you, ministers, for taking time to be with us today.
From the departmental side, the ministers are joined by Mr. Ian Shugart, deputy minister of the Department of Employment and Social Development, and Alain Séguin, chief financial officer.
From Service Canada we have Paul Thompson, assistant deputy minister from the processing and payment services branch. We also have Mr. Evan Siddall, president and CEO of Canada Mortgage and Housing Corporation.
Welcome to all of you. Members, since the meeting will be split into two one-hour sessions, we will go with five-minute rounds of questioning when we get to that point.
I'd now like to open it up to Minister Kenney to begin his remarks.
Thanks very much, Chairman, and good morning colleagues. I'm pleased to be here with the team that has been introduced. Particularly let me welcome Mr. Siddall, who has recently been appointed president of Canada Mortgage and Housing Corporation. They are very important responsibilities and he's off to a great start.
I'm pleased to be with you today to discuss the 2014-15 main estimates for Employment and Social Development Canada and to highlight some of our key areas of investment.
In this fiscal year, we are planning expenditures of $44.5 billion in income security. This amount includes payments through old age security, the guaranteed income supplement, the registered disability savings plan and the national child benefit.
Payments through old age security and the guaranteed income supplement are increasing by $1.6 billion, and of course, we can continue to expect to see that as our population ages and the number of retirees increases.
ESDC is planning expenditures of $3 billion in the social development program area. This includes the homelessness partnering strategy, for which Minister Bergen is responsible, the social development partnerships program, and the new horizons for seniors program, for which Minister Wong is responsible.
It also includes the recently created Federal Income Support for Parents of Murdered or Missing Children. This program is a new measure from our government to help families going through a very difficult period.
The social development program area also includes the Enabling Accessibility Fund, which is part of our government initiatives to help Canadians with disabilities. I would like to recognize the efforts of the committee chair for Canadians with disabilities. We recently created a workplace stream of this program to increase the ability of Canadians with disabilities to participate in our labour market.
Finally, the social development program area also includes payments directly to parents through the Universal Child Care Benefit—which our government is extremely proud of and which was one of our most important 2006 election campaign commitments.The increase in this area is because of an increased number of children entitled to this benefit. That is good news. By paying this benefit, the government recognizes that parents know best what child-care is best for their children. The Universal Child Care Benefit provides support to over 2 million children annually and has lifted 24,000 families out of poverty.
In the Learning Program area, the department plans budgetary expenditures of $2.3 billion. This program area includes the Canada Student Loans and Grants Program and the Canada Education Savings Program. The non-budgetary section of the 2014-2015 main estimates in this program area is the expenditures paid out in student loans, which are loans we expect to be repaid. Increases in this area are the result of more students receiving this support, more families saving for their children's post-secondary education and an increase in repayment assistance.
In the skills and employment program area, ESDC has planned expenditures of $1.1 billion in the main estimates before you. The main estimates before you show a $500 million decrease in this area from the year before. The reason for this is that the labour market agreements, which now include the Canada job fund and Canada job grant, were still being negotiated at the time the main estimates were tabled. We'll be bringing forward the $500 million in supplementary estimates as we have signed agreements in principle with all 13 jurisdictions for the delivery of the Canada job fund or grant and indeed final agreements with, I believe, five provinces. All this is to say there is not a $500 million cut. It just wasn't ready, frankly, to put in the estimates.
The skills and employment program area includes a number of our government's priority areas, including the aboriginal skills and employment training strategy, known as ASETS, which I think is a great program; the skills and partnership fund; the first nations job fund, a new initiative to try to get young aboriginal, able-bodied folks to move from welfare to work wherever possible; the Targeted initiative for older workers, which we've just renewed with a number of provinces; and the labour market agreements for persons with disabilities. The old agreements were sunsetted at the end of the last fiscal year, and we have been renewing them with provinces. There is also the opportunities fund for persons with disabilities; the Red Seal program, a very important part of our skills agenda; apprenticeship grants; and others.
Our ministry is planning expenditures of $168 million in the integrity and processing program area, which is obviously very important. This is responsible for ensuring that taxpayers' dollars are being disbursed correctly and only to those actually entitled to the benefits. This is particularly important in a department like ours, which is entrusted with a significant amount of taxpayers' dollars.
To provide you with a recent example, earlier this month a Toronto man was charged for allegedly collecting his mother's CPP and OAS benefits for 15 years after she died. Police alleged that this individual collected nearly $200,000 in fraudulent benefits. The reason this branch exists is to ensure that these funds are directed to those who paid into the system and truly qualify. This is also the program area responsible for processing specific benefits, including our very successful apprenticeship grants. ESDC is also planning expenditures of $118 million in the citizenship centre service program area.
ESDC is also planning expenditures of $118 million in the Citizen-Centered Service program area. This is the program area of the department responsible for ensuring that the department provides timely and quality service to Canadians. This is particularly important for a department like ESDC that deals directly with Canadians to deliver many programs.
One area here that I would like to highlight, on which we're particularly focused on improving the department's service delivery performance, is in employment insurance, EI, processing. Mr. Cuzner keeps offering constructive criticism in this respect.
When I was named Minister of Employment and Social Development, one of the early things I did was ask my parliamentary secretary, your colleague Mr. Armstrong, to conduct a review of EI processing.
He has been out meeting with Service Canada front-line staff and management across Canada to find ways to be more efficient and fix bottlenecks in the system. I look forward to hearing the results of his review and am hopeful that as a result we will be able to improve the department's service to Canadians in this area.
Finally, we are planning expenditures of $224 million in the internal services area, which is a reduction of about $54 million from the previous year as the department continues to look for ways to save taxpayers' money.
By reducing administration and back office expenses, we're able to provide more benefits to Canadians and more support for front-line service.
These are the summary highlights of our planned spending in the 2014-15 main estimates, Chairman, and I'm happy to take questions.
Minister Bergen, do you have an opening statement?
Mr. Chair, I'm very happy to be here today. The last time I was here at this committee, I was actually sitting in the chair's position, so it's interesting being across the way. It's a pleasure to be here. Thank you so much for inviting us.
As you know, I work very closely with on the social development side of our portfolio, and I'm very proud of what we have accomplished so far. Today I want to focus my remarks on the considerable progress we've made when it comes to combatting homelessness and on the investments we've made.
First of all, however, I do want to take a couple of minutes to outline our investments when it comes to ensuring affordable housing for Canadians. These investments are made through the Canada Mortgage and Housing Corporation, CMHC. CMHC estimates budgetary expenditures of $2.1 billion in 2014-15 for housing-related initiatives. This funding supports close to 600,000 households living in existing social housing, as well as the investment in affordable housing initiative, also known as IAH, to help Canadians.
The IAH bilateral agreements with the provinces and territories recognize the diverse housing needs of Canadians while also recognizing jurisdictional issues. Provinces and territories are best positioned to allocate the investments, for example, these initiatives, to meet their local needs and priorities, and we've given them very broad parameters that include new construction, renovation, home ownership assistance, rent supplements, and shelter allowances.
Economic action plan 2013 announced our commitment to working with the provinces and territories by investing more than $1.5 billion nationally over five years to extend the IAH. From April 2011 to December 2013, the IAH helped more than 177,500 households across Canada.
As you can see, our investments are making a difference, and they continue to, which is why we renewed our investment. In fact, about a month ago, I was very pleased to be in British Columbia to sign the investment with Minister Coleman for $300 million. When I was in Prince Edward Island, we signed our agreement with P.E.I. for $14 million. We just recently announced in New Brunswick an additional $78 million. I'm leaving for Edmonton later on today, and I'm looking forward to making an announcement tomorrow.
We're making real progress in terms of the investment in affordable housing agreements with the provinces. We're seeing a very positive response from them. Each province has a very different way of addressing issues of affordable housing.
I want to turn my efforts now to talking about what we're doing to combat homelessness. Just over two weeks ago, I joined the Mental Health Commission of Canada for the official release of the final results of the At Home/Chez Soi project. This was the largest study of its kind, looking at how using a housing first approach can reduce homelessness. Many of you, I think, are probably familiar with the approach. I think you know that it represents a departure from more traditional approaches.
Up until this point, the most common way of dealing with homelessness has been through more of a crisis-based model, so it's been very reactive, not just in Canada but in many developed countries. This model involves relying heavily on shelters and other emergency-based interventions. Typically, these individuals must first participate in a series of treatments and demonstrate sobriety before they are offered housing. This approach has been costly and not effective for the long term. It's pretty easy to see how with that kind of instability it's much more difficult to participate in treatment programs and to manage mental and physical health issues. As you can imagine, for individuals who spend a night in a shelter and then leave that shelter but have to stay very close to it so they know they'll have a place to stay later on that night, it becomes virtually impossible to go out and try to get treatment for an addiction or a mental illness, or to try to look for a job or advance their lives in any way, because they are tied to that shelter. It's pretty much common sense, but now the evidence shows that the housing first approach works.
With regard to cost, homelessness takes a tremendous toll on our economy and social services in terms of emergency housing, hospitalization, shelters, prisons, and a host of other crisis services.
The housing first strategy, on the other hand, involves ensuring the individual has immediate housing before providing the necessary supports to help them stabilize their lives.
Back in 2008 we knew this approach showed great promise and we knew it was something worth looking into, so that year, under the leadership of , we invested $110 million in the Mental Health Commission of Canada's landmark study on this issue.
We believe the evidence is overwhelming. We have heard some skepticism and opposition from the opposition, but I'm hoping, as they're looking at more and more of the evidence, we will all be able to come on board to support housing first.
We continue to invest in our HPS, homelessness partnering strategies, and we've renewed that investment. Thanks to the groundbreaking research from At Home/Chez Soi, we've been able to inform our policy direction moving forward. As policy direction, it's based on evidence. It's not a political decision. It's making smart investments so that we can see lasting results for probably the most vulnerable in our society. We're moving out of crisis mode in terms of managing homelessness and working towards eliminating it altogether.
As of April 1, we have officially begun the shift towards the housing first approach in our renewed homelessness partnering strategy. We have also built in flexibility so that smaller communities who may not have the resources don't have to move to a full housing first model. They can incorporate such things as shelters and transition housing. We're looking at the larger communities that we are funding to have a majority of their programs go towards housing first, but we believe it's important that this flexibility be there and that programs transition into a housing first model.
We've committed stable funding over five years at the same level to ensure that communities can plan and successfully implement the housing first approach. The other positive part of our HPS is that community entities and communities themselves make decisions as to where the funding goes. It's not the federal government, bureaucrats, or politicians in Ottawa making these decisions; it's at the local community level, which makes it a very strong and effective program.
We know that housing first rapidly ends homelessness and leads to other positive outcomes for quality of life. It's a sound fiscal investment that can lead to significant cost savings, and when we look at the evidence, it does. We're proud of this investment. The evidence shows that for the housing first group, an average of 73% of participants were in stable housing at the end of the study, compared with 32% for the usual care group over the course of the study.
Mr. Chair, as I've said many times, we want to do more than just create safety nets. A comparison I use is that we want to create trampolines, places where people can go from a difficult position and get to a better position. Housing first, the evidence shows, supports that. I'm proud of these investments.
I appreciate your support. I look forward to answering members' questions. Thank you.
Mr. Chairman, I'm pleased to report to the committee that we have signed, as I mentioned, agreements in principle with all thirteen provinces and territories, for them to deliver the Canada job grant through something called the Canada job fund. Through these agreements, we're renaming what was previously known as the labour market agreements as the Canada job fund. This will be a $500-million annual transfer to provinces allocated on a per capita basis. The provinces, in these agreements, are committing to allocate 40%, i.e., $200 million of the $500 million, toward employer-led training initiatives, which is enormous progress.
Mr. Chairman, I should back up a step and remind members that it was actually our government in 2007 that created, de novo, the labour market agreement and a half a billion dollar annual transfer to provinces specifically to address those Canadians who are, as we say, technically more distant from the labour market, folks who haven't been working for a while. We have the labour market development agreement, $2 billion, that comes out of EI funds for folks who are either on EI or who have worked in the past three years, but we realized there was a group of Canadians who perhaps had never qualified because they actually had never worked. Many of them maybe didn't finish high school, have literacy challenges, maybe are on social assistance, etc.
We developed, with provinces, some specific programming with this $500 million of new funding in 2007. However, as a general observation, Mr. Chairman, we were concerned, based on input and data, that we were getting inadequate results for the taxpayer's buck when it comes to training Canadians; that there were too many training programs that were training people for jobs that didn't exist, or training them for the sake of training; that some of these tax dollars were supporting the endless churn of resumé factories and well-intentioned organizations that really weren't linking people up with jobs in the real labour market.
We also observed that according to the OECD, Canadian governments collectively spend more on skills development and job training than governments in any other developed country, but Canadian employers in the private sector spend less, relatively, than virtually any other developed country.
The job grant came from this observation that we weren't getting maximum bang for the taxpayer's buck in terms of jobs created through the training system, and employers were under-investing in the system. The observation was we could address both of those deficiencies by priming the pump to increase the private sector employer investment in training, and then the employers would have an incentive to actually employ the people trained. That was the concept of the job grant.
As you know, we proposed it in the 2013 budget. We had some back and forth with the provinces. When I became responsible for the file last summer, I immediately began contacting provinces. I listened to them, listened to the business community and labour unions, and others, and we came back with several different iterations of the proposal, and finally came to an agreement in principle in March.
I'm very pleased with this. There would not only be $200 million of the $500-million Canada job fund transfer allocated to, generally, employer-led initiatives, which will typically mean consortia of businesses working through service-providing organizations to engage the long-term unemployed with relevant training that leads to actual jobs, but in addition to that, provinces are committing to spend $300 million, once fully implemented, on the Canada job grant. The key flexibility that we offered to get their agreement here was that they could source that $300 million in year four through any source of funds. That could come from any one of the roughly $3 billion we transferred in skills development. We also transferred, by the way, notionally, about $3 billion for post-secondary education, through the Canada social transfer. Oh, and by the way, we transferred tens of billions of dollars in other programs. They could source the $300 million out of any source of funds.
The commitment there is that they will set up a program that employers can apply for. What employers will do is identify individuals for specific training programs. They will make a commitment to hire those individuals at the back end of the training, and the employers will, on average, have to commit to paying for a third of the cost of the training.
We have introduced flexibility for the small and medium-sized businesses that have limited capacity, so they can either put in as little as 15% cash into the job grant, or they can account for half of their contribution through wages paid to trainees while they're undergoing training.
This has been an example of federalism working. I think the provinces have actually gone from being, shall we say, unenthusiastic to quite enthusiastic about the prospect of this new program. We have signed final agreements with five provinces, and I would hope that within a matter of weeks we'll have completed all the others.
Sure. You know, I've been fortunate to have been able to travel across the country and see some of the great things that are being done with the opportunities fund, for example. I know Minister Kenney has been working hard on the labour market agreements for persons with disabilities, so he might want to comment on that.
The premise of the support we provide for persons with disabilities is twofold.
First and foremost, we want to make sure barriers are removed for people with disabilities to participate in the economy and in our communities. The expert panel on persons with disabilities found that there are about 800,000 Canadians with disabilities who want to be working, and we think that if people want to be working there should not be barriers in place to discourage them.
There are things like the opportunities fund, the accessibility fund, and the newest ready, willing, and able program that we're funding that are removing barriers by physically and logistically helping persons with disabilities find work and get back into the workplace. It's also about educating employers. When you talk about the labour market and where there are gaps, we know that persons with disabilities can help fill those gaps. It's about educating employers and helping them see the value. They're seeing it more and more. The evidence and again those who are participating in programs show the value of employing people with disabilities.
The second thing we're doing, which is something that I know we are all really proud of and something our former colleague introduced, is the registered disabilities savings plan, which is the only one in the world, that is providing an opportunity and a vehicle for families to save for their children or people in their families who have disabilities. It's an amazing program with a large amount of grant money available. We know there still are some things that need to be tweaked and fixed, and we're working together with the provinces to do that, but it's something that means parents don't have to worry about what will happen when they're gone, who will look after their children, and how they can save money. The registered disabilities savings plan is doing that. We feel it's our responsibility, and we've talked about it in previous budgets, to make it better and to promote it so that more and more families know about it.
We also just introduced in our last budget additional support for special Olympics. Again, this is an opportunity to remove barriers and help kids who are making such a great contribution and making all of our lives so much richer.
Again, we're working in a number of areas, primarily to remove those barriers and help people with disabilities get to work, help them access the community, and help families to support their dependants and their family members.
Did you want to comment on the labour market agreements?
To be honest, it's difficult to measure how effective it has been statistically, because all the work we do is trying to change systems. We don't control the professional licensing bodies that make the actual decisions. We play a facilitative role trying to coax and prod provinces and through them the licensing bodies to get with the program and to speed up and simplify the process for foreign credential recognition and assessment.
In that regard, my view is we've made a lot of progress. This stuff doesn't make headlines, but it's hard, difficult, technical, granular work. In this thing called a pan-Canadian framework for the assessment and recognition of foreign qualifications, there's a big federal investment of $50 million. We're paying to bring together all 10 of the provincial licensing bodies as we work through the 40-plus licensed professions to get them to one table and hammer out simplified, streamlined procedures for credential assessment and recognition. By the way, this has the happy effect of enabling greater interprovincial labour mobility for Canadians.
We've gone through 14 of the 40-plus regulated professions. We're about to launch work on another several. We're identifying those professions that I'll say are more eager to participate. Some professions still seem to be stuck in an old-school protectionist or gatekeeping attitude. I think we need to start naming and shaming some of them.
Finally, I think we are having good effect with things like the foreign credential recognition loans pilot project. We've done a thousand of those loans, delivered through non-profit groups that have worked out arrangements with financial institutions to provide loans of up to $10,000 on preferential terms as bridge financing. This is to help foreign professionals stuck in survival jobs to maybe take some time off their survival jobs to get college diplomas, pay for their certification exams, and do what they need to do to get that little increment in skills and education so they can get their credential and get to work in their profession. Again, it's only a thousand, but that's a good pilot, and the results are phenomenally positive.
Finally, we are doing pre-arrival work overseas, such as through the Canadian immigration integration program delivered by the Association of Canadian Community Colleges, through centres abroad where we invite selected economic immigrants to come in for free to a seminar that includes personalized counselling on how to get ready for the Canadian labour market. We point them to where they can apply for their credentials in advance, and maybe backfilling they need to do in their education before they get to Canada as permanent residents. Again, the results in that population in terms of their employment have seemed to be extremely positive. I think CIC is doing a formal evaluation that will be forthcoming.
To be honest, we're dealing with relatively small numbers of people in those two programs. If we were to roll these out to affect hundreds of thousands of people, the costs would probably be in the tens of billions of dollars.
We're trying to play a facilitative and leadership role in this area. I think the situation is.... The most important thing is the reforms we're making to the immigration system by doing a qualitative assessment of people's education and credentials in the application process, so we stop the craziness of ascribing the same value to a degree from the Indian Institute of Technology, which is the MIT of Asia, as we do to the dodgiest college that is a degree mill.
We used to ascribe the same points, the same credibility, in our immigration selection process to the highest quality and the lowest quality degrees and diplomas. Now we are making a qualitative assessment of those people whose degrees or professional credentials are likely to be recognized as being at or close to the Canadian standard. Those are the folks we're seeking to give admission to, so they don't end up driving cabs and working in corner stores.
Thank you very much, Chairman. I'm pleased to be back. It hasn't been very long, has it?
Voices: Oh, oh!
Hon. Jason Kenney: I'm really delighted the committee has decided to take up a study of the renewal of the labour market development agreements. This is important stuff.
As we were finishing the last discussion, Ms. Sims was alluding to the broader skills agenda. We may not agree on all the details, but I think there's a pretty broad consensus from labour unions to businesses, from the NDP to the Conservative Party, and from academics to people on the street, that we have a big skills challenge, that we're not doing an adequate job. When I say we, I mean all levels in the public sector and the private sector are not doing an adequate job of preparing Canadians for the labour market of the future.
As a government, we are trying to go through all of the programs we have that deal with job training or skills development to try to get a better bang for the taxpayer's buck, better outcomes in terms of real jobs. Some of the principles that we think are useful include a greater participation of employers in the training process, trying to leverage increased employer investment in skills development and job training. When employers have skin in the game, they have an interest in training people for real specific jobs that the training will lead to, rather than just kind of training for its own sake.
I don't want to belabour the discussion on the Canada job fund, Canada job grant, labour market agreements because I already discussed that in the last session, except to say that the principles we got to there, such as, greater employer involvement, higher employer investment, training leading to real jobs, are the principles that we are trying to reflect across the whole array of federal skills development programs.
That includes the big daddy of those programs, the labour market development agreements. This is a $2 billion annual transfer that we make to provinces based on a formula that was worked out in these agreements 15 years ago. It's per capita with some flexibility that's sensitive to promises of higher levels of unemployment. Basically the result of that is that the per capita transfer to provinces like, for example, Newfoundland and Labrador, would be higher than it is to Alberta, given the variations in unemployment.
It's a $2 billion transfer based on these bilateral agreements we have with provinces. Most of the LMD agreements were signed back in the late 1990s. I want to acknowledge the good work of former minister Pierre Pettigrew at that time. I think this was a very good development of the former Liberal government, to give credit where it's due, to realize that it made more sense for provinces to deliver these programs where they are on the ground, sensitive to the local labour market realities, as opposed to know-it-all Ottawa delivering the programs.
We can all remember back in the 1970s the Manpower Canada offices. This is kind of the successor to that. That was the Ottawa cookie-cutter approach to job training. Thankfully, we've left that behind in the 1970s. We now basically take a portion of the funds that are raised through EI premiums, $2 billion, and then we transfer that to provinces and they agree to certain parameters in the labour market development agreement. But for all of the good progress that has been made, there has never actually been a full evaluation done of the LMDA. We've never sat down with provinces to discuss the outcomes and to discuss how we might get better results.
I've launched a process of consultations with interested Canadians, with my provincial counterparts. I would hope that this committee could give us some very good constructive ideas about how we could improve on the results from this significant spending being funded by workers and employers through their EI premiums.
As I say, I've raised this with my provincial counterparts. I've sent them two letters. I've raised it with the Forum of Labour Market Ministers that will be meeting in November. I anticipate I'll be meeting with them in July where we'll be discussing this at greater length. I've sent the provinces a series of questions that we want them to address, to kind of guide the discussion. I hope the outcome of this will be renewed agreements with the provinces and territories.
The questions I've asked are as follows: How do we connect training directly to employer demand? How can employers be more involved in identifying labour market needs and ensure LMDA funding goes to training that addresses those needs? How can we ensure the training leads to available jobs? How can we increase individual responsibility and investment in training? How can we increase employer responsibility and investment in training? How can we ensure the training meets employer demand, even if the demands are beyond local needs?
The second area of prospective reform is to support more effective returns to work. Should we formalize our collaboration projects that focus on earlier provincial and territorial targeting and referral of EI clients?
We're asking this because the data is pretty clear that when you engage people who have been unemployed with so-called active measures, when you get in touch with them right after they've been laid off and help them develop a plan to find new work, you get much better results.
We all know the situation. When people are unemployed for a long time, often they get a little bit depressed and discouraged. Their skills perhaps begin to get dated. They fall farther away from the labour market. You want to get in there as soon as you can with people.
We want to encourage provinces to not necessarily just serve whoever walks through the door first, but proactively to reach out to the people who have been recently unemployed. Get them into a program, whether that means upscaling, retraining, or job link services. Get them in as soon as they can.
When we hear about large-scale layoffs in certain companies, such as the Heinz factory in Leamington, or whatnot, we try to get in there with Service Canada with an early intervention. We just want to encourage provinces to be on the scene right away, helping those newly unemployed people with a work plan.
Also, are there additional efforts we can make to reach clients more effectively? That's the proactive part of this. As soon as someone signs up for us with EI, how can we share that information right away with the provincial department delivering the program so they don't just wait for the client to walk in, but rather reach out to the client and say, “We have a whole suite of services available for you. Why don't you come in? We've scheduled an interview with you.”
The third point is to ensure that eligibility is responsive to the evolving labour market. This is a big issue, and I give credit to the NDP for having.... The opposition in general, but particularly the NDP has been pointing out the changing nature of the Canadian labour market—more short-term work, more contract, and informal forms of work.
We have the problem of last hired, first fired. A lot of the young people who are at the margins of the labour market get into an employer and if there's a downturn or whatnot, they're the first to go. That often means they are not qualifying for EI, based on the criteria that have long existed. We need to recognize the evolving nature of the labour market, I think, in the EI eligibility criteria. We're open to a discussion about that.
We're asking provinces how they're using EI part two—that's what we're talking about here, the LMDA funds—to help employed workers. Can more be done to reduce the potential costs of employed workers at a higher risk of job loss? Should we expand eligibility for youth and other workers with insufficient hours to qualify? This is exactly the point I was raising. Should we expand eligibility for under-represented groups, such as the longer-term unemployed?
I talked in the last session about the labour market agreement clientele. These are the folks who, maybe, have never worked, or rarely worked. They're on income assistance. They are not eligible for EI-supported training. We don't want to leave them behind either, so how do we address them in this?
Next, to prove that the LMDA programming generates EI savings is an issue we've raised. Right now EI claimants are using about two-thirds of their part one benefits before returning to work. What more can be done to get people to return to work more quickly and thereby reduce net EI spending?
Really, what I'm raising here is the possibility of paying for results; that is to say, if provinces can reach out proactively to the recently unemployed, get them good programming and back into work right away, it will have the effect of reducing the payout of EI benefits to them.
Perhaps we should acknowledge that saving to the EI fund by giving a pay for performance bonus, as it were, to the province or the program delivering those results. We see pay for performance becoming a very interesting initiative in many countries and it seems to be producing pretty good results. Is there some way we can measure performance and perhaps compensate provinces that get the recently unemployed back to work faster? It's good for them, good for the country.
Finally, there's enhancing performance measurement. We're asking provinces how the annual planning process can be improved to ensure that the LMDA programming is more responsive to employer and client needs, and what the most meaningful performance indicators are to ensure that we can fully assess the costs and benefits of LMDA programs.
Basically, taxpayers deserve to know how these dollars are being spent, what results we're getting for them, and frankly, I think the accounting right now is insufficient. We don't want to burden the provinces with endless forms and reports, but we want to get some good metrics to tell us how we're doing on these programs. I know some of my colleagues—I won't name names; I'll let people speak for themselves. One of my colleagues on this side has often told me about a lot of the service delivery organizations funded by the province with these LMDA funds which basically just seem to produce resumés for people. Some people refer to them as resumé factories. As I say, they're well intentioned, but are they really getting results? Those are the kinds of things we need to know.
Mr. Chairman, I apologize for not having made a formal statement, but I simply wanted to give you a general picture of my ideas.
I am open to constructive ideas. I very much look forward to hearing the responses from provinces and territories as well as from the private sector, including unions and employers, but I am especially looking forward to hearing from you, members of Parliament.
Thank you very much.
Yes, absolutely. The reason that I led this study mission was precisely because I think we Canadians, as big and as open as we are, sometimes become a bit insular. We sometimes think we've got the model. I think the truth is that when it comes to skills development, we are anything but a model. We have one of the highest levels of university academic enrolment in the world, which is great. A lot of young Canadians graduate with university degrees. Unfortunately, as we know, a growing percentage of them go on to be under-employed or employed in areas in which they did not study.
As I said, we also have one of the lowest levels of private sector investment in skills development in the developed world. We have 14% youth unemployment, which is unacceptable, and 14% unemployment among recent immigrants. We also have unacceptable levels of unemployment among our aboriginal people. All of this is in an economy where employers are saying that skills shortages are their primary challenge, so something is not working here.
That's why I invited key stakeholders, including my provincial counterparts, business organizations and labour unions to join me on a study mission in Germany and the United Kingdom. We had a delegation of 30 that included five provinces, most of the major business groups and some of the larger unions.
Germany is, I think, broadly considered as having the most remarkable model, not simply the country of Germany, but what they call the Germanic system, which is very similar as well as in Austria, Switzerland and Denmark, where there is very strong moral and practical encouragement for young people in the secondary school system to go into paid apprenticeship programs. Their conception of apprenticeships is much broader than ours. We have about 150 apprenticeable occupations. In Germany they have about 350. It includes things like retail and banking, as well as construction trades.
Over 60% of young Germans, roughly at the age of 16, go into these apprenticeship programs where typically they are at an employer location for about three and a half days a week and at a vocational college for one and a half days a week. The learning they're getting, the theory they're getting in the college, is perfectly integrated with the experience they're getting at the work site, and they're getting a modest stipend. These apprenticeship programs on average last three years, which means that most young Germans are graduating with a certificate at the age of 19 on average. They're already with an employer. Over 90% of them go on to be employed in the field for which they were trained, and they're unencumbered by debt.
One thing that is key is obviously the high degree of employer involvement in the education system and the sense of responsibility employers have to invest in training. That means maintaining all that equipment, paying for trainers, paying modest salaries to the apprentices. It's a big investment. In fact, in Germany employers collectively invest the equivalent of $47 billion Canadian a year on apprenticeship programs alone.
The other key factor is what they call the parity of esteem between technical training, such as through apprenticeships, and academic university degrees. Everyone in Germany, including the academics, told us that a trade certificate which an apprentice obtains at the age of 19 has the same social and economic value in the eyes of all Germans as a university degree does. Perhaps that's the biggest cultural change we need to see in Canada. For too long we have diminished the value of technical training, experiential learning, and non-academic education.
I don't mean for a moment to set one up against the other. To the contrary, I mean to say we should value and encourage all choices, because we have, I would argue, too many young Canadians pursuing academic programs which have very poor labour market prospects and we have emerging skills gaps in more technical vocations with future skills shortages.
I think at a high level those are the issues we need to address.
Mr. Chairman, on the first point, I've encouraged wide-open discussion on the LMDA renewal and the broader skills agenda from this committee and from other interested parties. I don't think that compromises the federal negotiating position.
Once we get your input and that of stakeholders, we will then formalize the Government of Canada's negotiating mandate for LMDA renewal. We'll get your input first depending on your work plan because, to be transparent about this, we hope to have new agreements by the end of this calendar year and I would hope to formalize the federal offer to provinces for LMDA renewal this fall. We would hope to get your input in time for that.
On the second point, yes we need, as it were, to better educate the educators on the realities of the labour market. That, however, is not a federal responsibility. I've asked to meet the Council of Ministers of Education of the provinces and territories to raise precisely this question.
I am concerned, and all Canadians should be concerned, that we saw the closure of virtually our entire system of vocational high schools and of vocational training in our comprehensive high schools over the recent decades. There needs to be a re-engineering of the secondary and post-secondary education systems to create more choice and options for experiential learning in vocations and trades.
Again, it is not a direct constitutional responsibility of the federal government, but you know, we pay for a lot of this. We transfer billions to the provinces, partly for higher education. I think we, as the custodian of those taxpayer dollars, have every right to ask the province how those dollars are being spent and what outcomes they are getting in terms of employment. I've put that on the agenda with the provinces.