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.