Interventions in Committee
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Angella MacEwen
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Angella MacEwen
2015-05-26 8:58
Thank you.
On behalf of the 3.3 million members of the Canadian Labour Congress, we want to thank you for the opportunity to present our views today. The CLC brings together workers from virtually all sectors of the Canadian economy, in all occupations, and in all parts of Canada.
Part 1 of Bill C-59, which we're speaking to today, would implement a wide variety of income tax and related measures. Today our comments will be limited to three provisions: reducing the required minimum amount for withdrawal annually from the RRIF; increasing the annual contribution limit for the tax-free savings accounts; and renewing the accelerated capital cost allowance for investment in machinery and equipment.
First of all, in terms of retirement security, the changes to the RRIF withdrawals and the increases to the tax-free savings accounts are measures that are both related to retirement security, but it will be no surprise to members of this committee that the Canadian Labour Congress feels that expanding the Canada pension plan is a much better solution to the looming retirement security crisis in Canada. Changes to RRIF withdrawals benefit older workers who already have RRSP savings, but they do little for workers without the means to save through RRSPs. This is significant because only a third of Canadians today contribute to RRSPs, and the unused RRSP contribution room reached $790 billion in 2013. Eleven million workers in Canada have no pension plan other than the CPP. At the same time, the annual contribution limit for the tax-free savings account would increase to $10,000, as has already been discussed, and this measure would have an estimated cost to federal revenues of $1.1 billion by 2019.
Even at the maximum annual contribution of $5,500, the TFSA is projected to cost the federal government up to $15 billion annually, and cost the provinces another $8 billion when the program is fully mature. Doubling would further increase this cost almost exclusively to the benefit of higher income earners. In contrast, expanding the CPP would benefit all workers, follow workers who change employers or who have multiple employers, and be simple for employers to administer.
In terms of supporting manufacturing, we recognize that as a result of globalization, unfavourable trade deals, a high dollar, and the most recent recession, manufacturing in Ontario and across Canada has experienced devastating losses over the past decade. In recognition of this reality, we have long supported renewing the accelerated capital cost allowance for investment in machinery and equipment. This measure was first introduced in 2007, renewed in 2011 and 2013, and would now be renewed until 2026. While we support this measure, we want to note that corporate tax cuts have failed to spur business investment. In the same vein, we feel that continuing this accelerated capital cost allowance would be insufficient to support a struggling manufacturing sector in Canada.
Coming out of the recession, business investments in manufacturing have been very slow to rebound, despite the continuation of the accelerated capital cost allowance. In October 2014, the monetary policy report released by the Bank of Canada suggested that this is in part because of a semi-permanent loss of capacity in several manufacturing export sectors. Low interest rates and low taxes have not been sufficient drivers of growth. Weak and uncertain demand have played a significant role in subdued investment. All signs point to the need for the federal government investment in infrastructure to spur growth and therefore boost business confidence and private investment.
A singular focus on tax cuts has significant drawbacks. We note that while the budget 2015 documentation mentions the importance of investment in skilled labour in the same sentence as it mentions investment in machinery, government action on this front has been noticeably absent.
Let me remind the committee of some of the recommendations the Canadian Labour Congress has made in the past that would make a difference to investment in skilled workers.
One, establish a national skills council that brings key stakeholders together to identify skills gaps and develop strategies, policies, and programs to address them.
Two, establish a mandatory national workplace training fund. Employers with a payroll of more than $1 million who fail to invest 1% of their payroll in training should pay the shortfall into a public fund that is used to finance work-related training initiatives.
Three, increase funding for the labour market agreements, the LMAs, with the provinces and territories to help vulnerable unemployed workers, including immigrants, aboriginal peoples, persons with disabilities, women, older workers, younger workers, and less skilled individuals.
Four, mandate employers to hire and train apprentices. The federal budget should ensure that those projects receiving federal dollars through the new building Canada fund and the investment in affordable housing program mandate employers to hire and train apprentices.
This budget further erodes the fiscal capacity of the Canadian state and rejects the opportunity to take advantage of exceptionally low borrowing costs and invest in the current and future needs of working people in Canada.
Thank you.
Amy Huziak
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Amy Huziak
2014-03-06 16:01
Thank you.
Good afternoon, everyone.
As introduced, I'm Amy Huziak, and I'm the national representative of young workers for the Canadian Labour Congress. With me is my colleague, Angella MacEwen, who is a senior economist with the CLC. On behalf of the 3.3 million members of the Canadian Labour Congress, we thank you for the opportunity to present our views.
The CLC brings together workers from virtually all sectors of the Canadian economy, in all occupations, and in all parts of Canada. As a young worker myself, I'm one of more than 876,000 young union members in Canada today. I regularly hear from my peers, both unionized and non-unionized, about the many barriers we're facing in the current labour market. Recessions are always harder on young workers, but we are nearly five years past the end of the last recession and there's still no recovery in sight for young workers.
Comparing the unemployment rate of 15-to-24-year-old young workers to that of 25-to-54-year-old workers gives us some indication of how young workers are faring. In 2012, the unemployment rate for young workers was 2.4 times that of core age workers, its highest value since comparable data became available in 1976.
The unemployment rate for aboriginal young workers was 21.1% in 2010, which is the most recent data we could find. That is 6.5 percentage points higher than the non-aboriginal population. Racialized workers and newcomers also face greater barriers to labour force participation, but it's difficult to know exactly what is going on with this group, as data is scarce and unreliable.
Between October 2008 and January 2014, there was an increase of 100,000 unemployed young workers aged 15 to 29, so that there are now 540,000 unemployed young Canadians. Even more startling, though, is that over 350,000 young workers left the labour force over that period, for reasons such as returning to school or skills training, discouragement, or taking unpaid work to fill that gap. It has been estimated that there are between 150,000 and 300,000 unpaid interns each year in Canada, which is a labour market challenge that no previous generation of workers has had to face.
But unemployment isn't the only issue that needs to be addressed. One third of young workers are employed part time, and many are in low-wage, temporary, and otherwise insecure employment, with a large contingent located in the retail and service sector, which is notoriously insecure. Too many young workers are underemployed: either unable to secure enough hours of work or lost on the margins of the workforce. We calculate the underemployment rate for young workers aged 15 to 24 to be 27.7% for 2013. This is a significant number, meaning that more than a quarter of young workers are being affected by the situation right now, and it's a significantly higher number than just the straight unemployment rate shows.
This is a big problem for the upcoming generation of workers, as persistent or extended unemployment and underemployment leads to what we call “scarring”, which basically means that it's very difficult to recover the level of wages and labour market outcomes that we would have had otherwise. The IMF says that high levels of youth underemployment contribute to growing income inequality in developed nations such as Canada. They estimate that the wage penalty for unemployed young workers can be as high as 20% compared to peers who are lucky enough to find employment and can be felt for up to 20 years. Scarring effects also extend beyond wages into social exclusion and health outcomes.
In Canada, Professor Philip Oreopoulos from the University of Toronto has estimated that entry level wages are 10% to 15% lower for those who graduate during a recession. The longer the economic recovery, the longer it takes for these wages to catch up. TD Economics estimates this to cost at least 1.3% of the GDP for Canada.
The paid internships announced in the last federal budget will only reach a maximum of 2,500 individuals per year, less than 0.5% of unemployed young workers. This only addresses a fraction of the need and, more importantly, does not address the need for long-term permanent work for young people.
To top off the dismal labour market, our social safety net is failing young workers too. In 2013 only 18% of unemployed young men and 8% of unemployed young women were able to qualify for EI. High entrance requirements for new labour market entrants shut young workers out of employment insurance. Given that a large number of training supports are available only to EI-eligible workers, shutting young workers out of EI also cuts access to valuable training supports.
Recent cuts to LMA funding, which provides training assistance to workers not eligible for EI, further exacerbate this problem.
As we see it, the problem of youth unemployment needs to be addressed from three angles. First, we need an employment strategy that is linked with a training strategy to put young workers on a career path to good jobs, meaning that the work is decently paid, is permanent, and has such benefits as access to a pension.
Second, we need good labour market information to flow between the government, employers, and educational institutions to ensure that young people can make informed decisions about the fields in which they are educated and that institutions can properly advise students.
Finally, we need to strengthen social protections to ensure that young workers have equal access to EI and health care, as well as to a strong Canada pension plan and old age security system when they retire.
There are many phrases that we've been hearing about young workers lately: that young workers are being left behind, that this is the last generation. But the truth is that young workers have a lot to contribute in this economy, and we have to make sure they have the opportunities.
Thank you.
Angella MacEwen
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Angella MacEwen
2013-11-21 12:42
On behalf of the 3.3 million members of the Canadian Labour Congress, we want to thank you for the opportunity to present our views. The CLC brings together workers from virtually all sectors of the Canadian economy in all occupations and in all parts of Canada.
Leading economists, including bank economists, say that Canada's economic growth prospects remain weak due to insufficient business investment, high household debt, and weak global growth. Leading economists also fail to see any sign of labour shortages emerging. Some even suggest we should welcome the eventual tightening of the labour markets that will come when boomers retire.
Business investments are not where they should be. The across-the-board corporate tax cuts did not deliver the promised investments in real assets, such as new factories, or in workers' training. Thus these cuts failed to boost economic growth and productivity and did not help to create more and better jobs.
The overall labour force participation rate and the employment rate have not recovered to their pre-recession levels. Employment growth has been shallower than labour force growth, and the labour force participation rate is at its lowest level in 10 years. The participation and employment rates for 20- to 35-year-olds is markedly lower than pre-recession, indicating there's a difficulty for young workers to break into the labour market. On the other hand, employment rates have increased throughout the recession and recovery for people over 55.
Programs targeted at helping young workers get experience in the job market and information that helps them choose training for in-demand careers are both critical components of addressing this pressing issue. Second chance retraining opportunities for older workers affected by structural shifts in the economy are also important.
We're concerned about the rise in precarious labour, part of a much longer-term trend. For example, two million workers are employed in temporary jobs in Canada right now, which is about 13.5% of all employees, up from about 12% just before the recession.
Underemployment is also an issue that we're looking at closely. For the year between November 2012 and October 2013, an average of 1.35 million workers were unemployed. Some 900,000 workers worked part-time but wanted full-time work. That represents 27% of all part-time workers. Some 472,000 people were not in the labour force, but indicated to Statistics Canada that they did want work. These are marginally attached workers and they're an indication of how many people may be looking to enter the labour market should labour market prospects improve. Statistics Canada tells us that there are 6.4 unemployed persons per job vacancy in Canada, but that number doubles when we consider these marginally attached and underemployed workers.
The proportion of unemployed workers who remain unemployed for long stretches is also higher than pre-recession, with 20% of unemployed workers having been unemployed for more than 27 weeks, and 7% unemployed for more than a year. This is compared to pre-recession levels of 13% and 4%. All of this is to say that the labour market is weaker than the headline unemployment rate of 6.9% would indicate.
A recent TD Economics report by Derek Burleton and his colleagues found there are no wage pressures in high-demand occupations. In Saskatchewan, wages for in-demand occupations are actually growing at a slower rate than the provincial average. This evidence supports the position that before the government intervenes in labour markets, either to provide easy access to migrant works or to subsidize employer training costs, you ensure employers have “more skin in the game”, as employment Minister Jason Kenney aptly expressed. To properly assess the presence of actual labour shortages, we need better labour market information.
The CLC urges the government to take seriously the need for timely, reliable, and detailed labour market information as part of a broader investment in improving Canada's labour market productivity.
Is the time up?
Angella MacEwen
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Angella MacEwen
2013-11-21 12:47
The CLC also calls for the development of a national tripartite skills development strategy to prepare for the consequences of the aging workforce and to meet the specific needs of groups such as aboriginals, recent immigrants, and youth.
Training and lifelong learning are critical, and literacy and numeracy skills in Canada lag behind many other countries. LMA, labour market agreement, funding has been key to supporting this goal. We know that 86% of LMA clients are employed after participating in an LMA program and earn an average of $332 more a week. LMAs also have proven track records of reaching vulnerable and marginalized populations. For example, the CBC reports that in Saskatchewan, 60% of LMA beneficiaries were aboriginal persons and many of them lived in areas where new economic projects were planned.
Thank you.
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