Federal budget tackles skills gap, innovation

Extended parental leave, gender gap also on agenda
By Marcel Vander Wier
|Canadian HR Reporter|Last Updated: 04/19/2017

Canada’s skills gap and rapidly changing economy took centre stage in Ottawa last month when the 2017 federal budget was unveiled.

“Budget 2017 is all about jobs,” said Finance Minister Bill Morneau. “It’s about creating good middle-class jobs today, while preparing Canadians for the jobs of tomorrow.”

The budget signalled the government’s intention to ensure traditional workers aren’t forgotten in the push towards a more innovative, tech-driven economy.

Canada’s industries require a reboot, and the government’s acknowledgment is a good start — though there’s much work still to be done, said economist Linda Nazareth, senior fellow at the MacDonald Laurier Institute in Ottawa.

“Clearly, there’s a major, major shift going on in the world,” she said. “We are in the Fourth Industrial Revolution, and I don’t even know that we talk enough about that. This is not what we had 20, 30 years ago. This is not even like what they had in other industrial revolutions, where you tended to create jobs.”

“Things are happening at a pace that we’ve not been used to before, and some people will be left behind.”

Focus on skills training

The 2017 budget commits $2.7 billion over six years to expand labour market development agreements with Canada’s provinces and territories to finance a range of programs, including skills training.

Workers are worried that rapid technological change, a “seemingly never-ending need for new skills,” and growing demands on their time will mean their kids won’t have the same opportunities they had, said Morneau.

As workplace demands continue to change at a “dizzying” pace, so too must the education and skills workers bring to their jobs, he said.

While there was a need for the budget to address the “huge skills gap” in the country, the final structure of the plan will need to be addressed alongside the provinces and territories, said Hassan Yussuff, president of the Canadian Labour Congress in Ottawa.

“We’ll wait and see as to how the government rolls this out,” he said. “Despite the fact that a lot of money gets transferred to the provinces to make sure they’re helping people fill this gap, the government continues to acknowledge that we’ve got a problem… with people not having the right skills,” said Yussuff. “So if we’re going to keep spending money in that direction, I think it’s fundamental that we understand what we’re getting for it.”

The government should proceed cautiously in terms of its retraining efforts, said Nazareth.

“It wasn’t a ton of money, but that’s not necessarily the way you would want to fix this anyway,” she said. “I don’t think anything works by having government fix it. If you look at the training programs… so far, unfortunately, there aren’t as many success stories as we’d like.”

“I would love to see a lot more training by employers. I understand why it’s not happening, because we have a climate where you think people will leave. There’s no loyalty on either side,” said Nazareth. “You have to rethink that and say, ‘Maybe we have to talk about putting more into employees that we have.’”

While the government can attempt to help by making dollars available for research, education and innovation, a collective mindset shift may also be needed amongst employers that are more apt to fire workers to ensure a healthy bottom line, she said.

“Sometimes, there’s an unwillingness to put money into research because it hurts the short-term bottom line. We’ve become really focused on quarterly results.”

Boosts for education, innovation

The government also announced plans to break down employment barriers with a focus on skills development, training and education.

The budget committed $287 million for a three-year pilot project aimed at testing new approaches to student loan and grant rules to help more adults return to school. A further $132 million is being set aside to give Canadians the opportunity to pursue training while receiving employment insurance (EI).

Work-integrated learning also received a $221-million boost, with the government hoping to add 6,250 additional learning placements for post-secondary students and graduates over the next five years.

“As we create the jobs of tomorrow, we will support a culture of lifelong learning and skills training to help workers and their families adapt to the changing demands of our time,” said Morneau. “We will help students get the skills and work experience they need to kick-start their careers.”

Another aim of the budget is to position Canada as a world leader in digital innovation, with an increased focus on sectors such as advanced manufacturing, agri-food, clean technology and digital industries. Over the next five years, $950 million will be invested in business-led innovation superclusters in hopes of recreating the economic success of San Francisco’s Silicon Valley, said the government.

With an eye on the future, $50 million will be spent supporting organizations delivering digital skills training in the school systems over the next two years.

The government also committed to reducing red tape facing Canadian innovators by consolidating related bureaucratic departments under the banner of Innovation Canada.

Parental leave extended

Another significant announcement in the budget was the extension of parental leave from 12 to 18 months, with 12 months of payments spread over that time period.

Expectant mothers will also be able to file for benefits four weeks earlier than the previous eight-week limit before their due date.

The measures will cost $152 million over five years, and will lead to an increase in EI premiums beginning next year.

Extending parental leave options remains “a solution in search of a problem,” and the popularity of the change is expected to be low, said Dan Kelly, president of the Canadian Federation of Independent Business in Toronto.

“(But) I’m certainly not pressing the panic button over this one,” he said. “I don’t think that (there) is going to be massive take-up of this overall. When someone’s on maternity leave or parental leave, they are taking a cut in pay. Now, they’re going to get less over a longer period of time and there’s not that many Canadian families that can afford to take that amount of time away from the workforce.”

“It is a long time to be away from the workforce, and people’s skills do atrophy after long gaps,” said Kelly. “The budget makes a great point about trying to encourage more female participation in the workforce, and I’m hoping this doesn’t create bigger gaps for some workers who are, more often than not, women.”

The option to extend parental leave will be welcomed by many Canadian families, said Yussuff.

“We welcome it,” he said. “Some families may take advantage of it. Child care is a big impediment for families having kids. Quite often, people are quitting, thinking they’re better off doing that for a longer period of time.”

But employers are on the losing end of this measure, and small businesses will be especially hard-hit, said Kelly.

“If you’re going to 18 months, that really can create problems on a practical basis,” he said. “We already have the problem with people taking leave and then, at the end of it, deciding to quit. Meanwhile, the employer is twisting itself into knots to try and hire a contract worker, or perhaps make do without that person, and then they get the bad news that the person is not returning after holding the job open.”

Legislative changes mean an alteration of human resources policies will be in order, said Kelly.

“Absolutely, there’s going to need to be an update to all sorts of policies related to maternity and parental leave,” he said. “In particular, for larger employers that perhaps have an employee top-up for maternity leave, what do you do now?”

The rise in EI premiums was the “biggest negative surprise of the budget,” said Kelly.

“That’s going to be a payroll tax hit for every Canadian worker,” he said. “And for every employer, their payroll budget on Jan. 1, for each of the next six years, will go down. That’s going to have an impact in terms of jobs, hours and wages. There’s just no way it won’t. And employees are going to be looking to their employers to make up the difference at the same time the employer is going to be struggling to meet their own end of the bargain.”

Promoting gender equality

The gender gap was also addressed in Morneau’s budget address, including the promotion of women to senior roles.

The newly formed Canada-United States Council for Advancement of Women Entrepreneurs and Business Leaders will help remove barriers for women in business, he said.

“We aren’t taking full advantage of the talents, insights and experience of more than half of our population,” said Morneau. “It makes no sense.”

The government published a gender statement that’s meant to ensure all budget measures, not just those aimed specifically at women, will advance goals of fairness, stronger workforce participation and gender equality.

Part of the overall attempt to get more women into the workforce includes a $7-billion commitment to ease child-care costs over the next decade as the government aims to create 40,000 new subsidized daycare spaces across Canada in the next three years.

Other budgetary items of note for employers include: the ability for federally regulated workers to request flexible work arrangements; a $13-million commitment to investigations of wage theft; banning unpaid internships unless they are connected with a formal education program; and enabling employers to provide electronic T4s as standard delivery method.

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