The skills budget

Federal plan puts focus on shifting economy, employee transitions
By Marcel Vander Wier
|Canadian HR Reporter|Last Updated: 04/05/2019
Prime Minister Justin Trudeau and Finance Minister Bill Morneau walk to the House of Commons to deliver the budget on Parliament Hill in Ottawa, on March 19. REUTERS/Chris Wattie

A rapidly changing economy and its effect on workers were among the issues thrust into the spotlight when the Canadian government released its 2019 budget last month.

“There’s a growing sense of uncertainty taking root around the world, and Canada is not immune to those worries,” said Finance Minister Bill Morneau in his budget address on March 19.

“We live in a world that is changing — and changing quickly.”

Going forward, Canadian workers may change jobs many times over the course of their careers, he said.

As a result, the government will invest close to $7.5 million annually in skills development for workers earning between $10,000 and $150,000.

“For employers, it will mean a workforce that has the skills and confidence needed to help grow their businesses and our economy,” said Morneau.

It remains to be seen who chooses to access the new benefit, but lifelong learning is essential as individual skills decline with age, according to Parisa Mahboubi, senior policy analyst at the C.D. Howe Institute in Toronto.

“This is especially important for Canada because our population is aging. More senior workers in the labour market means some skills are declining and lifelong training is required to maintain a high level of skills.”

Canada Training Benefit

To help workers prepare for the challenges ahead, the finance minister pledged to introduce a Canada Training Benefit — a plan intended to fund up to 50 per cent of workers’ reskilling costs.

The “personalized, portable benefit” gives Canadians $250 every year to put toward the cost of future training, and includes a support benefit operated through employment insurance, said Morneau.

“With this support, workers won’t have to choose between training needs and their family’s needs,” he said. “They can take the time they need to learn new skills, knowing they’ve got help to cover their living expenses.”

The government also signalled its intention to move forward with leave provisions in conjunction with provinces and territories, so workers can take the time they need for training, without worrying about losing their jobs.

Co-ordinated through employment insurance (EI), those who qualify would be able to take four weeks off for learning within four years while earning up to 55 per cent of their salary — a government cost of just over $1 billion over five years.

“Taken together, this means that working Canadians will get four weeks of training every four years — with up to $1,000 to help pay for the training, income support to help cover lost income, and the security of knowing they’ll have a job to come back to when their training is done,” said Morneau.

The investments come at an opportune time for Canadian workers, as one-third feel under-supported at their current workplace, said Krystyn Harrison, founder and CEO of Prosper, a career coaching service in Toronto.

The investment by the government is a “very exciting opportunity for Canadians to really skill up,” she said.

“The modern workplace is changing and navigating your career is more challenging than ever,” said Harrison, noting the new training benefit will allow workers to take their career development into their own hands.

In an effort to ensure small businesses aren’t bearing extra costs as a result of skills training, the government also announced an EI Small Business Premium Rebate.

And in addition to expanding the Student Work Placement Program by injecting close to $800 million over five years, Morneau also indicated interest rates on student and apprentice loans will be lowered to the prime lending rate.

“We are setting a target of creating up to 84,000 new student work placements per year across Canada in five years’ time,” he said.

Advice for employers

For employers, the skills benefit provides an opportunity to further support and invest in workers, said Harrison.

“It’s a lot easier to retain employees and invest in their growth than it is to acquire new employees,” she said. “This is a really good prompt for employers to say, ‘Hey, let’s invest and support your training and continuous development.’ And it’s empowering for the employee to say, ‘I can actually be incentivized to invest in my career and job training.’”

The employer will need to bear some costs when employees require time off work for training, but with past technical skills quickly becoming obsolete, it provides an opportunity for all workers to keep their skills relevant, said Harrison.

“While it may cost you more in the short-term, in the long-term, you’re really investing in longer-term employee satisfaction and, ultimately, retention.”

Traditional one-size-fits-all training programs conducted online may not provide personalized learning paths, she said. “What the millennial employee really craves is this personalized approach.”

Training will vary by worker — some will need substantial training, while others will only need one or two courses, said Mahboubi.

And while businesses have been generally reluctant to invest heavily in their workforce, the government has now tabled its response, she said.

“This is something employers have always wanted from government — to do something about adult training.”

Employees will be limited to $5,000 in government funding for their career, according to Mahboubi.

However, the program fails to support precarious workers, as they will be less willing to take time off work for training, she said.

“They need their employers’ agreement.”

It should be noted that unemployed Canadians cannot take advantage of this specific program, said Mahboubi.

Pharmacare, pensions

Reskilling was not the only budget topic that will affect employers.

The government also took another step towards a national pharmacare strategy, announcing it will create a Canadian Drug Agency to use bulk buying power to negotiate better drug prices.

“This would help individual Canadians, such as seniors, and their families afford the medicines they need,” said Morneau.

“It would support the sustainability of the drug plans they rely on today, and pave the way for national pharmacare tomorrow.”

The agency would determine which medicines represent the best value for money through development of a national formulary, and also make expensive drugs more accessible, he said.

Other budgetary measures will affect pension and benefits plans to make retirement more financially secure, said Morneau.

“To ensure that all Canadian workers receive the full value of the Canada Pension Plan (CPP) benefits to which they contributed, we will proactively enrol CPP contributors who are 70 or older, but have not yet applied to receive their retirement benefits,” he said.

The change will affect 40,000 seniors, who will see a monthly income bump of $300 beginning in 2020.

The Guaranteed Income Supplement earnings exemption will also be enhanced to allow low-income seniors an opportunity to keep more of their earnings, according to Morneau.

Finally, the government will move to limit the benefit of stock option deduction for executives of large corporations, he said.

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