Flaherty will get you nowhere.

The name of this post is one of my father's favourite jokes. So that will tell you a little about the sense of humour around our place.

A couple of weeks ago I quoted from someone just as estimable - Juliet Merrifield's 1998 NCSALL report, Contested Ground: Performance Accountability,

"The customers of adult education began to be defined as employers, interested in the “product” of skilled employees."

Jim Flaherty's 2013 budget reinforces this notion. In it he proposes to change the Labour Market Agreements (LMAs) yet again. In 2014 he will launch the Canada Job Grant program, a wage subsidy scheme that would see the federal government provide business with $5,000 per worker for training if the provincial government and business agree to match the funds per worker. I think what this means that a business would identify a worker to be trained in a specific set of skills and pay $5,000 towards the training of that worker and two levels of government would subsidize that training with $10,000.

One of the things that IALSS told us was that participation in employer-sponsored training is not equal across groups of workers, and workers with the least education are also least likely to participate in training. So asking employers to pony up is a good thing, right?

Perhaps.

The Canada Job Grant takes $300 million-per-year from the current $500 million Labour Market Agreements. This could mean a reduction in other types of training, opportunities not requested by employers.

For example, the Canadian Labour Congress reports:

Current training spending through LMAs and LMDAs meets this critical labour market need. Adequate literacy is one key skill that many Canadians lack. The LMA is the sole source of government funding for workplace literacy training. .... For example, in Ontario 70% of literacy training funding is provided through the LMDA and LMA. Literacy and numeracy training enables Canadians to take on higher skilled, in demand job training, such as construction trade apprenticeships.

And David Macdonald at The Progressive Economics Forum says:

There is also a large change in how unemployment training is provided. The federal government devolved the unemployment training to the provinces in 2007. Now they are taking $500 million of that back through a new “Canada Job Grants” program. ... The requirements are few and the control is in the hands of employers. Basically if employers are running any training programs right now, they’ll be able to claim them through this program and get funding for what they were already doing. The dead-weight loss will be significant.

However, we already know that Canadian employers spend much less on training than other countries, like the US. Canadian CEOs love to complain about the so called ‘skills gap’ while at the same time doing little to train their own employees to fill it, or hire new ones and train them. Given this lack of interest from employers this program at most will provide $500 million, but if provinces or employers don’t buy in, it could provide substantially less than that. All of this funding, or lack thereof, will be taken out of current training programs for the unemployed.

In their analysis of the budget, Citizens for Social Justice 

...remain concerned about their single-minded focus on labour market solutions. Such focus communicates a decided lack of understanding of the broader social needs of Canadians (as well as a refusal to acknowledge the damage done by the systematic erosion of federal financial resources brought on by far-reaching tax cuts). Better aligning jobs and training will not address the situation of people working in precarious, low-wage jobs that don't provide enough for them to make ends meet. Nor will it respond to fundamental issues of human well-being – which go far beyond financial well-being.

Ouch.

Others wonder about the evidence for the oft-cited skills and labour shortages. We hear that that Prime Minister Harper is peeved and that Conservative "insiders" claim "There’s a general feeling there are too many kids getting BAs and not enough welders," but is this more than a feeling?

Andrew Jackson, Professor of Social Justice at York University and Senior Policy Adviser to the Broadbent Institute, asks whether "the federal government prefers labour market policy to be guided by employer opinion, or by accurate labour market information." In a Globe and Mail article, Does Canada have a labour shortage or a skills shortage? he says that

With the national unemployment rate at 7.4 per cent – well above the pre-recession level of about 6 per cent – and with 5.2 unemployed workers for every available job opening reported by employers, it would seem that Canada is not suffering generalized labour shortages.

It is true that some sectors report a skills shortage and can back that up with evidence that in these occupations "unemployment is almost non-existent and wages are rising rapidly" but that "a planned Statistics Canada Workplace Survey which would have obtained very detailed information on job vacancies, has been cancelled for 2012, an apparent victim of spending cuts. That leaves us with a very limited survey of job vacancies which provides no information at all on vacancies by occupation, nor on what measures employers have taken to try to fill reported vacancies."

Don Drummond himself made this point about lack of accurate labour market data on last Sunday's CBC program The House.

Why would employers report skills shortages that do not exist?

Jackson says

Employers have a very strong tendency to complain that they cannot find the workers they need at the wages that they want to pay, [emphasis mine] whereas most economists want to see evidence of genuine shortages in the form of a low unemployment rate and wages rising at well above the average rate.

That seems a little harsh. There must be some data to support the claims of skills and labour shortages.

The Institute for Competitiveness and Prosperity reports

...our research shows that growth in employment in the skilled trades has been slower than growth across all other occupations. Moreover, the unemployment rate for the skilled trades matches that of all other occupations – the major exceptions being during the recession of the early 1990s, where skilled trade unemployment exceeded all other occupations by about 2 to 3 percentage points, and during the current recession.

But these national statistics smooth over regional disparities. While growth in eastern Canada has been nil, it has been very buoyant in the west – home of the resource industries. Furthermore, unemployment among the skilled trades was particularly low in western Canada just prior to the current recession. These findings suggest that strong economic growth in the west may have strained the available supply of trades people, leading to temporary labour shortages there.

Still, if there was a shortage, we would also expect to see wages growing faster among the trades than among all other occupations. Our research, however, finds that growth in compensation has been slower among the skilled trades than among all other occupations. While wages are higher than the average for all occupations, they’re not growing any faster. Andrew Sharpe of the Centre for the Study of Living Standards, in his analysis of reported skilled trades shortages in manufacturing, argues that shortages in that sector are partially driven by the inability of manufacturers to attract workers at wages they can competitively sustain. Thus, the observed lack of wage growth may still coincide with shortages, at least in that sector. This isn’t just a problem of labour shortages, but of unsustainable business models.

On balance, it would appear that strong economic growth in western Canada may have created temporary trades person shortages. With the current economic slowdown, the issue has been made less pressing.

Alex Usher, president of Higher Education Strategy Associates,  seems to agree in this Globe and Mail article, Really, a skilled-labour shortage? In truth, we need arts grads:

So where do these notions of skills shortages and uber-successful plumbers come from? Mainly from Saskatchewan and Alberta, where skill-shortages do in fact exist thanks to the ongoing resource boom. But skill shortages in these provinces are not limited to skilled trades: though they hardly figure in recent policy discussions, they are at least as acute in the health sector as they are in trades.

So despite the Prime Minister's peevishness and Conservative feelings about the ratio of welders to BAs, it seems that this situation is specific to a certain region of Canada and, as Usher says

Given the regional nature of the shortages, it’s not entirely clear how the federal government has much of a role to play.

Thomas Walkom at the Toronto Star, Joe Friesen at the Globe and Mail and researchers at the Canadian Centre for Policy Alternatives report on the ways that the Temporary Foreign Worker program may be having an impact on the perceived skills and labour shortages.

Friesen says:

The rise of temporary foreign workers, who now occupy one in 50 jobs, has become a source of controversy as the economy sputters. Critics of the program argue that it depresses wages and fosters unsafe work conditions. Employers say it provides a reliable stream of labour and fuels economic growth.

CCPA would be listed among the critics:

Since 2006, the number of “guest” workers has surpassed that of economic immigrants who can become permanent residents and ultimately Canadian citizens. This policy shift not only increases the vulnerability of these workers, but also undermines wages and conditions for all workers in Canada.

as would Walkom:

Employers don’t train workers because most don’t have to.

They expect government to train workers at public cost. And if that doesn’t work, businesses expect government to let them import from abroad workers who are already trained.

If the federal government has a role to play in ensuring a good match between Canadian workers and employment opportunities, perhaps it is less in directing training initiatives and more in rolling back changes to the Temporary Foreign Worker program

Rather than respond to long-standing violations of migrant worker rights, Ministers Kenney and Finley recently announced that employers seeking highly skilled workers can now get their applications processed swiftly, and they can also pay these workers up to 15% less than the average rate of pay for those occupations.

and Employment Insurance eligibility

The changes to the system emerged because it was argued that ‘overly generous’ EI benefits discourage people from working while inhibiting labour market flexibility. However, a report published by the OECD actually found that “reforms that reduce the generosity of unemployment benefits are likely to reduce the aggregate level of measured productivity”. Providing unemployed workers with the time and resources to find jobs that match their skills results in increased overall economic efficiency.

But the silver lining is that Jim Flaherty's new program has shone a light on the issue of skills and labour in Canada and now we might better understand what literacy workers, tasked with preparing students for jobs, mean when they ask, "What jobs?" Especially if they are working outside of Alberta or Saskatchewan.

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Community Literacy of Ontario has prepared a round up of what others in literacy (with a focus on Ontario) are saying about Budget 2013 - download the PDF.

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