The Training Wheels Are Off
A Closer Look at the Canada Jobs Grant
The 2013 Budget announced the creation of a new program called the Canada Job Grant, slated to begin in April 2014. According to the federal government, the new program is meant to address a ‘skills mismatch’ in Canada where some workers go without jobs and some jobs go without workers because the available workers do not have the necessary skills to fill the available jobs.
In its March 2013 Budget, the federal government proposed a new employment skills training program called the Canada Job Grant. The new program would provide cash grants of up to $15,000 for training sponsored by employers. Its purpose would be to train unemployed and underemployed Canadians for available jobs. The federal government would fund one-third of the cost, with equal shares coming from the provincial or territorial governments and employers.
The new program would be financed by cutting $300 million annually
(60 percent of today’s $500 million total) out of federal funding to provinces and territories under the federal-provincial Labour Market Agreements. These agreements were first negotiated between the federal and each provincial and territorial government in 2007 to provide funding for employment training services for unemployed Canadians not eligible for Employment Insurance. The existing Labour Market Agreements largely serve the most vulnerable workers. This cut will force provinces to either cut services or increase spending to replace federal funds.
The proposed federal program would put further pressure on provincial budgets by requiring them to come up with new funding–a further $300 million–to match federal contributions. Significant administrative costs would likewise be expected to be borne by provinces to facilitate the implementation of the new program.
Provinces have practical and jurisdictional responsibility for labour market training. The Labour Market Agreements confirmed the 20-year drive in Canada to devolve training programs from Ottawa. Provincial governments are widely acknowledged–including by the federal government mere months ago–as better placed to design and deliver labour market programs. Without any published evidence, the federal government is suggesting a full U-turn, undertaken through a unilateral announcement with no warning or consultation with provinces.
Beyond the intergovernmental issues and the impact on provincial budgets, the proposed Canada Job Grant is deeply flawed public policy. The program is likely to deliver inferior results at higher costs compared to the programs under the current Labour Market Agreements that it would displace. It would remain out of reach to many of the unemployed and underemployed Canadians it is intended to serve. It would also be unlikely to address the needs of those employers and sectors unable to hire the skilled workers they need. The provinces are understandably reluctant to sign on under terms like these.
It is not clear what would happen if a province refuses to participate in the proposed federal program. Would the federal government only offer the training funds to workers in provinces that choose to participate and match federal spending? If so, it would represent an unprecedented and aggressive act by the federal government to hold unemployed and underemployed Canadians hostage to a federal-provincial dispute.
If this were allowed to proceed, it would mean that the federal government was offering a national program in some provinces only, which would be all the more remarkable given that this federal program would be funded by cutting transfers to all of the provinces.
This conflict, initiated by the federal government, was entirely avoidable. Addressing the labour market mismatch between skills and opportunities had high potential for national consensus. The prime minister and Canada’s premiers have each spoken publicly about the need to address the issue. It is not too late for that conversation. The federal government should abandon its proposal for a Canada Job Grant funded out of Labour Market Agreements and instead work with the provincial and territorial governments to develop a pan-Canadian approach to meet Canada’s need for skilled workers.
Michael Mendelson & Noah Zon
June 17, 2013