Training, Productivity and Political Football

“Canada’s New Government” says that it wants to focus on “the productivity agenda.” But they seem unable to look beyond partisan considerations to make the rather obvious link between investment in skills, and building a more productive economy.

The previous Liberal government had just begun to slowly re-invest in worker training and adult learning after years of federal cuts, devolution and withdrawal from this program area. By 2004, almost all provinces (with the exception of Ontario) were directing and delivering training for unemployed or recently unemployed workers under a very loose framework of Labour Market Development Agreements (LMDAs), funded from federal EI money. But the federal government was doing very little to support  the training of adult employed workers, or of marginalized workers who are ineligible for training funded from the EI program.

In the 2004 Budget, the Liberals announced that $25 Million over three years would be allocated to a Training Centre Infrastructure Fund. These funds have gone to match investment in training facilities, including some run by the building trades unions in support of apprenticeship programs. In the 2005 Budget, the Liberals also announced $30 Million over three years for the National Literacy Secretariat, approximately a 25% budget increase. The new money was to be focused on building community partnerships in support of literacy programs.

The 2005 Budget also announced $125 Million over three years for a Workplace Skills Strategy focused on building partnerships between employers, workers, and training institutions, including through financial support for innovative pilot projects.

Finally, in the November, 2005 Economic and Fiscal Update, the Liberals announced that $3.5 Billion would be spent over six years in support of Labour Market Partnership Agreements with the provinces. Flowing out of the NDP-Liberal Budget deal, these were intended to support apprenticeship, literacy, immigrant settlement and workplace skills development programs, as well as programs to support greater workforce participation of aboriginals and persons with disabilities.

Unlike Labour Market Development Agreements funded from the Employment Insurance program, the focus of LMPAs (funded from general revenues) was to be upon employed but relatively unskilled workers, as well as persons excluded from EI programs because of their exclusion from the workforce. Three LMPAs were concluded just before the 2006 election, with the provinces of Ontario, Manitoba and Saskatchewan. Other provinces were interested in following suit.

The agreements identified broad priorities for provincial spending, and were intended to give the federal government some latitude to support programs on the ground.

Shortly after taking office, the Conservatives put on hold the $3.5 Billion in promised funding for
the LMPAs, despite the signed agreements with three provinces. Vague promises have since been made that some or all of this money will re-surface as part of the solution to the so-called “fiscal imbalance” issue.  The government’s consultation paper on federal-provincial fiscal relations was generally critical of recent federal spending initiatives in areas of primarily provincial jurisdiction, but training was not listed (with, for example, child care and hosuing) as one of the examples.

Then, on September 25, 2006, the government announced $35 Million in cuts to adult learning and training programs as part of a $1 Billion spending cut. They cut $17.7 Million from adult learning and literacy programs, with the cuts targeted to provincial and community-based capacity building organizations which will lose a major source of funding.

They also cut $17.6 Million from the Workplace Skills Strategy. This will come from eliminating the Training Centre Infrastructure Fund, and the Workplace Partners Panel, an employer-union forum which promotes dialogue and policy development on workplace training. Some pilot projects will continue, along with funding for Sector Skills Councils.

In effect, the Conservatives have shut down the very modest legacy of the Liberal minority government, without coming up with a plan of their own. The danger is that they intend to abandon any federal role in this area.

This would be a critical mistake. While the provinces are key players, Canada is a national labour market, and needs programs which address national skill shortages, support inter-provincial labour mobility, and develop common credentials like Red Seal apprenticeships.

The federal government also has a special responsibility to promote the labour market integration and equal participation of recent immigrants and aboriginal Canadians, and has been a modest funder of employment programs for persons with disabilities. It can be argued that the federal government should be responsible for labour adjustment problems which arise from federal economic and trade policies.

Leaving it all to the provinces and employers, the dominant approach of the 1990s,  has produced what expert commentators like the OECD see as an extremely weak system for adult education and lifelong learning, especially outside of Quebec. The June, 2006 Economic Survey of Canada noted that “more effective strategies are needed to lift adult literacy and general skills levels.”

Getting things right when it comes to skills training has the potential to build a more productive economy, and a more equal and inclusive society. The OECD Economic Survey argues that “Canada could look for more effective co-financing (ie subsidized) programs to boost life-long learning, especially for the lower skilled, which would facilitate the diffusion of innovation through the economy (and) also contribute to social objectives.”

Canada’s role in a rapidly changing global economy has to be as a producer of unique, sophisticated, and high-quality goods and services. This kind of economy requires highly skilled workers.

But our lack of an effective workplace training and adult education system locks too many workers into low pay, low productivity jobs, even as some parts of our economy are experiencing serious shortages of skilled workers. While there is no generalized shortage of skilled workers, there are certainly shortages in many of the skilled trades and, increasingly, in health care occupations which could be filled by training workers  in lower paid, less skilled jobs.

Real opportunities to learn through life are very limited for most workers. Half of all young adults still enter the workforce without a post-secondary qualification. Once in the workforce, they are the least likely to receive employer-sponsored training, which goes overwhelmingly to managers and highly educated professionals.

Less than one in ten workers in the private sector with no post-secondary qualification has access to formal job-related training at work. Four in ten Canadian adults have very low literacy and numeracy levels. Many recent immigrants are trapped in low pay jobs, and cannot access programs which would allow them to have their education and skills recognized and, if needed, upgraded. Little specialized language training is provided to new immigrants, even though it is crucial to finding employment in many professional and technical fields.

This adds up to a huge loss of human potential, and also of productivity. Studies show that raising the average level of skills (as measured by literacy and numeracy levels) has a much stronger impact upon productivity than raising the proportion of the workforce with very high skills. A Statistics Canada study has found that a 1% increase in mean literacy skills relative to the international average can raise labour productivity by 2%.

Much of Canada’s productivity problem, in fact, lies in the low wage, consumer services sector of the economy.

Despite growing complaints about skills shortages, most employers invest far too little in apprenticeship programs and formal training. They spend under 1% of total payroll on average, much less than in many European countries where employers and unions negotiate comprehensive training programs. Only Quebec requires employers to invest in workplace training.

There are significant obstacles to employer provision of training: cost, lack of capacity in smaller enterprises, and the fact that responsible employers who do train often lose skilled workers to the irresponsible ones who do not. These obstacles require our governments to act, particularly at a time when skills shortages are becoming an issue.

In addition to efforts to increase training through collective bargaining and union-run programs, the labour movement has developed a detailed training policy agenda. It includes support for effective literacy, apprenticeship and immigrant settlement programs. And we have called for income insurance benefits under the Employment Insurance (EI) program for workers who take education or training leaves to upgrade their skills as part of a formal workplace training plan. This would build upon the current apprenticeship model (apprentices receive EI benefits for the classroom portion of training)

The LMPAs were a useful initiative which should be restored, with full input from labour among other partners..

Training is too important to our economy and to our social development to become just another political football. The Conservatives had better come up with a plan of their own, and fast.

Note:

For supporting argument on skills and productivity, see Andrew Jackson. “Productivity and Building Human Capital for the Bottom Third.”

http://canadianlabour.ca/index.php/Training/826