Amid wave of layoffs, Canadian labour force in need of employment insurance reform, better support for workers: C.D. Howe |

Posted on February 3, 2016 in Debates – Business/FP/Economy
February 2, 2016.   John Shmuel

After a year marked by reports of mass layoffs and sector contraction, Canada’s labour force is in need of an overhaul, a new report says.

C.D. Howe Institute, the Toronto-based think-tank, notes that the country is facing a greater number of displaced workers due to the recent commodity price shock and the ongoing shift from lower-skilled to higher-skilled work.

Policy changes, as a result, are needed to make sure Canada’s labour pool can adapt to the rapidly changing environment.

“Among the challenges facing Canada’s economy in 2016, tackling vulnerabilities in labour markets will be essential to the prosperity of Canadians,” said Craig Alexander, vice-president of economic analysis at C.D. Howe Institute. “The nation’s labour markets are being transformed by structural forces of globalization, technical change and aging demographics, while being buffeted by cyclical factors like the recurring boom-bust in commodity prices.”

Canada saw a wave of layoffs in the energy sector last year following a crash in oil prices. The Canadian Association of Petroleum Producers said last month it is likely the oil and gas sector lost 100,000 direct and indirect jobs last year.

Statistics Canada noted earlier this month that while the economy added 158,100 net new jobs last year, there was a clear sectoral shift, with natural resource jobs declining and manufacturing jobs increasing.

The wave of resource sector layoffs coincides with a longer-term trend that is seeing the labour market shift from lower- and medium-skilled jobs to higher-skilled jobs, says Alexander, who was previously the chief economist for Toronto-Dominion Bank. A variety of forces are influencing that shift, including globalization, technical change and aging demographics.

Alexander said policy change and more worker support is needed to make sure Canada’s labour force can adapt to the changes.

Among the recommendations he makes are reform to employment insurance.

“Different rules for access to, and the duration of, EI benefits are inappropriate,” he said. “For example, the recent plunge in oil prices has led to rising unemployment in Alberta (traditionally a low unemployment region), with the result that most Albertans need 700 hours of work to qualify for EI in sharp contrast to the 420 hours of work required for most Atlantic Canadians.”

He goes on to recommend that the regionally separate criteria should instead be replaced by a “uniform, countrywide” employment insurance program.

Alexander also takes aim at labour data, saying that although there is a large amount of it available in Canada, there are issues with public awareness, costs and whether the data are released in a way that is easy to use by businesses and analysts.

“There is scope for the federal government to assume greater responsibility for this file, strengthening the capacity of Statistics Canada’s and Employment and Social Development Canada to do more,” he said.

He goes on to add that Canada also has room for “upskilling” — training more workers in new skills and roles to adapt to the modern workforce. Efforts should be made to target “pockets of vulnerability,” including older workers, immigrants, Aboriginals and First Nations people.

Canada also needs to focus on making sure students are pursuing more degrees in science, technology, engineering and math, said Alexander, noting that many high-paying jobs are now found in these fields.

“A complex issue is whether youths have the skills that businesses are looking for. For example, it appears that too many students are pursuing degrees that experience low employment rates, and too few are pursuing degrees in programs with high employment rates,” said Alexander. “This is partly driving the trend in young university degree holders taking positions for which they are considered ‘overqualified.’ “

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