Update on Training Opportunities in the Residential Construction Industry through Federal-Government-Funded Programs (July 23, 2010)

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1 Update on Training Opportunities in the Residential Construction Industry through Federal-Government-Funded Programs (July 23, 2010) Executive Summary This report is an update of information about federal human resource initiatives used to prepare the residential construction industry s human resource development action plan: A Revised Approach to a Human Resource Development Action Plan for the Residential Construction Industry, April 2007 (see attached). In an October 2009 presentation to NETAC on "Training Supports for the Residential Construction Industry", Human Resources and Skills Development Canada (HRSDC) identified five training programs and initiatives that can benefit the residential construction industry. These include income support for inschool training for Employment Insurance-eligible apprentices, other Employment Insurance-funded initiatives targeted mainly for unemployed Canadians not eligible for EI, new Labour Market Agreements with provinces and territories, 2009 Economic Action Plan measures that include $2 billion in additional funding for existing initiatives, and other specific measures to support apprenticeship training introduced between 2006 and In 2007, the federal government formally adopted the principle that the provinces and territories are best placed to determine the labour market programming that meets their specific labour market needs. Consequently, programs developed with funding from Labour Market Development Agreements (for EIeligible individuals) and Labour Market Agreements (for non-ei-eligible individuals) are developed by provinces and territories under a common F-P/T framework. These agreements support apprenticeship training (without requiring any restriction to Red Seal trades) and a wide variety of other types of training and support. In 2009, CHBA of British Columbia delivered education and training courses and the Manitoba Home Builders Association delivered an Essential Skills Training Program with Labour Market Agreement funding. In 2010, CHBA-Eastern Newfoundland received $2.5 million in both Labour Market Agreement and Labour Market Development Agreement funding to conduct a two-year, "Try the Trades" mentoring program. Specific measures taken by the federal government that support apprenticeship training but which limit eligibility to Red Seal trades include: the Apprenticeship Incentive Grant, a taxable cash grant of $1,000 per year for first or second year/level apprentices in a Red Seal trade; the Apprenticeship Job Creation Tax Credit, a tax credit for employers of up to $2,000 per year for salaries and wages payable to eligible apprentices in a Red Seal trade; and, Apprenticeship Completion Grants, a $2,000 taxable cash grant available to registered apprentices who successfully complete their apprenticeship training and obtain journeyperson certification in a Red Seal trade. The CHBA has made several submissions to the federal government about the need to broaden eligibility for programs supporting apprenticeship training to include non-red Seal residential trades. These submissions include a presentation to a Parliamentary Standing Committee in 2006, three written submissions in 2007 and 2008 to the Minister of Human Resources and Skills Development, and subsequent communications and meetings with representatives of HRSDC in 2009 and

2 1. Introduction On October 23, 2009, the Director General responsible for Workplace Partnerships at Human Resources and Skills Development Canada (HRSDC) made a presentation to NETAC on "Training Supports for the Residential Construction Industry." This presentation identified five programs or initiatives under which "supports for training can benefit the residential construction industry": 1. Employment Insurance (EI) Part I - through which income support is provided to eligible apprentices during their periods of in-school technical training (which is not limited to Red Seal trades). 2. Employment Insurance (EI) Part II - which funds a variety of initiatives targeted mainly to unemployed Canadians (support for apprenticeship training is not limited to Red Seal trades). These initiatives include the following: Skills Development for individuals, targeted wage subsidies; Job Creation Partnerships to upgrade skills through work experience; Labour Market Partnerships (LMPs), for joint projects with employers and employer groups; supports can include helping employers to cover training costs for employees facing job loss; Labour Market Development Agreements (LMDAs), which funds provinces to deliver programs and services to the unemployed; and, Programs designed by provinces that address their specific labour market needs. 3. Labour Market Agreements (LMAs) - Federal/Provincial/Territorial government agreements which fund initiatives mainly for unemployed individuals not eligible for Employment Insurance. Initiatives can be similar to those funded under EI Part II and can include many types of training including apprenticeship (which is not limited to Red Seal trades). 4. Economic Action Plan measures - various measures included in Budget 2009 including an additional $2B in funding over two years for LMAs and LMDAs, $40M per year for Apprenticeship Completion Grants (Red Seal trades only) and an unspecified amount of money for Apprenticeship Incentive Grants (Red Seal trades only). 5. Other Government of Canada measures - including the Apprenticeship Completion Job Tax Credit for employers (for salaries and wages paid to eligible apprentices in Red Seal trades) and a New Tradesperson's Tools Deduction to help cover the cost of new tools necessary for employment in any provincially-designated trade. The federal government has restated the principle included in Budget 2007 that provinces are best placed to determine labour market needs and employment programming and that it will continue to provide specific supports targeted to "vulnerable populations" including youth, persons with disabilities, and people with lower skills. This report reviews the information on opportunities provided to the CHBA by HRSDC during the presentation to NETAC. It updates and summarizes previously-researched information on federallyfunded employment and training measures summarized in a series of reports and briefing notes prepared for CHBA from 2006 to

3 2. Summary of Programs and Funding 2.1 Employment Insurance (EI) Part I The Employment Insurance Act Part I includes provisions for income support for eligible apprentices during their periods of in-school technical training. 2.2 Employment Insurance (EI) Part II The Employment Insurance Act Part II includes several measures to support training and employment for individuals who are eligible for employment insurance. These programs, which are funded through Human Resources and Skills Development Canada (HRSDC), are known as Employment Benefits and Support Measures (EBSM). The range of measures can apply to apprenticeship training (in Red Seal and non-red Seal trades) and to other types of training. Labour Market Development Agreements(LMDAs) - The Government of Canada and all 13 provincial and territorial governments have signed Labour Market Development Agreements. These Agreements were introduced in 1996, with a total of $1.95 billion per year in funding from the federal government for all provinces and territories. Under these agreements, responsibility for the design and delivery of employment programs similar to the EBSMs has been transferred to the provinces and territories. Employment Benefits funded under LMDAs are designed to reduce dependency on employment insurance benefits and social assistance by helping individuals obtain and maintain employment. There are four types of Employment Benefits. Skills Development provides financial assistance to help eligible individuals pay for the cost of skills training and related expenses when enrolled in an approved training program including apprenticeship training. In some recent years, close to half of the EI claims from apprentices were made by apprentices employed in construction. Targeted Wage Subsidies provide employers with a temporary wage subsidy as an incentive to hire individuals who are having difficulty finding work (e.g. those facing employment barriers) who employers would not hire without a subsidy. The maximum duration is 78 weeks. Self-Employment provides financial assistance to help eligible individuals with business planning when they begin to establish their business. Job Creation Partnerships provide eligible individuals with opportunities to gain work experience on projects developed in conjunction with industry, public sector organizations (e.g., other levels of government), or community groups. The maximum duration is 52 weeks. Support Measures provide funding to businesses, business associations and communities that provide employment assistance services to unemployed Canadians. There are three types of Support Measures. Labour Market Partnerships provide funding to assist employers, employees, employer associations, or communities to improve their capacity to deal with human resource requirements and to implement labour force adjustments. Labour Market Partnerships are the primary means by which organizations such as CHBA and provincial and local associations are eligible to receive LMDA funding for employment projects. LMPs include local partnerships and pan-canadian 3

4 activities. Local Labour Market Partnerships provide funding for increasing capacity to deal with human resource requirements, including labour shortages, a lack of human resource planning capacity, and helping employers to cover training costs for employees facing job loss. Employment Assistance Services help unemployed individuals by providing counselling, job search techniques, job placements, and labour market information. Research and Innovation supports research activities that identify improved methods of helping Canadians to prepare for and maintain employment. Provincial government programs - Provincial and territorial governments have designed and implemented programs that address their specific labour market needs. These programs are not limited to the benefits and supports available under EI Part II. 2.3 Labour Market Agreements (LMAs) Initiatives mainly for unemployed individuals not eligible for Employment Insurance - Labour Market Agreements (LMAs), which were introduced in 2008, are designed to provide federal financial support to provincial/territorial programming for unemployed persons who are not eligible for Employment Insurance benefits. They complement the Labour Market Development Agreements that have existed since 1996 and that provide the same types of financial supports for unemployed persons who are eligible for EI (and also for employed persons who do not have a high school diploma or a recognized certification or who have low levels of literacy and essential skills). Bilateral Labour Market Agreements have been signed with all 10 provinces. These are six-year agreements in effect from to The total contribution from the federal government to Labour Market Agreements is $500 million per year for all provinces and territories. 1 Under the LMAs, each province has provided a six-year, high-level plan, presented as Annex 1 to their agreement. Each province also develops and publishes an annual plan for the fiscal year by October 1 of each year. The annual plans are available on-line at provincial government websites. Types of training and training supports - Eligible components and training priorities include: Technical skills training; On-the-job training and workplace-based skills training; Apprenticeship training programs; Enhancing access to training through e-learning; Labour market connections such as services to facilitate matching supply and demand and services that promote and enhance labour market efficiency (BC); and, New skills for new careers (Ontario). Partnerships with industry and employers are emphasized in the agreements. 1 The 2007 Federal Budget also included a proposal for the federal government to explore with provinces and territories the possibility of transferring responsibility for labour market programs for youth, older workers and persons with disabilities along with a funding transfer of over $500 million annually. 4

5 Eligible beneficiaries - Although all of the LMAs have the objective of increasing the labour market participation of under-represented groups including youth, older workers, Aboriginal people, new immigrants, persons with disabilities, none of the LMAs explicitly exclude other workers. Other relevant groups include women in non-traditional occupations and unemployed individuals who previously were self-employed. Use of LMA funding by Provincial HBAs - Two provincial Associations undertook projects in 2009 with LMA funding: CHBA of British Columbia ($1.3 million to deliver their education and training courses) and the Manitoba Home Builders Association ($150,000 to deliver an Essential Skills Training Program). CHBA-Alberta submitted an unsuccessful proposal to deliver an Essential Skills Training Program. CHBA-Eastern Newfoundland recently has received $2.5 million over two years from both LMA and LMDA funds to conduct "Try the Trades", a mentoring program targeted at unemployed and underemployed youth between the ages of 18 and Economic Action Plan measures As part of Canada s Economic Action Plan introduced with Budget 2009 ("to protect Canadians during the global recession and invest in Canada s long-term growth"), the federal government introduced the Canada Skills and Transition Strategy with a temporary investment of $8.3 billion in total funding "to support workers and their families." Part of the Economic Action Plan funding included $2.0 billion in funding commitments to the following: to supplement the Labour Market Development Agreement funding of $1.95 billion per year, an additional $1 billion over two years for training delivered through the Employment Insurance program under existing LMDAs (with the stated objective of enabling provinces and territories to train an additional 100,000 EI-eligible individuals); an additional $500 million over two years for employment and training programs delivered through the Strategic Training and Transition Fund (STTF); this money will be channeled through existing provincial/territorial Labour Market Agreements and will be used to support individuals whether or not they qualify for Employment Insurance; and, an additional $500 million over two years for the Career Transition Initiative (CTA) to help long-tenured, displaced workers to develop new skills and increase their chances of finding employment. Budget 2009 also included $40M per year for Apprenticeship Completion Grants (ACG). The Apprenticeship Completion Grant is a $2,000 taxable cash grant available to registered apprentices who successfully complete their apprenticeship training and obtain journeyperson certification in a designated Red Seal trade. Up to 20,000 apprentices per year could be eligible for the $2,000 bonus when completing their training in Red Seal trades. The Apprenticeship Completion Grants, established on an indefinite basis, complement the existing Apprenticeship Incentive Grant (discussed in Section 2.5) available to first and second year/level apprentices. The Economic Action Plan included an additional $60 million over the three years to supplement existing commitments for the Targeted Initiative for Older Workers (TIOW). This initiative was introduced in Budget 2006 with funding of $70 million and Budget 2008 committed $90 million to extend TIOW until The Targeted Initiative for Older Workers provides employment assistance services and employability improvement activities (such as skills upgrading and work experience) to unemployed older workers aged 55 to 64. The Initiative is cost-shared with the provinces and territories, which design and deliver projects aimed at unemployed older workers in communities experiencing ongoing high unemployment and/or with a high reliance on a single industry affected by downsizing or closures. 5

6 2.5 Other Government of Canada measures The Apprenticeship Incentive Grant (AIG) is a taxable cash grant of $1,000 per year for registered apprentices once they have successfully completed their first or second year/level (or equivalent) of an apprenticeship program in a designated Red Seal trade. The AIG covers expenses related to tuition, travel and tools. The Apprenticeship Incentive Grant, established on an indefinite basis, was implemented for apprentices completing training after January 1, The Apprenticeship Job Creation Tax Credit is a non-refundable tax credit equal to 10% of the salaries and wages payable to eligible apprentices in a prescribed trade (i.e., Red Seal trade). The maximum tax credit is $2,000 per year for each apprentice. This tax credit was introduced in The New Tradesperson's Tools Deduction provides employed tradespersons with an annual deduction of up to $500 to help cover the cost of new tools necessary to their trade. The deduction applies to the total cost of eligible tools if the total cost exceeds $1,000 and the purchase was made by an employed tradesperson working in any provincially-designated trade. The tools deduction was introduced in A significant change was announced in Budget 2007 by which the federal government formally adopted the principle that the Provinces and Territories are best placed to determine the labour market programming that meets their specific labour market needs. The federal government has restated their commitment to this principle. The federal government retains a role in supporting "vulnerable populations" including youth, persons with disabilities, and people with lower skills. These groups are identified as priorities for programming in both Labour Market Agreements and Labour Market Development Agreements as well as being targeted through specific federal government initiatives such as the Youth Employment Strategy and Office of Literacy and Essential Skills. 2.6 CHBA submissions to the federal government about support for residential skilled trades In September 2006, the CHBA made a presentation to the Parliamentary Standing Committee on Human Resources, Social Development and the Status of Persons with Disabilities about skilled trades training and other related labour force development issues in the residential construction industry. During this presentation, the CHBA informed the Committee about some of the deficiencies of the Interprovincial Red Seal Program for the residential construction industry and made recommendations for improving federal government support for the development and delivery of skilled trades training. The CHBA made three written submissions to the Ministers of Human Resources and Skills Development Canada in 2007 and 2008 about broadening the list of prescribed trades eligible for the Apprenticeship Incentive Grant and the Apprenticeship Job Creation Tax Credit to include non-red Seal trades. The responses to these submissions came in the form of contacts to the CHBA from senior officials of Human Resources and Skills Development Canada. There were no formal written responses received from the Minister. The CHBA's position and recommendations about broadening federal program support for apprenticeship beyond Red Seal trades have been re-iterated in subsequent communications and meetings with representatives of HRSDC. 6

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