MANUFACTURING – A SKILLED WORKFORCE (2023)

Issue

In the Canadian Manufacturers & Exporters (CME) Industry 2030 report, 35% respondents to a Management Issues Survey indicated that attracting or retaining skilled labour was one of their three most pressing challenges[1] and topped the list of possible responses. Further, the CME reported that close to 60% of businesses anticipate skilled labour shortages in 5 years. There are multiple strategies to attract youth to trade programs and to attract skilled immigrants. A third approach may be required to meet the growing skills gap: a flexible, easily accessible incentive program for employers to upgrade the skills of existing employees and potential hires to meet their specific skill requirements.

Background

Employers publicly denounce the lack of available skilled labour, which leaves positions unfilled. Unemployed or underemployed university graduates decry the lack of opportunities in their fields. Industry associations, such as CME, advocate for developing a stronger skilled workforce in Canada as part of their Industry 2030 reports.[2]

Policy solutions like expanding immigration and loosening temporary foreign worker regulations to assist employer access to skilled labour or introducing the trade careers earlier in the education stream to foster a change of perceptions regarding employment prospects are often proposed. One concept that has yet to be brought forward in any substantive form is the use of tax credits to provide incentives for personal or in-house training.

Despite a variety of programs, grants and tax incentives there is no over-arching, flexible opportunity to encourage employers and employees to work together to fill any skills gap. There is currently no updated data on how much employers spend on training for new and existing staff that reflects the current climate, which should be addressed with a Canada-wide labour market report. 

There are a number of programs that provide some incentives through grants and other tax credits; however, they are limited in various ways to specific demographics and defined circumstances. The Canada – B.C. Employer Training Grant provides up to $10,000 to employers per employee[3].There are tax credits available through WorkBC for very specific industries and activities[4] and a federal wage subsidy program for youth only, which has expired.[5] For older workers there is an employment assistance program for re-training – but only if the worker is unemployed, in a community experiencing high unemployment or economic downturn and has also expired.[6] The best program by far is the Training Tax Credit for apprenticeships through the Industry Training Authority.[7]

The targeted nature of grants and credits are very helpful to employers to onboard minorities and the sometimes hard to employ; however, if an employer requires a very specialized skill set and has an employee who, with training, could fill the gap, there is little to support either party, particularly for small to medium sized entities.

Employees, whether full or part-time, in their chosen career or underemployed based on their degree attainment bear some responsibility for their own training, but many are caught with student debt and minimum wage positions. Workers cannot gain experience because employers are reluctant to take on those who may require additional skills mentoring. Full time workers with families are unable to shoulder the high cost of tuition that is required for them to keep up with the changing nature of their employment. This is particularly true for positions that are becoming more vulnerable with the rapid advances in technology.[8] Further, employees and/or students are eligible for a small tax deduction for tuition fees,[9] but effective January 1, 2017, related education and textbooks deductions were eliminated.[10] Additionally, the federal government has waived interest on Canada Student Loans until March 2023 but it also announced plans to scrap student loan interest for all new and existing federal student and apprentice loans. If this change is approved, the forgiveness of student loan interest would come into effect on April 1, 2023.[11]

Employers no longer have the luxury of hiring a made-to-order employee as the nature of the labour force has changed and, employees no longer have job security as the nature of their work is rapidly changing due to advances in technology.[12] An over-arching strategy of incentives for skills-upgrading on the job would encourage employers and employees to fill their own gaps with their own resources, particularly when employees have the opportunity to tailor their skill sets to the need at hand.[13],[14]

THE CHAMBER RECOMMENDS

That the Provincial and Federal Governments:

1. Develop an easily accessible and understood portal to the tax credits and grants currently available for individually funded and employer-sponsored education expenditures;
2. Expand tax credits and grants and be more flexible in assisting businesses in filling diverse and specific skills gaps as they emerge especially for youth and elderly individuals; and,
3. Work with the federal government to commission a study through a chamber of commerce or board of trade to understand how much money employers are spending on employee training and upskilling.