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The Progressive Economics Forum

Young Workers Needed So Much More from Budget 2014

Recessions are always harder on young workers, but we are nearly five years out from the end of the last recession and there is still no recovery in sight for young workers.

The paid internships announced in this budget (some of which is previously announced spending) will only reach a maximum of 2,500 individuals per year, less than 0.5% (half of one percent) of unemployed young workers, and addresses a fraction of the need.

Between October 2008 and January 2014, there was an increase of 100,000 unemployed young workers (15-29), so that there are now 540,000 unemployed young workers. Even more startling, over 350,000 young workers left the labour force over that period. It has been estimated that between 150,000 and 300,000 young workers participate in unpaid internships each year in Canada.

One-third of young workers are employed part-time, and many are in low wage, temporary, and otherwise insecure employment. Too many young workers are underemployed – either unable to secure enough hours of work or lost on the margins of the labour force. I calculate underemployment for young workers 15-29 to be around 23% for 2013.

Leading up to the budget, there was hope that this government would realize the depth of this crisis for young workers, and take decisive action. Unfortunately, what we have is a selection of small and largely ineffective announcements. Funding paid internships for highly employable young workers in high demand fields is a shocking non-solution to a very real crisis.  If fields are in high demand why do we need to subsidize the hiring of young people for internships?

As has been the case in other recent federal budgets, most of what is contained in the budget is not new money, rather rehashing of previous announcements or re-allocated spending. Overall, there is only $51 million in new money for next year for education and training initiatives – that is a mere drop in the bucket.

For a comparison on the scale of the solution proposed, this government allocates $40 million over two years toward paid internships, yet has spent $473 million on Economic Action Plan ads.

General Training Initiatives

On a positive note,  this budget makes modest efforts to help apprentices through several targeted programs:

Apprentices and EI 

  • The EI waiting period will now only apply to the first period of an apprentice’s classroom training, and be waived for subsequent training. However, EI claims for apprentices will not be pre-approved, which leads to significant delays in receiving benefits for many apprentices.
  • A new initiative – but not new government money – will now allow employers to top-up apprentices EI benefits (while they are in-class training) to 95% of their normal wage similar to existing maternity leave top-up.
  • Employment Insurance Awareness Initiative for Apprentices, spending to let apprentices know that they may be eligible to receive EI while on approved training.

Canada Apprentice Loan Program – $100 million in interest free loans to first time Red Seal apprentices through the Canada Student Loans Program. Apprentices will be able to access up to $4,000 per period of technical training, and should help 26,000 apprentices per year. Only available for Red Seal trades and only for apprentices registered in their first Red Seal trade. This is a good step but it likely wont have a big impact in terms of improving apprenticeship completion rates.

Investing in Apprenticeship Technical Training a pilot project to examine innovative ways to deliver technical training and reduce non-financial barriers to apprenticeship completion. This includes remote learning and e-learning, as well as in-class simulators.

Youth Un(der)employment

However, on youth unemployment we find mostly token measures. The federal government’s Youth Employment Strategy barely touches the tip of the iceberg for struggling young workers in Canada. This budget announces several initiatives that sound great, but are unlikely to address structural issues facing young workers today and in the future.

Canada Accelerator and Incubator Program adds $10 million per year for 4 years to previously announced funding, for total funding of $100 million. For-profit and non-profit organizations will bid for funding to mentor young entrepreneurs. New money won’t start to flow until 2015-16.

Internships in High Demand Fields – $30 million over two years for an Industrial Research Assistance program, which will fund science internships in small and medium sized enterprises. $10 million over two years will be administered by the Youth Employment Strategy. In total, this will employ 1,500 post-secondary graduates each year for two years. This is largely ineffective spending, as it is focused on high demand science and tech fields where post graduates have been more successful finding work compared to other young workers.

Supporting paid internships in small and medium sized businesses by reallocating existing Youth Employment Strategy funds of $15 million per year, to fund a maximum of 1,000 internships for recent post-secondary graduates.

Eliminating Vehicles from Canada Student Loan Assessment There is currently a $5,000 exemption limit for vehicles when students list their assets on a Federal Student Loan Application. Students will no longer have to list the value of their vehicle, at an expected annual cost of $7.8 million per year. This claims to be aimed at rural students, but mostly benefits wealthier students.

A Missed Opportunity

The budget is a matter of choice. Clearly, the choices presented today confirm that the federal government does not want to take advantage of its current fiscal position to invest in productivity, training, and helping to create good jobs while ensuring Canadian workers’ income security today and in years to come.

This budget stays the course – a course that is undeniably the wrong course for Canada. This budget mostly re-allocates spending, rather than making new investments where they are critically needed. A grab bag of boutique measures and unproductive corporate tax cuts are paid for with continued austerity. This is not a budget that will help create jobs for workers of any age in 2014.

Enjoy and share:

Comments

Comment from Paul Tulloch
Time: February 13, 2014, 3:31 pm

Great report Angella, it is sad to see so little action on youth unemployment- especially the school to work transition and also those looking to return to upgrade.

As the empirical research has shown when the goes into recession and then stagnates it is the youth who bear a lot of the burden. Given this was the great recession and we are now at the longest stagnation period since the great depression, means we should be ramping up a massive program to help these workers engage the workforce. It is essentially sacrificing our built up human capital within the labour force by not engaging the youth- as the baby boomers exit, so to does their knowledge, experience, skill and shop floor knowledge. Given the length of time we are now encroaching, we could start to see some massive gaps develop and dead weight losses to the economy within this inter-generational transference of these skills and knowledge. As much as the management discourse wants us to believe that these assets are controlled, bound up and commodified within the corporate hierarchy over these knowledge pools and skills development process- they are not. It is not a mutually exclusive space the ownership over this knowledge transfer- especially in this increasingly knowledge intensive production process. So it is with great risk and inefficiency that we continue on with the current Harper and many provincial regimes approach to this space. We could see some permanent damage to the productive capacity of the economy- which translates into lower standards of living.

Doing the calculus on this equation of government increases in expenditure to help youth mitigate the effects of this downturn and hence reduce the impact on the school to work transition and also skill formation process, is a no brainer.

Sadly what we have is the Harperites stalling with most provinces on a larger effort to address this, and with the lack of any major announcement in the budget means the same ideological response- let the markets handle it. I was speaking with Canadian Federation of students last week, and their response to these market forces has been essentially a massive amount of underemployment, as well as a large increase in the amount of unpaid internships. The internet culture and the informational flows through social networks and such have allowed the market forces to increase their efficiency in extracting even more surplus from young workers- and it is premised on bidding to the lowest bid which is ultimately free labour. It is uncanny the amount of free labour in many of the higher knowledge work space is ongoing. Yes these workers are willing to bid down their wages to nothing, mainly due to the scarcity aspect of experience has in terms of social capital and “resume building”. But it could be easily argued that this is a sub-optimal outcome that these varieties of market forces produce.

Obviously, having public resources help out in these times of economic downturns produce very large outcomes for the economy and society in the medium to long run. It is again the ideology and belief in market forces that Harper and his austerity at all costs destructive economists unleash on the economy.

We are definitely messing around with our long term non-resource high value adding capacity here. The key word is “oil”. Potentially all youth should move to Northern Alberta. Again the solution to all Harper’s economic problems.

Comment from John Richmond
Time: February 13, 2014, 4:15 pm

Thanks for this – my teenage daughter (17) has long been nervous about entering the job market. Last summer my partner and I convinced her to give it a try – 7 months later and hundreds of applications she still does not have a job.

Comment from Larry Kazdan
Time: February 16, 2014, 1:37 am

Letter in Toronto Star:

A do-nothing budget for no one
http://www.thestar.com/opinion/letters_to_the_editors/2014/02/15/a_donothing_budget_for_no_one.html

Re: A gold-medal masterpiece of hype and obfuscation, Feb. 12

As Thomas Walkom notes, the key defect in Finance Minister Jim Flaherty’s budget is its failure to deal with an official jobless rate that remains stuck at roughly 7 per cent. While the government celebrates its goal of an upcoming budget surplus, it seems little concerned with the hardship faced by millions of Canadians who are unemployed, underemployed or who have completely abandoned the labour force in despair. Little thought is given to the long-term economic damage when a large segment of the workforce loses its skills, motivation and job-readiness.

Flaherty’s policies are exactly the opposite of John Maynard Keynes’ recommendations during a time of high joblessness. In 1933 the British economist stated, “It is the burden of unemployment and the decline in the national income which are upsetting the Budget. Look after the unemployment, and the Budget will look after itself.”

Larry Kazdan, Vancouver

Comment from the fris
Time: February 26, 2014, 7:54 am

Jobs for our Well educated youth.Eliminate all double dipping by retired government employees(ie teachers) across this country.Boom bag 100,000 jobs tomorrow.Good place to start yes?

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