Program to Subsidize Business at the Expense of the Unemployed by policyfix

By Kevin Linklater

Federal Employment and Social Development Minister, Jason Kenney, met with his provincial counterparts last Friday to discuss the federal government’s proposed overhaul of job training, the Canada Job Grant (CJG) program. The Provinces have opposed the CJG partly because it means a reduction in funding, as well as an intrusion into a traditionally provincial jurisdiction by the federal government. However, all Canadians should be concerned about how the CJG will privilege the interests of large corporations over the needs of communities, of unemployed workers, and those who have been hardest hit by the economic downturn.

The CJG will replace a set of Labour Market Agreements (LMA) signed between Ottawa and the provinces in 2008, as the global financial crisis started to affect Canada. These agreements were introduced to increase the labour market participation of underrepresented groups in the labour force, such as youth, persons with disabilities, Aboriginal people, recent immigrants, social assistance recipients, long-term unemployed, and older workers. These were the groups most affected by the crisis and who have been slow to be re-hired during the recovery. They will have the most to lose if the Canada Job Grant goes ahead, as up to $600 million in federal and provincial funding could be taken out of the LMA system to fund the CJG.

The Canada Job Grant will instead subsidize businesses, primarily large, well-connected companies. In order to participate in the CJG, businesses will have to contribute $5,000 and have established and officially recognized training programs in place. This means that most small and medium sized firms will be left out.

Canadian businesses are sitting on record savings, and are not investing. A subsidy to hire and train new employees will therefore not have much of a positive effect on hiring. Rather, it will primarily subsidize businesses which were hiring in any case as part of their regular business plans. Therefore, this pro-big business legislation will likely not result in much added job creation, but will help corporate Canada save on training new hires, thanks to taxpayers.

The Canada Job Grant has at its focus the needs of businesses, not the needs of Canadians struggling to find work. It should not be the job of the federal government to subsidize large, well-connected companies to do what they should be doing anyway, and especially not at the expense of those who are most in need of help in getting a job.

Kevin Linklater holds a Master’s Degree in Development Economics from Dalhousie University, and a BA in Political Economy from the University of Manitoba. He is currently pursuing a career in journalism and communications.