Reform Experiences of Asian Pacific Countries: The Case of Canada

Reform Experiences of Asian Pacific Countries: The Case of Canada

Linda FrenchA/Director General

Labour Market PolicyHuman Resources and Skills Development Canada

Presentation prepared for the OECD Policy Forum on Reassessment of the OECD Jobs Strategy, July 7 – 8, Tokyo Japan

2

Overview of the presentation

1. Macroeconomic and labour market challenges in the early 1990s

2. Policy responses to these challenges

3. Current macroeconomic and labour market challenges

4. Emerging policy directions

3

Portrait of Canada

4

1. Challenges in the early 1990s

Macroeconomic

• Recession of 1990 – 1991

• Worsening fiscal situation - increasing debt and deficits

• North American Free Trade Agreement (NAFTA) in 1994

• Widespread corporate downsizing

5

Challenges in the early 1990s

Labour Market

• Double digit unemployment

• Jobless recovery

• Decreased labour force participation for youth and older workers

Unemployment Rate, by Duration1990 - 2004

4

5

6

7

8

9

10

11

12

% o

f Lab

our F

orce

Une

mpl

oyed

Less than 1 Year Long-term Unemployed (more than 1 year)

6

2. Policy responses to the key challenges in the early 1990s

• Strengthened macroeconomic management – fiscal and monetary discipline

• Pension reforms

• Labour market reforms

7

Labour Market ReformsDrivers

• Enhanced labour market flexibility and attachment

• Fiscal imbalance – generate labour market efficiencies and reduce budgetary pressures

Objectives

• Appropriate incentive structures

• Reducing unemployment, long-term unemployment and benefit dependency

• Reducing regional disparities

• Making work pay

• Labour mobility

Strategy

• Getting people back to work quickly

8

Specific labour market and social reforms

Reforms to Unemployment Insurance (UI)

• Employment Insurance (EI)(active measures)

• Tightening eligibility

• Intensity rule (discouraging repeat use of EI, eliminated in 2000)

Agreement on Internal Trade (AIT)

• Encouraging labour mobility

National Child Benefit

• Levelling the playing field for those leaving social assistance (continued to receive child benefits while working)

• Promoting labour force attachment (reinvestment of social assistance savings to promote labour market entry)

9

Current state of the economy

• Strong macroeconomic performance

• Balanced budgets

• Improving labour market productivity – but still lags behind the United States

• Low inflation and interest rates

• Strong labour market performance

• Strong job growth

• Rising employment rates

• Low unemployment

10

3. Current challenges and opportunities

Global/Macroeconomic

Realignment of global economic power

• The United States – but vulnerable to budget and trade deficits

• Europe

• China and India

11

Current challenges and opportunities

Labour Market• Population aging constraining labour supply and economic growth

• Certain groups having difficulties participating fully in the labour market – Aboriginal people and new immigrants, low skilled workers, lone parents, persons with disabilities

• Persistent regional disparities

• Lagging productivity growth

• Rise of non standard work

• Skills mismatch and consequent skills shortages in specific occupations (e.g. trades occupations) and local labour market pockets

• Income polarization between high skill and low skill workers

• Underemployment (relative to educational levels)

12

4. Emerging policy directions

Drivers

• Demographics

• New technology

• Globalization

13

Transformative Change

Old Policy Reality

Entitlement

Learning during youth

Job-for-life

Reducing unemployment

“Any job is a good job”

Remedial skills development

Domestic vs. international interests

New policy reality

Empowerment

Lifelong learning

Employability-for-life

Increasing participation

Quality jobs and full skill utilization

Proactive upskilling for the future

Lines between domestic and international blurring

14

A human capital agenda is fundamental to many Government of Canada priorities

Human capital agenda supports the following goals:

• Wealth creation

• Stronger communities

• Regional development

• Innovation

• Social inclusion

• Global competitiveness

• Prosperity of Aboriginal people

15

A forward looking strategy

• Action in both the learning and employment systems

• Skills and learning across the life course

• Variety of settings

• More demand-driven, enhance employer investments in skills

• Enhance skills and adaptability of existing workforce

• Maximize participation

• Partnerships

16

InitiativesDemand driven policies

• Workplace Skills Strategy

Lifelong learning

• Skills agenda

Increasing participation among “at-risk groups”

• New immigrants, persons with disabilities, Aboriginal people

• International Trained Worker Initiative (ITWI)

Review of Canada Labour Code (Part III)

• To address changing work arrangements, work-life balance issues and non-standard work

Innovative employment programming

17

Conclusion

• These emerging labour market issues and global challenges are not unique to Canada

• Canada is well positioned to take advantage of the opportunities of the new economy

• Canada looks forward to continuing to work with our OECD partners to share best practices and find solutions to emerging labour market issues