Labour Mobility in Canada: Labour Mobility in Canada: Past, Present, FuturePast, Present, Future

Presentation to the Canadian Home Builders’ AssociationFebruary 25, 2009

By Niels VeldhuisDirector, Centre for Labour Markets

The Fraser Institute

Presentation Outline

• The Economics and Benefits of Labour Mobility

• Barriers to Inter-Provincial Mobility

• Reducing Barriers: AIT & Red Seal TILMA Amended AIT (Chapter 7)

The Importance of Domestic The Importance of Domestic MigrationMigration

Source: Statistics Canada (2008), Quarterly Demographic Estimates – July to September 2008

Numbers by source

Province Total immigrationOther

provincesOther countries

Canada 571,525 334,773 236,752

NL 11,302 10,757 545

PEI 4,011 3,017 994

NS 19,232 16,708 2,524

NB 15,571 13,928 1,643

QC 67,828 22,611 45,217

ON 179,496 68,160 111,336

MB 26,513 15,557 10,956

SK 29,315 25,795 3,520

AB 111,769 90,903 20,866

BC 101,147 62,189 38,958

Relative importance of domestic Relative importance of domestic and international migrationand international migration

0%

20%

40%

60%

80%

100%

Per

cen

t

Source: Statistics Canada (2008), Quarterly Demographic Estimates – July to September 2008

Net Migration (1973-2007)Net Migration (1973-2007)

Source: Statistics Canada (2008). Demographic Estimates Compendium 2007.

-40,000

-30,000

-20,000

-10,000

0

10,000

20,000

30,000

40,000

50,000

60,000

1973

1975

1977

1979

1981

1983

1985

1987

1989

1991

1993

1995

1997

1999

2001

2003

2005

2007

QC ON AB BC

Average Net Interprovincial Average Net Interprovincial Migration (2003-2007)Migration (2003-2007)

Source: Statistics Canada (2008), Quarterly Demographic Estimates: Canada, Provinces and Territories.

-15.0

-10.0

-5.0

0.0

5.0

10.0

15.0

20.0

25.0

30.0

In T

ho

usa

nd

s

AB BC PEI NB NS NL SK MB QC ON

Benefits of Inter-provincial Benefits of Inter-provincial Labour MobilityLabour Mobility

• Key to high performing and dynamic labour market is flexibility: free flow of workers is a key factor

• Fosters internal efficiency

• Re-allocates labour: reduces pressure (shortage) and unemployment

• Provides a quicker response that other mechanisms

• Re-allocates existing skills

• Involves constant marginal adjustment

Source: Rafael Gomez and Morley Gunderson (2007), Barriers to the Inter-Provincial Mobility of Labour,

Barriers To Interprovincial Barriers To Interprovincial Labour MobilityLabour Mobility

• Professional occupational licensing and certification

• Government licensing and certifications of trades

• Preferential hiring

• Income security programs

• Employment standards

Regulated Professions and Regulated Professions and OccupationsOccupations

Business • Certified Management

Consultant• Chartered Accountant• Insurance Broker

Health • Dental Hygienist• Dentist• Dietitian and Nutritionist• Midwife• Nurse Practitioner• Pharmacist• Physician [General, Family,

Specialist and Surgeon]• Veterinarian

Natural and Applied Sciences • Chemist• Community Planner• Engineer• Geologist• Land Surveyor

Social Science, Law and Education

• Early Childhood Educator• Guidance Counsellor• Lawyer• Social Worker

Regulated TradesRegulated TradesConstruction Trades • Carpenter• Concrete Finisher• Electrician • Locksmith• Painter and Decorator• Roofer

Industrial Trades • Auto Body Repairer• Automotive Painter• Boilermaker• Industrial Electrician• Machinist

Services Trades • Cook• Hairstylist

Agreement on Internal Trade (AIT)Agreement on Internal Trade (AIT)

• Came into effect in 1995• Implemented to reduce interprovincial

barriers to trade and labour mobility within Canada

• Chapter 7 covers labour mobility with a focus on professions

• Requires governments to:• Eliminate residency requirements• Mutually recognize of occupational

qualifications and reconciliation of differences in occupational standards

• AIT relies on Red Seal Program for trades

Agreement on Internal Trade (AIT)Agreement on Internal Trade (AIT)

• Few occupations were fully mutually recognized by 2001

• No default mechanism

• Weak enforcement: Dispute Settlement Mechanism

Trades: Red Seal ProgramTrades: Red Seal Program• AIT relies on the Red Seal Program

for trades

• Red seal has been the national standard for nearly 50 years

• Covers 50 (of 65) regulated trades

• Interprovincial Standards Red Seal Exam

• Not mutual recognition

Trade Investment Labour Trade Investment Labour Mobility Agreement (TILMA)Mobility Agreement (TILMA)

• April 28th, 2006 – TILMA

• Free trade agreement between AB and BC covering trade, investment, and labour

• Fundamental improvement on AIT

• Contains a default mechanism for labour mobility: mutual recognition

• Dispute resolution

Council of the FederationCouncil of the Federation

Council of the FederationCouncil of the Federation

• July 2008 meeting: “true” mutual recognition by summer 2009

• Similar to TILMA: “…recognition shall be granted expeditiously without further material training, examinations or assessment requirements”

• Enforcement: penalties up to $5 million for non-compliance

Changes to the AIT (Chapter 7)Changes to the AIT (Chapter 7)

• Red Seal Program: continued commitment to the Red Seal Program, as a well-established means of establishing common inter-provincial standards for trades

• Party without occupation standard for a particular occupation may wish to develop such standards in a manor conducive to labour mobility

• Move beyond Red Seal trades so long as more than one jurisdiction has similar occupational standards (matched)

• New dispute resolution

• Labour mobility becomes the default

Other Barriers to MobilityOther Barriers to Mobility

• Employment Insurance– Generous benefits for long periods

– Seasonal workers get extra benefits

– High unemployment areas get higher benefits

• Economic Effects:– Disincentive to move and find employment

– Increase unemployment

– Distort education and training decisions

• What to do…– High unemployment = higher benefits

– Reform: experience rating

• Restrictions on foreign workers– NAFTA applies to professionals, entrepreneurs, and

investors… but not skilled trades people– Skilled workers must meet provincial standards for

temporary work visas

• Economic Effects:– Canadian tests and risk of returning home disincentive to

mobility; for same reason, discourages Canadian employers

• What to do…– Extend labour mobility clause in NAFTA to skilled

trades– E.g. Australia and New Zealand

Other Barriers to MobilityOther Barriers to Mobility

ConclusionConclusion

• Finally making progress on labour mobility

• Governments must recognize benefits of labour market flexibility

• Must recognized non-Red Seal trades – mutual recognition

• Employment Insurance reform

• Foreign workers

Questions & Hopefully Answers…Questions & Hopefully Answers…

Niels VeldhuisNiels VeldhuisDirector of Center for Labour Markets, Director of Center for Labour Markets, Fraser InstituteFraser Institutewww.fraserinstitute.org