Welcome letter to the Minister of Families, Children and Social Development - 2021

Economic recovery

Prior to COVID 19, the Canadian labour market was performing well. Although Canada and other developed countries were experiencing slow economic growth (annual GDP growth at 2 percent, lower than historic trends), the labour market was creating new jobs at an impressive pace and the unemployment rate was near an all time low. At the same time, many employers were reporting shortages of skilled workers.

In less than eight weeks, COVID 19 shifted Canada’s economy and labour market dramatically from a position of strength to weakness. By April 2020, 3 million Canadians had lost their jobs and another 2.5 million saw their work hours significantly reduced. Canada’s GDP saw its largest contraction in recent history, leaving few industries unscathed. Small businesses were hit particularly hard with over 40% of them reporting losing more than 20% of their revenue compared to the previous year.

Close contact businesses, such as retail, restaurants, and performing arts, witnessed even more severe revenue losses. These industries employ women, young people and racialized persons in greater proportion than the rest of the economy. As a result, those Canadians who faced labour market barriers before the pandemic have been more severely impacted.

Despite this major contraction, the Canadian economy has shown resilience and economic forecasts for continued growth are promising. As of September 2021, employment was back to pre pandemic levels (19.1 million). However, there were still 1.4 million Canadians who were unemployed, an increase of 276,000 relative to pre pandemic levels. Economic uncertainty is still a concern as Canada is facing many potential challenges, including a new wave of COVID 19 currently driven by the Delta variant, supply chain disruptions to production and consumption of goods in Canada and shifting consumer demand, for instance increased use of e commerce, which requires enterprises to revise their business models.

The unusual nature of this current economic slowdown, driven by public health restrictions on economic activity rather than broader macroeconomic forces, means that a full recovery in many sectors will likely occur more quickly than would be typical. Canada could quickly pivot in the short term from elevated unemployment levels to low unemployment and labour shortages in many sectors and industries.

In fact, the labour market is already rapidly tightening in some sectors, and employers are finding it challenging to hire workers. Some of these challenges can be attributed to the fact that the economy is still in a period of adjustment, as a number of sectors reopened during the summer, and the process of matching available jobs with qualified workers is not an immediate one. Furthermore, recovery is likely to occur in an uneven manner across regions, and also across sectors. For example, hospitality, tourism and the arts continue to be constrained by public health measures. Finally, Canadians facing pre pandemic barriers and in precarious or impacted sectors risk falling further behind during the recovery period.

Changing nature of work and skills

Many of the trends that were putting pressure on the labour market prior to the pandemic (for example, technology, globalization and climate change) are likely to either continue or accelerate. The pandemic has hastened the trend towards automation, as many employers found themselves with reduced and unpredictable access to workers. The risk of automation related job transformation in Canada is higher for several groups of the population, including low skilled workers (individuals without post secondary credentials) and older workers, who are over represented in roles that are routine in nature and vulnerable to automation.

Certain populations, such as Indigenous peoples, are at greater risk of being left further behind in the future labour market. Nearly two thirds of jobs held by Indigenous workers are facing a skills overhaul, as data, robotics and advanced technologies drive transformational change in sectors that many Indigenous peoples depend on for work (for example, construction, retail and agriculture). The global shift towards low carbon economies will also mean that certain roles are either eliminated, changed, or created as new opportunities in clean energy emerge.

The trend towards jobs requiring higher skills is projected to continue in the future. From 2019 to 2028, about 75% of employment growth is expected to be in high skill occupations. Growth in high skilled employment has outpaced growth in low skilled employment in the industrialized world over the past 30 years. Moreover, 45% of Canadians do not have the literacy and numeracy skill levels required to perform well in the majority of jobs.

New approaches to skills development and adult upskilling or reskilling could facilitate employee retention and are often better linked to the demands of the workplace. A broad range of advanced skills will be needed to foster a dynamic economic recovery and ensure a more resilient and globally competitive economy over the longer term.

There is strong evidence that investments in training improve work attachment and earnings outcomes, and reduce dependence on government income support, such as Employment Insurance (EI) benefits and social assistance. Canada has one of the most educated workforces in the world and is above the Organisation for Economic Co operation and Development average with respect to participation in adult education and training. However, Canada does not invest as much as peer jurisdictions in training as a share of GDP.

The cost of training or lack of time because of work and family responsibilities impede some Canadians from pursuing learning and training activities and adapting to the changing skill needs of the labour market. Moreover, those who receive the least amount of training tend to be those who face the greatest employment challenges (for example, low paid or low skilled).

Canada’s labour force

In recent decades, a relatively youthful demographic distribution and increased labour force participation (principally driven by more women entering the workforce) have been significant drivers of economic growth. However, Canada, along with many industrialized countries, has an aging population. An increasing number of older Canadians have remained in, or have returned to, the labour force in recent decades. The share of workers aged 55 and over among all workers has doubled over the last 20 years (22.1% of all workers in 2020 compared to 10.4% in 2000). For seniors over 65 years, there has been a rise in labour force participation from 6% in 2000 to 13.8% in 2020. Nevertheless, Canada’s aging population will put downward pressure on labour force participation.

The coming decades will see labour force shortages and skills mismatches combine to act as a drag on productivity and economic growth. Upskilling and reskilling workers, increasing skilled immigration intake, growing the number of new graduates and increasing labour market inclusion of under represented groups, such as persons with disabilities, youth, visible minorities and Indigenous peoples, will be essential to addressing labour shortages and driving growth across the country. Fostering greater labour market inclusion of women continues to represent an opportunity to generate economic growth. In 2019, the labour force participation rate of women (61.3 percent) was 8.8% less than men (70.1 percent). This represents 1.4 million women (aged 15 or over) who could potentially join the labour force if their participation rate matched that of men.

Women with young children in the labour force were among those hardest hit by COVID 19. When schools and child care centres closed during the first wave of the pandemic, the employment of women with young children dropped. While employment among these mothers initially showed some recovery towards the end of 2020 with the gradual re opening of the economy, schools and child care centres, employment levels fell again as strict public health measures were re imposed to fight subsequent waves of the pandemic.

As of August 2021, employment recovery of women with young children is still lagging. Employment among women with toddlers or school aged children fell 7% between February and May 2020 compared to a decline of 4% among fathers of children of the same age. Single mothers were even more significantly impacted, with employment among this cohort down 12% from February to June 2020 compared to a 7% decline among single fathers. Despite absorbing 51% of job losses in March and April of 2020, women accounted for just 45% of job gains in May and June as economic activity restarted. The pandemic has pushed women’s participation in the labour force down to its lowest level in three decades.

Women’s participation in the labour force seems to be highly influenced by access to affordable, high quality child care. In 2020, the employment rate was the highest in Quebec (77 percent) which has a low fee, high quality early learning and child care system, but was lower in Alberta (66 percent), Ontario and British Columbia (67 percent) and Saskatchewan (68 percent), where access to high quality and affordable child care is more limited.

The pandemic has also underscored gaps in public income support for many Canadians, including uneven coverage across the country for many part time workers, as well as no coverage for job loss for self employed workers, including gig workers. The Employment Insurance program was not designed to account for the realities of today’s labour market and workforce, where a significant proportion of Canadians are engaged in non traditional forms of employment and work arrangements.

In 2019, approximately 37% of the Canadian workforce was in non standard forms of employment (for example, temporary, part time or self employed with no employees). Temporary emergency measures, such as the Canada Emergency Response Benefit, were introduced to support these workers during the pandemic.

Economic and social inclusion

It is likely that recovery from COVID 19 will continue to accentuate gaps and inequalities in employment and education for many Canadians (for example, people from low income communities, Indigenous peoples, persons with disabilities, and Black and racialized persons). These barriers act as a drag on economic growth, as well as increase spending on social services and lost tax revenue.

Early Learning and Child Care (ELCC)

$10 a Day Child Care for Families: work with provincial, territorial, and Indigenous partners to build a high quality, affordable and flexible ELCC system across Canada, investing up to $30 billion over the next five years, and a minimum of $9.2 billion per year ongoing.

Reduce fees for child care by 50% in the next year, reduce regulated child care fees to $10 a day on average within the next five years, everywhere outside of Quebec, build 250,000 new high quality child care spaces, hire 40,000 more early childhood educators, finalize agreements with all remaining provinces and territories, work with the province of Quebec to build on its world class, affordable child care system, improve working conditions for educators, and create more spaces for families, and enact federal child care legislation to strengthen and protect a Canada wide child care system.

Between July 8 and August 13, 2021, the Government signed Canada wide agreements with eight provinces and territories (British Columbia, Nova Scotia, Yukon, Prince Edward Island, Newfoundland and Labrador, Quebec, Manitoba and Saskatchewan), and the Department was recently directed to resume negotiations with the remaining five provinces and territories (Ontario, Alberta, New Brunswick, Northwest Territories and Nunavut). Negotiations could also resume quickly with the two remaining provinces (Quebec and Manitoba) that have not yet signed their smaller bilateral agreements, that is the extension of existing agreements and the one year workforce funding.

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Work with Indigenous partners to ensure Indigenous children have access to culturally appropriate, affordable, high quality ELCC (invest $2.5 billion over the next five years in Indigenous Early Learning and Child Care).

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Supporting Seniors

Introduce a 1 800 help line for seniors to provide a single point of access to a wide range of government services and benefits.

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Empowerment of Black Canadians

Implement the Black led Philanthropic Endowment Fund. This fund will be administered independently by Black Canadians and will help support Black led and Black serving community organizations.

In response to stakeholder calls for greater equity in the philanthropic sector and funding proposals received from proponents, the Department has investigated the use of endowment models, which hold considerable potential to increase support for organizations working for the advancement of Black Canadian communities. As long term, community led initiatives, endowments feature their own distinct set of implementation considerations, particularly as it relates to governance and control frameworks. In May 2021, the Department held roundtable consultations with 150 stakeholders from Black communities, who expressed their support for an endowment fund and offered their views on the governance, design and goals of an endowment approach.

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The Department is also continuing to implement the Supporting Black Canadian Communities Initiatives, which recently invested up to $82 million in approximately 1,300 projects to allow Black led organizations to purchase equipment, as well as retrofit and renovate their spaces to better fulfil their missions. The Initiative also recently launched a call for proposals to establish a National Institute for People of African Descent. We are also working on the implementation of an External Reference Group to convene and mobilize Black Canadian communities on priority issues and to advise on improving the social and economic outcomes of Black Canadians.

National School Food Policy

Work with our provincial, territorial, municipal, Indigenous partners, and stakeholders to develop a National School Food Policy and work towards a national school nutritious meal program with a $1 billion dollar investment over five years.

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Provincial and Territorial Fora

As the federal co chair of the Forum of Federal, Provincial and Territorial Ministers Responsible for Social Services and the ad hoc Table of Federal, Provincial and Territorial Ministers most responsible for ELCC, your provincial and territorial counterparts will be looking forward to engaging with you to advance key files, such as poverty reduction, income support to vulnerable populations, and ELCC, which are areas of shared mandate. This is an opportunity to strengthen our relationship and work in close collaboration with our key partners, as well as help shape and influence the agenda going forward.