Labour Mobility in Canada: Past, Present, Future Presentation to the Canadian Home Builders’ Association February 25, 2009 By Niels Veldhuis Director, 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 Migration Source: Statistics Canada (2008), Quarterly Demographic Estimates – July to September 2008 Numbers by source ProvinceTotal immigration Other provinces Other countries Canada571,525334,773236,752 NL11,30210, PEI4,0113, NS19,23216,7082,524 NB15,57113,9281,643 QC67,82822,61145,217 ON179,49668,160111,336 MB26,51315,55710,956 SK29,31525,7953,520 AB111,76990,90320,866 BC101,14762,18938,958

Relative importance of domestic and international migration Source: Statistics Canada (2008), Quarterly Demographic Estimates – July to September 2008

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

Average Net Interprovincial Migration ( ) Source: Statistics Canada (2008), Quarterly Demographic Estimates: Canada, Provinces and Territories.

Benefits of Inter-provincial Labour 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 Labour Mobility Professional occupational licensing and certification Government licensing and certifications of trades Preferential hiring Income security programs Employment standards

Regulated Professions and Occupations 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 Trades Construction 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) 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) Few occupations were fully mutually recognized by 2001 No default mechanism Weak enforcement: Dispute Settlement Mechanism

Trades: 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 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 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) 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 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 Mobility

Conclusion 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… Niels Veldhuis Director of Center for Labour Markets, Fraser Institute