1. Demographics – The Impacts of an Aging Population on the Labour Market February 13, 2007 Nicole Herod, Manager, Communications

2. 2 Canadian Apprenticeship Forum – Forum canadien sur l’apprentissage (CAF-FCA) CAF-FCA was established in June of 2000. CAF-FCA is a pan-Canadian, multi – partite organization including representatives of: Business Labour Inter-Provincial Alliance of Apprenticeship Board Chairs Educators Canadian Council of Directors of Apprenticeship Equity groups Human Resources and Social Development Canada

3. 3 Vision and Mission CAF-FCA Mission: To influence pan-Canadian apprenticeship strategies through research, discussion and collaboration by the apprenticeship community. To promote apprenticeship as an effective model for training and education, contributing to the development of a skilled, high quality, productive, inclusive and mobile labour force.

4. 4 CAF-FCA Vision CAF-FCA is a driving force for healthy, vibrant and progressive apprenticeship systems, on a pan-Canadian level. Vision and Mission

5. 5 Barriers to accessing and completing apprenticeship Nine generic perceived barriers: 1. negative attitudes about apprenticeship and trades 2. lack of information or awareness about apprenticeship 3. unwelcoming workplaces 4. costs of apprenticeship 5. economic factors 6. lack of resources 7. concerns about essential skills of apprentices 8. shortcomings of workplace-based and technical training 9. regulations

6. 6 Upcoming Projects in Canada = Top 10 Bruce Nuclear Power Station (Kincardine, Ontario) $4.25 B Eastmain1 Hydroelectric Development (Quebec) $2B. Canada Line (Vancouver) $1.8B Golden Ears Bridge (Vancouver) $1.1B Niagara Tunnel Project (Ontario) $985 M Montreal Metro Expansion (Quebec) $803 M Canaport LNG (NB) $750M Portlands Energy Centre (Toronto, Ontario) $730M Red River Floodway Expansion (Manitoba) $690 M Sea to Sky Highway (BC) $625M

7. 7 Workforce Profile “Over the next 15-year period, employers may be looking at replacing over 400,000 workers in the manufacturing context. 72% of “near-retirement workers” are males. Canada’s reliance on immigration for labour force growth is also evident in the manufacturing sector

8. 8 Workforce Profile Workers in the skilled trades occupations – construction, electrical, machinist, mechanics etc make up a significant share of employment in the manufacturing sector – Plastics, transportation, wood manufacturing…to name a few. This is about 380,000 workers in the skilled trades, of which one in eight is over aged 55.

9. 9 You, Me and Them: (Dr Linda Duxbury, Professor, Sprott School of Business) It is “sellers” market whereby there are more good jobs than there are employees Birth rates are declining throughout the world Population is aging Greater international competition for labour Competition for talent amongst sectors…

10. 10 Looming Labour Force Shortage Last 25 years the labour force grew 226,000 per year In the next 10 years, it will only grow by 123,00 per year By 2016 the annual growth will be near zero For every two people retiring, there will be less than one to take their place.

11. 11 Immigration not the full solution – Complex Issue Part of the solution, but consider this: Over past 5 years immigration accounted for 70% growth in Canada’s labour force F Over past quarter century immigration 166,000 per year F By 2016 need to reach 520,000 (low) to 650,000 (high) Obstacles for Immigrants getting into Canada F Processing time F Credential recognition China is one of Canada’s top sources for talent

12. 12 Enter the Dragon Watershed event happening in China Moving to a more open market Focus on training; looking at a Sector Council approach similar to Canada’s Increasing its share of the market F Greater market overlap over time of Canada’s traditional markets with US

13. Return on Apprenticeship Training Investment. Part of the Solution…

14. 14 CAF-FCA Board focused on 3 Business Lines Promotion Skilled Trades Campaign – just completed Research Essential Skills ROTI Other Think Tanks – Collaboration/Discussion Employer Engagement

15. 15 Return on Training Investment To obtain a more thorough understanding of the costs and benefits of apprenticeship as it relates to: employers, unions, apprentices, training deliverers and governments. A multi-phased project

16. 16 Survey of Employers This phase investigated the return on training investment as it applied to employers. CAF–FCA ran a pilot study by testing a survey tool with a group of employers Data collection was then conducted in 15 trades using the revised survey tool.

17. 17 Methodology  Through a detailed survey questionnaire, information regarding wages, charge-out rates, training costs ( ie cost of journeyperson time, wastage) and qualitative measures on the benefits of apprenticeship  11,550 employers were contacted, 1,941 (16.8%) qualified for the study  Approximately 1 in 5 qualifying employers completed the survey for a total of 433 employers

18. 18 Trades Selected Automotive Service Technician Tool and Die Maker BricklayerConstruction Electrician CarpenterHeavy Duty Equipment Mechanic CookInsulator Industrial Mechanic (millwright) Mobile Crane Operator MachinistRefrigeration and Air Conditioning Mechanic Motor Vehicle Body Repairer Sprinkler System Installer Sheet Metal Worker

19. 19 Cost-Benefit Model  Model based on a standard cost-benefit analysis for a single firm that hires apprentices  Net benefits (or costs) are calculated per apprentice per year  Benefit of apprentices is their “value added”

20. 20 Cost Components  Wages and Benefits – includes base pay and non compulsory and compulsory benefits (EI, CPP)  Opportunity Costs – includes lost journeyperson time, wastage  Disbursements – related to employer shares of costs to support ongoing training and development of apprentices  Administration – costs associated with hiring and training

21. 21 Benefit Components  Revenue generated by Apprentice – based on total annual chargeable hours of work, charge - out rates etc.  Tax Credits – where applicable

22. 22

23. 23 Research Findings  Apprentices for all 15 trades generate net benefits for employers within a short period of time  Majority of employers (66.1%) indicated apprentice’s productive value exceeds training costs by end of second year  Majority of employers (67.6%) indicated their journeyperson derived a benefit from training an apprentice

24. 24 Research Findings  Employers also saw a significant benefit of employing a journeyperson that was trained as an apprentice.  Majority of employers across all business sizes and regions viewed a “homegrown” journeyperson as more productive than an externally trained journeyperson

25. 25 Research Findings  Apprenticeship training makes good business sense and is the Path to Quality Workforce.  On average, for each $1 invested in an apprentice, a benefit of $1.38 accrues to the employer  All 15 trades included show an overall net benefit of apprenticeship training.

26. 26 Trade by Trade Results Trade Duration of Apprenticeship (Years)1 Costs2 ($) Benefits 3 ($) Net Benefit4 ($) Benefit -Cost Ratio5 Excl. Tax Credits Automotive Service Technician 4219,354327,835108,4811.49 Bricklayer 4 202,530270,72968,2001.34 Carpenter 4 192,080214,20722,1271.12 Construction Electrician 5275,424338,04062,6161.23 Cook 3 77,601119,70342,1021.54 Heavy Duty Equipment Mechanic 4208,231304,24796,0161.46 Industrial Mechanic (Millwright) 4246,061298,49352,4321.21 Insulator 4 202,149267,44165,2921.32

27. 27 Trade by Trade Results Trade Duration of Apprenticeship (Years)1 Costs2 ($) Benefits 3 ($) Net Benefit4 ($) Benefit- Cost Ratio5 Excl. Tax Credits Machinist 4 184,956283,66998,7131.53 Mobile Crane Operator 4 248,068256,3188,2501.03 Motor Vehicle Body Repairer 4180,647295,281114,6341.63 Refrigeration and Air Conditioning Mechanic 4242,960319,08476,1241.31 Sheet Metal Worker 4 251,698300,01748,3201.19 Sprinkler System Installer 4206,153338,933132,7801.64 Tool and Die Maker 4 173,469290,473117,0041.67 Average4207,425281,63174,2061.38

28. 28 Example: Cost-Benefit Results – AST (46)

29. 29 Validation Roundtables  5 roundtables were held to validate the cost benefit results and to determine if any significant costs and benefits had been missed.  Roundtables were held in:  HalifaxAutomotive Service Technicians  ReginaConstruction Electrician  VancouverRefrigeration and Air Conditioning Mechanic  EdmontonIndustrial Mechanic  OttawaEconomists

30. 30 Findings from Roundtables  Employers confirmed cost-benefit results are accurate although there are regional differences.  Employers agree on average apprentices generate a net return to their organization.  Economist roundtable supported the methodology, and noted the breadth of study exceeds that of previous research.

31. 31 Research Limitations  National level data statistically significant (n-400+)  Sample size is not large enough to provide a regional analysis  Trade specific data should be viewed with caution given small sample size

32. 32 Questions Arising from the Research Are there significant differences in the net cost of training an apprentice in a larger organization versus a small business? What are some of the regional differences that impact the return on training investment? What are some of the trade-related differences that may impact the return on training investment?

33. 33 Apprenticeship Training makes good business sense and = a strong bottom line!

34. 34 Next Steps Currently studying – ROI for Apprentices and Training Institutes Apprentices – survey F Employers and people in the trades appear to be # 1 influencer for apprentices to decide to enter trades F Higher than average academic standing prior to entering trades F For the apprentice Return on Investment is very high compared to other forms of education (especially for a young apprentice) Training Institutes – case studies

35. 35 Think Tanks Employer Engagement 3 targeted employer engagement activities in next fiscal These events will be linked to the concept of employer engagement and understanding reason to participate or not participate in Apprenticeship Training.

36. 36 In summary… Impact of: Aging population (retirements), declining world-wide birthrates, current immigration rate insufficient to meet future demands – fewer available and qualified workers Abundance of work (projects) Moving into a “sellers” market No one answer to looming labour shortage: Immigration not the sole answer, part of the answer Investment in human capital part of the answer

37. 37 Conclusion Once employers become aware of: labour market issues, and business case for investing in human capital …they can proactively plan and implement their own strategy for attracting and retaining their future workforce.

38. 38 Contact Information www.caf-fca.org CAF-FCA 116, Albert Street, Suite 812 Ottawa, Ontario K1P 5G3