Back to work: Modernizing Canada’s labour market partnership

Active Labour Market Policies (ALMPs) are the government programs that help un- and underemployed workers improve their skills and find jobs. Collectively, they make up the public employment service. They can be crucial to protecting individuals from the pernicious, cyclical effects of long-term unemployment. But the framework for ALMPs in Canada has not kept pace with changes to the labour market. This should be a major concern. Structural changes to the economy are underway, including a shift away from manufacturing and towards gig and part-time work, and ongoing impacts from automation across sectors. We need a functioning public employment service, and this starts with better, more rational federal-provincial collaboration. ALMPs are a joint federal-provincial responsibility. Since the mid-90s, provinces have been the central actors, while the federal government funds programs through a number of transfer agreements. The largest transfers, Labour Market Development Agreements (LMDAs), are funded from Employment Insurance (EI) premiums, and provide skills training programs only to workers who are currently or were recently eligible for EI. This is an increasingly smaller proportion of unemployed Canadians. Moreover, the allocation of funds among provinces is unfair and unprincipled, creating greater inequity between unemployed Canadians. With the federal government announcing new investments in the public employment service, the time is ripe for reform and re-engagement. In this report, we outline the current ALMP framework, including all the major existing program streams. We examine the existing international and Canadian evidence on ALMPs. We then identify five major challenges to the Canadian framework.