SUBJECT: PROCUREMENT OF TEMPORARY WORK AGENCY
PURPOSE: This briefing note is a recommendation for changes in policy pertaining to the administering of income assistance.
ISSUE: There is not enough action in helping income assistance recipients attain employment.
Background:
The Ministry of Social Development and Poverty Reduction provides clients with subsidies by which they can remain active in the society. Such subsidies come in the form of income assistance, disability assistance, emergency assistance, the bus pass program, paid recreational membership, educational supports and insurance coverage. These forms of assistance are designed to help the client reintegrate into society however, such supplements also serve to trap these clients into what is referred as the “welfare trap.” The welfare trap is a concept that says that taxation and the welfare system keep people dependent on the government system because the benefit to ascertaining low- paying employment is seen as not large enough as it pertains to total net income. Regardless, the Ministry cooperates with several other agencies such as Work BC to provide employment counselling to their clients. The main result of such counselling is what is referred to as the “Employment Plan.” This, “Employment Plan” is transmitted to the Ministry, to determine whether the client is conducting a thorough job search. The creation of the “Employment Plan” involves resume revisions, and documenting of actual job search of which Ministry clients are to continue to actively search each month for employment. Its main objective is to actually determine “persistent multiple barriers to employment” which can include things as a medical condition, domestic violence and less than grade 12 education, at which point these clients qualify for a higher rate.
As it pertains to the “welfare trap,” the minimum salary in B.C. is $14.60 per hour (as of June 1, 2020), therefore for full time employment a person receives $2336.00. The current rate that recipients receive from welfare is $935.00 if single of which shelter is $375.00 and the supplement is $560.00. With these, it is clear that the income assistance rate is much lower than the amount received from actual employment however, there is currently a shortage of labor workers in the province. According to BC Business there is a “severity of labor shortages: employers in most regions and industries of the province are challenged with recruiting and retaining quality staff due to the robust provincial economy and corresponding tight labor market.” Further, “significance of skills mismatches” meaning “employers … routinely hire less-qualified employees and train them on the job.” The Ministry addresses the second issue through education however there are limitations. As for the first mentioned issue, it is working conditions that prevent employees from staying in these jobs along with salary, benefits and business culture.
By acting to address the labor shortage, and allocating Ministry clients to these jobs, it would not only help the clients receive the experience they need to enter jobs with better perks, but it would also increase their earnings per month, thus resulting in a better quality of life. As for addressing the skills shortage, Ministry clients- income assistance, are only eligible for schooling if the program is approved by the Minister and also if the client is not a full-time student in a funded program. This means that the program can be funded via Student Loans with the Student Aid office of the province. By making access to education, difficult for recipients, it keeps and perpetuates their lack of motivation to transcend the “welfare trap.” It also does not address the skills shortage in the industry. For example, according to BC Business there are difficult to fill positions of which include, senior managers, middle managers, professional/ technical staff, skilled trades persons and financial/ accounting/ human resources. Perhaps having a program by which such in demand training can be accessed by Ministry clients can help the clients get out of welfare but also help the industry. Such program should be considerate of the current trends and should also address the demands of the current economy. For example, there was a shortage of health care staff in 2018, specifically “2,800 caregivers for those in assisted living and home health care, says BCCPA.” And in 2015, according to BCNU the provinces nursing shortage reached a “crisis,” level. According to CBC in 2018 the construction industry was experiencing shortages of “sheet metal workers, and 89 per cent [of businesses needed] more electricians and plumbers.” By keeping current with the shortages in the labor force, and fine tuning such educational program, it would not only give Ministry clients the skills they need to be competitive in the workforce, but it would also help fill the positions in these industries. As it stands currently with consideration to how education is permitted for Ministry clients, it is inefficient and keeps people dependent on the government system.
Considerations:
The unemployment rate in the province of British Columbia is 6.6% as of July 2021. There is a total population of 4,340,700 with 2,668,500 totaled B.C. employment. According to Work BC “about 80 percent of employment in the province was in the service sector, including 15 percent in Wholesale and Retail Trade and 12 percent in Health Care and Social Assistance.” The Canadian government according to StatCan, spent a total of $177.3 billion or $4,830 per person in 2017 on social support programs. These include “programs to help children, the elderly, those in low income, the unemployed and the disabled.” The objective here is to reach economies of scale so that funds can be allocated to such innovations as technology to reduce the effort of work outputted by employees so that quality of life can be improved, or funds can be allocated to the reserves of the country or used to pay the national debt which is currently at 721.36 CAD Billion as of 2020. Economies of scale says that a company reaches a point in production where the cost of production no longer increases. This can be done via control of inflation. By using the Ministry to provide the work force with employees and having an education program by which current on demand positions can be filled, it would reduce the sum amount allocated to the Ministry of Social Development in the long run thus affecting the amount of monies in circulation at which point helping to increase the value of the dollar. By controlling the value of the currency through economies of scale, it would reduce the amount needed to purchase goods and services, but it would also keep the rates of government programs at bay. Through such policies people can gain employment but also the value of the economy rises. The stakeholders for this matter are the government and the citizen.
Options:
Option 1: Procurement of temporary work agency.
The feasibility of this option is very high. However, the Ministry of Social Development is going to have to navigate through the government bureaucracy to be able to action this. It is going to take some time to have a temporary employment agency program for the Ministry however, it would serve the government well if enacted. By having such program, it would be very accountable, as it would reduce spending but also help recipients earn income closer to the cost of living in the province. This option is really equitable as it aims to give people more sources of income and through this, they would be able to transcend the poverty line and the welfare trap thereafter. From a security perspective, the amount of government monies in circulation would be reduced which would essentially help maintain the value of the currency. By keeping the value of the currency constant, it keeps goods and services affordable, but it also keeps rates fairly constant. Public acceptability for this option would be low, people are not adamant about returning to work, which is okay. However, it is such decision that breeds illiteracy, and it is this that serves to reduce the competitiveness of the country on a global scale. The ideal of the USSR fell because the people became dependent on the government system for support, it is up to the government to reduce the risks and vulnerabilities to their nation. It is also their obligation to promote a more responsible way of managing poverty than to just accept it and take the “easy way” out. By providing actual interventions to poverty, people would not only benefit through experience and gain literacy, but they would also gain employment which could result in better positions throughout their employment. The government needs to be able to convey the skills and knowledge necessary to get out of poverty and the actual income assistance serves as a stimulus by which to action that. Being a recipient to funds from the Ministry of Social Development gives people a specific time in their life to be able to manage themselves and their finances. It involves budgeting and effective use of critical thinking and such critical thinking needs to be reinforced by the Ministry employees so that these people can develop the skills necessary to gain literacy and prevent such unfortunate circumstance as the “welfare trap,” from occurring again in the future. By having a temporary work agency fill the role of employers for Ministry clients, it helps them transition to employment and out of dependence.
Option 2: Allow full time and part time education for some in demand skilled work as per economic trends.
This is very feasible; however, the Ministry would have to keep UpToDate with the economy to provide approval for certain programs as it pertains to the demand. The objective here is really to supply the economy with skilled workers so that Ministry clients can gain employment but also to make the workforce more sophisticated which could essentially increase the value of the Canadian citizen. This is very accountable as it aims to help clients receive the education they need to be able to be competitive in the work force. It would also prevent people from being dependent on the Ministry for support, and would thus reduce the expenditures of the government which could be allocated to other places. This is the most equitable, as it gives clients the ability to learn the skills they need to be able to reenter the work force. This option is very inclusive as it allows and permits Ministry clients to access employment in sectors of the workforce that may be in demand. This option could also be implemented in exchange for the discontinuing the self-employment programs of the Ministry of Social Development. Self employment is a luxury and requires a lot of experience to be able to find success. By helping people gain experience and education from the workforce, they can then start to build their own business. From a statistical perspective one in ten businesses succeed. A lot of these businesses experience deficits for many years. By discontinuing the self- employment program the Ministry provides, they act to ensure that clients first receive the skills and education necessary for enterprise which is essentially a prerequisite to success in business penetration, proliferation and development.
Option 3: Basic financial education.
This is the most feasible option. By giving basic financial education to clients, it would help them not only reduce their stress but allow them to be able to budget themselves appropriately. Through basic financial education the Ministry can reinforce the fact that such supplement provided is a temporary means aimed at getting people back to the workforce. Although the Ministry requires monthly job searches to be done, it is not enough and people still remain dependent on the government system therefore more needs to be done to convey the fact that such supplement is not permanent. This is very accountable as it would help clients be more financially literate. It would help them branch out to different streams of income.
Option 4: Mixture of option one and option two.
This is the least feasible option as it would require a lot of organizing. However selecting this option, gives the government flexibility on what it is they want to enact. This option is also accountable as it would allow the Ministry to identify the demands as according to the economy and the clients, which would thus serve as a way to address the actual needs. This option is the most secure because the individual issues or problems are being addressed and targeted.
Option 5: Status quo.
This is the most feasible however it is the least accountable. By selecting this option, the government chooses to increase the rates rather than to act on the actual value of the dollar or address inflation. This option would result in a Canada that promotes state dependence which could hinder its competitiveness in the world.
Recommendation:
Option one is recommended.
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