Canadian HR Reporter

CANADIAN HR REPORTER November 30, 2015 6 NEWS EmploymentSource™ New to WestlawNext® Canada EmploymentSource is your fastest route to the employment and OH&S law you need to expertly advise clients, employers and unions. Be more effective and efficient in your research with the right mix of resources in one online research tool. EmploymentSource combines exclusive expert commentary, case law, legislation and dismissal notice periods, with functionality that is easy to use. Experience the benefits • Prepare winning dismissal litigation strategies • Defend occupational health & safety charges • Advise clients/employers regarding health and safety compliance Visit westlawnextcanada.com/ employmentsource or contact us at 1-866-609-5811 for more details 00224VB-A47772 Alberta offers job creation incentives But critics challenge effectiveness, necessity of such government programs BY SARAH DOBSON NO DOUBT, Alberta is facing harsh times. In a bid to lighten the blow, the provincial government is launching a Job Creation Incen- tive Program in 2016 to support workers and employers during the economic downturn. e program is meant to en- courage hiring by providing grants to employers for creating new positions. Grants will be worth up to $5,000 for each new job and employers will be eligible for up to $500,000 in total support — the equivalent of 100 new full- time jobs. Grants will be made available on a first-come, first- serve basis. "We really wanted to be actively demonstrating our commitment to business to support them," said Lori Sigurdson, minister of ad- vanced education and minister of jobs, skills, training and labour. "We're in a tough economic time and so we really want to make sure we're working with en- trepreneurs, innovators, job cre- ators in Alberta to help them be able to support their businesses." But does this kind of initiative really have an impact? And does it make sense? Not really, according to Jack Mintz, president's fellow at the School of Public Policy at the University of Calgary. Studies have shown these kinds of incentives are not that effective, and only about 20 to 30 per cent of the credit creates jobs because employers would have hired peo- ple anyway, he said. "Five-thousand dollars isn't go- ing to make you hire somebody the way the economy is right now in Alberta," he said. "You'd have to pay pretty much 100 per cent tax credit of the salary right now. "People are not going to go out and hire somebody for $50, $80, $100,000 — whatever the price is — for a $5,000 tax credit, so it'll be particularly ineffective during this downturn in Alberta. And then, of course, if the economy starts picking up own the road, then the question is do you really need a new hire tax credit at that point because people will start hiring workers anyway." e biggest fear is the $175 mil- lion will go to employers that were going to make that hiring decision already, said Justin Smith, direc- tor of policy, research and gov- ernment relations at the Calgary Chamber, "so it's incenting behav- iour that would otherwise occur naturally." "e program is… attempting to do something that the market is already doing on its own, so we're facing significant economic head- winds in Alberta and most em- ployers will tell you that labour is typically 10 per cent cheaper than it was maybe 16 or 18 months ago, if not more, and so employers are able to pay $5,000 or $10,000 less for the same job than they were able to at the height of the boom in 2012 or 2013. So, it's a signifi- cant government expense that's addressing a cyclical problem that I think the market's already addressing, as opposed to some longer term structural issues that are more amenable to govern- ment intervention." Hiring tax credits were part of U.S. president Barack Obama's stimulus bill to support economic recovery but, looking back, it was felt these credits did not spur em- ployment, said Smith "It has been attempted both at the federal and state level in the U.S., with very little success." But the Alberta government is committing $178 million over two years, and employers can hire up to 100 people, which could add up to 27,000 new jobs in a year, said Sigurdson. "at's a significant contribu- tion, so I challenge some of the critics out there. I think that this is demonstrating very clearly the government of Alberta is support- ing Alberta," she said. "Even though we are in an eco- nomic downturn — largely due to the price of oil, so some sectors aren't hiring as much — there's certainly other sectors (where) this would be a big support to them… I know that employers are still wanting to hire in this economic time, so I think it does give them a boost." Obviously, if offered $5,000, employers are going to apply and receive that credit, said Smith, so the government can issue a press release talking about the wonder- ful uptake of the program and job creation, but it's questionable how many of those jobs were created on the basis of this policy, he said. "It's very easy from a PR stand- point to spin this as a success but when it comes to the overall health of our economy, I don't think it's going to have the effect they think." Is $5,000 enough? For employers, there's an element of risk associated with the hiring decision, said Smith. "You need to ensure you have a pipeline of business to require that hire in the first place. And there's financial risks associated with hiring full-time staff, whether it be the actual salary, the benefits or other payroll costs associated with that, investments in training and onboarding. You only do that when it's critical for your business to add that particular employee to accomplish your business goals or to hit your budget or to move your business forward and grow. "If all of those factors align, typically businesses will make that hiring decision, or not, on the basis of those factors, not on the basis of a $5,000 hiring credit that they may be able to get through a level of govern- ment. It's just too small of a credit to fundamentally affect a hiring manager's decision." What Alberta needs is more investment, according to Mintz, which is of course difficult dur- ing a downturn, as employers are already being challenged by the province's rising minimum wage (to $15 by 2018), rising corporate taxes and royalty rates and carbon taxes. "is $5,000 credit doesn't even offset the minimum wage increase that's being applied so it's kind of like giving in one hand and taking away with the other… e govern- ment needs a much bigger agenda than simply ineffective new hire tax credits to employ people," he said, adding infrastructure spend- ing would make more sense. Alberta is not facing a huge un- employment crisis right now, it's facing a liquidity crisis and access- to-capital issue, said Smith. "So when I talk about those lon- ger term structural issues, that's FUNDS > pg. 14 Credit: Topher Seguin (Reuters) Lori Sigurdson, Alberta's minister of advanced education and minister of jobs, skills, training and labour, says the province's Job Creation Incentive Program will provide a boost to employers.

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