Oct 8, 2020
When considering federal policy levers to aid in post-COVID-19 economic recovery, one item that must be addressed is the lack of incentives for skilled trades workers mobility. The economic recovery will be uneven across the provinces and regions with some areas experiencing more construction work than others. This scenario will create construction labour shortages in one geographic area and construction labour oversupply in others. In the past, labour supply dislocation has been addressed through a variety of methods including; increased apprenticeship, increased training, and increased immigration. While these initiatives have been, and continue to be, worthwhile, they represent a much longer- term approach to solving some of our industries labour supply challenges. The economic devastation caused by COVID-19 does not provide policy makers with the luxury of focusing on these longer-term solutions. In the near-term, Canada’s construction industry demands quick decisions on investments in infrastructure, community benefits and labour mobility. To mitigate the negative economic consequences of COVID-19, Canada needs a Skilled Trades Workforce Mobility (STWM) program. By incorporating such a program into our tax system, travel and temporary relocation will become more economically feasible for construction workers to temporarily relocate in areas where work is occurring and labour demand outstrips supply.
Currently, salespeople, professionals and others in the construction and maintenance industries can receive a tax deduction for the cost of their travel, meals, and accommodations, while the same option is denied to skilled workers. This is an inequitable tax policy. A Skilled Trades Workforce Mobility program could operate as a tax deduction, tax credit, grant from within the Employment Insurance system or in some other way. All skilled trades workers deserve the same treatment and deserve personal tax relief to allow them to travel where the work requires them. This would close this inequity in the tax system and also modernize and improve labour mobility for all construction workers across Canada. This incentive would also improve efficiency, productivity and profitability on construction projects across Canada.
Canada’s construction sector accounts for 15.7% of Canada’s GDP* and it continues to have major human resource challenges; a lack of skilled workforce in certain geographic areas and lack of labour mobility. Because of strong investment in the resources sector, some parts of Canada—often rural and northern regions—are desperate for skilled construction workers, while others have more workers than they can employ. The STWM program would make it easier for Canadian workers to go to where the work is and help to solve these challenges through a temporary relocation of workers.
Flexibility and mobility are common requirements of the construction workforce; employment ends when projects are complete, and construction workers often find the next available job is in another region or even another province. Workers often leave their homes and families to take on temporary contracts elsewhere. However, if their employer is not covering the costs of travel or accommodations, the financial burden on an employee may deter them from taking that job. A previous study indicated that on average, it costs a construction worker over $3,500 to temporarily relocate for work**. This is one of the largest barriers to construction worker mobility.
The Government of Canada has a responsibility to ensure a system of tax fairness is in place for Canadians who belong to a mobile workforce and who may work for more than one employer during a tax year. This class of employee and taxpayer has distinct characteristics from other single-employer classified Canadians. For example, this mobile workforce retains home and family in communities across Canada while spending personal funds to travel to gain employment. In the unionized sector, this class is also dispatched to jobsites through a hiring hall which generally covers a large geographic area. In some instances, this hiring hall sends the employees outside of this geographic area to obtain employment. In the non-unionized sector, individuals bear the same travel cost barriers. Tax measures that allow the deductibility of travel expenses for employment purposes are required for individuals currently classified as employees under the Income Tax Act. Included would be cost of travel, meals and lodging less any money paid by the employer for said purposes.
Construction workers often incur large personal expenses to travel to worksites before becoming employees of construction companies and this cost is not tax deductible under the Income Tax Act for individuals. In other cases, they subsidize the cost of meals, lodging and travel. In addition, construction employers often face large expenses to secure a workforce for the life cycle of their project. Construction employers face a disincentive to hire workers from other provinces for their jobsites which creates business risk for all involved in the planning process. If there were a tax regime in place that incented industry to use Canadian workers where there is a shortage of work, it would alleviate the high cost employers face when using Employment and Social Development Canada’s Temporary Foreign Worker Program.
Studies for the Construction Sector Council and CBTU show that:
- The cost of temporary relocation is one of the biggest impediments to mobility.
- 70 per cent of surveyed tradespeople travel for work at least once in their careers.
- On average, workers spend about $3,500 of their own money to relocate temporarily.
- Employers rarely reimburse workers for these costs.
- The construction mobility tax credit would increase long-term income tax revenues and reduce dependence on costly social programs.
- Initial studies show that the credit could yield a return on investment of nearly 5:1.
Private Members Bill C-201: An Act to amend the Income Tax Act (travel and accommodation deduction for tradespersons)
This bill was last introduced in the 41st Parliament, 2nd Session, and was previously introduced in the 41st Parliament, 1st Session.
Bill C-201 was to allow a tradesperson, and if they:
- are required under the contract of employment to pay those expenses,
- did not receive from his or her employer an allowance in respect of these expenses as per the Canadian Tax Act, and
- does not claim those expenses as a deduction for the year of any other provision of this Act.
A Skilled Trades Workforce Mobility program would increase the standard of living for many Canadians, addressing skill shortages and getting Canadians to work. It would increase job opportunities for skilled trades workers to temporarily relocate to where jobs exist without creating financial hardships, and increase contractor and employer confidence because of greater certainty in workforce supply. A Skilled Trades Workforce Mobility program would open doors for apprentices to receive critical on-the-job training to learn their craft, complete their apprenticeship and become certified. It would also provide the Government more financial support by increasing longer-term revenue through income tax and reducing dependency on social programs. This program will benefit all construction workers and would be made available to workers who do not have their accommodations and travel paid for by an employer, a condition usually laid out in current collective agreements and/or project labour agreements. On behalf of all construction workers, Canada’s Building Trades Unions urge the Government to implement a Skilled Trades Workforce Mobility program, as it was previously laid out in Private Members Bill C-201 and level the playing field for Canada’s Skilled Trades Workers. This policy will help balance labour supply and demand across Canada, improve productivity and profitability and grow the middle class with good paying employment opportunities.
**Construction Sector Council Study Working Mobile: A study of labour mobility in Canada’s Industrial Construction Sector