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Figure 5 illustrates how some of the major Canadian direct job creation programs evolved and were replaced by other programs over time. More details on these programs, their inter-relationships, and some evaluation results are presented in Subsections 4.1 to 4.11.

View Figure 5

4.1 Local Initiatives Program (1971-77)

The Local Initiative Program (LIP) was introduced in November of 1971. It had a two fold objective: (i) to create additional jobs during winter months from November to May of the following year; (ii) to invoke the participation and involvement of community groups and the unemployed to provide services that would benefit the whole community.

Projects were to provide at least 15 months of employment and a substantial part of it was to be additional employment over and above what would normally take place. Projects were to be of a non-profit nature. Project organizers were to use Canada Manpower Centres to hire unemployed workers.

Initially, $50 million was allocated for municipal projects and $50 million for privately sponsored projects. LIP operated for six winters, from 1971-77. In the program’s final winter, 1976-77, the original budget was increased to $190 million as unemployment rose sharply.

In 1974-75, a total of 4,150 projects were approved and the LIP contribution was $80 Million. These projects created a total of 31,160 jobs with an average duration of 20 weeks per job. The average gross cost per work-year was $6,675 (Manpower and Immigration, 1977). The incrementality ratio was 78 percent⁶ (i.e. 78 percent of employment created under the program would not have been created without the program).

LIP projects covered a broad range of activities from day-care centres to bridge building. Of those employed, about 25 percent were UI recipients and slightly more than another one-quarter were on social assistance. Women were under-represented in comparison with their share in the unemployed.

LIP was assessed to be an excellent program to create jobs quickly and at a low cost to the government. However, the Auditor General’s Report pointed out delays in data collection for evaluation and weaknesses in clarifying some program objectives in measurable terms. One example was “community betterment”, which was stated as an important goal of the program.

LIP was replaced in 1978 by a very similar program, called Canada Works.

4.2 Canada Works (1977-80)

Canada Works was introduced in 1977 as a successor to LIP. It was designed to create employment opportunities for unemployed Canadians by utilizing their skills for services to their communities. The objective was to get needed work done to the public benefit and by people whose energies and talents were temporarily surplus to private sector needs.

Funded at $253.6 million in 1977-78, Canada Works constituted the main element of that year’s employment strategy (EIC, 1980).

Wages for those who worked on the projects were generally about 10 percent above provincial minimum rates. For up to 52 weeks, projects could receive funding allocated on a constituency basis relative to the incidence of unemployment.

Ministerial Advisory Boards composed of community representatives were created in each constituency to review project proposals and make recommendations to the Minister who had final approval on projects.

The gross cost per job under Canada Works was estimated to be about $8,000 per work-year for 1978-79 in 1979 dollars and $10,000 for 1979- 80 in 1980 dollars (see EIC 1980, p.12). The average duration of participation was 25 weeks. The incrementality was estimated to be of the order of 80 to 90 percent (i.e. 80 to 90 percent of employment created under the program would not have been created without the program).

About two-thirds of all jobs created were in construction and environmental improvement projects. Priority was given to private non-profit organizations. Among participants, the mix of skills/educational background was rather heterogeneous. About one-quarter of the participants in 1977 did not have more than eight years of schooling; however, at the other end of the educational spectrum, 26 percent had some post-secondary education or a college or university degree.

An Economic Growth Component (ECG) feature was added to the Canada Works program in 1978-79 under which federal departments and agencies could submit job creation proposals. The eligibility criteria consisted of federal projects having the potential of contributing to economic growth and creating continuing employment in the private sector. The job creation had to be incremental and the project had to have a high probability of not otherwise occurring (EIC, April 1980). In addition, the project location was to be in constituencies with above-average unemployment (Cullen, June 1977, p.22). If a proposal was accepted, the funds required were transferred to the department or agency’s budget. In 1978-79, a total of $28.4 million was transferred and 3,163 work-years of employment were created (Hunter, undated).

The following are the findings and lessons that emerge from an evaluation of the EGC of the Canada Works program:

• The gross cost per work-year was $13,700 and was based on projects covering both years of ECG operation, that is 1978-79 and 1979-80 (EIC, April 1980). Thus, the cost of the ECG component was slightly higher than for the Canada Works in general. The estimated incrementality ratio for the ECG component was also somewhat lower at 78 percent compared to 80 to 90 percent for Canada Works in general.

• Based on an in depth analysis of some selected ECG projects, the lowest cost-benefit ratio was 0.63 and the highest was 5.0. The evaluation report noted that “the fundamental reason for such a wide variation in the results among projects relates to differences in the estimated probability of employment of project participants” (EIC, 1980).

• ECG experience suggests that the majority of federal departments do not consider job creation to fall within their mandate, and as such the response from them was rather poor.

• The project selection criteria and guidelines were vague and too much discretion was left with program officers. In addition, the accounting framework was weak and “there was no established authority to demand accounting for expenditures and adherence to program goals…”. Also, “Unemployment data did not play an obvious role in choosing projects…” (EIC, 1980, p.7-8). Further, inordinate delays in the project approval process was not conducive to program implementation.

• Adequate consideration was not given to data requirements and the data collection process for program evaluation.

Another special feature added in 1978-79, the Alternate Use of Canada Works Funds, allowed EIC to enter into four-year funding agreements with the provinces to create jobs in areas of provincial jurisdiction. In April 1979, responsibility for this feature was transferred to the Department of Regional Economic Expansion. Canada Works was replaced by CCDP (Canada Community Development Projects) in 1980.

4.3 Local Employment Assistance Program (1972-83)

Introduced in 1972, the Local Employment Assistance Program (LEAP) was designed to “create worthwhile employment for people who have been unemployed or receiving public assistance and who are not likely to become employed through normal labour market activity” (Manpower and Immigration, Annual Report, 1972-73, p.9).

The program was aimed at projects with the potential to become self-sufficient businesses. A large number of projects were targeted at native and disadvantaged groups including the physically and mentally handicapped, alcohol and drug abusers, and welfare recipients. In 1980-81, 48 percent of the LEAP participants were natives, 31 percent were women, 8 percent were handicapped, and 42 percent were youth including ex-offenders. By labour force status, 85 percent were unemployed; by income level, 64 percent had a low income level of less than $3,000; and regarding income source, over 30 percent were on welfare (EIC, 1982b).

Although initially started with a budget of less than $6 million in 1972-73, LEAP gradually expanded to $24 million by 1978-79. During 1980-81, LEAP created over 8,800 jobs, with an estimated gross cost of $10,600 per person year and an average employment duration of 33 weeks (EIC, 1982b). The incrementality ratio varied between 60 to 70 percent, based on a survey of project sponsors.

LEAP was seen as an effective means of helping some of the most disadvantaged groups of people in the labour market. Over 50 percent of LEAP participants found jobs within two months in the post-LEAP period.

LEAP was incorporated into Local Employment Assistance and Development (LEAD) in 1983.

4.4 Local Economic Development Assistance (1980-83)

Introduced in 1980, Local Economic Development Assistance (LEDA) was designed to play a direct and active role in stimulating private sector employment through local enterprise development within communities. LEDA funded the planning and operation of community-based corporations that would provide technical support and financial assistance to proposed or existing local businesses. The latter would then create continuing jobs in the community.

Jointly administered by EIC and the Department of Regional Economic Expansion, LEDA had a budget of only $3 million in 1980-81. Thus, the financial assistance component of the program was very limited. It created about 600 private sector jobs. The gross cost per job works out to $5,000 per job (not per work-year). The net cost could not be computed due data limitations.

The evaluation noted that LEDA corporations served a useful economic purpose in local communities and had been able to tap the expertise of local industrial/ economic development bodies. The report also noted that there was an over-representation of business people and an under-representation of participants from other groups.

In 1983, LEDA was incorporated into the LEAD (Local Employment Assistance and Development).

4.5 Canada Employment Program (1980-83)

Canada Employment Program (CEP) was introduced in 1980 as a comprehensive direct job creation program. It was a major government policy response to the problems of hardship created by a shortage of employment opportunities for unemployed workers. The program was designed “to create projects which (also) made a contribution of continuing value to the communities” (Employment and Immigration Canada, 1983b, p.2). In addition, the projects were intended to enhance the labour market experience of participants – to obtain favourable longer-term employment effects for the program clientele.

CEP had three constituent program components: Canada Community Development Projects (CCDP), Canada Community Services Projects (CCSP), and New Technology Employment Program (NTEP). The orientation of CCDP was primarily geographic and was aimed at areas experiencing relatively slow growth. For CCSP, the orientation was towards groups at a competitive disadvantage in the labour market. NTEP was designed as a wage subsidy program and targeted as a response to the problem of structural unemployment among highly qualified workers in the scientific and technology field. NTEP focused on recent labour force entrants who were unable to find employment. A stated program objective was also to provide encouragement to research and development (R&D;).

Under CCDP, the allocation was heavily concentrated in a small number of communities in the high unemployment provinces of the Atlantic region and Quebec in harmony with the program objective.

The evaluation methodology consisted of:

1. analyzing the short-term impact by conducting post-program surveys of participants and the comparison group (rejected applicants);

2. long-term labour force tracking of pre- and post-program employment experience for up to three years after program participation; and

3. analyzing the value of output of the program based on in-depth case studies involving site visits to a limited sample of projects.

The evaluation findings were as follows:

• Based on some in-depth case studies of actual projects, the evaluation concluded there was “no evidence of widespread incrementality problems with CCDP and CCSP” (EIC, 1983b, p.11). Both of these program elements provided significant employment for individuals who would not otherwise have been employed in the absence of the program -- with an average incremental employment of about 63 percent (and a range of 55 to 70 percent).

• While NTEP also produced a positive impact on employment, the incrementality was substantially small at a maximum of 29 percent. In a large number projects, the expenditure on R&D; would have been undertaken by firms without the program assistance but at a later date. Thus, NTEP brought forward the scheduling of the projects that incorporated technological change. In addition, in the converse case of employee participants, the majority of them were drawn from groups for which the probability of employment without the program was assessed to be high.

• In the short-term, CCDP participants did not show any significant increase in the proportion of time employed in the post-participation period, when compared with the experience of the comparison group. Also, there was no apparent income gain for participants after the project ended. In the case of CCSP, however, special training was positively related to the post-program employability and employment duration.

• In the longer-run, the evaluation of CCDP/CCSP showed that the average post-program employment duration, as well as the average unemployment duration, increased relative to pre-program experience.

• Around two-thirds of projects under CCDP/CCSP satisfied the standard that work resulting from these employment programs should be of continuing genuine value to the community (EIC, 1983b). The findings for NTEP were less favourable.

• A benefit-cost model was developed to assess the overall impact of the program on the economy involving wages paid and the “social opportunity cost of labour”. Evaluation studies showed that the net benefits to the economy were modest. For CCDP/CCSP, the benefit-cost ratio was 1.2. For NTEP, it was somewhat less.

The following are some major evaluation lessons that emerge from the findings:

• There are no strong arguments in favour of justifying these job creation measures in terms of their direct contribution to the economy resulting from the divergence between the social opportunity cost of labour and wage cost. The rationale for job creation programs must lie with the indirect economic benefits resulting from a more equitable allocation of job opportunities among the regions. Special training measures for the disadvantaged should be an area of important potential. In this social objective context, a program may be justified even if the cost to the economy exceeds the benefits.

• The developmental element of the program should be much more strongly linked with long-run regional development goals and modified to reflect the need for an orientation towards improving long-run employability.

• In view of the unfavourable findings for the NTEP, it was pointed out that the more appropriate program response would likely be in the form of government loans or loan guarantees rather than employment subsidies.

• There was a high incidence of recycling between program participation and UI, and therefore the linkage between the two is a matter of some concern in the longer run. Program design should reduce this type of recycling.

• Under NTEP, job creation and the encouragement of R&D; were incompatible program goals. The impact on technology development was negligible due to enrolment of inexperienced workers. R&D; did not lead to innovations but to adaptations as evidenced by the fact that they could not be patented.

The evaluation studies emphasized two crucial evaluation lessons arising out of community employment programs. Both of these pertain to faulty program design. First, the outcomes were not measurable because the likely effects were too small to be detectable under any plausible circumstances, given the uncontrolled variables in the environment of the programs. The question arose whether the programs could be more effective by offering intensive assistance to fewer target communities (EIC, 1990, p. vii). Second, a great degree of variability was built into the programs. The content of the programs had largely been for communities to decide. This also “made the outcome measurement and attribution virtually impossible “ (Watson, 1995).

CCDP was incorporated into the Local Employment Assistance and Development (LEAD) in 1983.

4.6 Local Employment Assistance and Development (1983-86)

Initiated in 1983, Local Employment Assistance and Development (LEAD) began with the objective of increasing “the number of permanent jobs in localities of chronically high unemployment”(EIC, 1986, p.62). LEAD was to fund infrastructure projects, enterprise projects, or LEAD corporations, depending on community needs and plans.

Organizations representing local development interests in communities with populations of 50,000 or less were eligible sponsors. Some 18 percent of jobs created, as reported by the LEAD corporations, were attributed to technical assistance and the remainder were attributed to financial assistance. Over 40 percent of jobs created were in manufacturing and 32 percent in services, and only 3 percent in construction. This result was a distinct difference from LIP, LEAP, and Canada Works, where a vast number of jobs were created in the construction sector.

An evaluation of LEAD was completed for 1985-86. The evaluation reported that results generally were positive and encouraging, noting in particular the low cost of jobs created⁷. The gross cost of a person-year was only $1,900 in 1986 dollars. Based on a survey of the LEAD corporations, the incrementality ratio was very low at 45 percent. This worked out to an incremental cost of $4,200. One reason why the cost is so low is “the leverage factor generated by the funds that corporations loaned/invested in their communities” (EIC, 1986, p.95). For each dollar the LEAD corporations contributed, an additional $3.80 came from other involved economic groups. Therefore, the LEAD corporations were able to create a job-creation process that increased over time.

LEAD was incorporated into the Community Futures and Job Development components of the Canadian Jobs Strategy (CJS) in 1986.

4.7 Young Canada Works (1977-80)

Introduced in 1977, Young Canada Works (YCW) had as its main objective creating short-term employment for students in areas of high unemployment. The secondary objectives consisted of: (i) creating employment that would be of some benefit to the community; and (ii) offering participants a learning and meaningful experience that they could relate to their educational goals or future career aspirations. Projects could be funded for up to 14 weeks between May and September.

In 1977, about 30,000 jobs were created under the program with an overall program expenditure of $44 million (EIC, 1978). The average number of weeks worked per job was 10.5 weeks. The gross cost per job can be estimated from the data to be $7,260 per work-year. On the whole, the majority of program participants found their experience to be directly relevant to their educational goals and career aspirations.

Regarding the distribution of funds by sponsor, the largest proportion (27.4 percent) went to Recreation and Leisure Organizations and Youth Oriented Groups. This was followed by Local and Municipal Agencies (19 percent), Service Groups and Welfare Organizations (12.5 percent), and Business and Labour Organizations plus the Private Sector (11.8 percent). Reflecting the distribution by sponsor/sponsoring organization, the following was the distribution of funds by type of activity: sports and recreation (22.5 percent), environment improvement (18.6 percent), social services (12.6 percent), research and analysis (10.7 percent), and others (35.6 percent).

The title Young Canada Works was discontinued in 1980, but similar programming was continued under Summer Youth Employment Program (1980-83). The latter program was succeeded by Summer Canada (1983- 85), and Summer Canada was brought under the Canadian Jobs Strategy in 1985⁸.

4.8 Employment Tax Credit Program (1978-81)

Employment Tax Credit Program (ETCP) was introduced in 1978 “to stimulate incremental employment in the private sector “by providing general tax incentives⁹. A secondary objective of the program was to “improve the future employability of participants above that which would have occurred in its absence”. The program offered a tax credit of up to $2.00 per hour to a maximum of 40 hours per week for a maximum of 12 months for each “eligible” worker hired (e.g. unemployed and registered with a Canada Employment Centre).

By the end of the program’s second year, some 26,000 employers participated in the program and 66,000 jobs were created, the highest participation being among companies in Quebec and the Atlantic provinces. The average duration of the subsidized job was 24 weeks

The following were some of the findings from an evaluation covering a two-year period:

• The incrementality was rather low at 37 percent. This means that 63 percent of the jobs would have been created without the program.

• The cost to government per incremental work-year, in terms of loss of revenue, was $13,500 in 1980 dollars.

• ETCP participants were more likely to draw UI benefits following termination of the subsidized employment, compared with regular workers leaving jobs about the same time.

4.9 New Employment Expansion and Development (1982-83)

New Employment Expansion and Development (NEED) program was introduced as a direct job creation initiative in 1982. It formed part of the federal government’s response to the economic recession of 1981-82. The main target group was the longer-term unemployed who had exhausted their unemployment insurance benefits and/or who were on social assistance.

NEED involved a tri-level partnership in job creation – federal, provincial and municipal governments, and the private sector. This approach marked a new era in direct job creation policy because it involved joint funding of program expenditures with the provincial government and the private sector.

Projects were required to demonstrate incremental employment growth, and sponsors were required to contribute 50 percent towards the total project cost. Project output was to be of economic value. Also, local Canada Employment Centres were to play a key role in hiring workers.

Project participants were as follows: 80 percent were UI exhaustees; 12 percent were on social assistance; and the remaining 8 percent were other unemployed persons. About 50 percent of employment was in construction, 10 percent in forest renewal, and 8 percent in high technology. During 1982-83, the federal contribution to the program was $464 Million. Provincial governments contributed about one-third of the federal contribution. In addition, the private sector contributed almost a matching amount to the federal contribution.

The evaluation findings indicated strong positive outcomes from the program. During 1982-83, the program created 88,000 jobs with an average employment duration of 23 weeks. The gross cost of job creation to the federal government (i.e. excluding cost to other partners) was estimated to be $11,900. According to selected project surveys, the average incrementality ratio was 74 percent.

4.10 Developmental Uses of UI (1977)

The Unemployment Insurance (UI) Act was amended in 1977 to design programs that would enable claimants to make constructive use of their time while on UI claim. Three developmental uses of UI funds embodied in the UI Act were for occupational training, work sharing, and direct job creation. Activities under these programs were mainly community-based, applicable to new labour market entrants as well as those who had already established UI eligibility, and generated subsequent UI entitlement. The Canada Community Development Projects and the earlier Canada Works program typified this approach. Developmental Uses of UI funds for direct job creation (permitted by Section 38 of the UI Act) was limited to UI recipients, and participation in these projects did not establish further UI eligibility after the project terminated.

The program was concentrated in three industrial sectors – forestry, mining, and fishing – which were hit hardest by the recession of 1981-82. Most projects and participants were in British Columbia and Ontario. Most of the participants were laid-off workers with UI eligibility.

The program cost mainly consisted of top-up UI benefits for project participants (estimated to be on average $2,000 more than what they would have received as regular benefits). In addition, some small expenses were granted for equipment rental or purchase.

The average duration of program participation was 13 weeks, which was short relative to other programs. The incrementality was quite high and was estimated on the basis of using a control group consisting of those who had UI eligibility but were not program participants. The incrementality was factored into the computation of cost. It is estimated (by the present authors) that the incremental cost of job creation under this program was a modest $8,500. Two factors contributed to the low cost: (a) the low opportunity cost to government of providing employment to those who otherwise would have been on UI; and (b) participation in the program did not establish further eligibility for UI following project termination.

4.11 On-Site Program (1983)

The On-Site program was developed in response to two main concerns: (a) a growing number of well educated professionals were unable to find employment in the resource management sector; and (b) a large number of organizations required temporary employees to meet their environmental responsibilities (for details see HRDC, December 1995).

The program, funded in part by Section 25 of the UI Act, provides qualified, unemployed professionals with hands-on experience addressing industrial, institutional, and municipal resource management problems. For funding to occur, participation criteria must be met by host employers as well as program workers. Employers were required to demonstrate their willingness and ability to offer incremental term employment in one of the designated program categories (which included environment management, hazardous waste management, occupational health and safety, and energy). Project workers must be in receipt of UI and possess the relevant education or work experience. The government provided enhanced UI benefits to program workers.

The following are some of the major evaluation findings and lessons learned:

• The primary conclusion from the evaluation was that the On-Site program was meeting its objectives in an effective manner and that the program was working well.

• On-Site cost of job creation per work-year is estimated to be $7,540 (estimated by the present authors from data)¹⁰. The average duration of participation in the program was 19.5 weeks. Based on a survey of employers, the incremental ratio was 76 percent (i.e. 24 percent said that they would have carried out the project irrespective of the program assistance).

• Over one-third (36 percent) of participants were hired by their On-Site employer. Of these participants, 32 percent were hired to full-time permanent positions and 50 percent were hired on contract.

• The key barrier to participation in the On-Site program in the case of workers was identified to be a lack of awareness among potential participants. Non-participants who took part in the fieldwork commented that they were unlikely to visit a Canada Employment Centre (CEC) as part of their job search because they did not believe that CECs had suitable programs or job postings for job-seekers with their background. As a result, UI recipients who did not visit a CEC or who did not know someone involved in the program were unlikely to find out about the program.

Footnotes

6	Derived from a survey of managers, 1972-73 projects (Hawkes et. al., 1973).
7	L. Ladouceur and P. Kinoshameg, The Evaluation of the Local Employment Assistance and Development Program, Ottawa, EIC, November 1986.
8	For a detailed review of youth initiatives see Human Resources Development Canada, Lessons Learned: Effectiveness of Employment-Related Programs for Youth, Evaluation and Data Development, June 1997.
9	For details see EIC, January 1982a.
10	Includes only the cost to government in terms of enhanced UI benefit payments to program workers; does not include costs to the employers (e.g. purchase of project-specific equipment, etc.)