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The Canadian experience with direct job creation programs generally falls in line with that of most other OECD countries. Similarities and differences are briefly highlighted below.

6.1 Other OECD Countries

In other OECD countries, the popularity of direct job creation programs increased considerably in the mid-seventies with rising unemployment. Similar to Canadian job creation programs, the target groups have usually been the general unemployed, long-term unemployed, older workers, young people, women, and new labour force entrants¹¹. Also, the eligible sponsors were similar to those in Canadian programs: local authorities, voluntary and charitable organizations, and sometimes also private sector employers. Almost all programs specified “additional” employment as a requirement for eligibility.

Major program funding was generally provided by the federal governments and in the form of subsidised wages of participants (usually ranging from 60 to 100 percent). In Denmark, however, the subsidy was 120 percent of gross wage costs. In the U.S. and U.K., some projects require supplementary program funding from other levels of government.

As in Canada, projects in other OECD countries generally occurred in the following sectors: construction, urban renewal, forestry, and environmental areas. The project duration did not usually exceed 52 weeks (18 months in the U.S.).

6.2 The United States

There are two major direct job creation programs in the U.S., and these are funded under Comprehensive Employment and Training Act (CETA). One program is designed for the disadvantaged who have been unemployed for 15 weeks or more (Title II. D). The other is for those who have been unemployed for 10 weeks or more and who come from low-income families (Title VI). The intent is that Title II.D should have basically a structural impact, while Title VI is expected to serve counter-cyclical purposes.

With the use of two programs, two objectives of job creation are kept somewhat distinct. In most Canadian job creation programs, however, the distinction is not so clear-cut. Whether this is desirable or not is discussed below.

6.3 Two Key Issues

In the light of a brief review of direct job creation programs in other OECD countries, two issues appear to be of major importance.

The first issue concerns the job displacement effect and the related level of incrementality in job creation. As in the case of program evaluation in Canada, other countries derive the incrementality estimates from sample surveys. These surveys are necessarily subjective and hence not strictly comparable. While recognizing the limitations of these estimates, however, the incrementality ratios of Canadian job creation programs compare quite favourably with those reported in other countries (50 to 60 percent in the U.K., and 65 to 70 percent in the U.S.; see OECD, 1980). Due to more targeted programming in recent years, job creation programs in Canada seem to have reduced job displacement and achieved a larger measure of program incrementality.

The second issue relates to the objectives of direct job creation programs. As temporary employment measures, they have two broad objectives: (a) to provide counter-cyclical economic stimulus; and (b) to reduce structural problems among certain demographic groups, regions, or industry sectors. Ideally, as a counter-cyclical measure, job creation programs should be capable of a fast phasing-in and phasing-out, be highly labour intensive, have low displacement, and draw clientele from the unemployed but not from outside the labour force. To address structural labour market problems, however, the speed of phasing-in and phasing-out is not so important. In fact, to phase-in a series of projects designed to give maximum adjustment assistance to groups with structural labour market problems probably takes time, and the phasing-out of successful projects may not even be desirable (OECD, 1980). Also, there is no rationale for restricting such programs to non-profit activities. In many instances, therefore, counter-cyclical and structural goals may be inconsistent objectives within the framework of the same program.

The analysis presented in this report indicates that tension between competing objectives is embedded in several Canadian programs. In several other countries, especially in the U.K. and U.S., the counter-cyclical and structural elements have been kept distinct from one another and not combined within the fold of the same job creation program. This important consideration should be kept in mind in future program design in Canada.

Footnotes

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In the U.S., two principal direct job creation programs are covered under the Comprehensive Employment and Training Act (CETA): one targeted to the general unemployed; and the other targeted to low-income and disadvantaged groups. In the U.K., the Job Creation Program (JCP) was introduced in 1975 and was conceived much along the lines of the Canadian LIP. JCP has recently been replaced by two separate programs: Youth Opportunities Scheme (restricted to unemployed young people); and Special Temporary Employment Programme (targeted to older people with long-term unemployment). In Denmark the major job creation programs are Public Employment Works (PEW) and Employment Projects for Young People (EPY); the two programs target all unemployed and young workers respectively. Programs in Norway, called Extra Employment Scheme (EES) and Alternative Jobs in the Public Sector (AJPS), have a similar orientation as in Denmark. For details, see OECD, 1980; Jackson and Hanby,1979; and Davis, 1996).