The blinding brightness of a very strong spotlight is exposing a transitional moment in the evolution of Ontario’s workforce - the skills mismatch.  

Describing the skills mismatch is a challenging exercise.  Essentially, it's determined by an employer's ability to find the employees they require to complete the work of their business and to subsequently grow their business.  And the ability for those in the workforce to apply their skills to the needs of employers. 

The Ontario Chamber of Commerce recently released a report titled “Talent in Transition: Addressing the Skills Mismatch in Ontario”.  The report offers 10 recommendations to government on how to move the bar and create a workforce in Ontario that is firing on all cylinders.   

Broadly speaking, the report is based on discussions with a multi-faceted advisory group (of which the Peterborough Chamber of Commerce was one voice), consultations and breakout sessions at a half day forum, and policy
resolutions from the Ontario Chamber Network that are currently part of the advocacy narrative for the provincial chamber.   

The recommendations fall into three buckets:
1. Exploring the Potential of Experiential Learning

• Address the limited capacity of small and medium enterprises (SMEs) to facilitate experiential learning opportunities by leveraging existing networks
• Drive employer awareness of programs designed to support experiential learning opportunities in Ontario 
• Leverage experiential learning opportunities to promote inclusive economic growth throughout the province

2. Developing A Systems-Based Approach to Training

• Shift towards greater client centricity
• Evaluate the potential of an outcomes-based employment and training systems funding model

3. Modernize the Apprenticeship Framework

• Revise the journeyperson to apprentice ratio framework
• Enhance support for apprenticeship consortiums
• Modernize the apprenticeship application process
• Reform the Ontario College of Trades
• Promote career pathways in the skilled trades

​Introducing younger generations to the world of work they will be entering into after their schooling is critical.  As such, it's positive to see the federal and provincial governments budgeting for such experiential opportunities.  However, recognition of the various pathways to achieve the goal is needed, along with ensuring meaningful
engagement.  Businesses need to be able to integrate programs with ease and ensure that the experience is just as positive for the student as it is for the business.   

The ultimate goal of reducing the skills mismatch is to improve the productivity of the workforce.  The provincial government invests a significant amount of money through the Employment Ontario program to support people looking to improve their workforce position, so taking steps to ensure the results are client-centric and outcomes-based is a natural evolution for the training program system.     

The bulk of the recommendations fall into the bucket of modernizing the apprenticeship framework. This group of industry sectors is at the core of the mismatch discussion.  The need to push the boundaries of the current apprenticeship framework might challenge the current norms but is wholly necessary.  As quoted in the Ontario Chamber report, 40 percent of new jobs created in the next decade will be in the skilled trades but only 26 percent of young people are considering a career in these areas.  That statistic alone should be impetus enough for us to start innovating in how we view jobs that are considered very traditional. Perhaps it’s worth likening the need to
transition at this juncture to moving from mainly human powered tools to motorized and electric versions to
keep up with demand. Pathways need to be clearly marked and maintained so that the desired outcome of more people entering the trades and completing apprenticeships is achieved. 

The upside of this entire discussion is that the Ontario Chamber of Commerce and the Chamber Network are not speaking about this issue in a vacuum. The government and other groups have joined the dialogue.  The challenge is to make sure that all discussions around talent and skills result in actions that lead to a more productive workforce and increased prosperity across Ontario. 

Talent in Transition: Addressing the Skills Mismatch in Ontario

In case you missed it, another Cyber Attack in the form of Ransomware has surfaced.  It can be sent as an attachment via email or embedded into a website. 

Some helpful tips from the Chamber:

• Use caution when opening any email attachments or links.  Verify the address of the sender to ensure that it isn’t off by a letter or digit trying to make it seem legitimate
• Back up your files regularly
• Invest in layered security systems (Firewall, Antivirus with active monitoring, Anti-malware, Anti-ransomware)
• Install the latest Microsoft updates.  Microsoft has released security updates including updates for unsupported Windows versions (XP, Vista, etc)
• If you think your computer may be infected disconnect the computer from the network and call a professional

To learn more about reducing your risks and protecting your business, contact one of our trusted Computer Support members
​

We are approaching the midway point of 2017, but the budget process for 2018 is officially underway at the City of
Peterborough.  The Director of Corporate Services has released the 2018 Budget Guideline Report and it was received as information by council earlier this week. The 2018 proposed tax increase currently sits at 2.85%, which
covers increased operating costs, an increase in sanitary and storm sewer operating and capital cost and an additional .5 % to continue to implement the city’s Capital Financing Policy.  Overall, that would add $109 to the combined municipal, education, storm and sewer surcharge levy on a house assessed at the median value of $243,500.  

What does it mean for our business community?
There are several points to note, including the following taken directly from the city report:
"That the revised Tax Ratio Reduction Program continues for the 2018 Draft Budget and reflects reductions: 
i) to the Commercial and Industrial Class Tax Ratios but not the Multi-residential Class, and 
ii) at the reduced rate established through the 2016 Budget process, and 
iii) for the Commercial Class only, accelerated by a one-time amount of $300,000." 

The Tax Ratio Reduction Program was collaboratively lobbied for by the Peterborough Chamber of
Commerce, the Kawartha Manufacturer’s Association and the Peterborough and the Kawarthas Association of Realtors.  The goal of the program is to have the commercial and industrial tax rate 1.5 times that of residential.  This result would make Peterborough more competitive on a tax basis with other mid-size cities in Ontario.  

The guidelines also lay out the City’s proposal to handle casino revenues and the monies from the sale of PDI to Hydro One.  In each case, city staff is proposing that these revenues be directed to future capital projects. 
That any additional investment proceeds in 2018 from the sale of Peterborough Distribution Inc., be directed towards enhancing Capital financing, and not be used for purposes of reduction in net tax levy. 

"That, regarding any potential gaming revenues to be received from a Casino in 2018, the draft budget contain recommendations that will: 
i) Direct the City’s share of all future municipal gaming revenues towards financing future Capital works, and not be used for purposes of reduction in net tax levy in the Operating Budget, and 
ii) Place any residual Gaming Revenues over and above the amount budgeted in 2018 in a new
Gaming Revenues Reserve to be used to finance future capital works."

The Director of Corporate Services also recognizes various outside pressures on the budget in the 2018 guidelines, among them are the uploading of Mandatory Benefits to the province and, changes to Children’s Services as management of the Ontario Early Years Centres is moved to the municipality.  Other outside pressures include: an increase in hydro costs of approximately 6% over 2017, with an estimated budget impact of $840,800 for heat and hydro when street light use is included; and the potential impact of an increase in minimum wage with preliminary estimates as high as a $200,000 for 2018. The budget guidelines also suggest there may be future implications for costs of contracts with suppliers such as security, courier and cleaning services due to potential minimum wage changes.  There is also concern that there may be budget impacts with other employment standards for equal pay for equal work for casual, part-time, temporary and seasonal employees.  

The document also highlights transfers to other organizations that the city is committed to, including Fairhaven, the Downtown Business Improvement Area and police services.   

For the 2018 Capital Budget, Council has pre-committed $11,392,500 in funding to nine different projects or initiatives. Almost $4.8 million is tax supported.  City staff also cites 2018 will be the last year of funding for Hospice, the second year of funding for the Humane Society’s Animal Care Centre, and they are also expecting a request for funding for the new Canoe Museum.  

The budget guidelines also explore how a casino opening in June 2018 will impact the budget.  A report from May 2016 estimated the construction value of a casino to be $49 million and a hotel $17 million with $1 million generated in tax revenue.  Because of the timing of opening and the difficulty of estimating gaming revenues, city staff are recommending the formation of a new Gaming Reserve Fund to be used to finance future capital works. 

In summary, city staff reiterates that given the number of unknowns supporting existing levels of service at a reasonable cost to taxpayers will be a difficult task.  

If you would like to comment or make a presentation on the 2018 budget, the first public meeting is June 28, 2017.   
 
Read the report

Peterborough City Council has decided to do away with the Vacancy Rebate Program, starting with the 2017 calendar year.  While this initially caused some concern, the Peterborough Chamber is encouraged by and supportive of the decision to redeploy the money set aside for the program to the Tax Ratio Reduction Program.   

In response to a call for feedback on the City’s consideration of changes to the program, the Peterborough Chamber of Commerce Board of
Directors provided staff with a similar recommendation.  

What is/was the Vacancy Rebate Program? 
The City of Peterborough sets aside $300,000 each year under the current Vacancy Rebate Program.  The program, which has been in place since 1998 and is mandated by the provincial government, provides tax relief through a rebate of property taxes to owners of vacant commercial and industrial buildings.  Currently, the rebates sit at 30% for commercial buildings and 35% for industrial, should the property meet certain requirements, including length of vacancy.  

Why was the City looking to change the program?
Recently, the province allowed municipalities to start discussions and make changes to the program. 

Several options were on the table: 
1. Eliminate the rebate program in its entirety, beginning in 2018 for the 2017 tax year.
2. Phase out the program over a 3 year period:

• Applications received in 2018 for the 2017 tax year to be processed as normal.
• Applications received in 2019 for the 2018 tax year would be eligible for a rebate of 20% if commercial and 23.5% if industrial.
• Applications received in 2020 for the 2019 tax year would be eligible for a rebate of 10% if commercial and 12% if industrial.
• No rebate would be offered beginning in 2021.

3. Status Quo – no changes to the current program.
4. Revise the current program. 

• Potential changes that may be considered include reducing the rebate percentage, increasing the minimum period of vacancy and limiting the property types eligible for the program.  

What was the Peterborough Chamber's response to the call for feedback?
After reaching out to our membership of more than 900 businesses, discussions at the Policy Committee and Board of Directors level, the business community believed there were other options than those above to encourage continued business investment in Peterborough and revitalization of current building stock.  As the Vacancy Rebate Program applied to ratepayers in commercial and industrial tax class across Peterborough, it was felt the
redeployment of any funds should be city-wide as well.  

Our members also wanted City staff to know that use of the program could be very helpful in certain cases and not a reason for building owners to keep space vacant.  

What was the recommendation from the Peterborough Chamber of Commerce?
The Tax Ratio Reduction Program, which resulted from a coordinated lobbying effort by the Peterborough Chamber of Commerce, Kawartha Manufacturer’s Association and Peterborough & the Kawarthas Association of Realtors, is currently set to meet its target of 1.5 times the residential tax rate by 2021.  Our understanding was that applying the Vacancy Rebate Fund to accelerate the program will allow the commercial rate to realize that ratio a year ahead of schedule in 2020.

An added bonus to redeploying the money in this way is that it will provide city-wide relief to businesses of all sizes and sectors and in turn create an even more business-friendly environment for economic growth in Peterborough.   

What is the final approved Council Resolution?

• That the Vacancy Rebate Program be eliminated for the 2017 taxation year, commencing with the 2018 budget.
• That the $300,000 budget for the Vacancy Rebate Program be redeployed to the Tax Ratio Reduction Program by accelerating the reduction of ratios for the Commercial tax class.
• That staff provide a report on a possible program to assist in the redevelopment of existing buildings. 

While a number of businesses took legitimate advantage of the Vacancy Rebate Program, switching this funding to the Tax Ratio Reduction Program is more broad-based, benefiting all commercial taxpayers.

The decision behind last week’s announcement to increase the minimum wage to $15 per hour appears to have been made with scant evidence and little or no consultation.

The Changing Workplaces Review Committee had been meeting for two years, enjoyed broad stakeholder input and explicitly excluded minimum wage from the discussion. Indeed, the process for establishing minimum wage was just introduced two years ago, tying the minimum wage to the Consumer Price Index. This was to avoid what had become the pattern – no minimum wage increases for years, followed by a dramatic increase, with no warning, for political purposes.

The Chamber of Commerce network is calling for some evidence based thinking. In the few days following last week’s announcement, dramatic and overwhelming evidence has been provided by local small business people, members of both the Peterborough Chamber of Commerce and the Kawartha Chamber of Commerce & Tourism:

Local Manufacturers - “I’ve just won a contract to supply another local company with my product. This is a major order that will require an expansion of my business, including a building addition and hiring more people. At $15/hr, I am no longer competitive and will have to walk away from the work. I thought hydro rates, now my largest business expense, were hard enough to deal with. This is impossible.” / “We do agree with wage increases over time but such a large one up front will definitely hurt our small business.  We are a new business of only 7 years and will have to cut hours to stay competitive in the market we are in.  Yes, people will receive more, but they will also be paying for taxes back to the government.  Someone has to pay for all this, and sadly it will be the consumer.”

Local Not for Profit – “with 35 employees during the summer, our labour costs just went up 30%! We will use a combination of hiring fewer people, shortening shifts and increasing prices to adapt. Unfortunately, hiring fewer students for the summer will be the first move.”

Local Restaurants – “Our payroll will increase by over $90,000 dollars…I see hiring fewer people, increasing prices, automation, and phasing out employee benefits. This is the most devastating cost to hit the hospitality industry – ever…”/ “Higher hydro bills and propane prices, and now a $15 minimum wage?  I will decrease my operating hours, cut down hours for current staff members; I will not hire new staff, but instead have my family work with me for longer hours, and I will raise menu prices - which is my least favourite option, since I run the risk of becoming unaffordable for my customers. Without customers, we’ll be closed.”

Local Retailers – “At this point we have estimated that this increase will cost us upwards of $50,000.00 a year. Where is that coming from, profit, which is used to grow our business.” / “Every single one of my employees makes more money than I do… Enough talk about the fat-cat business owner…” / “The government continually praises small business as being the backbone of the economy, yet measures like this increase the burden on small business. This legislation would increase my payroll costs by approximately 20%. I will have to choose between significant price increases, reducing staff or closing the door.” / “Increasing minimum wage to $15 will affect our entire pay scale. An employee currently making $15 an hour has earned it through experience, training and proving themselves.” / “This drastic jump will be financial suicide for many small businesses. Price increases, a hiring freeze, a cut back in operating hours. This new minimum wage strategy will without a doubt increase unemployment!” / “We are still in shock – why so fast?  The previous increases were gradual and better able to be factored into our business models.” / “More than half of my business is serving the other local businesses in Peterborough. If those businesses are suffering and feeling the pinch my store will be negatively impacted by this as well. Honestly, I fear that there will be very few winners - one of them possibly being the government, through increased tax revenues - and way too many losers.”

Local Farmers - “We will have to condense our Pick Your Own business to one farm only, cutting out 4-6 seasonal jobs each year, at a minimum. We will almost certainly have to raise our prices as our margins are already so small that there are years we come close to only breaking even. One of our biggest worries is the 48-hour rule for cancelling staff. If we have in the peak of our season 30 people regularly scheduled for work and have to cancel them because of the weather...that means we are still paying out 90 hours of work for one cancelled day. This will certainly break us, as well as many other farmers.”

Local Accommodation/Hospitality - "We will need to seriously consider the viability of our tourism product, with projected increases needed in the 5 – 10% range to cover not only the immediate wage increase but all the other liability increases that will go along with it. It may not be feasible for us to operate past December, which will result in the layoff of 5-8 full time employees.” / “In order to maintain remuneration integrity I will have to increase everyone’s wage by 23%. In my business’ case that would represent a $50,000 extra annual cost. I would have to increase my consumer rates by 12% to offset the wage increase. I have not been able to increase rates since 2001, so I will be forced to cut back on labour, hire fewer employees, reduce hours, increase prices, sell the business, or simply shut down.”

Our recommendations include:

• Conduct a comprehensive economic impact analysis
• Explore alternatives, such as minimum income vs minimum wage, or income tax measures

The Premier’s own 2014 Minimum Wage Panel concluded that for every 10% rise in Minimum Wage, teen employment drops by 3 – 6%. 

The citizens of Ontario are already reeling from the loss of some 300,000 manufacturing jobs in the last ten years. The economy is in transition and under tremendous competitive stress.
​
This increase will be a shock to the economy, with unintended consequences. The Provincial Government needs to prove their case with well-researched evidence.