Ottawa extends work-sharing agreement

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Canada's popular work-sharing agreement will be extended by an additional 26 weeks and extra funding will flow to hard-hit unemployed youth, the federal government announced Thursday in a budget that otherwise offered few new direct measures to support Canada's 1.5 million unemployed.

The government will let companies continue their existing or recently ended work-sharing agreements for up to 78 weeks from 52 weeks currently. It will also increase flexibility in the eligibility criteria for new agreements.

Work-sharing lets employers shorten their staff's work week if demand suddenly drops, avoiding the need for mass layoffs. Employees can collect employment insurance on their days not worked.

It has proven popular. More than 160,000 workers are currently participating in nearly 6,000 work-sharing agreements, the government says.

The move will cost $106-million over two years, with the new measures in place until March 31, 2011.

"This measure…means even more workers will keep their jobs, while employers will also be able to retain skilled employees with years of experience," the government said.

The move comes as employment remains 280,000 below its peak in October, 2008. While hiring remains sluggish, the labour market has shown signs of improvement in recent months, with job growth in the past four of six months.

While the labour market has stabilized, "many Canadians are struggling to find jobs," the budget, entitled "Leading the Way on Jobs and Growth," said.

The other measure aims to help youth. Few groups were as hard hit through the recession as young people, who experienced more than 90,000 job losses between this January and last.

The government will spend $108-million over the next three years to help young people gain skills and experience. This includes more support for the education of First Nations children and youth.

These measures include:

- a one-year $30-million increase in funding aimed at career-related internships for college and university graduates, including more internships in green sectors of the economy.

- $10-million to youth entrepreneurs.

- one-year $30-million increase to fund skills programs for youth at risk.

- $20-million to help tutor and mentor lower-income youth in high school.

- $30-million over two years to support First Nations students.

The rest of the budget aims to spur job creation through continued stimulus spending and by making Canadian businesses more competitive.

The federal government aims to maintain or create 220,000 jobs by the end of jobs, and claims that an estimated 130,000 jobs have been created or maintained so far.

It's tough, though, to calculate precisely how many jobs have been created through stimulus spending, said Michael Gregory, senior economist at Bank of Montreal.

"There aren't a lot of specific measures that create a lot of jobs, but hefty stimulus spending is coming through the pipeline and that's adding to momentum in the economy," he said.

The budget did not include make any additional changes to the employment insurance system.

Canada's jobless rate is currently 8.3 per cent while the U.S. rate is 9.7 per cent.

Mr. Gregory sees the jobless rate staying near where it is this year - easing to 8.1 per cent - because more people will resume looking for work as the economy recovers.