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Employment Minister Jason Kenney speaks about the federal government’s job strategy at the Economic Club of Canada in Toronto on Oct. 8, 2013.

DEBORAH BAIC/The Globe and Mail

The Conservative government is offering to waive the requirement that provinces match federal contributions toward a new Canada Job Grant – a key concession that is part of a behind-the-scenes push to get the program off the ground.

The Canada Job Grant was a centrepiece announcement in the 2013 budget and Ottawa wants to have the program in place by April 1. Reaching a national job-training deal is particularly important for federal Conservatives, who are under pressure to act in the face of rising unemployment but are planning an early February budget that will continue with spending cuts and offer little new spending or tax breaks. The push to bring reluctant provinces on board comes as some jurisdictions continue to struggle with slow economic growth and large deficits.

The original premise of the job grant was that Canadians could apply for $15,000 toward job training, with the cost split evenly among Ottawa, a province and a business looking to hire.

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Ottawa is also indicating in the discussions that small businesses could cover part of their contribution through wages in a work placement. Ottawa's latest offer involves a pledge to cover the provincial contribution, meaning the maximum $15,000 grant would include up to $10,000 from Ottawa and up to $5,000 from an employer. No new federal money is included as part of the offer, meaning the original number of grants to be offered would be reduced.

Ottawa originally projected that about 130,000 Canadians a year would receive the grants once the program is fully implemented. At up to $5,000 per grant, that would have left provinces and the private sector on the hook to find as much as $650-million a year each to pay for their matching contribution – though estimates have suggested the average grant would be about half that amount, meaning provinces would have been on the hook to find approximately $300-million in matching funds.

Sources confirm the major concession from Ottawa was delivered to the provinces on Christmas Eve, as part of a broader proposal from federal Employment Minister Jason Kenney.

Provincial officials are currently reviewing the package and have not yet prepared a response. Negotiations appear to be at a sensitive phase, with some provinces more supportive of the grant than others. British Columbia and New Brunswick are playing a leadership role in representing the provinces, though Quebec has made it clear from the beginning that it has no interest in the plan.

The latest offer from Ottawa does not budge on one of the main concerns from the provinces, which is that the federal plan will ultimately lead to a $300-million reduction in provincial transfers.

The federal government currently transfers $2.5-billion annually to the provinces to deliver training programs, with $500-million coming from Labour Market Agreements where money is targeted toward "under-represented" groups that do not qualify for employment insurance, including immigrants, the disabled, aboriginal people, youth and older workers.

Ottawa is proposing to gradually reduce that transfer from $500-million to $200-million to pay for its share of the new job grant. Ottawa has said the provinces will be allowed to dip into the remaining $2-billion transfer fund – called Labour Market Development Agreements, which are aimed at people who do qualify for EI – to pay for existing programs aimed under-represented groups.

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Alastair MacFadden, acting assistant deputy minister for labour market development with the Government of Saskatchewan, is part of the negotiations. He confirmed Ottawa has made a new concession around matching funds, but declined to be specific.

"The initial design of the job grant required provinces and territories to cost match and that would create some new pressure on provincial budgets. So that's an area where there was some detailed discussion," he said. "They have offered a new proposal for the Labour Market Agreements and job grant – there's greater flexibility than there was with the initial offer. So while a deal has not yet been reached, it's fair to say that discussions are ongoing and the government of Saskatchewan is hopeful that an agreement can be concluded before the end of March."

Private training schools and some labour groups that initially supported the grant had argued they could provide training for the grant. Chris Smillie, a senior adviser with the Building Trades, said the group that represents unionized construction workers will be asking Ottawa for clarification as to how this latest concession will affect training providers.

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