The Broadbent Institute is proposing a “new deal for young people” that involves business relinquishing a fraction of the “dead money” it is hoarding to offer jobs for young graduates.
The institute says an injection of $670 million from business and an equivalent amount from the federal government could lead to the creation of 186,000 full-time jobs to help young Canadians begin their careers.
It proposes a Youth Job Guarantee – a promise for every person under age 25 of a co-op position, apprenticeship or job offer within four months of leaving formal education or becoming unemployed. Jobs would last 12 weeks and pay about $15 an hour.
This would help reduce the 13.3 per cent unemployment rate among Canadians aged 15 to 24 and diminish the risk of these young people becoming “discouraged workers” who no longer seek employment, the institute said.
Executive director Rick Smith said the federal government has failed to show leadership on youth job creation, reducing spending on its Youth Employment Strategy to $335.7 million in 2014 from $397.9 million in 2011.
"Canada’s approach to youth unemployment at the moment is not working. Youth are the only demographic that has not recovered their employment since the recession," he said in an interview with CBC News Network's The Lang & O'Leary Exchange.
The government estimates its program helps about 49,748 youth, while 380,600 young Canadians are out of work.
Smith proposes a scheme in which government money would support placements with small private-sector employers and not-for-profit organizations, while bigger businesses would pay the full cost of a co-op placement.
Cheaper than income-splitting
"This is a government that’s talking about blowing $3 billion next year on an income-splitting scheme for richer Canadians that don’t really need it," he said, pointing out that this proposal would cost much less at $670 million.
The Broadbent Institute plan is based on an EU guaranteed youth jobs plan, which funnels graduates into co-op and apprenticeship positions at the start of their careers.
Canadian business was criticized by then Bank of Canada governor Mark Carney in 2012 for sitting on “dead money” rather than using it to invest in the business or return to shareholders. The IMF also pointed to the large pool of unused capital held by private corporations, estimating it $630 billion in the first quarter of 2014.
"We’re challenging the private sector to step up. There’s an enormous amount of dead money out there in the private sector, a fraction of which if applied to this problem of youth unemployment could have a big impact," Smith said.
Meanwhile, Canadian youth face a future in which they are less likely than their parents to earn a decent wage, have a secure job, or own a home, Smith said. Many are stalled at the beginning of their careers because they have no experience and cannot get a first job.
Not developing young talent has a cost to the economy, Smith said, both in lack of skilled labour and in diminished earnings later in their careers for young people who cannot get a first job.
"Parents are worried about their kids. The job prospects of millennials are worse than their boomer parents at the same age," he said.