This past week, premiers issued a strong rebuke to the Harper Conservatives’ plan to overhaul the country’s job and skills training framework. The Conservatives want to replace the existing federal-provincial framework with their newly proposed Canada Job Grant, a major centrepiece of the Conservatives’ economic strategy that is set to come into effect in April 2014. Premiers, however, are up-in-arms over the new proposal and have threatened to boycott the plan.

The showdown between the provinces and the federal government is over the direction of job market and skills training, and also what premiers see as an intrusion by the federal government into a traditionally provincial jurisdiction.

The premiers argue that they know their local labour market needs best, and that a one-size-fits-all approach administered at the national level will not meet the needs of Canada’s diverse economic regions.

British Columbia Premier Christy Clark and New Brunswick Premier David Alward have been tasked to take the lead on the issues of labour force development and skills training for the provinces. They met with business groups in Toronto last week to develop an alternative proposal to the Conservatives’ plan.

“All premiers agreed that the program as it stands will not go ahead in any province in the country,” said Clark to the Globe and Mail.

The current Labour Market Agreement sees the federal government transfer $500 million to the provinces annually, which then funds programming aimed at increasing labour market participation of underrepresented groups – namely: youth, persons with disabilities, Aboriginal people, recent immigrants, social assistance recipients, and long-term unemployed and older workers.

The proposed new Canada Job Grant is aimed at addressing Canada’s supposed skills shortage, or skills mismatch in its workforce. The program is designed to help businesses hire and train new employees, by sharing the costs of training a new employee. Costs would be split evenly three ways between the employer, the particular province, and the federal government.

Premiers have doubts over the program’s effectiveness – particularly that it will not address the needs of vulnerable workers and that small and medium-sized businesses will be unable to participate.

Labour ministers also argue that the Canada Job Grant will bypass small businesses due to the cost-match  required to participate in the program.

A joint report from the Caledon Institute of Social Policy and the Mowat Centre for Policy Innovation is highly critical of the proposed Canada Job Grant.

“It will be the rare small business where someone has the time, knowledge, and experience to initiate and design a training program to access a Canada Job Grant,” reads the joint report.

The report argues that the proposal will do little to spur job creation, and instead would be a “windfall opportunity” for employers to gain public funds to subsidize training they would have provided anyway.

Other prominent voices have also raised concerns over the new proposal. Former chief TD Bank economist Don Drummond says there is little evidence to support the diagnosis that Canada is suffering from a serious skills mismatch or skills shortage in its workforce.

Statistics Canada reported that there were 5.5 job seekers for every job opening in 2012, suggesting that the main problem of continued high unemployment in Canada could be due to a lack of job openings, and not a skills mismatch.

Labour ministers called for “an evidence-based approach,” and said the new proposal will not meet the need of employers and stakeholders.

The federal government has fought back, issuing a list of business associations that support the Canada Job Grant, including the Canadian Chamber of Commerce, the Forest Products Association of Canada, and Canadian Manufacturers and Exporters.

The Federal Minister in charge of Employment and Social Development, Jason Kenney, has said he will meet with premiers soon to discuss the Conservatives’ proposal. A deal will have to be worked out soon, as the current agreement is set to expire in April.