May 3, 2013

As most will know, within the last few weeks the Temporary Foreign Worker Program has attracted a lot of negative attention, originally sparked by a complaint accusing RBC of replacing Canadian workers under the program. This was not an entirely accurate or nuanced portrayal of the situation, and that original report has done a lot to discredit the program in the media. The program is meant to assist employers in filling short term employment gaps of skilled workers. One thing the media should be doing is ensuring that the public understands that in many instances, the program is fulfilling its mandate, and that meeting the acute skills set shortage needs of corporate Canada is crucial to the Canadian economy and good for Canadians in general. For more detail, the CERC has recently created a white paper on the issue, and it is worth reviewing. The white paper defends the TFWP and does accurately point out that hiring through the program is not a simple process. To use the program, companies must prove they can’t find the skills they need in the local market.

However, the CERC white paper cannot categorically and universally make the claim that “Canadian employers are not using the Temporary Foreign Worker Program as a tool to drive down domestic wages and by-pass the hiring of Canadian employees…” In many instances employers are using the program to fill acute labour shortages in high skilled jobs. However, few are in a position to conclude on the entire Canadian-wide usage of the program. The growth of usage of the program has been incredible, tripling over the last decade to 338,189 applications last year, according to the Globe and Mail. That type of growth means that monitoring of its uses and possible abuses must necessarily have been strained (let’s remember that due to government cutbacks the total number of bureaucrats as has been in decline at the same time). Is the program still, consistently, always meeting the needs as expressed in its original mandate or have the usages, in many instances, expanded beyond the original mandate?

The CERC white paper rightfully points out that employers have to ensure that working conditions, benefits and compensation are equal to 85% of the wages paid to a Canadian permanent resident performing the same tasks (this just changed a few days ago to 100% of the prevailing wage). It is also absolutely true that, in a number of cases, employers ended up paying 100% or even more in terms of compensation anyway. The report goes on to note that many Canadian employees are not willing to relocate within Canada for such an employment opportunity. There is a flipside way of viewing that comment: It could be that the employer in question is not willing to pay the costs of such a relocation. The relocation benefits to move a homeowner from Fredericton to Calgary is likely to cost 3-4 times (if covering the real estate disposition and purchase costs) more than bringing in a Temporary Foreign Worker, who is not a homeowner and does not have a comparable opportunity in the origin country, so would accept such a position with a smaller relocation benefit. This would necessarily go into the calculations as to whether to relocate a new hire domestically or globally. Of course, the decision-making is more complicated than this, but my point is just to show that the situation is indeed nuanced.

We should consider economists’ opinions on the program, and some economists are concerned that abuse of the program could be depressing wages in Canada, creating a disincentive to training Canadians in important skills or even reducing domestic mobility. If this is the case, then this would not be to the benefit of the overall Canadian economy. I agree with the CERC white paper’s recommendation that as the federal government looks at the TFWP, it takes a comprehensive look at best immigration policies, domestic mobility and future labour force growth.

My concern is that with 300% growth in a decade the federal government quite possibly took its eye of the ball, and let abuse of the program seep into the system. Now, with the backlash against the program, the possibility of the government acting in a politically expedient manner rather than a strategic manner is high. In the midst of higher than normal unemployment, it was absolutely predictable that the rigours around the program would tighten and that is what has happened the other day. The program’s original mandate was sound, and if the government let abuse seep into the system, then they are to blame for allowing this to become a political issue rather than a policy issue. It is certain that the TFWP is harder and more costly today than it was yesterday, and this, in many instances, is likely a good thing.

However, a larger concern is that this increased rigour, driven by political expediency, will seep out to other programs, and this is what is happening. We had already seen increased scrutiny on both the processing of Labour Market Opinions and for Business Travellers entering Canada before the Harper Government’s announcement the other day. The Accelerate LMO process has been suspended. There is also a full review of the Labour Market Opinion process that will definitely lead to increased complexity, increased duration of the process, increased employer efforts and increased fees for both LMO’s and Work Permits. Slowing down the immigration process for legitimate applications for Labour Market Opinions and regular Work Permits is not good for the Canadian economy, and will negatively affect Canada’s ability to attract the talent it needs in a cost effective and expedient manner. With the war for talent in full gear, the federal government should not have let this happen. All Points will be monitoring any changes and updating you shortly.