By Jock Finlayson

Recent months have seen a high-profile debate over the role of temporary foreign workers (TFWs) in the Canadian economy. While the main focus has been on the practices of a handful of companies alleged to have violated the rules of the federal government’s TFW program, the underlying public policy question revolves around whether and to what extent Canada should be relying on temporary foreign workers in the first place.

Low-Skilled TFWs Sparked Moratorium
The backdrop to the debate is a steep increase in the number of TFWs in Canada, following the progressive relaxation of the program’s rules starting in 2002. By last year, 338,000 TFWs were in the country, up from 100,000 a decade earlier, with most of the growth occurring in the western provinces.

There are several different channels through which employers can bring on temporary foreign workers: under the provisions of international trade agreements, such as NAFTA; based on reciprocal arrangements between Canada and other Commonwealth nations (e.g., the UK and Australia); as academic researchers; via the movement of intra-company transferees; based on the seasonal agricultural and live-in caregiver streams of the TFW program; or when an employer applies for a Labour Market Opinion (LMO) allowing the selection of a TFW for a position that can’t be filled by a qualified Canadian.

It is the growing number of relatively low-skilled foreign workers entering under the LMO process that has been attracting considerable media and political attention – and that prompted the federal government to announce, in April, a moratorium on new LMOs for the restaurant industry.

Questions Surround New Policy
For understandable reasons, policy-makers want Canadians to have priority for vacant jobs. Under the LMO stream, employers must demonstrate that they have looked for Canadians to fill positions before they can obtain approval for a TFW. But how extensive a search should they be required to conduct? In the local labour market only, or right across the country? Is it reasonable to expect an employer to undertake a national search for entry-level workers? How many unemployed or under-employed Canadians are prepared to move to a different province for a job – especially a relatively low-paying one? Finally, is the quality of Canadian labour market information sufficient to determine whether and where skill or broader labour shortages exist – and whether letting in more TFWs will adversely affect domestic workers? These are difficult questions, the answers to which bear on the design and scope of a sensible TFW program.

Critics Cite Unemployment Impact
Critics maintain that imposing a higher cost for using the TFW program would strengthen incentives for employers to find domestic candidates and also nudge businesses currently dependent on TFWs for lower-skilled jobs to boost wages. Some recent academic studies suggest that the expansion of the TFW program starting in 2002 contributed to higher unemployment rates for Canadians with qualifications suitable for entry-level positions. Federal government ministers responsible for immigration and employment matters appear to share this assessment, which means that more changes to the TFW program are probably in store.

Legitimate Opportunities for TFWs
Canada needs a well-designed TFW program. I would argue that accessing TFWs should be seen as a legitimate option in the following cases:

• To recruit hard-to-find skills in occupations where the domestic labour supply is insufficient. An example could be foreign welders and pipefitters needed to help build large industrial projects in northern B.C. These kinds of skilled trades personnel are in short supply across the country.
• To recruit workers with varying skill levels into service-sector jobs in smaller or remote communities where the local labour pool is very limited or non-existent. Here, an example might be using TFWs to staff positions in the tourism or restaurant industries in smaller communities that are distant from populated urban centres.
• To access a specific group of foreign workers for well-defined purposes, such as seasonal agricultural workers or live-in caregivers.

Big Cities and Better Information
On policy grounds, it is hard to justify the presence of large numbers of TFWs in entry-level service jobs in big cities where, in theory, there are plenty of unemployed/underemployed domestic candidates. Canada has a market-based economy in which changes in prices are used to address situations where demand and supply diverge. In the labour market context, wages play a role analogous to prices as a means to help bring demand and supply back into alignment when imbalances develop. There is a risk that a large-scale temporary immigration program focused on relatively low-skilled workers could prevent the wage adjustment process from operating effectively.

That said, at this stage I would argue that the most pressing task for the federal government is not to tinker further with the TFW program. Instead, Ottawa needs to make a firm commitment to improve the quality and timeliness of labour market information in Canada so that we can all acquire a better idea of the nature of job vacancies and the extent to which there are shortfalls in the supply of qualified domestic workers on both a regional and an occupational basis.

Jock Finlayson is the executive vice-president of the Business Council of BC.

(PeopleTalk Summer 2014)