The unintended consequences of Temporary Foreign Workers Program reforms



WHAT started in April with complaints that three Victoria McDonald’s franchises were favouring temporarily foreign workers over domestic employed culminated in a June announcement by federal Employment Minister Jason Kenny of sweeping policy changes impacting every sector across the country.

The Tories’ sense of urgency was elevated by polls showing that the intense media coverage had convinced the majority of voters that a program representing less than 2 per cent of our total workforce was stealing large numbers of jobs from unemployed Canadians.

Such a rapid response by typically plodding policy making is usually worthy of applause. But it’s now clear that the time taken to restructure a complex program that’s been part of Canada’s economic mosaic for four decades was insufficient to avoid some very serious unintended consequences.

For example the skiing industry employs hundreds of temporary foreign workers, some of whom are instructors in short supply in Canada. The new temporary foreign worker application fee increase from $275 to $1,000 must be amortized over the relatively short ski season. David Lynn, President of the Canada West Ski Areas Association captured the view of many business leaders: “We feel that government should deal directly with the people that are abusing the program and not institute a series of draconian changes that impact . . . people who use the program responsibly”.

One of those “draconian changes” will tighten the screws from a cap of 30 per cent for “low-skilled” temporary foreign workers to just 10 per cent by mid-2016. And a new income criterion increases the proportions of temporary workers categorized as low-skilled. The previous rules that tied low-skilled jobs to a widely accepted standardized list of occupations have been changed to jobs receiving less than the median wage.

In Alberta, for example, Statistics Canada data shows the 2013 average hourly wage for temporary workers was $20.87, while a 2013 Labour Force Survey shows a 2013 median wage of $24.23, resulting in significantly larger numbers of temporary foreign workers being caught in the new more restrictive rules. This, together with the progressive tightening of the proportion of low-skilled workers, explains the highly negative reaction from Alberta businesses already struggling to find workers.

Meanwhile, in Atlantic Canada, where provincial unemployment rates range from 9 to 12 per cent, a complete phase out of temporary foreign workers for provinces with unemployment rates above 6 per cent is also drawing fire. Nova scotia Labour Minister Kelly Regan has said that “. . . there may be some fish plants that have great difficulty in getting in the harvest . . . if they are not able to have temporary foreign workers” Prince Edward Island is equally alarmed that the changes would prevent processing of its all-important lobster harvest.

That provinces with the highest unemployment rates share concerns with the province having the lowest unemployment rate serves to illustrate the hazards of precipitous, broad brush policy changes that don’t consider our country’s complex employment mosaic.

Ironically, another government program aimed at helping Atlantic Canada is actually making the situation worse. Unemployment insurance benefits that favour Atlantic Canada results in many workers refusing work once they have qualified, making it even harder to find local workers willing to do the less attractive fish plant environment.

These realities discredit the very concept of tying foreign worker restrictions to provincial unemployment rates.

But it also illustrates a broader reality. The agricultural industry is exempted because planting and harvesting are truly temporary jobs requiring large numbers of workers for short periods. Fish processors, ski instructors and many other such peak load jobs should also be exempted from rules that are designed for more continuous worker needs as in restaurants and hotels.

While the changes are supposedly aimed at low skilled workers, the additional red tape and higher application fees are impacting seasonal and transient workers who regularly move back and forth across the border. For example, doctors who live in Detroit and work in Essex County/Windsor have to fill out multiple forms and pay multiple fees (which have been increased from $275 to $1,000) Exacerbating the problem is a rule that requires a separate application for each location a doctor might work in, such as a hospital, nursing home or in doctor-short rural clinics. The rules also require that the physician jobs be advertised in each job site. And since the permits only last one year, the process must be done over and over again for each doctor.

Janet Ecker, President of the Toronto Financial Services Alliance, complains that the new rules are also making it difficult for banks, insurance companies and pension funds. “Our economy is dependent on the ability . . . to have access to global talent”. Even the technology sector is finding that the rigidity and bureaucracy of the rules is making it harder to hire skilled workers such as software developers. The red tape also requires employers applying to hire low-skilled temporary foreign workers to state how many were interviewed for each job and why Canadians were not hired.

Yet to come are new rules for live-in caregivers, which mainly refers to as nannies.

Hopefully, these will be more carefully considered. And that consideration should take heed of the fact that very few Canadians are interested in being nannies, and that the ability of nannies is critical to the ability many mothers to fill the skilled jobs our country needs.


Gwyn Morgan is a retired Canadian business leader who has been a director of five global corporations.