Canada’s recent changes to the Temporary Foreign Worker Program (TFWP) are slamming the door on low-skilled workers trying to come to Canada, and in some cases to stay in the country. To some, this might not seem to be a bad thing, but a shortage of low-skilled workers will have consequences in both the short and longer terms.
A recent Canada West Foundation report describes the history of foreign workers programs and the effects of the 2014 changes, including the increased cost in money, time and administrative process to bring in a low-skilled worker who then cannot stay in Canada as long.
Starting this year, not more than 10 percent of the workforce (based on hours worked) of any company can be TFWs. In other words, Canadians have to do 90 percent of the total work.
But there is also a catch-22: To hire foreign workers, an employer will now have to hire more Canadians. But the reason the employer is hiring more foreign workers in the first place is because he cannot find Canadian workers, who are already the first choice anyway.
According to a survey by the Alberta Chambers of Commerce, it costs companies between $200 and $1,000, mainly for advertising, to hire a Canadian worker who can be put to work at once. The cost of hiring a foreign worker for a year, again according to the survey, is $11,055 to $14,605. The government processing fee alone has increased from $250 to $1,000 and is payable regardless of whether permission is given to bring in the worker. (The good news is that the fee will cover monitoring costs to prevent abuses.) And the time between beginning the process to (perhaps) having the worker on site is measured in months. No employer would pay this high a price in money, time and hassle if they didn’t have to.
And reducing the number of foreign workers available for low-skilled jobs does not necessarily mean there will be more work for Canadians. Most serious labour shortages are in small centres and remote locations where there are few unemployed people to draw on. Often, these centres have high costs of accommodation and other expenses to meet on a relatively low salary. I expect that most adult Canadians would choose to stay close to home and wait for a better paying positon than relocate. Our Employment Insurance system was designed to give them that option.
In the short term, the shortage of low-skilled workers will leave businesses understaffed. Remaining workers and business operators will be asked to work longer hours, which in turn could lead to employee burnout, reduced hours of operation, a decline in service levels, and even business closures. I have heard of hotels in Fort McMurray which, before the availability of TFWs, left sheets and towels out for the guests to make their own beds as room cleaners were simply not available.
These effects will be more noticeable outside of major cities, the very places where we find many of our best investment opportunities. In the case of B.C.’s Liquefied Natural Gas developments, such projects already face the challenges of managing the environmental impact, dealing fairly with First Nations and attracting a project workforce. If an absence of low-skilled workers leads to a drop in the quantity and quality of basic community services, like coffee shops, it may be the last straw.
In Japan, with its low birth rates and virtually no immigration, the impact of worker shortages has led to long-term economic stagnation. Much of the country’s manufacturing has moved to more populous countries. But the demand for human beings to do basic work persists: people are smuggled in as undocumented illegals.
Canada could also find itself facing a similar problem of illegals doing work that we all agree needs to be done, but have no one else to do it, if we bar the door too tightly against low-skilled workers.
It would be far better to open our door to less skilled people from other countries, while implementing an adequate monitoring system to ensure they are protected by our laws and standards. If, as in the past, the foreign workers do a good job, maybe we should even drop both the T and the F and give them a path to becoming Canadian workers.
Troy Media columnist Roslyn Kunin is a consulting economist and speaker.