Last Updated on January 24, 2019
Recent changes to Canada’s Temporary Foreign Worker Program are preventing employers from bringing in much needed low-skilled workers into Canada. While some believe this to be a positive development for economy in Canada, the shortage of low-skilled workers will have several detrimental consequences for Canadian businesses, in both the short and the long term.
First, the changes have created an additional operational burden for businesses in an already challenging economic environment. A report by the Canada West Foundation on the effects of the 2014 changes to the Temporary Foreign Worker Program highlights the significantly increased cost in terms of time, money, and bureaucratic process required to bring in low-skilled workers.
According to the Alberta Chambers of Commerce, it can cost companies between $200 and $1,000, mainly in advertising, to hire a Canadian worker who can then start working straight away. By way of contrast, under the new rules the cost of hiring a foreign worker has ballooned to anywhere between $11,055 to $14,605, with the government application fee alone being $1,000. And the new lengthy application and clearance processes means that it takes several months for TFWs to be allowed to commence employment after they have been hired.
Additionally, one of the changes puts businesses in an impossible situation. Starting July 1, 2016, not more than 10% of a company’s workforce can be temporary foreign workers, meaning Canadians will have to make up to 90% of a company’s work force. So in effect, in order to hire foreign workers an employer must first hire more Canadian workers. But the very reason employers seek to hire foreign workers in the first place is because they cannot find Canadian workers. When employers source the foreign market, the economy in Canada and the labour market in Canada must be given first consideration.
Furthermore, reducing the number of foreign workers allowed to work in low-skilled jobs does not necessarily mean there will be more jobs available for Canadians, as most labor shortages are in relatively remote locations where unemployment is low to begin with. With the high costs of accommodation and relocation involved to gain what is a typically low salary, most Canadians would choose to wait for better work opportunities closer to home rather than relocate.
In the medium-to-long term, the effects of the changes will be felt the most outside of the major cities, which to date have been the driver of Canada’s economic development. In the short term, the shortage of low-skilled workers will leave businesses understaffed, and the remaining workers will have to work longer hours to fill in the gaps. This in turn will lead to employee burnout, a decline in productivity, reduced hours of operation, and possibly even business closures.
The end result is that if Canada closes the door on low-skilled workers, as new figures show is taking place, it could potentially be opening itself up to economic stagnation, as well as the increasing use of illegal migrants to do work that absolutely needs to be done but for which no Canadian is available.
A far better option to the current system would be to allow less skilled people from other countries to come to Canada via an efficient immigration system to fulfil Canada’s employment requirements. And once they have contributed sufficiently and integrated in to the Canadian way of life, they should be allowed a clear path to becoming Canadian citizens. Current government policy however, favours a restrictive approach to temporary foreign workers.