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.
In June last year many changes were made to Canada’s temporary foreign worker (TFW) program in an attempt to address the concern that foreigners were taking away jobs from the Canadian people. As a result of these changes, several foreign workers now face an April 1 deadline to leave Canada, with their employers scrambling to find suitable replacements to fill in for them.
Experts believe that overhauling of TFW program might benefit a few regions in Canada, however it is most likely going to harm Alberta’s economy. In an attempt to soften the effects of the harsh measures, the employment ministry offered a minor reprieve to the program, allowing a one-time work permit extension for certain temporary foreign workers in Alberta. This exemption will be provided to those temporary workers who had made their applications under the Alberta Nominee Program before July 1, 2014, and meet the permanent residency requirements.
This adjustment will allow employers to retain some of their employees who had been working for them for the past four years, thus averting a looming labor shortage crisis. However, even though this measure may provide some respite to employers in Alberta, it fails to address the long-term need of businesses to find a consistent and reliable pool of low-skilled employees.
For instance, according to the revised rules of the TFW program, the employers will have to limit the numbers of temporary foreign workers to 10% of their workforce, which implies that the above exemption might not apply to many ‘waiting’ permanent residents who would therefore not be counted as TFWs despite belonging to low wage category.
Moreover, many low-skilled workers are in service jobs, while some are employed in high-demand jobs like driving trucks. For all of them, the Alberta Immigration Nominee Program is the only way to gain permanent residency, however, it is very likely that only those who are in high demand jobs or high skilled jobs and have strong language skills will qualify for the work permit extensions. Thus despite the reprieve, many TFWs will be leaving Canada from 1st of April, forcing Alberta’s employers to search for people who are willing to do the low-paying jobs of serving food and cleaning. While this leaves the door open for many Canadians to take up these jobs, it remains to be seen how many are willing to do so and therefore fill the urgent requirements of the businesses.
The figures for 2013 show 40,471 TFWs working in Alberta across different occupations. 75% of TFWs who entered Alberta in 2013 were working in low-wage positions. According to the new rules, Alberta can accept only up to 5,500 provincial nominees annually. There would be thousands of applications for this annual quota, from which the government of Alberta will have to choose suitable candidates for both low-skilled jobs that don’t find many Canadian takers as well as for high demand and highly skilled jobs. This will be an arduous task, and whatever the outcome, is likely to adversely affect Alberta’s businesses.
Immigrations experts feel that the new rules may not be viable for Alberta’s economy and the federal government may end up having to take further steps in the coming months to fill the gaps in the labor market that may emerge in the near future.