Foreign-worker changes could spell trouble
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Hey there, time traveller!
This article was published 13/05/2022 (198 days ago), so information in it may no longer be current.
CANADA has been welcoming temporary foreign workers since 1973, but the programs that facilitate this have often been criticized for abuse and mismanagement. Recent changes introduced by the federal government that will expand the number of foreign workers could lead to even more such criticism, as every indication is low-income Canadians will suffer because of the government’s reforms.
Programs that welcome low-skill foreign workers can be of great assistance to employers in very tight labour markets where employees are hard to come by. But the danger of unchecked growth is that these workers typically are willing to accept lower wages and worse working conditions than Canadian workers, which can lead to wage suppression for Canadians or even displacement.
In 2013 and 2014, as the number of foreign workers swelled, abuses of these workers were covered widely in the Canadian media. In some cases, foreign workers were underpaid, or their working conditions were odious; in others, corporations recruited them despite high local unemployment rates. The result of this media coverage was several restrictions introduced by prime minister Stephen Harper’s government designed to slow growth in the number of low-skill foreign workers.
Since then, Ottawa has been besieged by fancy corporate lobbyists intent on loosening these restrictions. In April, Prime Minister Justin Trudeau’s Liberal government finally caved, agreeing to reverse the 2014 restrictions. These changes, which have already taken effect, will likely lead to a spike in the number of low-skill foreign workers in Canada.
In particular: the cap on the total number of foreign workers in several sectors was boosted from 10 to 30 per cent. There is no limit on the number of foreign workers that can be employed in the agriculture, caregiving, and fish and seafood processing sectors. Crucially and inexplicably, employers will now be able to hire foreign workers in regions where the unemployment rate exceeds six per cent.
The problem with expanding access to low-skill foreign workers is that doing so short-circuits market forces that should benefit Canadian workers. When labour markets are tight, employers must compete for the applicants available. The result is higher wages, better benefits and more attractive working conditions.
Employers also have to expand their searches and be more open to applicants they may previously have passed over; for example, disabled Canadians, recent immigrants and refugees, apprentices and young Canadians.
Canadian workers should be benefiting from these market forces. But, to the contrary, post-pandemic wage growth is very low. Indeed, inflation has meant that real Canadian wages may in fact be declining. Low-wage workers — including working class-families, single mothers, and immigrants and refugees just starting out in Canada — are hit hardest by inflation since any marginal increase in costs is felt most acutely by these vulnerable Canadians.
Opening access to foreign workers will present an opportunity to business, but it will likely prolong the pain already faced by working-class Canadian families as wage growth continues to stagnate. Economists Fabian Lange, Mikal Skuterud and Christopher Worswick argue convincingly that the government’s recent reforms will further undermine wage growth despite the tight labour market. They ask, “Does relying on foreign guest workers to fill low-wage job vacancies make sense in this environment?”
Well, it makes perfect sense for corporations.
A few months ago, it was revealed that Tim Hortons, the ubiquitous coffee chain, was facing a staffing crisis that was directly related to low wages. Emails obtained by BNN Bloomberg show that managers at 22 high-traffic suburban chains, mostly surrounding Toronto, were panicked by a lack of workers to handle the post-pandemic return of motorists picking up coffee on the way to work.
As these franchises’ profits have increased, the solution to their staffing problem was obvious: increased wages and enhanced benefits to draw potential workers back from other sectors. But Tim Hortons was among the corporations that protested the most loudly when the government restricted the use of temporary foreign workers in 2014. Should anyone wonder how the coffee chain and other corporations will address staffing shortages now that the Harper-era reforms have been reversed?
When provided with an opportunity from the federal government to suppress labour costs, why wouldn’t employers take it? Workers hoping for relief in this sector may be out of luck.
This raises the question: who is looking out for these Canadian workers? New Democrats fancy themselves the party of workers, but Jagmeet Singh recently dragged his party into a confidence-and-supply agreement with the Liberal government that scrapped the old restrictions. Should voters hold him as well as the Liberals accountable in the next election?
Royce Koop is a professor of political studies at the University of Manitoba and academic director of the Centre for Social Science Research and Policy.
Updated on Friday, May 13, 2022 7:34 AM CDT: Adds tile photo