Shut down the temporary foreign worker program – labour academics, advocates say

By Chen Zhou

The Canadian government once again expanded the controversial Temporary Foreign Worker Program (TFWP) citing “labour shortages” last month, making it easier to hire migrant workers even in areas facing higher unemployment.

But labour advocates and academics insist that the government should be doing the reverse, by shutting down the program entirely.

Canada’s TFWP has been in place for almost 50 years to supplement labour shortages in the country. But it has caused multiple cases of human rights abuse such as racism, discrimination, and dubious contracts.

Back in 2014, the leader of the Liberal Party of Canada Justin Trudeau wrote an op-ed[1] “How to fix the broken temporary foreign worker program” in Toronto Star to criticize the Harper administration’s TFWP for bringing in a large pool of vulnerable workers and driving down wages and displacing Canadian workers.

In the article, Trudeau said the TFWP needs to be scaled back dramatically over time and refocused on its original purpose: to fill jobs on a limited basis when no Canadian workers can be found.

But eight years later, the program under the Trudeau government continues to expand and is subject to the same criticisms.

An article[2] written by three labor economics professors points out that the federal government’s recent changes to the TFWP eased employers’ access to low-paid temporary foreign workers, which could undermine real wage growth and exacerbate income inequality.

“The workers in the low wage stream of the TFWP, their contracts tie them to their current employers. This creates a power imbalance which opens the door to abuse,” says one of the authors Mikal Skuterud. He is a Professor of Economics at the University of Waterloo.

Is it time to shut down the TFWP program?  

Syed Hussan, Executive Director of Migrant Workers Alliance for Change said that Canada keeps making it easier for employers to hire migrant workers without ensuring migrants have basic rights and protections that can only be accessed by those with permanent resident status.  

“Bad employers use immigration status as a tool to divide and pit workers against each other – citizens against non-citizens – to keep wages low and profits high,” says an open letter named Full Immigration Status for All, which calls for a single-tier immigration system, where everyone in Canada has the same rights.

Hussan told ThinkPol that every major labour organization, civil society group, and migrant organization in the country–that is 400 in total, has signed this open letter. “Only permanent status can provide sufficient protection,” he emphasized.

The letter mentioned some sad stories during COVID, including migrant farmworkers hit by massive COVID-19 outbreaks, some lost their lives; Migrant domestic workers trapped in the homes of their employers, facing greater surveillance, abuse and violence; Migrant students, working in low-wage jobs in warehouses and as delivery drivers, had their tuition fees hiked to subsidize Canadian universities and colleges.

“In some industries, there are low-wage jobs done primarily by migrants. During COVID, we learn that those are the most essential jobs. Without them, our society cannot function,” Hussan says. But when someone’s doing temporary work, it isn’t possible for them to assert their basic rights.

The Immigration, Refugees and Citizenship Canada (IRCC) introduced a vulnerable worker open work permit in 2019, for those foreign workers with employer-specific work permits who have been mistreated by their current employer.  But Hussan pointed out that there are many problems with this program.

“The first is that it’s incredibly difficult to apply. Basically, you need to have a lawyer and have a lot of evidence, which most people do not. Secondly, this is a nonrenewable permit between six to 12 months, and after that, you can’t renew it. So workers know that there’s no actual protection.” 

Skuterud also questions the effectiveness of the measure, he says a temporary foreign worker’s biggest worry is being dismissed, or not going to be hired next season. And those who have the potential for permanent residency are willing to put up with anything temporarily because after making that transition, they are free to go to any job they want. 

“Canadians don’t want to do these jobs. Why do we think temporary foreign workers want to do that if they have other options,” he says.

He mentions without shutting down the TFWP, providing more pathways to permanent residency for temporary foreign workers creates more problems. Because if it becomes easier to become a permanent resident, people are even more willing to accept poor working conditions and low wages, and the country needs more temporary foreign workers because they’re leaving so quickly. 

Skuterud and his co-authors propose a solution, a “cap and trade” system in which the IRCC issues a fixed number of permits to meet current demand, but gradually reduces the number of permits issued in subsequent years. Employers may trade unused licences to others who are willing to pay higher fees. 

“The cap ensures certainty in the number of permits issued, while the market for temporary foreign workers is left to determine the competitive market price for permits. In this way, temporary foreign workers will be employed by firms where they are the most productive, thereby improving the economic efficiency of the system and the wages and working conditions of Canada’s lowest-wage workers,” their article says.

The labour shortage is a blessing

“Canada’s work permit programs are essential to the Canadian economy and help Canadian businesses fulfil labour shortages,” says Julie Lafortune, Communications Advisor of IRCC.

Since the COVID-19 pandemic, Canada has been more concerned about labor shortages. Driven by strong demand for low-wage workers, Canada’s business lobby pushed to ease access for temporary foreign workers, and the government announced its Workforce Solutions Roadmap on April 11, 2022.

Since 2014, the TFW Program has placed a cap on the maximum proportion of an employer’s workforce that can be made up of low-wage temporary foreign workers. The Roadmap increases the cap from 10 percent to 20-30 percent. It also gives a longer working duration for these low-wage positions.

The data provided by Skuterud shows Canada’s Labour Market Tightness (Number of job vacancies for every 10 job seekers) went through a sharp rise from the beginning of 2021 to September, ranging from 3 to over 8. The ratio began to drop down a little bit since then, and Skuterud thinks there’s good reason to believe that it is going to slack and a lot more. 

“So, I don’t think the labour shortage problem is nearly as much of an issue now as it was six months ago,” he says, “what’s going to contribute to that is an increase in business failures. They were lower during the pandemic which had a lot to do with the amount of money that the government put into the economy. It contributed very much to labour demand. But as that support disappears, you’re going to see an increase in business failures, and that’s going to reduce labour demand and job vacancies, for sure.”

In Skuterud’s opinion, labour shortages are not a problem for workers, they’re actually a blessing. Workers don’t need to compete with other applicants by accepting lower wages, instead, businesses compete against each other for scarce workers.

“Unfortunately, when the government responds to this problem–which is how businesses see it, by increasing access to temporary foreign workers, I think that’s a problem for Canadian workers because you don’t get that natural response that happens in a capitalist competitive economy. You don’t get firms improving wages and working conditions and investing in more technology, that doesn’t happen if they can access lower-wage foreign workers.”

Saskia Rodenburg, Media Relations Officer at Employment and Social Development Canada replies to ThinkPol that, unlike permanent migration, temporary migration is demand-driven. There are no set levels or limits on the number of foreign workers admitted to Canada.

“A key pillar of the TFWP is the protection of the Canadian labor market by ensuring that Canadians and permanent residents are considered first by employers for available positions,” she says.

But data provided by Skuterud shows the temporary foreign worker’s share of total employment in Canada has been growing persistently from less than one percent in 2000 to around 4 percent in 2021. The number would be higher if foreign students are included. They have the right to work in Canada and have increased five-fold since 2000.

“If those working positions are really temporary, this number should go up and down in accordance with the boom and recession of the economy, but it doesn’t. This means the dependence and reliance on these temporary foreign workers is becoming entrenched in the economy,” Skuterud explains.

“The TFWP intends as a temporary labour shortage. But if you look at the employers who use this program, it’s the same employers repeatedly, it’s not temporary at all. It’s a business model for companies that wouldn’t survive otherwise. And I would say, maybe the right thing to do is let those companies fail,” he says.

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