Naureen Aqueel

Changes to TFW program raise tensions among businesses and labor groups

Posted on: December 24, 2014

It may just be time to say goodbye to steaming cups of coffee late at night and products piled neatly on shelves in the grocery stores in Fort McMurray, a booming town nestled near the boreal forest that covers the Athabasca oil sands in Alberta.

The federal government’s changes to the Temporary Foreign Worker Program are forcing businesses to cut down their operations, negatively impacting the growing city, says Nick Sanders, president of the Fort McMurray Chamber of Commerce.

“We don’t want to go back to 2006 and 2007 where all the food was piled in the aisles in the grocery store and there was no one to put it on the shelves,” he says, also mentioning how the local Tim Hortons is eliminating its night shift and cancelling plans for a new location at the airport due to staffing problems. “We just want what every other Albertan and every other Canadian has and that is food on the shelves and customer service that is reasonable.”

More than five months after the government announced changes to the Temporary Foreign Worker program, businesses and business groups across the country are complaining that the negative effects of the reforms are already starting to manifest themselves. Some businesses have also reduced their hours after not being able to hire the Canadians that they need, says Monique Moreau, director of national affairs at the Canadian Federation of Independent Businesses (CFIB).

“Crocodile tears.”

That is how Gil McGowan, president of the Alberta Federation of Labour describes the complaints by businesses.

“There is no company that shut down their operations, there is no evidence anywhere,” he says. “This is just overheated rhetoric from employers who have been addicted to the temporary foreign worker program and addicted to using cheap labour. Just like with any other addict when you cut off their drug of choice they will complain but they are likely to recover.”

McGowan says the changes have had a positive effect and that he has heard from Canadian workers who say they are finding it easier to find work since the changes have been put into place.

The reforms created an uproar among business groups when they were first introduced in June this year. Labour groups and some experts, on the other hand, have welcomed them saying that they would allow for more jobs for Canadians.

But tensions are rising as the effects of the government’s changes are starting to kick in.

Earlier this year, Employment Minister Jason Kenney announced in June that the government was phasing out the temporary foreign workers program in low-wage jobs by putting a 10 per cent cap on the number of low-wage temporary foreign workers employers can hire per work site by 2016. The cap will be phased in gradually starting at 30 per cent, then 20 per cent in 2015 and 10 per cent in 2016. Other reforms made at the same time included an increase in the number of inspections of the program, an increase in application fees for each worker requested; fines of up to $100,000 for employers who abuse the program; and reducing the amount of time a temporary foreign worker can be employed in Canada to two years, down from four. The changes were made after reports of widespread abuse of the program by employers who were either exploiting the workers or displacing Canadians by hiring labour from abroad.

Fees for applying to hire a temporary foreign worker have gone up from $275 to $1000. For small businesses, that is a substantial amount to pay regardless of whether or not they get an approval, says Moreau whose organization represents 19,000 businesses of which less than 10 per cent use the temporary foreign worker program. Moreau says the organization has received calls from members from across the country who are concerned that they would be at a risk of closing down their businesses because of the caps.

“We think this is a result of a few bad apples who were misusing and abusing the program and of course, all of our workers support penalizing those individuals,” she says. “Regrettably however, the industry is now suffering as a whole because of those individuals.”

These views are shared by Laxman Chouhan who owns an Indian restaurant in Toronto called Bombay on the Lake and used to hire a chef from India but currently has a permanent resident working as a chef. He says the caps are harmful for businesses and that the temporary foreign worker program is essential for businesses like his as it is very difficult to find labour with the specialized skills needed for the job.

Dave Kaiser, president and CEO of the Alberta Hotel and Lodging Association says its member hotels in resort areas like Banff and Jasper and rural and resource based communities like Fort McMurray and Cold Lake have been impacted significantly as access to the program has been restricted. Positions that have taken the greatest hit are for those who clean hotel rooms, change the linen and wipe the bathroom floors.

Moreau says this labour shortage exists throughout the country not just in the west. “For whatever reason Canadians have decided it’s menial work and they don’t want to do it,” she says.

Businesses have also complained that the policy changes made by the government are informed by flawed data about the number of temporary foreign workers companies are employing. The Conservative government is also beefing up its blacklist of employers who have broken temporary foreign worker program rules and provincial labour laws, leading to a fear among businesses that flawed data may lead to businesses erroneously ending up on the blacklist, having a “devastating” effect on operations.

Moreover, businesses decry the challenges with labour mobility in the country. In areas with low unemployment like Alberta, labour mobility challenges often leave employers with little option but to turn to temporary foreign workers.

“There are people from Ontario or somewhere else that are interested but once they find out where the job is yes they turn it down,” says Kaiser. “It’s easy for an economist to stand back and look at a spreadsheet and say we’ve got X number of unemployed people in this province and X number of jobs over here but in reality it’s not easy to just take those folks and move them all where the jobs are. That isn’t happening.”

However, McGowan says the labour market is a market like any other and in order for it to work price signals need to be sent. The problem with the temporary foreign worker program is that it was short circuiting market signals by allowing employers to access a large and growing pool of cheap labour from abroad as opposed to responding to the labour market by increasing wages and sending price signals to Canadians who might be looking for jobs, he says.

“These employers cannot legitimately say that there is a labour shortage unless they have actually increased wages but the evidence is clear that in many cases they haven’t done that,” says McGowan.

Critics of the Temporary Foreign Worker program say the program was not like it is today until before the Stephen Harper government. Under the Harper government, the low-skilled workers stream was introduced and many of the problems began. The opposition has also criticized the government for not properly enforcing the rules.

“It’s hard to say what impact the changes have had because a lot of the changes just seem to be there on paper,” says Jinny Sims, official NDP critic for employment and social development. “So every time the government gets caught in doing something wrong or the employers, the government makes a little tweak. But really does that fix the problem? No.”

The reforms to the temporary foreign worker program are affecting some regions more than others as is clear from the complaints from employers and business groups in provinces like Alberta. Business groups like the Fort McMurray Chambers of Commerce have called for a localized approach in regions of high unemployment that have trouble attracting labour.

On the other hand, critics of the program say the unemployment threshold that the government set for allowing the hiring of temporary foreign workers in regions where unemployment is below 6 per cent does not reflect the high levels of unemployment in First Nations reserves. Experts also say that problems with the quality of Canada’s labour market data make it impossible to know the level of the labour shortage in the market.

Dominique Gross who wrote the C.D. Howe Institute report on the temporary foreign worker program said in an interview that the changes the government made to the program were a bit too simple to fix the problems with the program. She said that the biggest problem is the lack of information about the labour market. According to her, the solution is for the government to work on obtaining this information about the labour market.

“So as long as there is no clear information about that, it is going to be very difficult to have an efficient temporary foreign worker program.”

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