Today, Federal Immigration Minister Jason Kenney announced that the Government of Canada was tightening the rules for companies wishing to use Temporary Foreign Workers (TFWs) in their businesses. I found out about this when Joan Crockett, another Calgary MP, tweeted:
Now, this isn’t the only change to the regulations. Kenney also announced:
- Employers will also have to show they have a training and recruitment plan to transition to an all-Canadian workforce.
- temporarily spiked a pilot project that provided accelerated labour market opinions
- new fees for labour market opinions and foreign worker permits
Here is the problem. Alberta and Saskatchewan have unemployment rates below 5%. Considering the welfare state in Canada and the lack of market forces in education to drive young people towards the jobs the economy is creating, 5% unemployment is essentially full-employment. There are lots of people who choose not to work, and many more who have failed to gain the skills the economy is demanding.
Is there significant unemployment in other parts of Canada? Yes, but this isn’t going to fix that. This will simply increase the cost of doing business in Alberta and Saskatchewan. Unless the government also makes it more attractive for the unemployed in Ontario, Quebec or Atlantic Canada to move west (i.e. by making it less attractive to be on the dole).
But the bigger problem is that the education system in Canada has failed miserably to respond to the market. We continue to flood the market with university graduates with worthless liberal arts degrees, while we continue to be short of accountants, engineers, and skilled tradespeople.
The old TFW program had a rule that stated that companies could pay TFWs no less than 85% of the prevailing wage for a job in Canada. This margin was intended to consider that the cost of finding and importing foreign labour was nontrivial, and that the total cost of hiring a TFW would not exceed the cost of employing a Canadian. With the new rule, TFWs will cost substantially more than Canadians – except that there are not enough Canadians willing to do the work. Companies will still need TFWs – but they will be forced to go through a more expensive and lengthy LMO process to hire them – but they will hire them. And this will drive costs for business up by 15-25%.
In some industries, this will destroy the economics of the business. Major capital projects, which are extremely sensitive to capital costs, labour costs and time will suddenly look less attractive. Those dollars, instead of being invested in Canada, will move elsewhere.
Now you might ask why the Government of Canada would do such a thing – damaging the very businesses that the Conservative party supposedly is friendly with. The answer is obvious.
In recent weeks, the Royal Bank of Canada got into some PR trouble when it admitted to planning to outsource jobs to an Indian subcontractor, and was using the TFW program to help transition the work out of Canada. This did not go over well in suburban Canada, and the Conservatives are particularly sensitive to this at the moment because of the supposed appeal of Justin Trudeau to those same voters.
The problem is, these policies won’t help those voters get jobs. It will damage the competitiveness of Canadian business and drive up unemployment. Political foolishness.
FYI – I’ve sent this directly to Minister Kenney to express my displeasure.