Canada's economic landscape varies greatly across the country. These differences are particularly stark in the market for labour. Alberta's unemployment rate stands at 4.4 per cent, while the rate in Newfoundland is 12.7 per cent (the national rate is 6.8 per cent).
Federal policy needs to recognize these differences and allow the private sector to respond effectively to local labour market challenges. In particular, governments need to recognize the link between Canada's growing need for immigration, and labour markets. Nowhere is this more striking, and more important, than in Alberta.
The recent furor over the reforms to the federal temporary foreign worker (TFW) program clearly illustrates both the difficulties of a one-size fits all national program and some general confusion regarding labour markets.
Alberta's labour woes persists despite the fact that more than a third of jobs created nationally in the last year were created in Alberta. We cannot treat tight labour markets lightly nor dismiss the long-term impacts of inaction. Net new job creation in the private sector is closely associated with increased economic activity, wealth creation and improved overall living standards.
Alberta's labour market challenges are not a passing phenomenon. While the population has increased by a third in the past 15 years, labour market participation remains the highest in Canada at 72.5 per cent (6.5 points above the national average) and unemployment still sits at 4.4 per cent. Much of this population increase has been the result of in-migration from elsewhere in Canada, driven in large part by significant job opportunities in Alberta, relative to other provinces. Low levels of unemployment suggest that population movements from elsewhere in Canada are not enough to address Alberta's labour shortages.
We need to look internationally in order to attract workers to Alberta. To this end, the TFW program has been valuable to the Alberta economy, and by extension to Canada, because it has provided a mechanism to attract foreign workers. Attracting people to fill jobs that firms are not able to fill is the main benefit of the program. While much has been made of the salaries paid to workers in the program, particularly during part of 2013 when some firms were allowed to offer temporary workers lower salaries than what they paid Canadians, the truth is that many employers in Alberta are willing to pay "what it takes" to hire the workers they need. For these employers, the challenge with the TFW program is much more about red tape.
Some opponents of the TFW program point to the need do a better job of helping existing labour pools, including within many aboriginal communities, develop skills that will help these individuals enter the labour force.This is a worthy goal, but is not likely to make enough of an impact to deal with today's labour challenges. We need longer-lasting solutions.
First, let's let the market function, as it does pretty well, in setting wages. Alberta's average weekly earnings are more than 10 per cent above the national average. This needs to be connected to our ability to attract and retain workers on international markets. The TFW program might be too temporary, and certainly appears to be too constraining in Alberta. We need to press Ottawa for more temporary visas, faster processing and more permanent residency spots associated with the program. Let's figure out how to offer more international applicants attractive and sustainable opportunities for longer-term employment and residency.
The need for more structured and explicit laddering through the TFW program into permanent residency seems clear in Alberta. The recent snafu where thousands of TFWs lost their opportunity to apply for permanent residency is disheartening for the individuals concerned, costly to the firms in need of those workers, and detrimental to our need to attract labour.
Ottawa needs to allow provinces with tight labour markets more input and control over programs such as TFW. The benefits extend well beyond Alberta.