Employers can hire more temporary foreign workers if they hire more Canadians, but if they could hire more Canadians, employers wouldn't need more foreign workers. This is the Catch-22 created by the federal government's June, 2014, overhaul of the Temporary Foreign Worker Program.
What makes matters worse is that the changes impact the wrong provinces.
Instead of putting Canadians first for jobs, provinces with the lowest unemployment rates are the ones set to lose the lion's share of foreign worker entries. The federal government's figures predict that by 2016, 75 per cent of the reduction in entries of low-wage temporary foreign workers will come from the West. More than 50 per cent of the nation's total reduction will come from Alberta alone. That's compared to 8 per cent in Ontario, which has three times Alberta's labour force and four times as many unemployed people for every job vacancy.
Under the previous program, employers could have as many foreign workers on payroll as the federal government approved. In the new system, the number of low-wage temporary foreign workers is capped. By July, 2016, employers can only have 10 per cent of their work force as low-wage temporary foreign workers.
Without access to as many temporary foreign workers, western employers will be forced to find other solutions to their labour needs. In the meantime, they fear service will suffer, businesses will shrink and, in the worst-case scenario, some places will close.
This is particularly worrisome for the food and hospitality sectors in western Canada. Imagine hotel rooms left unclean and fast-food restaurants shut down for part of the day. In Alberta, during the labour shortage of 2007, that's exactly what happened, and that's one of the reasons why the province began turning to temporary foreign workers. Now, with a lower Canadian dollar, tourism is expected to increase and with fewer temporary foreign workers, clean hotel rooms could be at a premium this summer. Fast food restaurants, which become more popular during economic downturns, are also likely to feel the pinch.
During this period of lower oil prices, recently unemployed workers may be more willing to take the jobs. But employers know that the minute that oil prices go up, those employees will go back to higher paying jobs.
The solution to low-wage labour shortages isn't as simple as increasing wages. One Alberta fast-food employer couldn't find a Canadian to work the overnight shift for $15 per hour – above the province's minimum wage of $10.20. Further, higher wages in tight-margin businesses can lead to higher prices. The last time a fast food chain raised the price of coffee by 10 cents, it made headline news.
The changes to the TFWP were made in response to concerns that foreign workers were taking jobs away from Canadians. Instead, they have created new hiring headaches and haven't really helped the unemployed in provinces such as Ontario, where many more Canadians are looking for work. A flexible but imperfect program is now less flexible and, yet, still imperfect.
A well-designed program would permit fewer foreign workers in areas with higher unemployment and enable hiring more foreign workers in tight labour markets. This way, Canadians have first crack at jobs and employers can access the workers they need to run and grow their businesses.
Long-term solutions to tight low-wage labour needs should go beyond the TFWP. The answer won't come easily or quickly. It is vital to improve the labour force participation of Canadians who are not in the work force, including people with lower levels of education, or those who struggle with poor basic skills.
Realistically, providing this kind of training and support is beyond the capacity of most small employers. A broader effort may be required to pull underrepresented groups into the work force and sustained partnerships between industry and government will be needed. In the meantime, it is hard to ignore the irony that denying employers access to temporary foreign workers will not guarantee jobs for Canadians.
Farahnaz Bandali is a senior policy analyst with the Canada West Foundation; Janet Lane is the CWF's director.