Reports of RBC outsourcing jobs to temporary foreign workers to replace existing Canadian employees should prompt a broader debate about the massive expansion of the Temporary Foreign Worker Program in recent years. Is this program addressing genuine "labour shortages" or undermining job opportunities and wages in Canada?
The number of temporary foreign workers in Canada has more than doubled since the Harper government took office. The Department of Citizenship and Immigration reports the presence of 338,000 temporary foreign workers at the end of 2012.
This temporary work force is now almost as large as New Brunswick's entire employed labour force and far exceeds that of Newfoundland and Labrador (not to mention Prince Edward Island.) With remarkably little evidence or public consultation, the Temporary Foreign Worker Program has added the equivalent of a small province to Canada's labour market.
RBC was clearly not suffering from a labour shortage. It already has Canadians doing the jobs in question. Many other Canadian residents are looking for work.
Statistics Canada classifies 1.4 million workers as unemployed, almost six for every unfilled job in the country. Even the provinces supposedly suffering from the worst labour shortages – Alberta and Saskatchewan – have two unemployed workers per available job.
The existence of vacancies does not indicate a labour shortage. At any given point in time, some jobs will be vacant because of turnover. Statistics Canada reports a job vacancy rate of only 1.5 per cent nationally and of no more than 3 per cent in any province.
The federal government's own Department of Human Resources and Skills Development recently concluded, "With limited incidence of imbalances between labour demand and supply in recent years, and with the projections showing similar levels of job openings and job seekers for each broad skill level, no major imbalances by skill level are projected over the next decade."
To the extent that there may be shortages of specific skills in a particular area, the long-term solutions are for more local residents to acquire these skills or for workers with those skills to permanently relocate to the area. Unfilled job postings and better wages attract people to pursue training and/or relocate. But the Temporary Foreign Worker Program often allows employers to fill vacancies without providing training opportunities or raising wages.
In any case, the program's expansion has not been targeted to perceived shortages. RBC is not alone in bringing temporary foreign workers to Toronto, a city with an unemployment rate well above the national average.
Since 2008, the number of temporary foreign workers has increased by 24,000 or 60 per cent in Toronto, 18,000 or 70 per cent in Quebec, and 5,000 or 80 per cent in the Atlantic provinces. Together, these regions of high unemployment account for most of the post-recession increase in Canada's temporary foreign work force. With the exception of Toronto as well as Newfoundland and Labrador, wages in these regions are below the national average.
Expanding labour supply, without an offsetting expansion of demand, increases unemployment and/or decreases wages. Because temporary foreign workers are not permitted to permanently settle in Canada and often remit earnings to their home countries, they are unlikely to contribute as much to Canadian consumer demand as to labour supply.
The government's policy of allowing employers to pay temporary foreign workers up to 15 per cent less than the prevailing wage obviously undercuts prevailing wages. Because temporary foreign workers are beholden to their employers, they have little ability to assert their workplace rights or negotiate wage improvements.
An econometric study based on data through 2007 published last year in Canadian Public Policy concludes, "The expansion [of the Temporary Foreign Worker program] in Canada to all low-skill occupations without limit has had an adverse effect on the Canadian labour market." There is reason to fear that adding more vulnerable workers to weak labour markets since 2008 has further worsened unemployment and undermined wages.
RBC provides a particularly compelling example of why the Temporary Foreign Worker Program must be reined in. It should be limited to areas with demonstrable skill shortages.
Before importing temporary labour, employers should have to meet a much higher burden of proof that they cannot find Canadian workers. Those temporary foreign workers who are admitted should have a clear path to permanent residency and citizenship, so that they can fully contribute to our economy and exercise the same workplace rights as other Canadians.
Erin Weir is an economist with the United Steelworkers