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ROB Insight is a premium commentary product offering rapid analysis of business and economic news, corporate strategy and policy, published throughout the business day. Visit the ROB Insight homepage for analysis available only to subscribers.

This week's brouhaha over Royal Bank of Canada's latest outsourcing move is a sideshow to a larger issue: Canada's exploding temporary foreign worker population. The federal government promised reforms in this area in its recent budget. Let's hope the feds are serious – much needs to be fixed.

Canada's temporary foreign worker program has fallen into the trap of similar short-term guest worker programs. Stop-gap efforts to fill temporary job shortages typically "last longer and grow larger than intended … developing structural labour market dependencies among employers" and creating job ghettos that are dominated by foreign workers, writes Athabasca University industrial relations expert Jason Foster in an excellent recent paper.

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In Canada, the number of temporary foreign workers increased by 50 per cent from 2000 to 2006 under the Liberal government, and has more than doubled since then, to 338,000 last year (as the number of unfilled jobs in Western Canada increased). According to Mr. Foster, the proportion of these workers considered "high skill" has fallen sharply, to 31.1 per cent in 2010 from 51.8 per cent in 2000, while the number with no stated skill level more than doubled, to 36 per cent. These people, he and others point out, are far likelier to be exploited, paid less and take jobs from Canadians.

Rather than ebb and flow with the needs of the job market, Mr. Foster predicts the program will only expand as it "is primarily employer-driven, and as such government has no direct capacity to reduce applications" for new temporary foreign workers and "lacks the tools to check rising demand" from employers who increasingly depend on the cheap temporary foreign labour. (Migrant agricultural workers are handled under a separate process.)

Consider a government pilot project launched last year: Before hiring temporary foreign workers, employers need a labour market opinion or LMO from Human Resources and Skills Development Canada. To get the LMO, they must document that they've made every possible effort to recruit Canadians for full-time jobs before turning to foreign workers, and that they will pay market wages.

But under the pilot project, employers can now get an "accelerated" LMO to fill "high-skilled" jobs through a more streamlined application. They are permitted to pay 15 per cent less than market rates, while requirements to advertise the job to Canadians, and prove Canadians have even been considered, are greatly reduced. The government has stated no more than one in five applications would be subject to compliance reviews.

Under other LMO applications, employers must commit that they won't recoup recruitment costs from employees, that they will provide health coverage until employees become eligible, to review and adjust wages after 12 months and commit to register employees under prevailing worker compensation programs. Not so under the accelerated LMO application.

It should come as no surprise, then, that employers have quickly made a mockery of the accelerated process. An access to information request by the Alberta Federation of Labour shows that of the close to 5,000 employers who have applied, many are fast-food chains, gas retailers "and other businesses that almost exclusively employ low-skilled workers," AFL president Gil McGowan says.

Is this what Canadians want – a program to make it easier for domestic employers to skip the local labour pool entirely and underpay temporary migrants who have little chance of staying on afterward – unless they become part of an undocumented migrant population of the sort that has exploded across Europe?

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If the government is serious about fixing the temporary foreign worker program, it should kill or fix the accelerated process. Other changes are needed, such as better documentation of how long workers stay, what sectors employ them and who their employers are – information now lacking from public disclosures. The data published by the federal government now "doesn't answer key questions Canadians want answered," says Sharry Aiken, associate dean with the Queen's University faculty of law.

Better communication is needed between federal and provincial government, she adds, since federal laws govern who gets in, but labour law enforcement is left to the provinces. Scrutiny and penalties for employers who abuse the system should be cranked up.

But most of all, Canadians need to ask about the implications of an expanded temporary worker program with looser checks and balances. Are we creating meaningful opportunities for migrant workers to become Canadian citizens and participate in the growth and economic development of the country? Or are we planting the seeds for social and economic unrest in the long term by giving employers a cut-rate deal on hiring?

Sean Silcoff is a contributor to ROB Insight, the business commentary service available to Globe Unlimited subscribers. Click here for more of his Insights, and follow Sean on Twitter at @seansilcoff .

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