Nazareth in iPolitics: Weak temporary foreign worker program hurts the economy

Writing for iPolitics, MLI Senior Fellow in economics Linda Nazareth argues that the temporary foreign worker program has an important role to play in generating economic growth. Nazareth, the author of a recent Straight Talk Q&A on the subject, says that in many cases businesses are turning to the TFW program to fill labour needs where domestic workers are unavailable. Denying access to those workers only hurts the economy, she argues, since businesses need to find the right people to help grow.

Linda Nazareth, May 29, 2014

Canada’s Temporary Foreign Worker (TFW) program has been widely demonized in the media and is currently under review by the federal government.

But the debate is being characterized — erroneously — as a choice between hiring Canadians at one price and hiring TFWs at a lower price. In fact, the choice may well be between hiring TFWs or hiring no one at all — and if that’s the case, Canada’s economy pays the price and employment is destroyed, not created, for more people.

Take a look at the Bank of Canada’s latest Business Outlook Survey, where 23 per cent of surveyed companies said that a lack of suitable workers was making it difficult to meet demand. Or better yet, talk to a hiring manager in the technology sector.

I spoke to such a technology executive at a company located in the Kitchener-Waterloo technology triangle. That’s a place where BlackBerry recently cut plenty of jobs, and where you might expect to find a surplus of highly-qualified workers. And yet, when the company in question set out to find someone to head a new division, they were not able to find anyone they considered suitable except for an individual from Silicon Valley.

Bringing that person to Canada entailed a huge amount of red tape and expense; had there been anyone even vaguely suitable closer to home, the company would have been happy to hire that person. The choice, as it was explained to me, was between bringing someone up from the States or moving the entire Canadian division down there — at a cost of 12 Canadian jobs.

Canada is facing a cutthroat global environment in which competition is coming from all sides. And we’re still early in the game: an aging workforce is going to make things worse, but so is the fact that strengthening economies in emerging nations such as India and Indonesia will make it more attractive for highly skilled, would-be immigrants to simply stay where they are.

All this explains why it made sense to create the TFW program — and why making it increasingly expensive and difficult to use is an odd strategy.

But the government is facing populist calls to do just that. One example is the ‘transition plan’ imposed by the government last year. A paper by the Canadian Chamber of Commerce noted that the requirement “does not recognize the fact that businesses that hire TFWs do not prefer TFWs to domestic workers”. In other words, if companies could find Canadian workers, they would have hired them in the first place.

At this point, we need to look at the real goal of the TFW program — which, presumably, is to get the people in place to let Canadian companies function at their highest possible level. If there are abuses within the system, they should be fixed. But we also should be open to making changes that would make it easier for business to compete and give Canada the best chance to grab a footing in an economic environment that will only get more challenging.

That goal does not — should not — conflict with the goal of creating jobs for Canadians.

Linda Nazareth is a senior fellow at the Macdonald-Laurier Institute. She is the author of several books on economics, the most recent of which is titled Economorphics, and she is the subject of MLI’s latest Straight Talk interview on the topic of temporary foreign workers.