Is Canada Dependent on Outsourcing?

Are employers addicted to the temporary foreign worker program?

Written by Associated Press

Dave Kaiser operates two restaurants in British Columbia, one of which is located in the small town of Fernie.

Fernie is home to five coalmines and only 5,000 people, and Kaiser says he’s desperate for local staff.

He adds, “There are a lot of restaurants €¦ and there are a lot of hotels [here], and we’re all looking for [staff]. There aren’t enough people.”

This is a surprising dilemma for a country that has 1.4 million people out of work, as well as a total eligible workforce of 18 million, according to figures released today by Statistics Canada.

The current solution for many employers is temporary foreign workers.

As it stands, more than 330,000 workers live and work in Canada as part of the federal temporary foreign worker program. The number of participants in the program has nearly tripled over the last 10 years, with the bulk of those coming to Canada going west.

Read Worth the Risk? 3 Questions to Ask Yourself Before Hiring Temporary Foreign Workers

However, B.C. has struggled to keep pace with Alberta, Saskatchewan and the territories when it comes to attracting staff. Fewer than 5% of those working in B.C. moved there in the last five years, compared with 7.6% in Alberta.

The foreign worker program was originally designed to attract skilled employees that would help address temporary labour shortages. The emphasis shifted in 2002 to low-skilled workers, such as those in the food and beverage industry, construction and retail.

The federal government’s decision to open the program to lower-skill occupations came in response to pressure from employers, said Jason Foster, an Athabasca University academic coordinator.

He adds Western Canada’s economic boom during the early 2000s did result in labour shortages in certain industries, such as construction, but the trend was not universal.

But when the global recession hit in 2008, the expected drop-off in temporary foreign workers never happened. “The way the rules work, you’re supposed to only have temporary foreign workers if you cannot find Canadians to fill the position,” says Foster.

“However, we now know that that [doesn’t] happen,” he adds. The numbers [of people coming in] leveled off for a year or two, and continued to rise.”

This suggests employers have become addicted to the program, said labour economist Erin Weir.

He says, “It’s often very convenient for employers to have people who they know aren’t going to be able to take other jobs, and have little ability to push for better wages.”

Critics of the program say it undermines the natural economic forces in Canada’s job market by artificially filling low-paid, low-skill positions and removing the impetus for higher wage demands.

Read Canadians Not Sold on Temporary Foreign Workers

“In some areas of the country, the need is dire for workers, they have serious trouble attracting people, and it is urgent to find people immediately,” says Catherine Connelly, an associate professor at the DeGroote School of Business at McMaster University.

The opposite problem exists in hard-hit Ontario cities like Windsor and St. Catharines, as well as in Newfoundland and Labrador. The latter region ranked last among all the provinces and territories in a 2011 survey, given it has an employment rate that barely clears 50%.

Rod Goy, dean of the B.C. Institute of Technology’s School of Construction and the Environment, says in areas such as the Alberta oil sands, employers can suddenly find themselves in urgent need of hundreds of trades people for short-term work.

But rather than depending on outsourcing, he’d rather see employers take on local apprentices. However, only 17% of Canada’s employers are willing to train them.

Today’s numbers also show trades certificate programs are struggling to attract young applicants.

There were just 67,680 adults aged 25-to-34 with a certificate in mechanic and repair technology in 2011, compared with 104,200 workers aged 55-to-64 and on the cusp of retirement.

The gap between the two groups was 21.7% for certificates in precision production, a trade that produces machinists and welders; for the construction trades, the deficit was 6.3%.

Dan Kelly, president of the Canadian Federation of Independent Business, says the number of people attending post-secondary institutions is to blame for these gaps.

He says, “We have one of the highest post-secondary education attainment levels in the industrialized world.”

Kaiser concedes he would rather hire Canadians over foreign workers because the paperwork is simpler, but pay and location means a lot to staffers.

“People will move across the country for a $30-an-hour job, but they will not move across the country for a [low-paying] job.”

Along with RBC being targeted for using foreign workers earlier this year, the public lashed out against the B.C. government’s support for Chinese-owned HD Mining’s plan to use outsourcing at its proposed Murray River coal mine in Tumbler Ridge.

So, Ottawa responded by doing away with a rule that allowed employers to pay foreign workers up to 15% less than the median wage. It also made it harder to bring in workers from outside Canada, and introduced stricter rules for applications, new fees for employers and a promise of stricter enforcement.

But Foster isn’t convinced certain industries, such as those in food services, will scale back on their dependence on the foreign worker program.

Originally appeared on PROFITguide.com