Temporary Foreign Workers Cluster#%$ (part 1?)

The growing brouhaha over the Temporary Foreign Worker (TFW) program is, well, growing. Close on the heals of recent revelations of several McDonald’s franchises in B.C. abusing the program, not to mention RBC getting caught more than a year ago, we are now learning of a restaurant in Weyburn, SK that appears to have “restructured” it’s operations and SURPRISE (not really) their TFWs remain employed while two of their Canadian employees (or rather, former employees) lost their jobs.

The idea of the TFW program is a reasonable one. Allow employers to hire temporary foreign employees to fill positions that cannot be filled by Canadians. Unfortunately this program appears to be rife with the potential for abuse. In order for employers to hire a TFW, they have to demonstrate that they cannot fill the position with a Canadian citizen or permanent resident. This is known as a Labour Market Opinion (LMO).

I think most people can imagine that there are highly skilled positions that are hard to recruit for and obviously hiring a TFW as a last resort is a reasonable solution. I’m sure virtually every Canadian can imagine how hard it can be to recruit doctors to work in rural or remote areas. However it seems inconceivable to me, and probably to a growing number of Canadians, how so-called “low skill” positions would need TFWs, except in the most dire of labour shortages.

One of the requirements of getting a Labour Market Opinion is that an employer has to demonstrate (from the Citizen and Immigration (CIC) website):

 

  • the efforts made to recruit and/or train willing and available Canadians/permanent residents;
  • that the wages you are offering are consistent with the prevailing wage rate paid to Canadians in the same occupation in the region;
  • that the working conditions for the occupation meet the current provincial labour market standards; and
  • any potential benefits that the hiring of the foreign worker may have on the Canadian labour market (e.g., creation of new jobs, transfer of skills and knowledge, etc.).

 

Now the first seems pretty easy for employers to comply with, and in my opinion, too easy. All they have to do is advertise the open position. The second seems to be somewhat more troublesome. If the employer cannot attract Canadian labour at the wage they are offering then I would argue that the employer doesn’t meet that criteria. How can an employer demonstrate that they are offering wages “consistent with the prevailing wage rate” unless they offer a wage sufficient to attract and retain a Canadian employee?

They “demonstrate” this because when the request for a LMO is evaluated, they compare the wages offered to wages paid to Canadians in the same occupation and region. But the statistics available are by their very nature, historical. It is unlikely that these statistics can keep pace with a fast moving, growing economy with relatively low unemployment. I also wonder how “regional” this comparison is. I don’t doubt that it is easier to recruit low-skill, near minimum wage employees in Saskatoon than it is in say, Weyburn or Humboldt. But then how accurate is the comparison?

The justification for needing a TFW should not be “I can’t attract any Canadians to work for me for minimum (or near minimum) wage”. It should be “I can’t attract any Canadians to work for me at fair market wage rate”. It seems though that to get a positive LMO, employers need only demonstrate the former, and not the latter.

How do you determine what the fair market wage rate is? When you go to an auction, what’s the fair market value of that car or truck rolling across the auction block? Or how do you determine how much your house is worth if you were to sell it? It’s worth whatever willing buyers will pay, and what willing sellers are willing to sell for. That second part is important. Many free market supporters are quick to spout the first, but often ignore the second.

It would appear that in a growing number of Canadian communities, Canadian workers are not willing to work for minimum (or near minimum) wage and thereby (to use the auction analogy) have set a “reserve” price on their labour. Employers who are seeking employees should have to show that they are at least offering to meet that “reserve” price.

If employers are not willing to meet that reserve price, then they have shown that they are also not meeting the fourth criteria above. Because by hiring TFWs for no other reason than their unwillingness to pay a wage that a Canadian would accept, they are demonstrating that there is no benefit to hiring the TFW. In fact, I would contend they are doing the exact opposite. The hiring of the TFW at minimum wage does nothing but serve to suppress wages.

The only way I can see to demonstrate that second criteria is to offer a wage sufficient to attract and retain a Canadian employee. Then the free market has determined what the fair market “prevailing wage rate” is, between a willing “buyer” and a willing “seller.

But then the whole rationale for needing to hire a TFW is moot.

 

 

 

 

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