Jason Foster

by Jason Foster

April 1, 2015 was a pivotal date for Canada’s labour market. On that day work permits for tens of thousands of temporary foreign workers (TFWs) expired, requiring them to leave the country. Many had been living and working in Canada for more than five years and had developed connections in the community. Most had dreams of getting permanent residency and building a new life here.

In the media flurry surrounding the deadline, voices from all perspectives could be heard. In the din they created, it could be difficult to ascertain what was really happening and if the change was good or bad. It is even harder to predict what is going to happen next. I hope to shed a bit of light on both questions.

The workers’ permits expired due to rule changes in 2011 restricting a TFW’s maximum stay to four years. April 1 was the fourth anniversary of those changes, creating the first, and largest, batch of workers who hit the maximum. No one knows exactly how many workers are now required to return home, although some estimates suggest as many as 70,000.

Media reports made it sound like airports across the country would be crammed on April 1 with TFWs boarding planes. The reality is much less dramatic. The exodus will occur slowly over the next couple months as people make plans or linger a little longer in the hope that their luck will change. Plus, this group is just the first wave. In the coming months other permits will expire, although in much smaller numbers.

Some have expressed concern that many of the now permit-less workers will stay anyway and move “underground”, working and living without documentation. Again, no one knows how many will choose to remain, but experience in other countries suggests a good number. Undocumented workers are more vulnerable to exploitation, ineligible for health care and other essential services, and live trying desperately to avoid being deported.

As for employers, especially in Alberta where TFW numbers are the highest, they are predicting service reductions, shortened business hours and higher costs for overtime and recruitment. These claims are based on anecdotes and come mostly from business lobby groups, meaning they need to be taken with a grain of salt.

First, the TFW program is not ending. A large group of TFWs are being forced to leave, but many of the employers they leave behind remain eligible to hire new TFWs to replace them. Rule changes made last year were aimed at reducing the number of low-skilled TFWs an employer can hire (by capping the percentage of TFWs in a workplace), but those reductions are being phased in, meaning employers have plenty of time to transition.

Second, the new restrictions apply only to the lowest skill occupations, such as found in retail, food, and hospitality. Many employers, including those in construction, are unaffected by the changes. As well, other pools of temporary foreign labour exist, including the rapidly expanding International Experience Canada which involves young adults mostly from Australia, England or other parts of Europe. The shift is hardly Armageddon for employers.

The bigger question, is what is the future of the TFW program and what does it mean for Canada’s labour market? Obviously no one knows for sure, be we can safely say we are in uncharted waters.

First there is the issue of the TFWs themselves. Those who have returned home cannot come back (to work) for four years, meaning they will likely find other options, including working in other countries. It can be hard to not feel an injustice has been served to these men and women as they did nothing wrong except work hard and dream of a better life in Canada.

Those who choose to remain in Canada undocumented face a precarious existence, a profound humanitarian concern. Canada is about to face its first modern experience with undocumented residents (of any significant number). As the U.S. attests, large numbers of undocumented workers feeds a grey economy operating on the margins, creates holes in the social safety net, increases tensions within communities and feeds racist sentiments.

As for the labour market, it will find its balance, as it is wont to do. During the past decade labour market outcomes for aboriginals, youth and immigrants have worsened as employers turned increasingly to TFWs. Declining TFWs may create more space for these groups of workers to find employment.

Reducing the number of TFWs in the labour pool will lead to a tighter labour market. Tight labour markets can lead to higher wages and improved working conditions, as employers compete for available workers. We may see this occur in the most affected sectors – retail, restaurants and hotels – in the coming years. Whether this is a good or bad thing depends on your perspective, I suppose, but it does demonstrate that the labour market is often self-correcting.

Finally when thinking about the future, we cannot ignore the political landscape. The TFW program was first expanded in 2002 in response to employer lobbying. Every change since then, including last year’s announcement, has been motivated by solving political problems, not building a better program. In this respect, the TFW program is a classic example of politics besting good policy.

The germane point arising from this reality is we happen to be months away from a federal election and politicians of all stripes are desperate to avoid TFWs being an issue with voters. I am left to wonder that once the ballots are safely cast if we are going to be presented with yet another set of reforms to the program, once again setting us on a new course. Time will tell.

NOTE: Opinions expressed here are those of the author(s).