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Temporary Foreign Workers: Filling a Void?

July 22, 2013
Pedro Antunes Pedro Antunes
Director
Forecasting and Analysis
Alicia Macdonald
Senior Economist
National Forecast

In 2006, the Conference Board published a report on Alberta’s looming labour shortages. At the time, energy investment was increasing rapidly, most of the country was performing well economically, and employers were finding it more and more difficult to find workers—especially out west.

Image of a chart comparing temporary foreign workers and the national unemployment rate from 2002 to 2012

Then, there were just over 150,000 temporary foreign workers (TFWs) in Canada. A lot has changed over the past few years, and the labour market is much different today than it was in 2006. Despite the recession and a higher domestic unemployment rate, the number of TFWs in Canada continued to grow, reaching almost 340,000 this past December.

There has been a lot of controversy in the media in recent months over Canada’s TFW program. As the previous chart The Young and the Jobless illustrated, Canadian youth are struggling to secure employment. This, justifiably, raises the question: if the unemployment rate remains relatively high and so many young and able Canadians are unable to find work, why are we still bringing in so many people under the TFW program?

Unfortunately, there is no clear-cut answer. Possible reasons include a skills mismatch, labour market rigidities (such as higher unemployment benefits in certain geographic areas that have a distortionary affect on relocation decisions), or the perception that foreign workers can be hired for less than their Canadian counterparts.

The federal government recently announced changes to the TFW program that will make it more difficult for businesses to hire foreign workers, including:

  • a temporary elimination of accelerated labour market opinions (LMOs);1
  • elimination of “wage flexibility” so that temporary foreign workers must be paid the prevailing wage rates
  • increased government ability to suspend and revoke permits and LMOs; fees for processing LMOs; and
  • increased fees for work permits.

Time will tell how these changes impact the labour market, but the recently announced program changes should put downward pressure on the number of TFWs in Canada each year—leading to better alignment between domestic unemployment and foreign workers.

This is the third part of our labour market series “The Good, the Bad, and the Ugly: Looking at Canada’s Post-Recession Job Market.”


The Good, the Bad, and the Ugly: Looking at Canada’s Post-Recession Job Market

Canada has more than recouped all the jobs that were lost during the last recession. But the gains have not been shared evenly among industries, or even among demographic cohorts. The Conference Board is delving into the Labour Force Survey data to determine which industries have been driving job creation since the 2008–09 recession and which age groups have been the beneficiaries.


1  A positive LMO is a prerequisite for bringing in TFWs, unless the position in question is eligible for an LMO exemption.

 

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