A recently-released report says Canada’s temporary foreign worker program is a 'breeding ground' for contemporary types of slavery. Temporary foreign workers from Mexico plant strawberries on a farm in Mirabel, Que., on May 6, 2020.Graham Hughes/The Canadian Press
Christopher Worswick is chair of the Department of Economics at Carleton University.
Canadians are understandably confused by the state of our international migration programs.
The two main pathways by which people are admitted to Canada to work are as economic immigrants (who can stay permanently) and temporary foreign workers. And the public discourse on the two pathways has been contradictory.
We have repeatedly been told we should be open and welcoming to newcomers since, not only does this make us a civilized country, Canada also gains economically from immigration. At the same time, there are concerns about both the welfare of temporary foreign workers and the negative impact their presence may have on the wages of Canadian workers.
While these statements, at first glance, may seem at odds, there are valid economic reasons to be in favour of skilled (permanent) immigration but opposed to less-skilled temporary foreign worker programs.
We must therefore redesign our international migration policies. Ottawa’s announcement on Monday to further restrict the temporary foreign worker (TFW) program is a step in the right direction but not enough. Canada needs to go further and abolish the program.
We need to quickly phase out the low-skill stream of the TFW program, which the government has expanded to let companies fill perceived labour shortages. Then we should merge the higher-skill part of the program into our economic immigration program.
This would retain the advantages of the TFW program for higher-skilled workers, which is that it provides for a trial period for prospective immigrants. It would also ensure the temporary foreign workers are admitted in line with the goals of the economic immigration program: that they have high-enough skills to become immigrants whose presence greatly benefits the Canadian economy.
Ottawa to clamp down on low-wage temporary foreign worker program
This must be done to reverse a long-standing, concerning trend. With support from the provinces and the business lobby, the federal government has greatly increased the numbers of immigrants and the number of temporary foreign workers coming to Canada, with 2022 levels that are more than 50 per cent higher than the 2017 levels in each case (according to the Immigration, Refugees and Citizenship Canada Annual Report to Parliament on Immigration). Given that these remarkable increases have coincided with both a health care crisis and a housing crisis, it naturally raises the issue of redesigning our international migration programs.
My research with Matthew Doyle and Mikal Skuterud from the University of Waterloo (forthcoming in the Canadian Journal of Economics) shows there are clear economic benefits from immigration that prioritizes the most highly-skilled applicants. Relative to less-skilled immigrants, these immigrants have higher earnings in Canada, meaning they will pay more taxes helping to fund our social programs.
In contrast, the TFW program is meant to fill “labour shortages” when Canadian employers are unable to find workers in Canada. But the need to fill such perceived shortages is a manufactured one. Without such a program, the wage should rise when there are more jobs than workers until the number of jobs matches the number of available workers. A TFW program short circuits that competitive process since the government allows the firm that has had an unsuccessful job search to fill the vacancy with a foreign worker. This removes the need to re-advertise at a higher wage and suppresses wage growth of Canadian workers.
Worse still, the initial wages advertised to Canadians could actually be lower when a TFW program exists since firms should anticipate that a failed search leads to hiring a more productive temporary foreign worker. My 2020 research with Pierre Brochu and Till Gross in the Canadian Journal of Economics shows that firms prefer hiring temporary foreign workers from low-income countries relative to Canadians, even at the same wage, since these foreign workers are motivated to work harder and are more likely to stay with the job than Canadian workers willing to take these jobs.
The temporary foreign workers are also more likely to tolerate poor work conditions since they cannot switch employers in Canada and the temporary job is better than what they would have in their home countries. In this sense, a failed search could be a good thing for the firm since they end up hiring a more productive foreign worker at the same wage as they would have paid a Canadian worker.
In contrast, economic immigrants have more rights than temporary foreign workers and this has real economic implications for both the immigrants and for Canadian workers. Like Canadian workers, immigrants have the freedom to leave employers to pursue either a higher wage or to avoid poor work conditions without leaving Canada. This makes it harder for the firm to underpay an immigrant (relative to a temporary foreign worker) since the immigrant can quit and move to another Canadian firm. Canadian workers are better off under the immigration program because they are not competing against temporary foreign workers who feel they must accept lower wages and worse work conditions.
That’s why, in addition to abolishing the TFW program, we should also allow the remaining temporary foreign workers to switch employers within Canada. This would reduce the power imbalance between the worker and the firm, allowing temporary foreign workers to go to higher-wage jobs and avoid unsafe or abusive situations.