Front Burner - Cracks in Canada’s temporary foreign worker program

Episode Date: August 16, 2024

Over the last two weeks, Liberal Employment Minister Randy Boissonnault has said he's considering tightening Canada's temporary foreign worker program.This is amid criticism of its growing use and the conditions facing those who are in it.Since the Liberals first loosened the rules in response to the pandemic in 2021, the program has played a bigger part in our labour market, including with staff at large food and retail chains.Some Canadians believe that that’s suppressing wages and taking away jobs from young people. So how valid are those fears? And is the program also exploiting the migrant workers themselves, who so often see their rights violated or ignored? Armine Yalnizyan is an economist, a columnist for the Toronto Star, and the Atkinson Fellow on the Future of Workers.For transcripts of Front Burner, please visit:  https://www.cbc.ca/radio/frontburner/transcripts

In the Dragon's Den, a simple pitch can lead to a life-changing connection. Watch new episodes of Dragon's Den free on CBC Gem. Brought to you in part by National Angel Capital Organization, empowering Canada's entrepreneurs through angel investment and industry connections. This is a CBC Podcast. Hi, I'm Jamie Poisson. So if I say temporary foreign workers, you might think of just the workers Canada brings in seasonally every year to work on farms. But Canada's temporary foreign worker program has been playing a growing role across our labor market, including food and retail and big chains like Tim Hortons. Last year, Canadian businesses got approval to hire almost a quarter of a million temporary foreign workers. That's more than double what it was five years prior. I've seen a whole lot of concern about this over the last

few weeks, including that businesses could be using this to suppress wages, or that it's worsening our youth unemployment problem. Or most of all, that this program is exploiting the migrants themselves for cheap labor in a system where they are often misled and their rights are so often abused or ignored. The UN has put out a new damning report taking aim at Canada's temporary foreign worker program. It calls it a breeding ground for modern slavery. So is the temporary foreign worker program broken, both for the migrants we invite here and for Canada's labor market?

Or is all the anger about it scapegoating problems from much bigger economic forces? And with liberals saying this week they could tighten the program, what's the right balance? Armin Yelnezian is back to walk us through it. She's an economist, a columnist for the Toronto Star, and the Atkinson Fellow on the Future of Workers. Armeen, hi. Always great to have you. It's terrific being back with you. So, like a lot of the economic stories that we have been telling lately, I think we need to start this one with the pandemic. Beginning around 2021, who was putting pressure on the federal government to loosen the rules around temporary foreign workers and why? Around the middle of 2021, Quebec was having trouble finding people to work, especially in low wage jobs, because people were making a lot of money. It wasn't clear the pandemic was over. This is a province that is famous for its hospitality. So restaurants,

bars and hotels were having a really tough time finding workers to come back to normal. Quebec's Mont-Tremblant was grappling with labour shortages before COVID, but the pandemic has made it much worse. Immigration is at a relative standstill, and many workers are choosing government support or moving on from the service industry. They may have childcare issues and safety concerns. And with students returning to school in the fall, hiring is expected to become even more of a challenge. But also their long-term care facilities and child care facilities were wanting for workers who are chronically low paid. And so they turned to the federal government and asked, could you add a few occupational categories to the temporary foreign worker program, please, and increase the threshold

of workers? That is the upper limit on how many temporary foreign workers can be in an individual workplace. The feds did, raising the threshold from 10% of a workforce to 20% of a workforce. 10% of a workforce to 20% of a workforce. And that was the beginning of a process that a year later had increased those thresholds to 30% of any individual workforce for an incredibly broadened scope of occupations, which were primarily, not exclusively, but primarily low-wage workers in construction, in hospitality, in the care economy. And when we say low wage, just explain to me what that means. Oh, they're getting paid slightly above the minimum wage, and sometimes exactly the minimum

wage, but sometimes slightly above the minimum wage. If you are a temporary foreign worker, however, even though there is a legal minimum wage, you can find that you get paid less than the minimum wage. For example, at a convenience store or a gas station, the employer can withhold wages. And that is the source of the biggest problems of people breaking the rules, is wage theft. People not even getting the minimum wage. Dozens of migrant and undocumented workers rallied in a show of solidarity in several cities across the country, including here in Toronto. Advocates say they would like the federal government to introduce an uncapped regularization program

that grants permanent resident status, saying this could give migrants and refugees the tools to protect themselves against abuse. We all deserve the ability to speak up when our employers are abusing us or stealing our wages. And just put this into context for me, how big of a share of the total amount of migrant labor in Canada is now due to temporary foreign workers? We don't know exactly how much it is because we don't count them very well.

The problem with counting temporary foreign workers is that you can count them in one of two ways. You can count them on the year the permit was issued. They may or may not be working. You can also count them by a census, and the census is on December the 31st, when a lot of temporary foreign workers have disappeared from the scene, especially agricultural workers. The only way we have information about how many people are working that is totally bulletproof is through T1 tax forms. So that takes us about two years to get that information and process it to understand. So we're two years out of date. So we know that the number of temporary foreign workers has grown in the labor market. It was about 2% in 2012 when I first started it. And when Mark Miller says, the immigration minister says he wanted to get the

share of temporary residents down to 5% from 6%, from over 6%, I'm hoping that they're thinking the same thing about the labor force too, because most temporary residents that come in are working age people, and most of them are working. So Armeen, now that we have a better sense of the scope, what I want to talk to you about is that in the last couple of weeks, I've heard a lot of anger in Canada seizing specifically on the temporary foreign workers. And so I'm hoping today you can walk me through some of those dynamics. First, a big argument businesses continue to use for why they're hiring temporary foreign workers is the idea that there's a labor shortage, especially for these kind of jobs. And in this current moment, how valid of an argument is that? There's two answers to your question.

The first is the statement, I can't find a Canadian to do the job, leaves out the part of the sentence that is in parentheses, at the current wages. So it is very much low-cost businesses that are unable to find people doing low-wage jobs. For example, the ones that you have mentioned, large retail chains, large fast food outlets, hotels, bars, restaurants, and as I mentioned earlier, long-term care, childcare, and elements of healthcare. So this is absolutely true that some people will not do those jobs at the current prevailing wages. But it's also true that there are parts of the country and types of jobs that

even if you were to double the wages, most Canadians would not want to do them. I'm speaking of agricultural work, harvesting, plowing, weeding, seeding, picking things in soaring heat and freezing temperatures in rain and in sun. Most Canadians don't want to do that. It doesn't matter how much you pay them. That's also true of many laborers' positions in construction. And it for sure applies to jobs where people are changing diapers for the elderly and for the young. So we will always need more people. And we are in a demographic moment where more people are leaving

the workforce, more Canadian born workers are leaving the workforce, that's the boomers that are aging out, then young Canadian born workers are moving into the workforce. That's because of falling fertility rates for the last four decades. And so 96% of our labor force growth is coming from newcomers. But just a bit of a counterpoint there. The unemployment rate is 6.4% right now. It's higher than it's been in a long time. And you do see anecdotal stories of people like at job fairs, and there being very long lines there. And so like, do you really think that like a McDonald's

in London, Ontario, or a Tim Hortons near a subway line in Toronto can't find somebody to work there? No, I do not. And I think that the conditions have changed dramatically in the last few months, exactly when young people are most likely to take a not very well paying job because they need something. It's the summertime and they're going back to school and they need some money. So 100% they could have hired more Canadians. But you know, public policy doesn't turn on a dime, right? When you have got years-long labor shortages and you are dealing with businesses that will go under if they don't find workers because they can't meet demand without workers. So many small businesses barely hung on through the pandemic because they had no business. Then things reopened again

and they had no workers to meet the existing demand. Some of those businesses are now hanging on for dear life because of rising costs of borrowing. And you don't want to be part of the government that says, I will not help you. And watch your business ecosystem be kind of like the cheese stands alone at the end. It's only the big players that can survive these enormous transitions end. It's only the big players that can survive these enormous transitions, even though some of the big players have been benefiting the most from these temporary foreign worker programs. It certainly helps small players as well. Yeah, I mean, just the big players. I guess another counterpoint to that would be like,

would be like, you know, if a business can't afford to pay its workers the prevailing wage, is it really a viable business? That's an excellent question, Jamie. I don't know if you remember this, but a few years ago when cauliflower was $6 a head, people would say, oh my God, I'm going to go out of business. Or, you know, sometimes it's electricity bills. Like there are things that are going to be the straw that breaks the camel's back for businesses all the time. We are likely to see in the next six months more small businesses shuttering entirely because it's a perfect storm of rising costs and not enough demand. So yes, businesses will fail. And yes, paying low wages are not a reason to keep businesses alive. But there is also the concern that we are looking at a wholesale wipeout of small businesses.

And you really do not want a market sector that is dominated by very large presences with very large market share because they throw their weight around. They change the rules and they set the prices. These are not the players you want to have. You need competition in a marketplace. In the Dragon's Den, a simple pitch can lead to a life-changing connection. Watch new episodes of Dragon's Den free on CBC Gem. Brought to you in part by National Angel Capital Organization. Empowering Canada's entrepreneurs through angel investment and industry connections.

Hi, it's Ramit Sethi here. You may have seen my money show on Netflix. I've been talking about money for 20 years. I've talked to millions of people, and I have some startling numbers to share with you. Did you know that of the people I speak to, 50% of them do not know their own household income? That's not a typo. 50%. That's because money is confusing. In my new book and podcast, Money for Couples,

I help you and your partner create a financial vision together. To listen to this podcast, just search for Money for Couples. I know another thing that people have been concerned about here with the temporary farm worker program is that it could have the effect of suppressing wage growth, right? If you have the option to pay less, then you'll take that option. And then one good thing about a tight labor market is that employees have more leverage, right? And so what about the argument that you're taking that leverage away from them? A hundred percent. I mean, pure demographics, hands to Canada, on a silver platter, the opportunity to make every job a good job. And when you pour in extra supply of desperate workers and desperate students also, who turn out to be workers, you take away some of the shine of that platter,

but it exists underneath it all. So we are dialing back and you will see probably more worker power right now, but you know, the offset now is higher unemployment rates. So, you know, one hand, give us the other hand, take us away. And just, I know this was a point that you brought up earlier, but I just want to put a period on it. Like, you know, when we're talking about the unemployment rate, it's quite bad for young people right now, right? Like they are really disproportionately being affected. Oh, 100%. I've written about it actually in The Star where my entire life, when you look at labor force numbers, in good times and bad, young people have got higher unemployment rates than the general headline unemployment,

usually by about one and a half, one and three quarters times. And of course, it goes up in downturns because the last in is the first fired and young people have shorter tenure at jobs. But what we are seeing right now is unlike anything we've seen before, we're well over double the unemployment rate. It has something to do with the number of international students we poured into the system. Everybody's hungry, but there's a lot more everybody that is hungry in that 15 to 24 age group. And some of them are desperate to do anything to stay afloat. I want to take a second here to make clear that we don't mean to pin any of the impacts that we're talking about on migrant workers themselves, especially because another really important consideration around how we

should use this program is how poorly it can treat those workers, right? And so, I mean, in what ways can the temporary foreign worker rules and the resulting power dynamics fail to guarantee the rights of the people that are brought in? Well, that's a great question. And the short answer is you need to enforce the rules that exist better. Like there's just too many examples of inspections where we're trying to make sure that the rules are being enforced, come with an incredible heads up, very low conviction rates. And even when you're convicted, you pay a small penalty. It's the cost of doing business for very terrible businesses. But there's also when it comes to the temporary foreign worker program itself, which is actually a small part of the story, one that we have focused on a lot in the last few weeks. But it's

a very small part of the story. That one actually ties people to an individual employer. And that is what the UN rapporteur called indentured labor, basically wage slavery. And we can get rid of that. That is a very simple thing to fix because the majority of temporary foreign workers are not tied to an individual employer. Yeah. And just for people listening, the idea is like, if I'm coming here to work for Tiny Tim's donut company, right, which is not a real company that I know of right now, and I'm tied to this company, that means they have a lot of power over me, right? Like, if they fire me, I have to go back. So, of course, that opens the door for, you know, the possibility of a lot of abuses. Yeah. We are told, for example, that these workers also have

labor and human rights, but if you try and exercise them, you're out the door. You might not even know you have those rights to begin with, but even if you knew them, even if you knew that the behavior was egregious towards you, exercising them can mean being deported. And a lot of these people can't afford to be deported. I just want to note really quickly that this week, Employment Minister Randy Boissoneau did say that they are going to look at changing the rules that would help enforce the rules better and stop fraud in the businesses. Where there is LMIA fraud taking place, I want it stamped out. Nobody should be selling workplaces in Canada for $20,000, $30,000, $40,000 to a vulnerable person to come here to Canada, have no protections and actually have no pathway to citizenship. That's illegal. It should be stamped out. On a fundamental level, I mean,

this program that we've been talking about brings in people from other countries to work for less money than Canadians are willing to. Their labor is supporting a country that they are very likely unable to stay in. Should we be concerned about the ethics of that? Oh, 100%. 100% we should be looking at how we export first world values. We don't import third world labor. It's nuts what we are doing. It is unethical. It verges on the immoral. And it's all justified by market dynamics, by not enough workers at a time when now we have enough workers. So it's very difficult

to roll back the clock once you've set it ahead like this, but it is possible to do. And I have every faith that that is what our federal government, whoever it is, will do because they all say they're working for workers. Well, talking about rolling back the clock, I just want to talk a little bit more about what you mean by that, because, you know, I spend too much time online, for sure. And there are people shouting for Canada to slam the door on migrant workers, right? And deport the ones that are already here. Is that what you would like to see happen? What do you think that that would mean for our economy? Just react to that for me. Look, for people that are saying deport them

and slam the door because they're taking jobs. Just a gentle reminder that the economy will shrink if you get your way. 96% of labor force growth is coming from these people. Our demography is shrinking for the working age class compared to the other people that need to be supported, who are too old, too young and too sick to work. We've got more people exiting the labor market than entering it from the Canadian board. So if that's what you want, really expect to see GDP not only decline, it won't even be a recession. It'll be a long-term slump. And if that's what you want, okay, argue for it, but you have to know it comes with a very high cost. And so what do you think the answer is

then, considering that high cost? Like, what is the right balance? How do you strike the right balance here? I think there is a distinction between temporary foreign workers and students who have been brought in in a huge, like, they have ballooned into the sector. And so I think there's two sets of pathways here. Number one, for temporary foreign workers who enter temporarily on a work permit basis. We need more paths to permanence. And we need to remove the things that tie any worker to one employer. That is crazy. You can have sectoral permits, you can have regional permits to address labor shortages without exploiting workers. Right. Like just Alberta, you have to stay in Alberta, you have to work in Alberta, but you don't have to work at Tim

Hortons to be able to stay here and work. Yeah, that's correct. Yeah. Or you can decide, no, you have to work in healthcare, but you can work in healthcare anywhere. So like, you can decide, no, you have to work in healthcare, but you can work in healthcare anywhere. So like, you can decide what kind of a sectoral or regional approach you want, but you need to have an open permit for people or they will get exploited the end. Then secondarily, we need way more pathways to permanence. And that's beginning, but we need to do it far more rapidly. If you're going to let people in temporarily faster than the people that are getting through the immigration door, we need to make sure that they have a clear pathway when they enter that brings them to permanence if that's what they want. You know, a lot of people that enter as temporary foreign

workers under the International Mobility Program, which is the biggest program for temporary workers, a lot of those people don't stay. I'm talking about, you know, the terminators that come in, in multinational companies to lay people off, or artists and musicians, or sports people, or people that fix diamond cutting machines, like these people come in, they do a job, they leave. And that's a huge part of that group. But some people are coming in temporarily on the hopes of staying. And our pathways to permanence are so convoluted. And there's about 2000 of them, we need to simplify it, we need to make it clear from the get go, so that people that want to stay and meet the requirements do stay just like immigrants. And then I want to stay and meet the requirements do stay, just like immigrants. And then I want to make the distinction between these people and international students who have been fed a false bill of goods more and more rapidly over the last few years, where they're

paying triple the tuition of Canadian counterparts. They're being told by recruiters in foreign countries that if they come and study in Canada and get a Canadian education, they can get a Canadian job and be on a fast track to immigration. And every aspect of those promises are false. And they don't know what they don't know, but they have to pay for that. That industry has to be removed. That is the most unethical part of the whole story. These kids that are coming in on study permits are de facto workers, most of them. And frankly, they make up almost half of all the temporary residents that came into the country in 2023. We are dialing that back, but not fast enough. Yeah, it sounds like, correct me if

I'm wrong, but it does sound like what you're saying is that you think even the international students should be getting more of our attention than even the temporary foreign workers are getting right now. Well, I'm saying that the whole shoot and match needs to be revised. We need a huge reform of what we're doing to bring in people from outside of Canada to deal with our problems here. When we are literally poaching talent from countries that have less purchasing power to train these people. All right, Armin, thank you as always. Really great to have you. You know, it's such a pleasure being with you, Jamie, and this is such an important topic. Thanks for having me on. All right.

That is all for this week. Front Burner was produced this week by Derek Vanderwyk, Joythasen Gupta, Matt Muse, Ali Janes, Matt Alma, and Zoe Pearson. Sound design was by Mackenzie Cameron and Sam McNulty. Music is by Joseph Chabison. Our executive producer this week was Elaine Chao. I'm Jamie Poisson. Thanks so much for listening. Talk to you next week.

For more CBC Podcasts, go to cbc.ca slash podcasts.