Blogs & Comment

A simple way to fix Canada’s Temporary Foreign Workers program

Temporary foreign workers have a place in Canada. The problem is we let them in too cheaply

Mexican Braceros standing in a field

Mexican braceros in an undated photograph. Canada’s Temporary Foreign Worker program problems could have been predicted. (University of North Carolina)

In September 1942, the first batch of 500 Mexican workers crossed the border at El Paso, Texas, on their way to the sugar beet fields of California. With America’s entry into the Second World War, the country’s farms faced a labour shortage. To compensate, the government allowed farmers to hire Mexican workers—known as braceros, Spanish for “manual labourers”—on a temporary basis. There were conditions: the foreign workers couldn’t take jobs away from Americans, they couldn’t bring their families along and employers would pay the cost of their transportation. Meant as a stopgap measure, the braceros program lasted 22 years. At its height, 27% of the agricultural workforce in California were braceros. There were accusations that employers favoured Mexicans over local workers, along with a high-profile television investigation that exposed abuse of the temporary workers. A prolonged, sputtering political fight ensued, leading to the end of the braceros program in 1964.

That’s a long way of saying the Conservative government could have seen the current temporary foreign worker scandal coming from five decades away. The contemporary parallels with the braceros program are plentiful. California’s farming sector was chided like RBC and McDonald’s are today. But what’s remarkable is how often history has repeated itself. From the United States to Singapore, Germany to Kuwait, there are ample precedents to show how a large influx of low-skill, temporary workers can warp an entire country’s labour market.

When Canada first launched the Temporary Foreign Worker Program in 1973, it was designed to allow companies to hire skilled professionals, like engineers, from outside the country when their expertise couldn’t be found in the domestic market. The policy patched over any skills gaps until they could be closed through immigration. But demand in the oil and gas sector led the then-Liberal government in 2002 to expand the strategy to unskilled workers. Six years later, the Conservatives started expediting applications in 12 “occupations under pressure,” many in the hospitality sectors. Roughly 101,000 temporary workers came to Canada in 2002; by 2012, the number skyrocketed to 338,000.

This tripling of the itinerant workforce resulted in unemployment being 3.9 percentage points higher in Alberta and British Columbia, where the use of temporary foreign workers is prevalent, according to a recent study by Simon Fraser University professor Dominique Gross. But the entire country’s labour market suffers. Once again, there’s an instructive parallel with the braceros program: during its run, the number of California natives employed in the agriculture sector remained relatively constant. What fell dramatically—from 52,000 in 1949 to 41,000 in 1959—was the number of “dust bowlers”—Americans from outside the state coming to work in California. In both instances, the systems make it cheaper for employers to recruit employees from a different country instead of a different province or state. Employers pay a mere $275 to apply—and, thanks to recent changes, the visa lasts two years instead of just one. Unskilled foreign workers can be paid 5% less than the median wage in their field, whereas employers might need to offer Canadian workers a higher paycheque to move their family. Why even bother trying to recruit an out-of-province Canadian when you can get a foreigner at a cut rate?

Canada could easily solve this problem by hiking the fee to apply for temporary foreign work visas. If hiring a non-resident is meant to be a measure of last resort, it should be priced that way: the U.S. charges up to $2,325 per application. Singapore charges a monthly levy, creating a disincentive to use the program for any longer than absolutely necessary. Much of the discussion surrounding the current debacle has concentrated on shifting away from a reliance on temporary workers and instead bolstering immigration policies. That’s important, but we need to ensure our policies encourage workers to flow between provinces—not just over borders.