240,000 that's the number of temporary foreign workers the Canadian government allowed Canadian employers to bring into the country last year it's the most ever on record and almost double the number that they approved just two years ago but here's another number 1.4 million that's about how many Canadians are without a job and looking right now that's got some economists arguing that this program meant to be an extraord orary measure to be used when a qualified Canadian isn't able to fill a job vacancy that it's evolved into something else entirely it's really moved a long way
past its intention as a program in the approval rate it has gone from about 7% to now it is it is about 97% this low wage stream has grown absolutely out of control and the concern is that shift is having very real very serious consequences for the country and on younger Canadians looking for work let me explain Canada's foreign worker program was originally designed to fill positions mostly in agriculture you can think of a local farm that needs seasonal workers to help with its Harvest each year other Industries could use foreign workers too but there
was a cap no more than 10% of your Workforce but then um we're short employees reports of businesses struggling to rehire restaurants fast food and Retail in particular were struggling they had open jobs that they couldn't fill to the point where they didn't even have enough people to stay open what they needed they said was to be able to bring people into work from overseas open the floodgates there is just quite simply a tremendous amount of lobbying pressure from businesses in in Canada and so the government you know at a time when there were really
you know job vacancies were very high they had hit record levels they responded to that threat by essentially opening up the system so the system as it was capped foreign workers at 10% of a business's Workforce but a couple of years ago the government bumped that up to 20% across the board and all the way up to 30% for more than half a dozen Industries and look what happened this chart from the glob in mail shows how many workers Canadian employers were allowed to bring into the country each year to fill the category of low
wage jobs so that's the blue line that you see here entrylevel positions in retail construction manufacturing Transportation but what's behind this big jump that you see over the past two years is the food service industry hiring of foreign workers in that category is up close to 5,000% since 2018 according to Bloomberg in Ontario Tim Horton took on 58 temporary foreign workers in 2019 but last year it was over 700 this has been a big transformative change this is tens of thousands of extra temporary foreign workers particularly at a coffee shops and convenience stores uh you
know ice cream places and and that kind of uh [Music] workplace now there are still rules in place to make sure businesses aren't just filling as many positions as possible with cheap labor it is supposed to be a last resort right so for example they have to post the job locally first and make the case that the pay they're offering for the job is fair I mean these are what we call generically Labor Market tests they're essentially just a way for the government to ensure that these are genuine labor market needs that can't be satisfied
locally with local labor and I think this is an attempt to sort of protect Canadian uh workers the problem is in practice it doesn't work that well because it's you know very hard to determine whether or not that's the case um whether they there really aren't local sources of Labor supplies and that's a really important point something that's hard to verify with an application so for example if a business says it had no qualified local applicants for a job a bureaucrat looking at their application to hire foreign workers has to determine well what does that
mean how do I tell if someone was or wasn't qualified especially when you're posting a job with no formal education or technical requirements it isn't that there's you know these hard rules that must be satisfied it is quite simply a very sort of subjective um you have to document that you have made efforts the experts we spoke to say it's gotten to the point where the requirements are so nebulous and there are so many applications coming in they're just being rub stamped when you the the probability your application is accepted with a 97% success rate
there's really not much of a test anymore and if you're thinking well maybe 97% of applications are perfectly legitimate uses of the program well just look at what happens when the government does go back later to audit those companies this is a rolling list of businesses that have received fines over the past few years for breaking the rules and take this audit of d y produce in cobri Ontario just as an example the company was fed $25,000 last month because the job details it wrote on the application didn't match what the job actually was the
government handed out more than2 million in fines just like this this past year and here's the thing the government not only opened the floodgates in 2022 it removed the guard rails as well here's what I mean there used to be a rule that applications in the food and Retail sectors would be automatically rejected if the local unemployment rate was 6% or higher so the thinking being that if lots of locals were looking for work there should be no reason to depend on cheap foreign labor but in 2022 the government got rid of that rule and
take a look at the city of Toronto's unemployment rate for most of the past 2 years it's been above 6% and by now almost every major Canadian city has reached 6% some even higher than that if the unemployment rate is that high it seems like there are a lot of people who could be filling these these V job [Music] vacancies one of the big concerns for economists right now is the impact all of this is having on young people all these jobs are important jobs but they're also jobs that um especially in the fast food
sector this is often PE you know Canadians young Canadians first jobs now again this program is supposed to be a last resort to fill jobs when there aren't any Canadian workers available but let's look again at Toronto there are about 120,000 people between 15 and 24 looking for work that's an increase of 50% in Just 2 years the C says they received 37,000 applications this year the most in IND X's history the competition was a lot because they wouldn't even read my emails would even call back on that question of callbacks the economists we spoke
to say some companies actually prefer to hire temporary foreign workers over young Canadians because they're generally more mature they have more life experience and in many cases they're much less likely to complain about low pay or poor working conditions I mean the research I've done shows that you know there's reasons to think that employers will pitch a low wage when they advertise if if the search fails hope that the government gives them um permission to hire a temporary foreign worker there are ways of you know advertising on sites that aren't used as much uh perhaps
putting in some exotic type requirements and then saying well yes you know we had uh 37 domestic applicants but none of them met our needs so so we have to uh we have to go overseas so it's it's not difficult if you really have a preference for the foreign candidate over the Canadian candidate to say that the Canadian candidate wasn't somehow suitable and I think that's ultimately what the problem is with these tests and take a look at this between the time these new rules were introduced in 2022 and now the national youth unemployment rate
has spiked from around 9% to over 14% And for young immigrants who've landed in Canada in the past 5 years it's even worse around 23% a fiercely competitive job market means young people across Vancouver are struggling to score work there is no question uh that this is negatively impacting uh the employment prospects uh for younger people but there's also another side to this coin because it's also probably true that some young people just aren't applying to these service sector jobs because they don't think the pay is high enough and maybe the pay isn't high enough
because employers have access to people who think the pay is just fine we should keep in mind that you know what they're trying to do is bring in temporary foreign workers at the current wage rather than raising their wages and and trying to attract uh more uh domestic labor so even when the program is working as designed it's suppressing wage growth uh for for the folks who are already in Canada think of it this way if I own a food truck in Ontario and I'm posting a job because I need someone to help me flip
Burgers I'm going to post it at minimum wage in Ontario that's $16 55 an hour a few days pass and I'm not getting any takers so I say okay maybe I need to make the job a little bit more attractive we're not going to pay minimum wage instead we're going to pay $18 an hour and boom suddenly a lot more people are interested but what happens if I don't have to do that and if instead I can just apply to hire someone temporarily from another country where 1655 an hour suits them just fine before we
had temporary foreign worker programs the process would be that you had to pay the competitive wage and the competitive wage is where Supply equals demand the temporary foreign worker program in sense hijacks that process and if wages are stagnating instead of of rising that adds up over time here's just how little wages in this category have grown since 2010 end to end this is an increase of 50 cents maybe a little bit more and this is adjusted for inflation but still now is this solely because of the temporary foreign worker program no but the economists
we spoke to say it is very likely contributing if there are jobs in the economy that Canadians won't do maybe we should start asking ourselves why Canadians won't do those jobs maybe we should be asking ourselves well maybe the problem is those jobs just aren't attractive enough and and that needs to change for the most part the businesses that rely on temporary foreign workers see all of this from a very different perspective they say taking away these workers would mean they'd have to bump up prices lay off staff or even shut down altogether Canada like
many other countries have has become addicted to temporary foreign workers there they may be some uh firms that could not survive at you know if they have to raise their wage from 17 to 18 or to19 but we have to ask ourselves what do we want more do we want a handful of marginally profitable businesses to survive or do we want to see wages go up for hundreds of thousands of young Canadians in my mind that's an easy tradeoff some economists even go so far as to say this program has taken too much pressure off
Canadian businesses because when they know that they can hire a whole bunch of ultra low-wage workers there's much less incentive to make large scale Investments develop new processes or adopt new technologies to become more efficient and we know Canadian businesses are falling behind in all of those areas we have a labor productivity problem in this country the way we increase labor productivity is not by working harder it's by working smarter it's by giving workers the tools the equipment the she Mach Machinery the technology that allows them to produce more every hour that they work that's
what we need now there is a broader question worth asking about who else the temporary foreign worker program potentially hurts including temporary foreign workers themselves but the federal government has made some small tweaks to the program over the past few weeks and they've promised there's more to come now it's not clear whether they'll roll back all of the changes they made in 2022 or try to adjust the application process but some of the economists we spoke to said if it were up to them it wouldn't be a question of what to change they'd cut this
low-wage stream we've been talking about entirely [Music]
