05/07/2013 12:26 EDT | Updated 07/07/2013 05:12 EDT

Temporary Foreign Worker Program May Be Distorting Labour Market Needs: Study


TORONTO - Canada's temporary foreign worker program was under renewed scrutiny Tuesday as a new report suggested the increasingly controversial system "could be distorting" the natural supply and demand of the country's labour market.

The University of Calgary study suggests Canada isn't facing a wide-scale labour shortage but rather is experiencing a "serious mismatch" between the skills of its labour force and the demands of the labour market.

Kevin McQuillan — lead author of the study titled "All the workers we need: debunking Canada's labour shortage fallacy" — said improving the balance in the labour marketplace does not require an increase in the labour supply.

"Indeed, the TFWP (temporary foreign worker program) is sometimes being used to fill jobs with foreign workers in regions that already suffer from relatively high unemployment rates," wrote McQuillan.

"Temporary foreign workers could be distorting the labour market forces that would bring together more Canadian workers and jobs."

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Photo gallery Largest Canadian Employers Using Temporary Foreign Workers (2013) See Gallery

McQuillan suggested an improved immigration policy — that could adjust intake levels with labour market needs and reduce the number of temporary foreign workers brought in — as part of the solution.

"The country is not likely to benefit from a growing class of low-paid, temporary residents," he wrote. "Canada needs to make more effective use of its homegrown human resources."

In 2012, some 213,516 people entered Canada via the temporary foreign worker program, more than three times the number admitted a decade ago.

The private sector brought in 25 per cent more foreign labourers last year than the number of economic immigrants accepted by the government, which has long insisted caps on its own programs are necessary so as not to flood the Canadian labour market.

McQuillan's report conceded there are worker shortages in specific industries and certain regions, but he argued that young Canadians need to be encouraged to pursue an education and careers in fields where jobs are available.

He said this could be done through government funding into educational institutions with programs that match labour market needs and tuition pricing that charges more for study in a field where there is already an excess of labour.

He also suggested the government should find ways — such as a tax break — to entice Canadian workers to move from high-unemployment regions to provinces where workers are needed.

Statistics Canada's labour market survey placed the unemployment rate at 7.2 per cent in March.

Tuesday's report refocused attention on the temporary foreign worker program, which the Conservative government was recently forced to admit is due for an overhaul after weeks of public outcry over the scarcity of Canadian jobs.

Under the proposed changes, employers will no longer have flexibility to set the wages for foreign labour, putting an end to a rule that allowed businesses to pay foreign workers up to 15 per cent below median wages, if that's what they were paying Canadians.

The Conservatives also called for a temporary freeze to a program that fast-tracked the ability of some companies to bring in workers from outside Canada through what's known as an accelerated labour market opinion.

The two key changes are part of a larger overhaul of the program that also includes stricter rules for applications, new fees for employers who apply and a promise of stricter enforcement.

The temporary foreign worker program has become increasingly contentious as Canadians have reacted to the way in which it has been used by some large employers.

In April, it was revealed that the Royal Bank (TSX:RY) contracted an external supplier to provide IT assistance, which resulted in the bank outsourcing some Canadian jobs. Questions were raised about how the supplier brought its own employees into Canada under the temporary foreign worker program so they could be trained at RBC branches.

Last year, a mining firm came under scrutiny for being approved to bring in foreign labour by claiming the ability to speak Mandarin was an essential requirement of the job.