Canada is hiring low-wage immigrants to find a quick fix to its labor shortage

Prime Minister Justin Trudeau’s government is opening up Canada to a temporary increase in foreign workers in a controversial experiment designed to ease pressures on the country’s overheating economy.

From Saturday, the federal government will ease restrictions on hiring low-paid employees from abroad, changes that could bring in thousands of additional migrant workers.

The move adds to an intensified effort to increase immigration to fill record high levels of job vacancies as the country faces one of the tightest labor markets in decades.

However, critics warn that the changes will suppress wages and undermine incentives for companies to make productivity-boosting investments, while expanding a program accused of leaving foreign workers vulnerable to exploitation.

“The challenge is to strike a balance between meeting the needs of the labor market and ensuring protection for workers within the program itself,” Employment Minister Carla Caltrow said in a phone interview.

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From April 30, the government will allow employers to increase the share of their workforce that comes from the so-called Temporary Foreign Worker Program if they can prove that there are no workers in Canada who want the jobs. In sectors with significant labor shortages — including manufacturing, retail, hotels and food services — the cap would increase to 30 percent of its workforce in low-wage jobs. The ceiling for other sectors will rise to 20 percent. Both limits are up from 10 percent now.

The new rules add to changes implemented earlier this month that permanently removed any cap on foreign workers on “seasonal industries” such as seafood processing, while allowing workers to stay in Canada for longer.

The intensification of the foreign worker program comes as employers across the country struggle to find employees, with the unemployment rate dropping last month to the lowest since at least the mid-1970s. A shortage of available workers is fueling inflation and is one of the main reasons why the Bank of Canada is racing to curb inflation by raising interest rates dramatically.

Since September, total employment in Canada has risen 2.4 percent, outpacing the 0.8 percent increase in the working-age population, and highlighting a potential imbalance between job supply and demand, according to Statistics Canada. All of the nation’s employment gains over the past decade have come from workers who were not born in the country.

“There is no one to hire right now,” said Marie France McKinnon, vice president of the Canadian Meat Council, whose latest survey found there are more than 10,000 job openings for butchers, a fivefold increase from 2018. There are a variety of sectors at the moment facing the same dilemma.”

“Temporary Service”

However, Canada’s regular immigration system is already buckling under ambitious targets, forcing the government to allocate billions just to process and settle new permanent residents. Trudeau has pledged to bring in more than 1.3 million new arrivals over the next three years – a record.

The Temporary Worker Program currently represents a small percentage of the country’s non-immigrant foreign workforce, which totals about 600,000 people – most of whom are foreign students currently employed in Canada and other international worker programs. Last year, just over 100,000 temporary permits were issued. The bulk of it went to men from Latin America and the Caribbean doing less skilled work.

Canada has sought to keep the program small because it is very controversial. The residence of these workers is linked to their employment in a particular company, which may expose them to exploitation. Miles Korak, a City University of New York economics professor and former advisor to Trudeau, said in a tweet that the relaxation of the rules was “shameful,” calling the program “something very close to programmed slavery.”

Many of these workers will tolerate poor working conditions because they see their work as a path toward permanent residence, according to Michal Skuterud, professor of labor economics at the University of Waterloo.

These workers will put up with just about anything because they are desperate to make the shift. They have lower rates of absenteeism. “They’re accepting lower wages,” Scottyrud said in a phone interview. “From an employer’s point of view, these are huge profits to be reaped from the appearance of these workers.”

There is also a strong economic argument against the programme, he said. Reliance on foreign workers prevents Canada from dealing with a “serious productivity challenge,” missing an opportunity for increased competition for workers that would raise wages, according to Scotterud.

Caltrow, who was a human rights lawyer before entering politics, said the government had taken a number of steps to boost support for workers. This includes providing them with more information about their rights and consulting with workers’ representatives. Another example is requiring union companies to pay the same wages to migrant workers.

“I am very aware of protecting workers,” Caltrow said.

“This is a relatively small part of the workforce,” she said. “We are not inclined to this and say, this is how we are going to deal with the labor shortage in Canada. It is part of a broader approach to a really urgent issue.”

Companies insist that with the economic recovery outpacing employers’ ability to hire, there is no choice but to tap into the supply of foreign labor. Canadians avoid many of these jobs because of potentially squalid working conditions or remote rural areas, such as farm harvesting or butchering and butchering animals.

“They find that either nobody applies, or sometimes they will have people show up for a day and then they don’t stay,” said Janet Craden, workforce specialist with the Canadian Mushroom Industry Association. “That’s because the jobs are rustic. It also involves dealing with live plants or animals – things can smell a little bit smelly. It can be uncomfortable. And so those are the hardest to fill in.”

Qualtrough has acknowledged that there are workforce gaps that are hampering essential economic functions. “Right now, we need to feed the country,” she said.

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