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Ontario’s Election: The “Foreign Workers” Subsidy Controversy

I’m back from Cambridge and ready for the new term.   The Ontario election campaign is now in full gear.  The first story I read on the plane back related to a Liberal proposal to grant a $10,000 ‘tax credit’ to employers who hire new immigrants (usually defined as having been in Canada for 5 years or less). So we have an employment issue already.

Why are the Liberals proposing this?

The answer is that statistics consistently show that new Canadians have around double the unemployment rate of all other Canadians.  Moreover, as my colleague here at the School of HRM, Dr. Tony Fang, has found, more than 1/2 of these workers who get jobs are in jobs for which they are overqualified.  They also earn $2 less per hour than Canadian-born workers.  Canada certainly appears to be under-utilizing its new immigrants.

But should the state try to ‘fix’ this?

If you believe that labour markets are perfectly competitive, then you will likely believe that these stats, if accurate, are a simple reflection of the lower productivity of new immigrants.  If they were not less productive, then employers would all rush to hire them, since they are a bargain compared to over-priced longer-term Canadians.  Therefore, the fact that new immigrants are hired less and earn less must be because they contribute less in productivity to the employer.   That being the case, the state should do nothing. There is no problem impeding the hiring of new immigrants.  The labour market is operating properly.

That is the position of the Ontario Conservative Party. They are calling the Liberal proposal “affirmative action” (it is nothing of the sort) because they know that phrase gets people all agitated.  Affirmative action laws set fixed hiring quotas for people with certain characteristics.  The Liberal proposal requires absolutely nothing of anyone.  It simply says to employers, if you choose to hire someone in the class of people who have double the unemployment rate of all other workers (new immigrants), the government will give you a small tax-based reward.   Tory leader Tim Hudak is calling the targeted workers “foreigners” (they are Canadians, actually), and everyone else Canadians. This is part of the us-vesus-them political strategy that worked well for the Conservatives in the mostly white-bred rural and suburban ridings in the mid-1990s.

The Liberals believe that the state does need to be involved to address a problem with the labour market:  the fact that employers don’t like to hire new immigrants and new immigrants skills are being wasted. They have proposed a tax-based solution to help steer employers towards addressing what they perceive to be a systemic problem in our labour market.

Can you think of an employment law strategy to address the fact that new immigrants have double the unemployment rate of everyone else?

It is already illegal for an employer to refuse to hire a new immigrant on that basis.  See section 5 of the Human Rights Code. However, it is very difficult for a job applicant to prove that they were not hired because of their ethnicity or citizenship.  Our human rights laws also probably already permit employers to give preferential hiring to new immigrants. Read section 14 of the Human Rights Code. It says it is not illegal discrimination for an employer to adopt a program aimed at assisting “disadvantaged persons or groups to achieve or attempt to achieve equal opportunity.” Can there be any doubt that new immigrants are a “disadvantaged group” based on the stats noted above?  I am not sure if that section has been used in this way.

So the idea of using law to encourage employers to hire these people is not new.   Would you try and use law to address new immigrant unemployment?  If so, how?

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2 Responses to Ontario’s Election: The “Foreign Workers” Subsidy Controversy

  1. Steven Reply

    September 12, 2011 at 11:30 am

    I’m not sure it is necessary to consider whether section 14 of the Human Rights Code would apply.

    Section 10 of the Human Rights Code includes this definition:
    “services” does not include a levy, fee, tax or periodic payment imposed by law;

    The application of the definition of services was recently considered by the Human Rights Tribunal of Ontario (HRTO) in an application dealing with the Ontario Sales Tax Transition Benefit (“OSTTB”).

    In the cases considered by the Tribunal, the Associate Chair found, “that the OSTTB does not fall within the social area of “services” because of s. 10(1) and the Application is therefore outside the jurisdiction of the Tribunal.”

    The full decision is here: http://www.canlii.org/en/on/onhrt/doc/2011/2011hrto1521/2011hrto1521.html

    It seems likely that the Tribunal would dismiss any challenge to the proposed tax credit as being outside of the Tribunal’s jurisdiction before it ever got around to considering whether section 14 of the Human Rights Code applied.

  2. Machado Reply

    September 12, 2011 at 2:21 pm

    This sounds very much like the Ontario Targetted Wage Subsidy program http://www.tcu.gov.on.ca/eng/employers/wageSubsidy.html. The only difference is, now employers will have to hire new immigrants to Canada in order to qualify for the $10,000 tax credit. Smaller organizations would be the employers who would take advantage of this.

    So what about existing Canadians? Would this be discriminating to them? If an employer interviews a new immigrant and an existing Canadian, and the employer wants the $10,000 tax credit. They would hire the new immigrant. But I don’t think we will see major increases across the board.

    In my opinion, they are offering up a carrot to employers to hire the new immigrant, but they are still ignoring the real issues. Why are new immigrants not being hired in their respective fields? Being over looked? It all stems back to the perception Canadians and employers have of new immigrants. The perception… New immigrants can’t speak English too well. They “bought” their education from there home country. They find it difficult to adapt from their home culture to the new Canadian culture. Employers don’t know what their education is worth. They have no idea of foreign Universities. Which one is like the University of Pheonix and which is similar to U of T? These are the real issues about why new immigrants face barriers to employment. We still won’t see an increase until we can deal with these perceptions.

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