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The Temporary Foreign Worker Program and the Neoliberal

Here’s an interesting subject for industrial relations students.  You might have seen recent stories about how a Chinese/Canadian coal mining consortium was granted permission by the Federal government to bring in about 200 Chinese miners to fill jobs at a coal mine in B.C.  Here is a Vancouver Sun piece.  The company apparently plans to seek allowance to bring in thousands more Chinese workers in the coming years.  Because unions found out about the Chinese miners and complained that actually Canadians are pretty good at coal mining and could do this work, the government has now announced it will review the program and the coal miners situation.

I’m not going to run through all of the specifics of the Temporary Foreign Worker Program.  And I’m not an expert on how the program works in practice.  However, in a nutshell, it is a program that allows Canadian employers to receive permission from the federal government to bring in foreign workers to fill jobs in Canada when the jobs have been advertised and qualified Canadians do not fill the jobs.  

The mining company must have put ads in papers and jobs boards for the positions, and they claim no candidates applied.  I can’t find a copy of the ads.  The Feds agreed that there are no Canadians willing or able to do the job at the posted rate, so it granted 201 permits for ‘temporary’ Chinese workers.  A strange twist in the B.C. coal mine case is that the job ad apparently listed knowledge of Mandarin.  I’m confused by that part. Listing knowledge of Mandarin as a job requirement in a job ad would violate the Ontario Human Rights Code (Section 23).  Is that not the case in B.C., my Western friends?  Surely a job ad that violates human rights laws would not satisfy the requirement for the jobs to be properly posted under the FTWP?  If it does, then that would be a seriously flawed model.

The TFWP program is controversial for a number of reasons.  But I want to focus on one aspect of it that is relevant to our industrial relations course.  This program has flourished under the Federal Conservative Party, the party that is most aligned with the Neoliberal Perspective we discuss in class.  That perspective promotes reliance upon ‘market forces’ to fix wages and working conditions.  This leads them to be suspicious of government regulation of work, since regulation is said to interfere with the market forces.   Curiously though, the TFWP is an example of government intervention in markets designed to help employers lower their training and labour costs. The Conservatives are fine with this sort of state intervention in labour markets.

The TFWP requires the employer to post jobs for a period of time to try to attract Canadian workers.  The posting must include: a ”wage range (i.e. an accurate range of wages being offered to Canadians and permanent residents). The wage range must always include the prevailing wage for the position”.   The ‘prevailing wage’  is calculated by using a government calculator called a Wages and Outlook Report .  I tried ‘Coal Miner’ in the Okanagan-Thompson area because no rate is listed for Northern B.C., and got this:

Hourly Wage Rates:   Low End:  $24    Median:   $30.80   High End:  $36

[For fun, I also tried University Professor for the Toronto area and was told this:Hourly Wage Rates:   Low End:  $18.34    Median:   $43.27   High:  $69.71]

So, I assume that a coal mine in this geographic area would need to list a range that included $30.80 per hour.   But what if no miner wants to work in that region for the median wage rate?   As I understand the Model, the employer would not then be required to offer the High End of the range, or to go above that.  Rather, if no people step forward at the posted rate that the employer wants to offer, the government will then allow the employer to go abroad to find workers who will work for that rate.

But here’s a question:  If an employer can’t attract workers at a wage rate within the median range’, then doesn’t neoliberal labour market theory simply require the employer to raise the offering price?   That is how the price of labour ’clears’, how supply will eventually meet the demand for coal miners.  If you offer a high enough wage rate, you will no doubt begin to attract coal miners from across Canada.   If the employer can’t find qualified workers, then wouldn’t a neoclassical model require the employer to provide training in order to attract workers (or to find a solution with the government to assist in training workers)?  These are production costs that companies are usually expected to absorb in a market system.

The TFWP program rejects these core market-based principles by permitting Canadian employers to bypass Canadian labour market forces and tap into a pool of foreign workers who come to Canada with fewer legal rights.  These workers usually don’t speak English, so its hard for them to learn their legal rights, and they can be sent back to their country at any time if their employer doesn’t want them any longer.  It is a system designed to permit Canadian employers to benefit from vulnerable foreign workers.

This distorts the market place in order to keep wages low and to allow employers to avoid providing Canadian workers with training.   It is good news for the employers that the state intervenes in the operation of labour markets in this way.   However, if you are an adherent to the gospel of ‘free markets’ and limited state intervention, then can you also support the TFWP program?

What do you think?  Is the Foreign Temporary Worker Program inconsistent with Neoliberal economic teachings?

Should Canadian employers be required to pay that rate required to attract workers to remote areas of Canada, even if that rate is higher than the employer would like to pay?

Should employers be required to train Canadian workers if there is a skills shortage, or should they be able to look abroad for foreign workers who will need less training?

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4 Responses to The Temporary Foreign Worker Program and the Neoliberal

  1. Steven Reply

    November 15, 2012 at 4:43 pm

    You stated, “Listing knowledge of Mandarin as a job requirement in a wanted ad would violate the Ontario Human Rights Code (Section 23).” This is not correct. Read the section again and pay attention to ss. 23(3).

    Speaking Mandarin is a “skill” or qualification. Employers are permitted to list required skills in job ads and can refuse to hire persons who do not have the required skill. job ads are filled with positions that require applicants to speak French or be bilingual or that indicate that applicants with additional language skills will be preferred over less-qualified applicants. In this case, it would appear that the requirement to speak Mandarin is not a bone fide skill or requirement in the situation. It appears to be a pretext.

    But surely, the prevailing wage should be for highly skilled Mandarin-speaking miners, not the lesser skilled unilingual coal miner…

  2. Doorey Reply

    November 16, 2012 at 11:57 am

    Thanks Steven. I disagree with your intepretation of Section 23. Section 23(3) which you mention doesn’t deal with job ads, it deals with interviews, where the scope of permissable questions is broader. Section 23(1) is the applicable section to job ads. It prohibits inclusion in a job ad of any requirement that indirectly discriminates on a prohibited ground. A requirement to speak Chinese indirectly discriminates against people who are not of Chinese ethic origin, since they are far less likely to be able to satsify the qualification. The purpose of s. 23(1) is to stop employers from weeding out potential applicants by including a requirement they won’t be able to meet, before a discussion can be had about whether accommodation is possible. If Mandarin is a bona fide job requirement, the employer could ask about it at the interview stage, but it could not deny a non-Mandarin speaking applicant the job unless it is not possible to accommodate that person without suffering undue hardship (Section 11). If an employer can weed out the entire population of non-Mandarin speaking applicants simply by including a requirement to speak Mandarin in a job ad, then it can completely avoid having to consider accommodation. That is precisely what Section 23(1) is trying to prevent.

  3. Ethel Reply

    December 4, 2012 at 11:16 am

    I suppose in a purely laissez faire model, there should be minimal rules to prevent the international mobility of workers. As it stands, it seems rather inconsistent to allow international mobility of capital to a much greater extent than the international mobility of labour.

  4. Dougald Lamont Reply

    February 15, 2013 at 10:41 am

    The question for any libertarian or laissez-faire economist is why the government is intervening in the labour market to drive the price of labour down?

    The foreign temporary work program is just one of several ways in which the Harper government intervened in the existing labour market with the result of depressing wages for many in order to increase gains for a few.

    It is based on the idea that people who are on EI or in the social safety net are “dependent” and are therefore not desperate enough

    • Foreign temporary workers can be paid 15% less than Canadians citizens. Harper has argued it is specifically to deal with a problem in Alberta, which raises the question why it is a national policy.

    • EI changes force the unemployed to take jobs that are available, rather than letting them holding out for a better job, which also lowers wages. 

    • Extending the retirement age to 67 hits low-income seniors, particularly men, the hardest, since they will be denied two years of provincial benefits as well as OAS, but also because while the rationale for the change is that people are living longer, longevity is not evenly distributed throughout the population. The people who are living longer tend to be people who have higher incomes, and are more likely to have private retirement income. The people with the lowest incomes have the shortest lives.

    • Changes to the health and social transfer will hit “have-not” provinces while benefiting “have” provinces – when “have” and “have not” status is determined mostly by the number of high-income individuals. 

    • Killing the Wheat Board for “marketing choice” will net higher profits for the richest producers – including international grain companies, which are almost all privately owned by families – while smaller producers will be driven out of business.

    In his book, “The Big Short” Michael Lewis makes the point that certain kinds of agreements effectively (and unwittingly) expose one side of the deal to all of the risks of the other. The initial deal seems simple, but the ramifications are huge, hidden and complex.

    In the natural world and in human affairs (including investing), differentiation is a survival technique. Having “barriers” that slow the influx or outflux of capital can reduce instability. A fixed-term bond is a perfect example, but there are countless other financial instruments that are based on “locking the customer in.”

    A financial “monoculture” – a common currency in the EU, a shared market – means that risks can propagate across borders so that mistakes in one area (Greece) can deeply affect people elsewhere living under very different economic conditions. In short: mistakes end up being much more painful, and affect many more people who had nothing to do with what went wrong.

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