OPINION: The Temporary Foreign Worker Program is one of Canada’s most effective tools for dealing with the country’s current labour shortage—but there is still space for improvement.
According to a recent Canadian Federation of Independent Business research titled “Labour shortages are back with a vengeance,” 54 per cent of businesses are unable to find all of the workers they require, with only 42 per cent reporting being able to adequately staff their operations.
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Some small businesses have implemented improvements to improve their job market competitiveness, such as raising wages, however, only 22% of those who raised wages deemed it effective. Almost two-thirds (63 per cent) of organisations said that the biggest impediment to their labour problems was a shortage of individuals with the requisite skills/experience. While jobs may be accessible, employers still require individuals with the necessary skills to satisfy the demands of their organisation.
Labour shortages are being driven by a lack of candidates, qualification mismatches, and labour market disturbances.
Small businesses were already suffering from a severe labour shortage at the start of 2020, and the epidemic has further aggravated the situation. Industries that were shut down for extended periods of time, such as hospitality, saw a major exodus as workers were upskilled or switched to other industries or sectors.
Employees in social services and hospitality switched fields at a rate of 37% and 48%, respectively. While virtually all industries have experienced major demographic shifts—nearly 24 per cent of small businesses reported that employees switched industries as a result of the pandemic—the major concern now is that there are not enough new workers coming in to replace those who are retiring or switching fields.
Small businesses have been impacted hard by 19 lockdowns and restrictions. Now that the majority of the country is reopening, governments must address labour shortages as soon as possible to ensure a solid rebound.
Wage rises have not been the promised panacea for retaining or attracting new personnel.
More than four out of every five enterprises (82 per cent) that are suffering personnel shortages have already raised wages. While this worked for some, half of those polled said it was ineffective at attracting personnel. These companies said that despite upping their wages, they received no eligible candidates or no applicants at all for open positions.
Business owners are in a difficult situation because they must reconcile job seekers’ expectations with their capacity to remain competitive.
One factor for the low number of candidates is an imbalance in the distribution of job seekers across academic levels. In the first quarter of 2021, 22 per cent of the unemployed had a level of education equivalent to or higher than a bachelor’s degree, despite the fact that only 15 per cent of the market needed this level of education. At the moment, the majority of job openings in Canada are centred at lower education levels. However, job seekers who want to move to Canada have a higher level of education, resulting in a mismatch in skills and expectations. Because of this overqualification, job applicants may expect different working conditions—salary or role—then what an employer is willing to supply.
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The Temporary Foreign Worker Program has the potential to be one of the most effective labour-shortage solutions.
The most successful solutions to the labour crisis cited were increasing the level of automation utilised in enterprises (81 per cent success rate) and using the Temporary Foreign Worker Program (TFWP) to bring in additional workers (52 per cent success rate). However, while the TFWP’s success rate is higher than that of certain other techniques, the program’s utilisation rate is lower. Only 16% of small firms said they had used the TFWP. The low utilisation to high success rate ratio shows that temporary foreign employees could be a potential solution to Canada’s labour needs, particularly if the programme were expanded to other industries. Opening the TFWP to a broader segment of the business sector would allow for a more moderate influx of labour while keeping the essential skills to match what companies and employees are seeking.
The TFWP also allows firms in the most immediate need of additional workers to apply for them without having to compete for the labour pool directly. Throughout the epidemic, the relocation of workers has increased the labour pool’s competitiveness significantly. Many positions in Manufacturing, Agriculture, and Professional Services (e.g., information technology, copywriting, mechanics) are far more difficult to compete for. By having a direct application pool, these industries and others will be able to discover the personnel they require more easily.
Certain TFWP fixes should be explored in order for the TFWP to become a key solution. The TFWP is currently exceedingly time-consuming—and expensive—for most small firms to use, costing up to $1,100 for each application and potentially taking months, if not longer, to process. Because they are not guaranteed to be matched with a temporary foreign worker even after paying for the Labour Market Impact Assessment, some businesses may be discouraged from participating in the programme before they have ever applied (LMIA). Any further restrictions or delays mean that businesses in the hardest-hit industries cannot readily look to hire temporary foreign workers, especially at a time when they need a solution to their staffing challenges right away.
To help alleviate Canada’s current labour deficit, the government should implement the following reforms to the TFWP:
Improve and streamline the Temporary Foreign Worker Program and permanent immigration system in order to bring foreign employees to Canada more quickly, including establishing a pathway for permanent residency for these workers.
To ensure a good fit between immigrants and the roles they are coming in to fill, ensure that job-seekers match the demands in the Canadian employment market.
As a temporary solution to solve the urgent labour shortages caused by the pandemic, open the TFWP to all sorts of jobs and all industries, regardless of the prevailing area unemployment rate.
Create a Trusted Employer system to speed the application process for Canadian companies recruiting temporary foreign workers to fill labour shortages, while also ensuring that smaller firms with lower-wage roles can qualify.
Employer fees will be waived temporarily for small business owners who want to use the TFWP.
Small firms face a long and arduous road to recovery, and having the necessary people or other tools to solve labour shortages is a critical component. Small businesses have done everything they can to attract people, but they need the government to help by enacting laws that boost productivity, connect job searchers with employers, and do not make hiring prohibitively expensive for enterprises.
With 95,000 members from every industry and location, the Canadian Federation of Independent Business (CFIB) is Canada’s biggest association of small and medium-sized businesses.