Canada’s Low-Wage Immigration Problem | City Journal

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Mass immigration has caused a backlash nearly everywhere in the West, erupting in the mid-2010s with Brexit, Donald Trump, and the rise of right-wing parties in Europe. Canada, however, had been an exception.

Immigration to Canada has always been high by the standards of developed countries. There was a national consensus in favor of it until recently. Before the Liberals were elected in 2015, about 250,000 new Canadians were granted permanent residency every year, and about 67 percent of them were high-skilled economic immigrants. Those immigrants were qualified to work and spoke at least English or French competently. But under Prime Minister Justin Trudeau, the overall number now approaches 450,000 a year, and the proportion of those who are high-skilled has fallen to about 50 percent. Refugees, family-reunification, and other so-called humanitarian forms of immigration have ballooned. And so has the most controversial immigration stream of all: the Temporary Foreign Worker Program.

Canada, by land mass, is the second-largest country in the world. With our vast size and low population, it will always be possible to make a case for some form of foreign labor. The TFWP was created in 1973 with this in mind. Since foreign workers don’t get permanent residency, the number was not capped at the program’s founding. The idea behind its passage was to fill gaps in the labor market—temporarily—until Canadians could be found or trained to do the jobs.

The TFWP was meant to be similar in principle to the old West German Gastarbeiter, or guest-worker, initiative for rebuilding the country after the Second World War. But Canada’s guest workers never left, and the program metastasized into something different. What began as an immigration stream for seasonal agricultural workers in the late 1960s was folded into TFWP, along with a number of other low-wage, low-skill jobs.

Before 2002, however, about 50 percent of TFWP workers were high-skilled. But in that year, the low-wage part of the TFWP was greatly expanded, opening the lower end of the Canadian labor market to practically anyone, whether or not a real labor shortage existed. There was even a notorious stream for strippers, which the last Conservative government abolished. Further expansion came in 2006, and recruitment of foreigners was fast-tracked in the resource-rich areas of Alberta and British Columbia—just in time for accelerating demand for Canadian commodities from the developing world. Unsurprisingly, the program more than doubled in size between 2003 and 2013, to almost 340,000 workers; and from 2006 to 2014, it grew to about 500,000 workers, above and beyond the number of new permanent residents.

Canadians don’t tend to mind the high-wage workers brought in via the program. When I held the TFWP file as a political staffer in Ottawa, for example, I encountered a case concerning a professorship at a major university. The hiring committee could not find a Canadian with competence in an extinct Near-Eastern language (Sumerian, if I remember correctly), and so had to hire from abroad through the TFWP. The need for a worker with an unusual skill justified the use of the program.

The trouble is the low-wage workers allowed in under TFWP. And here Americans may find the problem hard to grasp. The TFWP, after all, is a legal, temporary immigration stream created and perpetuated by multiple Canadian governments of both the Left and Right. But the best comparator to Canada’s low-wage migrants in the American context is illegal immigration. Breaking the law and sneaking into the United States allows foreigners to gain quick access to the lower end of the America’s labor market. The consequences of such migration—downward pressure on wages—are the same in both America and its northern neighbor. This is why Canadian businesses love the TFWP: They can recruit eager foreign workers, pay them minimum wage, and keep prices low and profits high.

This low-wage labor comes at a high cost for those Canadians trying to enter the labor market, however. Employers use TFWP as a business model, pricing out unskilled domestic workers. What does this look like in practice? Your local restaurant hires foreigners, leaving your teenaged kid without summer work, without employment experience, and eventually, living in your basement. It is also bad for the foreign workers. I know from experience that, in many cases, they are effectively paid below minimum wage, because they are forbidden from taking breaks, they work unreasonably long hours, and they live in employer-owned accommodations while rent is deducted from pay. This is tantamount to indentured servitude. A recent United Nations report exaggerated when it included the TFWP among modern examples of slavery, but only somewhat.

Policymakers could ignore these problems as long as the economy hummed and the resource sector boomed. This changed when two scandals broke in 2013. First, HD Mining International, a Chinese-owned mining company based in Vancouver, refused to hire some 200 Canadians for a new project, and instead sought to bring in an entire workforce of Chinese laborers. Second, the Royal Bank of Canada replaced 45 Canadian IT professionals with workers from India, and the outgoing employees had to train their replacements. In both cases, Canadians were indeed available to do the jobs, but those companies simply refused to hire them because it would be cheaper to employ foreigners. The TFWP was suddenly making daily headlines, and outrage grew.

These scandals occasioned the ruling Conservative Party’s TFWP reforms in 2014. The government’s solution, which I played a part in implementing, was to phase the program down over three years, eventually capping low-skill TFWP workers at 10 percent of a firms’ employees, and making foreign recruitment more expensive and more difficult. We banned the use of the program altogether in areas of high unemployment, ratcheted up enforcement measures, and established a public blacklist for naming and shaming delinquent employers. This worked, and the number of foreign workers immediately began to fall.

One cheerleader for TFWP reform was a member of Parliament from Quebec. He demanded that the TFWP be “scaled back dramatically over time,” because “it drives down wages and displaces Canadian workers.” This was the future Liberal prime minister, Justin Trudeau. But not long after the Liberals won the election in 2015, his government allowed the number of foreign workers to rise again. It more than doubled between 2018 and 2023, from about 109,000 to 240,000. In 2022, the Liberal government raised the 10 percent TFWP worker cap in certain industries to 30 percent, and increased the amount of time that the workers were allowed to remain in Canada. Scandalously, the Ministry of Employment and Social Development instructed its workers to skip fraud-prevention steps when vetting applications for foreign workers in order to speed up the process.

The Conservative government’s reforms were all but reversed. Canada did not return to where it started, however, but entered a new era of ultra-high immigration, importing our equivalent of a large city every year, without any of the requisite civic infrastructure or housing. There are now almost 3 million non-permanent residents in Canada. That’s more than 7 percent of the population, and it’s a growing amount. Compare this with the alarm caused in America by the presence of some 11 million illegal immigrants—3 percent of the population—and you can see the nature of Canada's problem.

Unsurprisingly, Canada’s old pro-immigration consensus is gone. A poll conducted by Leger this past August shows that 65 percent of Canadians think the government will admit too many immigrants, and only a mere 20 percent think it will admit the right amount. The Trudeau government has hastily announced several measures to ratchet down immigration, including a return to the 10 percent cap on the TFWP.

This is a welcome change. But it will not be enough to cure Canada’s economic and social diseases. If you ask an employer about hiring practices and employee retention, you will hear the same thing almost every time: the domestic workforce is generally lazy, entitled, and unreliable. This was true of millennials, and Gen Z apparently is even worse. Though it can’t be true in all cases, employers say that retaining Canadian workers in entry-level or low-wage jobs is hard. Cutting off the stream of foreign workers won’t make this problem go away. Wages will have to rise, and employers will have to work harder to reward loyalty. But will there be a new work ethic? Will younger Canadians work with the same effort and pride as foreigners?

The greater challenge may lie beyond politics. Can we stop treating human beings—domestic and foreign—as units of economic input? No foreigner should be exploited, and no citizen denied the dignity of work. Do Canadians believe this?

Canada’s immigration system is by no means hopeless. But when I contemplate our prospects, I’m reminded of the old joke about a lost tourist asking a rural bumpkin for directions. His answer: “If I were you and I wanted to get there, I wouldn’t start from here.”

Photo: Manjurul / iStock / Getty Images Plus

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