Thursday, November 14, 2013

Feds tell employers to raise wages?!?

On Wednesday, federal Employment Minister Jason Kenney told employers to raise wages and stop relying on temporary foreign workers, thereby reversing 15 years of federal labour-market policy. It is a bit like he had whatever the NDP equivalent of a come to Jesus moment is.

Kenney was speaking about the floundering Canada Jobs Grant (CJG) program that the Harper government is trying to push on the provinces (which the provinces are having none of). His point was that employers need to take steps to address the labour shortage, including investing in training. The unlikelihood of employers actually paying for training (which is a central feature of the CJG) is one of the issues the provinces have identified with the CJG.

Before we start mooning over a new era of enlightened Tory labour market policy, we should take a breath. While there has been a fair bit of chatter lately about how over blown the notion of a labour shortage is, there hasn’t be a lot of analysis about the feds role in it.

Labour shortages are usually relative, rather than absolute, shortages. Basically, when no more workers will make themselves available for prevailing wages and working conditions, the labour market tightens (“oh no, labour shortage!”. In the (Tory-revered) free market, employers can improve wages and working conditions and this causes more workers to come forward. Or employers taper off investment and labour demand declines. In either case, the labour market loosens.

But employers don’t like these options because they cut into profits. Employers would prefer to simply have more workers injected into the labour market. Enter temporary foreign workers (TFWs). TFWs are available because the federal government loosened the rules but told us that TFWs can only come when there are no Canadians available for the job.

And here is the rub.

When employers know they can get TFWs, what they do is offer wages and working conditions they know won’t attract Canadian workers (i.e., they manufacture a shortage). It sounds like a conspiracy but is actual just the natural operation of informed actors in the labour market (no tin-foil hat here!).

This dynamic creates the “evidence” of a labour shortage that is used to get permission to hire a TFW. In effect, the existence of the TFW program creates the so-called labour shortage. Employers desire TFWs because they can be exploited by employers in various ways.

So come back to Minister Kenney’s comments. After 15 years of increasing access to TFWs, suddenly he’s lambasting employers for not training Canadian workers. But why would employers pay $5000 to train a Canadian worker under the CJG when they can just go hire a TFW by paying a $275 application fee?

If Kenney is serious about training Canadians and employers paying their fair share, then he needs to radically reduce the number of TFWs that are available. Until he does that, his proclamations about employer training responsibilities are simply hollow words.

-- Bob Barnetson

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