Monday, June 9, 2014

Restaurants Canada campaign for cheap workers

Restaurants Canada, an association representing restaurateurs, has recently begun distributing this handbill in places like Tim Horton’s. The gist is that the moratorium on temporary foreign worker (TFW) permits in the food services sector is problematic for restaurants and restaurateurs want the ban lifted.

The handbill advances two specious arguments.

The first is that TFWs can only be hired when restaurateurs have exhausted efforts to recruit Canadians. The media coverage that lead to the moratorium on TFWs in the food services sectors demonstrates this claim is false. The current system has essentially non-existent oversight (which is the fault of the federal government) and TFWs are hired in the restaurant industry when there are Canadians willing an able to do the work (which is the fault of profit-maximizing employers).

The second is that TFWs are necessary to staff restaurants; in their absence, some restaurants would have to reduce their hours or close their doors. By avoiding this outcome, TFWs help protect Canadian jobs. 

This statement is trickier to untangle.

The assertion that “no TFWs means few hours and closures” is not necessarily true. Employers can almost always induce workers who are sitting on the sidelines (in a specific jurisdiction or elsewhere) to join the labour force if the wages and working conditions are right. A look at unemployment among marginalized groups (aboriginal, disabled) and other provinces suggests that lots of potential workers available. But, higher wages and better working conditions raise labour costs which reduces restaurateurs' profits.

It **may** be that some restaurants will end up going out of business without access to TFWs. But if a business can’t afford to pay its suppliers (including its workers) a competitive price, isn’t this a sign that the business is not viable? And won’t any displaced Canadian workers then find employment at another restaurant (which will pick up the customers from the closed business)?

This self-correct dynamic (which is called "the free market at work") highlights the devious nature of the assertion that “TFWs protect Canadian jobs”. On the surface, TFWs do protect specific Canadian jobs by allowing otherwise unprofitable businesses to suppress wages via access to additional workers.

But people change jobs all the time. The real question is whether a moratorium on TFWs will result in long-term job losses among Canadians.

Eliminating employer access to TFWs may well cause a period of disruption, with some Canadian workers changing jobs. But, if restaurant really do hire TFWs only when there are no Canadians, then all of these displaced Canadians should be able to find work. And, when this period of disruption settles out, both wages and working for Canadians are likely to be better (because scarce employees have more bargaining power).

What this campaign is really about is minimizing labour costs for restaurateurs by giving employers access to a larger labour pool.

To be fair, continued access to TFWs in the food service industry mean (1) restaurants are open longer hours and (2) the price of a meal will be lower.

But, the framing of this campaign doesn’t lead to a meaningful debate about the relative merits of migrant workers, low wages, cheap food and 24-hour cheeseburgers.

Instead it seeks to raise anxiety about the (false) spectre of fewer (lousy) jobs and pressurize the government to allow employers access to low-cost workers.

-- Bob Barnetson