Labour Mobility in Canada

Transcription

1 RESEARCH PAPER Labour Mobility in Canada Issues and Policy Recommendations By Hadrian Mertins-Kirkwood October 2014 Hadrian Mertins-Kirkwood is a social and economic policy researcher based in Ottawa,

2 Ontario. He has completed an Honours BA in Media Studies from Western University and an MA in Political Economy from Carleton University, where his SSHRC-funded research project was a critical analysis of the Trans-Pacific Partnership free trade agreement. In addition to international trade, Hadrian's research interests include Internet freedom, socioeconomic inequality, and global political economy. He holds the 2014 Andrew Jackson Progressive Economics Internship at the Canadian Centre for Policy Alternatives. Table of Contents Executive Summary 1 Recommendations 2 Introduction 3 What is Labour Mobility? 4 Part 1: Interprovincial Labour Mobility in Canada 5 Overview of Interprovincial Agreements 6 Issues for Canada

3 8 Part 2: International Labour Mobility in Canada 10 Overview of Programs 10 Canada s Labour Mobility Commitments Under International Agreements 12 The Scale of Migrant Workers in Canada 17 Issues for Canada 21 Looking Forward: CETA 27 Looking Forward: Other New Agreements 31 Conclusions and Recommendations 33 Summary of Key Recommendations 37

4 Acronyms AIT CEC CETA CIC ESDC FSTP FSWP FTA GATS ICT IEC ILMI IMP ISP LICP LMIA / LMO MFN NAFTA NWPTA OCWPP PGWPP PNP Agreement on Internal Trade Canadian Experience Class Canada-European Union s Comprehensive Economic and Trade Agreement Citizenship and Immigration Canada Employment and Social Development Canada Federal Skilled Trades Program Federal Skilled Worker Program Free Trade Agreement General Agreement on Trade in Services Intra-Company Transferee / Intra-Corporate Transferee International Experience Canada Program Interprovincial Labour Mobility Initiative International Mobility Programs International Student Program Live-in Caregiver Program Labour Market Impact Assessment / Labour Market Opinion Most-Favoured Nation North American Free Trade Agreement New West Partnership Trade Agreement Off-Campus Work Permit Program Post-Graduation Work Permit Program Provincial Nominee Program

5 TFWP TILMA TISA TPP SAWP WTO Temporary Foreign Worker Program Trade, Investment and Labour Mobility Agreement Trade in Services Agreement Trans-Pacific Partnership Seasonal Agricultural Worker Program World Trade Organization 1 Executive Summary Labour mobility refers to the free movement of workers between provinces, regions, or countries. When labour mobility between two jurisdictions is high, a worker in one can easily cross the border to deliver services in the other. High labour mobility is economically efficient, because workers can move to where they are most needed. However, there are many barriers to labour mobility, such as certification requirements when crossing provincial boundaries or visa requirements when entering another country. Typically, governments impose these barriers on labour mobility to advance legitimate social interests, such as encouraging local development or ensuring public safety. In Canada, labour mobility is governed by a patchwork of legislation and treaties at the provincial, federal, and international level. Taken together, these programs, laws, and agreements seek to strike a balance between the free movement of individual workers and the broader public interest. This labour mobility regime has been more successful within Canada than between Canada and other countries. At the interprovincial level, workers are mostly free to move between provinces to find employment. The 1995 Agreement on Internal Trade (AIT), which was updated in 2009, requires that all provinces recognize the existing training, skills, and certification of workers in regulated occupations, ensuring that these professionals are qualified to work in all provinces and territories (there are some exceptions). In general, this framework encourages mobility while respecting the provinces' right to regulate. Notably, this framework does not extend to apprentices and other trainees, who in most cases cannot cross provincial boundaries to complete their training.

6 At the international level, Canada's labour mobility regime is much more convoluted and far more problematic. Numerous programs and treaties pursue contradictory goals and ultimately lead to a variety of negative social outcomes, including wage suppression and inflated unemployment. The Temporary Foreign Worker Program (TFWP) in particular has been widely criticized for its concerning social impact. Not only have migrant workers who have entered Canada through this program been abused, with few avenues for recourse, but the program has become a crutch for entire industries unwilling to pay Canadian workers an appropriate wage. In addition to the TFWP, Canada offers a wide variety of lesser-known International Mobility Programs (IMPs) that facilitate the temporary entry into Canada of large numbers of migrant workers every year. For example, the International Experience Canada Program (IEC) provides working holiday visas to 60,000 international youth workers every year. A further 30,000 workers enter Canada every year as intra-corporate transferees (ICTs), student workers, or as the spouses of migrant workers. Altogether, around 60% of the more than 200,000 migrant workers entering Canada every year, do so through Canada's International Mobility Programs. Crucially, unlike the TFWP, these programs do not require a Labour Market Impact Assessment (LMIA), which is a government review process intended to ensure that migrant workers are only hired where legitimate labour shortages exist. The potential labour market impact of all of these workers is startling, although a lack of data collection makes it impossible to draw concrete conclusions. Unlike the Temporary Foreign Worker Program, which is being wound down in response to public outcry, the International Mobility Programs are poised to expand in the coming years. New international treaties such as the Canada-European Union s Comprehensive Economic and Trade Agreement (CETA) will provide even greater unrestricted access to the Canadian labour market for certain categories of migrant workers. These programs and agreements deserve far more attention than they have received to date. 1 Recommendations

7 Within Canada, workers should have the right to move anywhere for work; apprentices and other trainees in particular should have greater mobility rights than they currently possess. Increasing employer investment in workplace skills development will also help to strengthen the domestic labour market. So long as there are Canadians looking for work, the solution to long-term labour and skills shortages should not be temporary migrant labour. In the case of legitimate short-term skills shortages, or where long-term labour shortages cannot be addressed through investment in the domestic labour market, workers from other countries should absolutely be able to enter Canada. However, these workers should enjoy the same rights and protections as Canadian workers, and should be offered a pathway to permanent residency. A robust immigration system is a more appropriate and democratic avenue for shaping Canada's labour mobility regime than secretive trade agreement negotiations. The free movement of labour is economically efficient and is a worthy policy goal, so long as its social consequences are understood and appropriately addressed. In the interest of greater understanding, Canada's labour mobility policies at both the national and international levels need to be informed by better data. The International Mobility Programs are especially poorly monitored and demand a thorough review and more stringent data collection protocols moving forward. 1 Introduction Qualified Canadians should have first crack at available jobs, declared Federal Minister of Citizenship and Immigration, Chris Alexander, in August "Our Government s number one priority remains jobs, economic growth and long-term prosperity, added Jason Kenney, Minister of Employment and Social Development, as the pair announced reforms to the much-maligned Temporary Foreign Worker Program.1 Imagine the surprise of workers in the small logging town of Mackenzie, British Columbia, when that summer they learned that a new project to build a fuel storage facility in the area was being completed by American workers from an American contractor even though local workers were willing and able to do the job.2 The company, Oregon-based O&S

8 Contractors, had won the contract legitimately. But, instead of hiring qualified local workers, the contractor took advantage of Canada s littleknown intra-company transfer rules to import comparable workers from the US. Local unions were outraged, but as their ongoing Federal Court challenge is likely to prove, O&S was well within its rights.3 Unfortunately, according to Brian Cochrane, who represents the workers, there is simply little Canadians can do to stop the job loss to foreign workers.4 But what gives American companies this right? Why are Canadian workers powerless to stop it? And what do cases like this mean for Canadian society and the Canadian economy more broadly? This paper serves as both an investigation into Canada s labour mobility regime, as well as a guide for future policy. It unpacks Canada s labour mobility programs at both the interprovincial and international levels so that policymakers, researchers, and workers themselves can develop a better understanding of the institutions and rules that facilitate the movement of workers into and within this country. Throughout the analysis, problematic economic trends and concerning social issues are highlighted for discussion and further analysis. The paper concludes by recommending specific actions that policymakers can take to make Canada s labour mobility regime work better for workers, and for Canada. 1 What is Labour Mobility? Labour mobility refers to the ability of workers to move freely between jurisdictions and occupations in order to work. When labour mobility is high, workers face few barriers in moving to find employment. When labour mobility is low, workers are prohibited or discouraged from doing so. Generally speaking, increased labour mobility means a larger and more flexible labour force, which has a variety of consequences. On one hand, an increased labour supply means more competition for work, which tends to increase productivity. Labour mobility also creates individual economic opportunities, because it allows workers to move to find employment better suited to their skills, needs, and aspirations. On the

9 other hand, greater competition amongst workers tends to drive down wages and working conditions, and can increase unemployment. Depending on the circumstances, increasing labour mobility between uneven economies can either exacerbate existing differences or serve to level them out, both internationally and regionally. Labour is increasingly mobile within and between most countries, but workers are rarely completely free to move. A wide range of natural and artificial barriers inhibit the free flow of labour between countries or regions. Natural barriers include social, structural, and personal restraints; such as cultural differences (including language), personal limits on physical and mental competencies, and the capacity or willingness of workers to relocate due to distance or cost. Artificial barriers are institutional or political, and often exist for legitimate social and economic development goals. They include accreditation requirements, availability of education and training, preferential hiring rules (e.g. Employment Equity), employment standards (e.g. minimum wage), social welfare (e.g. Employment Insurance), and measures designed to encourage local development. In Canada, artificial barriers to labour mobility exist at a variety of levels. The movement of workers within Canada referred to by economists as domestic labour market flexibility and between Canada and other countries is governed by a complex web of provincial and national legislation in addition to interprovincial and international treaties. To make matters more complicated, these overlapping policies and agreements are occasionally at odds with one another as a result of different governments pursuing conflicting goals over time. Policymakers at both the provincial and federal level have struggled to strike a balance between the free movement of workers and the legitimate social and developmental goals of governments, which has produced this disjointed labour mobility regime over time. 1 Part 1: Interprovincial Labour Mobility in Canada Canadian citizens and permanent residents do not need work permits or visas to move between provinces. Indeed, the right to mobility is enshrined in Section Six of the Charter of Rights and Freedoms. Therefore,

10 low-skill workers are generally very mobile in Canada (barring the natural barriers outlined above). High-skill, regulated workers on the other hand face a number of impediments to interprovincial mobility. These workers, which include professionals (e.g. doctors, lawyers, and accountants) and skilled tradespeople (e.g. electricians, carpenters, and cooks) make up about 6% of the Canadian workforce.5 Barriers have emerged because the regulation of labour falls primarily under provincial jurisdiction. Each province is responsible for setting out occupational standards to define what work counts as a given profession in that province. Therefore, an occupation that exists in one province may not be recognized as a regulated occupation in another. For example, while British Columbia recognizes both Registered Nurses (RNs) and Registered Psychiatric Nurses (RPNs), Ontario only certifies the former, making it potentially difficult for an RPN from BC to move east. To make matters more complicated, the responsibility for certification requirements of each occupation in each province is typically devolved from the provincial government itself to a professional governing body (e.g. the College of Registered Psychiatric Nurses of BC), which facilitates and monitors the accreditation process. Therefore, even if an occupation is recognized in two provinces, a worker s certification might not be acknowledged by the receiving province s professional governing body. 1 Overview of Interprovincial Agreements The Agreement on Internal Trade, which came into force in 1995, was meant to streamline some of these issues. Chapter 7 of the AIT, the Interprovincial Labour Mobility Initiative (ILMI), was explicitly designed to enable any worker qualified for an occupation in the territory of a Party to be granted access to employment opportunities in that occupation in the territory of any other Party.6 Among other provisions, it largely eliminated residency requirements for interprovincial work. However, ten years after the ILMI came into effect, 35% of regulated workers attempting to move between provinces were still rejected on the basis of incompatible or unrecognized qualifications.7 Frustrated by the AIT s failure to deliver true, nation-wide labour

11 mobility, some provinces negotiated their own regional agreements. The Trade, Investment and Labour Mobility Agreement (TILMA), signed by Alberta and BC in 2006, which was later expanded into the New West Partnership Trade Agreement (NWPTA) with the addition of Saskatchewan, is the most important of these agreements. TILMA and the NWPTA harmonized certification rules through the principle of mutual recognition, which ensured that professionals and skilled tradespersons certified in one province will be recognized as qualified in all three provinces.8 Motivated by the success of these agreements, the AIT was amended in 2009 to extend the principle of mutual recognition to every province in Canada. This change complemented the long-running Interprovincial Standards Red Seal Program, which is a federallysupported initiative to certify workers in specific skilled trades across provincial boundaries. Although the revised AIT was a significant step forward for interprovincial labour mobility, it failed to resolve some important issues. Notably, although certification requirements are now largely harmonized, the provinces remain responsible for defining occupational standards. Some important differences in standards remain. Furthermore, the principle of mutual recognition does not apply to apprentices and other trainees, which means schooling or other training started in one province must be completed there. An apprentice welder who does her classroom work in New Brunswick will not receive credit for any on-the-job training completed in Saskatchewan. Tight restrictions on mobility are one factor in Canada s low apprenticeship completion rate.9 1 Issues for Canada Advocates of greater labour mobility within Canada argue that increasing the flow of workers between provinces will help to smooth out regional differences, such as those created by the Western resource boom. If unemployed skilled workers in Ontario are free to move to Alberta, where skilled labour shortages are more common, the receiving province benefits through increased productivity and the sending province benefits through remittances (money sent back or brought back by returning workers). Extending mutual recognition to apprentices could

12 have a similarly beneficial effect for skill-starved regions, as well as for individual trainees. Calls for reform of the AIT are increasingly widespread. Professional organizations, employers, and provincial governments are among the voices demanding a more robust national framework for interprovincial labour mobility, such as the one found in the NWPTA. Federal Industry Minister James Moore has promised changes to the AIT to address these issues and is currently consulting with stakeholders across the country, although he has yet to produce specifics. So far, the discussion surrounding the AIT has focused more on barriers to trade in goods, so potential changes for labour mobility are unclear. Nevertheless, there will be changes in any new or updated agreement with implications for labour. Generally speaking, workers, employers, and the provinces would all like to see improved mobility through the AIT. It should be noted that further increasing labour mobility within Canada may have some unintended side effects. A handful of sending provinces are concerned that greater mobility will have devastating long-term consequences for economic development in their regions. The Atlantic provinces, in particular, are already struggling to keep workers from migrating West, where jobs are plentiful and wages are relatively high, even though Atlantic provinces face skills and labour shortages of their own.10 For example, a 2007 report by the Newfoundland and Labrador Skills Task Force nervously concluded that the province faced a vicious cycle of worsening skills shortages due to demographic shifts and workers being siphoned off to Alberta.11 Without the skilled workers necessary for far-sighted, large-scale local development projects, a province like Newfoundland and Labrador may be challenged to implement any kind of serious, long-term development strategy. Therefore, even if the free movement of labour is economically efficient (i.e. it produces a net economic benefit for Canada), and even if sending provinces benefit somewhat from any wages brought back by returning workers, draining these provinces of their locally-trained, skilled workforce is likely to hurt their economic strength and selfsufficiency in the long run. The possibility that increasing interprovincial labour mobility will exacerbate existing regional disparities is an

13 important consideration for labour policy in Canada. Moreover, the social costs of this internal migrant labour force are considerable. Migrant workers are routinely separated from their families for weeks, months, or years at a time, and migrant worker communities like Fort McMurray, Alberta often lack the social supports of more settled areas.12 Pressuring workers in high unemployment areas to move to find work can also disrupt traditional aspirations and ways of life.13 In reforming Canada s internal labour market regime, a balance must be struck between the benefits of economic efficiency in terms of employment and growth and the potential social dislocations produced by increased mobility. 1 Part 2: International Labour Mobility in Canada At the international level, Canada s labour mobility policy is closely tied to Canada s immigration policy. Workers who wish to enter Canada whether temporarily or permanently and Canadian employers who wish to hire internationally must do so through programs offered by Citizenship and Immigration Canada (CIC). CIC offers more than a dozen different pathways for international labour mobility, which it groups into two categories: those programs requiring a Labour Market Impact Assessment and those that are LMIA-exempt. The LMIA-exempt streams are collectively known as the International Mobility Programs. An LMIA previously known as a Labour Market Opinion (LMO) is a document either confirming or denying that a legitimate labour or skills shortage exists in a specific industry in a specific area. They are issued at the request of employers by Employment and Social Development Canada (ESDC), which monitors the Canadian labour market. The purpose of the LMIA process is to ensure that Canadian employers hire Canadians first when jobs are available; employers should only turn to migrant workers as a last resort when suitable domestic workers cannot be found. Unfortunately, cases of unwarranted ESDC approvals, whether due to disingenuous employers or a lack of administrative resources, are common.14

14 Overview of Programs The following CIC labour mobility programs require employers to receive a positive LMIA from ESDC before they can hire a migrant worker. Unless otherwise noted, workers are not offered a pathway to permanent residency in Canada. Temporary Foreign Worker Program (TFWP): a set of programs designed to meet short-term Canadian labour market needs where employers are unable to find suitable Canadian workers.15 Agricultural Stream: allows employers to hire migrant workers for on-farm primary agriculture for up to two years at a time. Live-In Caregiver Program (LICP): allows families to hire migrant workers to provide care in a private household, wherein the worker is also required to live; the LICP offers a pathway to permanent residency after a minimum of 22 months. Seasonal Agricultural Worker Program (SAWP): allows employers to hire migrant workers from Mexico and select Caribbean countries for on-farm primary agriculture in specific sectors for up to eight months at a time. Stream for Higher-Skilled Occupations: allows employers to hire migrant workers in a variety of higher-skilled positions; specific rules govern the temporary entry of academics and entertainment-related occupations. Stream for Lower-Skilled Occupations: allows employers to hire migrant workers in any lower-skilled positions for up to 12 months at a time (renewable up to 24 months). Federal Skilled Trades Program (FSTP) and Federal Skilled Worker Program (FSWP): designed explicitly for Canadian employers facing long-term skills shortages; the FSTP and FSWP offer a pathway to permanent residency for high-skill workers with a permanent job offer. Canadian Experience Class (CEC): provides a pathway to

15 permanent residency for migrant workers who are already wellestablished in Canada. Unlike CIC s LMIA streams, the International Mobility Programs are exempt from the LMIA process. According to the government, LMIAs are not necessary for these programs because workers entering Canada through the IMP have a neutral or positive labour market impact, either by providing competitive advantages to Canada or reciprocal benefits to Canadians.16 However, as we shall see below, this is a problematic assumption; the IMP may be just as open to abuse as the LMIA streams, if not more so. The IMP includes the following LMIA-exempt sub-programs. Unless otherwise noted, workers are not offered a pathway to permanent residency in Canada. International Experience Canada Program (IEC): provides travel and work permits (i.e. working holiday visas) to young people from one of the 32 countries with which Canada has a reciprocal youth mobility agreement.17 International Student Program (ISP): a set of programs that allow international students to participate in the Canadian labour market during or immediately after their studies. Off-Campus Work Permit Program (OCWPP): allows international students to find part-time employment while enrolled full-time in a Canadian educational institution. Post-Graduation Work Permit Program (PGWPP): provides a 3-year open work permit to international students who have recently graduated from a Canadian educational institution. Provincial Nominee Programs (PNP): CIC allows each province to fast track a set number of economic immigrants every year to meet provincial labour market needs; each PNP offers a pathway to permanent residency. Canada s commitments under international agreements (see next section). Taken together, this patchwork of programs permits the entry into

16 Canada of a wide variety of workers from around the world on both a temporary and a permanent basis. In all cases, the government claims these workers augment, rather than undermine, the domestic labour market and Canada s international competitiveness. 1 Canada s Labour Mobility Commitments Under International Agreements Canada extends additional labour mobility rights to the citizens of certain countries on a bilateral, plurilateral, or multilateral basis. Citizens and permanent residents of these countries enjoy all of the usual rights to labour mobility for foreign workers in Canada, as outlined above, but they also receive special access to the Canadian labour market in accordance with each agreement. For example, business visitors from the United States and Mexico do not need a work permit or LMIA to enter the country on a temporary basis. In return, Canadian business visitors receive the same mobility rights in those countries. Over the past few decades, Canada has signed a flurry of international treaties and free trade agreements (FTAs) with a wide variety of countries. Some agreements place labour mobility at the centre of negotiations, such as bilateral airline personnel agreements, but in most cases the movement of people is a secondary consideration to the movement of capital and goods. Even in recent, comprehensive economic partnerships, such as the 2012 Canada-Jordan Free Trade Agreement, labour mobility is sometimes excluded altogether. Nevertheless, these agreements play an increasingly important role in entrenching and extending labour mobility into and within Canada. The most important agreements in this regard are explored here. The General Agreement on Trade in Services (GATS) was one outcome of the World Trade Organization s (WTO s) Uruguay Round, which culminated in GATS extends basic labour mobility rights to the citizens of all 140 members of the WTO, including Canada, on a multilateral basis. It is significant because the agreement implies a binding obligation on states to admit non-nationals on to their territory. 18 However, these rights are both limited and rife with exceptions.

17 Although GATS ensures that service suppliers (whether independent, contractual, or intra-corporate) of one country are free to deliver that service through the presence of natural persons in another country (also known as Mode 4 service supply), commitment to this principle is essentially voluntary. Each WTO member chooses which sectors it is willing to oblige itself to, and unsurprisingly, few countries have made substantial commitments under Mode 4. Moreover, GATS does not apply to measures affecting natural persons seeking access to the employment market of a Member, nor [does] it apply to measures regarding citizenship, residence or employment on a permanent basis.19 GATS does not prohibit governments from imposing requirements for visas, work permits, or economic needs tests, provided these regulations do not contravene the member s scheduled commitments. Therefore, the impact of GATS on the global labour market is extremely limited. In 2013, less than 300 workers entered Canada through our GATS commitments.20 Most countries have been more ambitious with labour mobility on a bilateral and regional basis. The European Union is perhaps the gold standard for international labour mobility, as it provides complete freedom of movement within the EU for all EU citizens. For Canada, the 1994 North American Free Trade Agreement (NAFTA) is most significant for two reasons: first, it facilitates the movement of a substantial number of workers between Canada and our largest trading partner, the United States, and second, the labour mobility provisions in NAFTA have become the template for almost all of Canada s subsequent FTAs. Chapter 16 of NAFTA eases mutual entry requirements for citizens of Canada, the US, and Mexico who are engaged in activities related to trade and investment on a temporary basis. It removes the LMIA requirement for all persons covered by the agreement and, where it does not prohibit work permits, it allows covered persons to apply for a permit at their point of entry. NAFTA covers four categories of workers: Business visitors: American and Mexican business people who come to Canada to facilitate international business without actually entering the Canadian labour market are allowed to stay up to 6 months without a work permit. Professionals: American and Mexican workers in a specific set of

18 63 occupations who meet the relevant certification requirements and have a job offer from a Canadian employer can receive an LMIA-exempt work permit to enter Canada for the duration of the contract. Intra-company Transferees (ICTs): American and Mexican managers, executives, and workers with specialized knowledge who are employed by an American or Mexican company with a corporate presence in Canada can receive an LMIA-exempt permit to work for the same company in Canada on a temporary basis; in the O&S Contractors case, discussed earlier, the American workers received their work permits through NAFTA s ICT rules. Traders and investors: American and Mexican business people who are supervising or managing a large amount of trade in goods or services can receive an LMIA-exempt permit for the duration of their work in Canada. Since NAFTA came into effect in 1994, Canada has completed ten more free trade agreements, almost all of which include temporary entry provisions modelled on NAFTA s Chapter 16 (see Table 1). Canada s bilateral FTAs generally follow the NAFTA model by extending temporary entry rights to business people and some higher-skilled workers on a temporary basis. The specific breadth of these provisions varies from deal to deal and has fluctuated over the years. Initially, all of our FTAs took a positive list approach to temporary entry, which means only those occupations explicitly listed in the agreement text are covered by its provisions. This is the case in Canada s FTAs with the US, Mexico, Chile, Costa Rica, and the EFTA, as well as GATS. Over time, that approach changed. Our FTAs with Colombia and Peru, both signed in 2008, take a negative list approach, which means all professions are covered by these agreements except for those explicitly carved out by negotiators. In our more recent agreements with Panama, Honduras, and Korea, Canada has reverted to a positive list approach for all categories of professionals, although that list is much longer than in the first generation of Canadian FTAs. Table 1: Labour Mobility Provisions in Canadian Free Trade Agreements Agreement Year Signed Year in Force North American FTA (NAFTA) Scope Of Temporary Entry Provisions (1) Business visitors (2) Traders and investors (3) Professionals (4) Intra-company Visa Requirement To Enter Canada Mexico: Yes United States: No

19 Table 1: Labour Mobility Provisions in Canadian Free Trade Agreements Agreement Year Signed Year in Force Scope Of Visa Requirement Temporary Entry To Enter Canada Provisions (1) Business visitors (2) Traders and North American FTA investors Mexico: Yes (NAFTA) (3) Professionals United States: No (4) Intra-company transferees Canada-Israel FTA None No Canada-Chile FTA (1) Business visitors (2) Traders and investors (3) Professionals Yes (4) Intra-company transferees (1) Business visitors (2) Intra-company Canada-Costa Rica transferees FTA (3) Spouses and Yes children (1) Business visitors (2) Intra-corporate Canada-European Free transferees Trade Association FTA (3) Spouses and No children Canada-Peru FTA (1) Business visitors (2) Traders and investors (3) Professionals Yes (4) Intra-company transferees Canada-Colombia FTA (1) Business visitors (2) Traders and investors (3) Professionals and technicians Yes (4) Intra-company transferees (5) Spouses Canada-Jordan FTA None Yes Canada-Panama FTA (1) Business visitors (2) Traders and investors (3) Intra-company transferees Yes (4) Persons engaged in specialty occupations (5) Spouses Canada-Honduras FTA 2013 n/a (1) Business visitors (2) Intra-company transferees Yes (3) Spouses and children (1) Business visitors (2) Traders and 2014 investors

20 Canada-Panama FTA Canada-Honduras FTA 2013 n/a 2014 Canada-Korea FTA (concluded, not n/a signed) investors (3) Intra-company transferees (4) Persons engaged in specialty occupations (5) Spouses (1) Business visitors (2) Intra-company transferees (3) Spouses and children (1) Business visitors (2) Traders and investors (3) Professionals (4) Intra-company transferees (5) Spouses Yes Yes No In addition to business people and professionals, a few of these agreements include provisions covering technicians and specialty occupations skilled tradespeople, in other words. Unlike professionals, which typically require a 4-year postsecondary degree, technicians covered by these agreements require as little as one year of training to be eligible for an LMIA-exempt work permit. Some of these FTAs also include mobility rights for the spouses and dependents of migrant workers. Spouses of Korean workers who enter Canada through the Canada-Korea FTA can receive an LMIA-exempt open work permit for the duration of their spouse s contract in Canada. Unlike the contracted worker, the spouse is not bound to any particular occupation or employer. Despite these meaningful differences, all of Canada s FTAs follow the same general pattern of providing temporary access to the Canadian labour market for certain categories of workers on a reciprocal basis. In theory, these agreements only facilitate the entry of business executives and some professionals into the country. As the O&S Contractors case demonstrates, however, the range of workers entering Canada through these agreements is far broader in practise. Therefore, when taken together, these free trade agreements make up an important component of Canada s international labour mobility regime. But just how significant is this regime for the Canadian labour market? 1 The Scale of Migrant Workers in Canada Between Canada s LMIA streams, like the TFWP, and those that are LMIA-exempt, such as NAFTA s Chapter 16, Canada permits a wide

21 range of migrant workers into the country on a temporary basis. In some instances, such as the LICP or FSWP, it also provides pathways to permanent residency. Measuring the labour market impact of all of these workers is challenging, but statistics published by CIC and ESDC about the TFWP and Canada s International Mobility Programs shed some light on the question. According to CIC,21 there were just under half a million migrant workers in Canada at some point in 2012, up from about 180,000 in 2003 (see Table 2). This increase is due in large part to a deliberate widening of the pipeline for migrant workers under the Conservative government.22 The number of temporary migrant workers entering Canada every year has more than doubled in the past decade, from approximately 103,000 to over 213,000. Migrant workers are now the fastest growing category of temporary entries to Canada (173% increase since 2003), significantly outpacing students (57% increase) and the humanitarian (i.e. refugee) population (22% decrease). Table 2: Migrant Workers in Canada Category Change % Change Migrant workers Total 102, , , % entering Canada Share of all entries 35.5% 50.7% 15.2 pp 43% Migrant workers Total 179, , , % present in Canada Share of all temporary 26.3% 45.0% 18.7 pp 71% residents Approximately 18 million people are currently working in Canada, which means migrant workers make up about 2% of the national labour force. 23 Jason Kenney, Federal Minister of Employment and Social Development, has used this figure to downplay the scale of Canada s international migrant worker regime.24 Yet focusing on the proportion of migrant workers in the overall labour force distracts from the real issue, which is competition between migrant workers and those permanent residents who are looking for work. The number of migrant workers is irrelevant if every Canadian looking for work can find it. In reality, around 7% of the workforce, or approximately 1.3 million Canadian citizens and permanent residents, are unemployed. Therefore, in theory, if every migrant worker was replaced by a Canadian worker tomorrow,

22 the unemployment rate would drop to around 5%. Put another way, a quarter of the unemployment rate in Canada today can be indirectly attributed to migrant workers, up from 8% a decade ago.25 This proportion will continue to grow as the number of migrant worker entries to Canada continues to outpace domestic job creation. CIC s data reveal other important trends. First, the increase in the number of migrant worker entries only explains part of the rise in the absolute number of migrant workers in Canada. The majority of this growth has come not from more workers entering the country, but from migrant workers staying in Canada for longer. The definition of temporary has stretched over the past decade. Second, the majority of migrant worker growth is not attributable to Canada s labour marketoriented programs like the TFWP. In fact, the proportion of migrant workers entering Canada through the TFWP and other programs requiring an LMIA has decreased significantly as a share of all migrant worker entries to Canada over the past decade. In 2003, about half of all migrant worker entries to Canada received LMIAs; in 2012, just over a third did. Instead, the majority of new entries have been through the IMP (see Table 3). None of the pathways in the International Mobility Programs require a Labour Market Impact Assessment from ESDC. This means that the migrant workforce in Canada is trending away from occupations and industries with known skills and labour shortages towards more ambiguous participation in the Canadian labour market. Table 3: Migrant Worker Entries by Category Category Change % Change International Mobility Programs (excluding free Total 37, ,119 65, % trade agreements) [LMIA-exempt] Share of all migrant worker entries 35.9% 47.8% 11.9 pp 33% Free trade agreements Total 15,751 29,118 13,367 85% [LMIA-exempt] Share of all migrant worker entries 15.3% 13.6% -1.7 pp -11% Migrant workers requiring LMIAs Total 49,194 80,613 31,419 64% (including TFWP) Share of all migrant worker entries 47.8% 37.7% pp -21%

23 [LMIA-exempt] Share of all migrant worker entries Migrant workers requiring LMIAs (including TFWP) Share of all migrant worker entries 15.3% 13.6% -1.7 pp -11% Total 49,194 80,613 31,419 64% 47.8% 37.7% pp -21% The rapid increase in migrant workers entering Canada through LMIAexempt streams has a number of problematic social and economic implications, which will be discussed in more depth below. This shift also has troubling implications for data collection and analysis. For workers entering the Canadian labour market with an LMIA, ESDC tracks and publishes comprehensive statistics.26 We know that most LMIAs are granted for intermediate and clerical work in general and sales and service occupations in particular; the industry receiving the most LMIAs nation-wide is accommodation and food services. We also know the regional distribution of LMIAs; the data show that there has been a clear shift from East to West, particularly from Ontario to Alberta, over the past decade. ESDC even publishes a complete list of all employers who are granted LMIAs, which permits an extremely detailed analysis.27 However, for migrant workers entering the Canadian labour market without an LMIA, we know very little. As noted above, the spouse of a skilled Korean migrant worker can receive an open work permit, which means he or, more commonly, she, since most migrant workers are men can be hired anywhere in Canada, regardless of local labour market conditions. The same applies to foreign student workers and young people with working holiday visas. As more workers enter the Canadian labour market without ESDC vetting, the less we know about who they are and what work they do. Overall, the available data suggest that migrant workers play a significant and growing role in the Canadian economy. Both our International Mobility Programs and our labour market-oriented Temporary Foreign Worker Programs facilitate the entry of a substantial number of migrant workers into Canada. However, the balance is shifting away from the streams requiring an LMIA, such as the TFWP, toward streams that are LMIA-exempt, such as FTAs. Although migrant workers in lower-skilled occupations are on the rise, as evidenced by ESDC s LMIA data, the number of people entering the country to work without any consideration for labour market needs is increasing at an even faster rate. We have a poor understanding of these workers, who include intracorporate transferees, international students, and family members. There

24 is a clear need for more comprehensive data collection and reporting on all categories of migrant workers. 1 Issues for Canada Given the current national context of high unemployment and regional economic disparity, Canada s international labour mobility regime has come under intense public scrutiny in recent months. Amidst allegations of abuse and short-sightedness, the Temporary Foreign Worker Program in particular has drawn the ire of many Canadians and has provoked a political firestorm for Minister Kenney. Criticisms of the TFWP are grounded in a variety of concerns, but can be broadly grouped into three categories: concerns for foreign workers, concerns for domestic workers, and concerns about labour market needs. First, the treatment of migrant workers by employers is poorly monitored, which has resulted in a number of documented cases of abuse.28 Claims of intimidation, forced overtime, inadequate pay, recruiter extortion, and other mistreatment are common. Some critics argue that programs like the SAWP are effective precisely because the rights of workers are restricted, which allows employers to squeeze out more labour hours at a reduced cost.29 To make matters worse, the complaints system available to workers in the TFWP is inadequate and largely inaccessible.30 The lack of pathways to permanent residency for migrant workers is perhaps the biggest issue. Regardless of their contributions to Canadian society, the majority of migrant workers in Canada have no way to stay in Canada once their work permits have expired. Second, programs like the TFWP have been shown to have a negative impact on domestic Canadian workers by driving down wages and working conditions in certain sectors.31 Unfortunately, some unscrupulous employers have brought in migrant workers for no other reason than to keep labour costs low. For critics, employers are turning to the TFWP not as a last resort but as an opportunity to suppress wages and avoid training costs.32 Third, there is an apparent mismatch between employers claims of

25 labour shortages and the reality of high unemployment in many parts of the country. In areas as far apart as Northeastern BC and Prince Edward Island, employers claim widespread labour shortages, even as unemployment sits well above the national and regional average.33 Employers in these areas assert that skills mismatches exist between vacant positions and the local workforce, but critics simply see Canadians being passed up for much-needed work in favour of low-wage migrant replacements. Evidence to support employers claims is hard to come by.34 Indeed, independent studies have clearly linked the increased presence of migrant workers in Canada with increased unemployment.35 Responding to overwhelming public pressure in all three of these areas, Minister Kenney announced reforms to the TFWP in June In general, the changes made it more difficult for employers to hire migrant workers by raising fees, replacing the old Labour Market Opinion with the more rigorous Labour Market Impact Assessment, placing caps on the share of migrant workers in each workplace, and banning the program entirely for low-wage workers in high-unemployment areas.36 Employers, especially in the food service and hospitality sectors who had become reliant on a low-wage migrant workforce, decried the changes.37 Conservative politicians in regions with a large migrant workforce, predominantly in Alberta and Saskatchewan, were also critical of the government decision.38 On the other hand, longstanding critics of the TFWP felt that the changes did not go far enough to address the root issue. The Canadian Labour Congress described the changes as a rescue mission for a program that is deeply flawed, because although the changes may discourage some employers, the most egregious abusers of migrant workers can continue to rely on it.39 The Alberta Federation of Labour reiterated that the changes keep alive a program in a region where supposed labour shortages are largely a myth propagated by employers.40 Kenney may have tightened the TFWP pipeline, but he did not turn it off. The Temporary Foreign Worker Program continues to be debated around the country and at all levels of government. The program is undoubtedly a pressing issue worthy of national attention. Unfortunately, in the controversy surrounding this particular set of programs, Canada s other

26 international labour mobility programs have been brushed aside or ignored. Far more workers enter Canada through the LMIA-exempt IMP streams, which have a much murkier but potentially just as severe impact on the Canadian labour market. This is an even bigger concern in the wake of the recently-announced changes to the TFWP, since employers who are no longer able to hire migrant workers through those programs may be encouraged to turn to less-regulated streams. These streams include our international agreements, which give special rights to certain categories of workers, such as intra-corporate transferees, professionals, and contractors (as well as their spouses), but also programs like International Experience Canada, which facilitates the LMIA-exempt entry of huge numbers of young migrant workers into Canada. According to CIC, roughly 60,000 workers enter the country every year through these reciprocal youth arrangements, which is almost as many as the entire TFWP.41 Where are these international migrant youth workers employed? Neither CIC or ESDC can tell us, because LMIAs are not required for their work permits. Unlike the TFWP, which is employerinitiated, the IEC is almost entirely worker-initiated, which means it is largely unresponsive to the domestic labour market. At least with the TFWP migrant workers are employed where they are ostensibly needed. That is not the case with migrant workers entering through the IEC program, although we can assume that these young workers are competing for the same sorts of low-wage, seasonal work as many young Canadians. Retail stores, summer camps, ski resorts, and serving positions are all popular among youth workers and there is no lack of supply. In 2013, about 390,000 Canadians aged 15 to 24 were unemployed, or approximately 13.5% of those young people in the labour force, so the number of people struggling to find work in this demographic is significant.42 Technically, Canadian youths have the same right to work or study abroad in partner countries, but as the government itself admits, the number of young Canadians going abroad has been stagnant in recent years, and there are several countries to which virtually no Canadians apply to go.43 ESDC calls this a serious concern, but instead of tightening the IEC program to limit competition from unregulated low-

27 wage workers, CIC merely proposes to enhance its efforts through increased promotion of the program to make young Canadians aware of the opportunities it presents.44 Similarly, spouses of some migrant workers can receive an LMIA-exempt open work permit through a number of our international arrangements. In 2013, more than 10,000 migrant workers entered Canada this way.45 Unlike migrant workers entering through the TFWP, who are bound to a specific employer, the spouses of workers entering through many of the IMP streams face no limitations on where they can work on a temporary basis. Comparable employment rights are granted to an additional 10,000 foreign students every year. Taken together, the total number of unregulated workers entering Canada every year, without any consideration for labour market conditions, is comparable to all the streams of the TFWP combined. Since there are so few limitations, these workers can range from unskilled labourers to highly-trained professionals. The IMP also provides LMIA-exempt closed work permits for a wide variety of workers, which means the worker is tied to a single employer or a specific contract. More than 13,000 intra-company transferees enter Canada every year, in addition to comparable numbers of independent professionals.46 Although defenders of the program dismiss these workers as insignificant to the Canadian labour market, either due to their relatively low numbers or their concentration in high-skill occupations, abuses of these programs have still been documented. One of the most egregious cases saw eight American construction workers transferred into Canada to complete a project, even though they had no special skills and Canadian workers were willing and able to do the job. Since the IMP lacks the same oversight as its counterparts in the LMIA streams, the potential for abuse is significant. To make matters worse, the international agreements to which Canada is party cannot be reformed unilaterally. When Minister Kenney announced in June 2014 that the rules around ICTs would be tightened, he neglected to mention that these tighter rules would not apply to the workers of countries with which Canada has already signed a labour mobility agreement, like NAFTA. Our government may be able to reform the TFWP, but it is