Sunday, 9 February 2014

Canada's Temporary Foreign Worker Program

FORT MCMURRAY, Alta. - The federal government is investigating an allegation that several dozen Canadians working in Alberta's oilpatch were laid off this week and replaced with foreign workers. 
A spokeswoman with Employment Minister Jason Kenney's office said Thursday that he has asked for an urgent review. 
The Alberta Federation of Labour said that 65 of its ironworkers were laid off on Tuesday. The workers' paystubs say they were being paid by a company called Pacer Promec Joint Venture. 
Federation president Gil McGowan said the employees were immediately dismissed from their jobs at Imperial Oil's (TSX:IMO) Kearl oilsands mine. 
"They called the guys into an office, told them that they were gone, and they literally walked past the replacements on the way out," McGowan said. 
He alleged the foreign workers from Croatia are making about $18 an hour — half the wage of the Canadians.

This follow up story from the Toronto Sun indicates that the workers have been re-hired. But the public backlash from this type of story, similar to that seen after the RBC TFW debacle last year, is interesting to me on a few different levels.

The two important issues, to my eye, should be: was there a law broken? and if we don't like the law, how should we change it?

The first question might be more important in the short term, but it's also less interesting. With the layers of bureaucracy involved in these programs and the typically opaque nature of such programs, it's tough to actually have a clear cut law break (with the information that is readily available). So what's the solution?  So was there a law broken? Probably not. If there was, then of course prosecution should follow.

It's the second question that is much more interesting to me. How should we evaluate these types of laws? Typical reaction is to vilify the company utilizing the TFW program and appeal to a sense of nationalistic, even xenophobic, tendencies. The appeal generally finds pretty widespread support amongst the entire range of political opinions. That would suggest a more conservative (not in a political sense) approach to allowing foreign workers into Canada.

I've always found this fascinating. I compare this to the current account/renminbi discussion that has long held the fascination of american politicians and commentators alike. Chinese currency manipulation. I'm going to hold up Paul Krugman as my example of a 'liberal' which, stereotypically, should be the type you'd expect to be most concerned about helping poor people.

A quick search on the NY times shows how recurring this theme has been for him over the years.

From this 2010 article:
Ask yourself: Why is it so hard to restore full employment?
Krugman suggests that American's need to increase the competitiveness of their exports via a deprecation of the dollar. Depreciation is of course relative to another currency.
But given our economy’s desperate need for more jobs, a weaker dollar is very much in our national interest — and we can and should take action against countries that are keeping their currencies undervalued, and thereby standing in the way of a much-needed decline in our trade deficit. 
That, above all, means China. And none of the arguments against holding China accountable can stand serious scrutiny.
Now, I'm not arguing with the economics of his argument. When China's running huge capital account surpluses it creates a ripple effect that impacts countries around the world which may in fact be sub-optimal at any given point in time. But notice how there is no discussion on the impact this would have on Chinese workers? (I don't intend to cherry pick, I believe this is a fair observation based on being a regular reader for years)

One might argue that he is simply interested in the market distortions and macro impact that this creates rather then commenting on the real effect. Which might be true. But when it comes to domestic issues, Krugman consistently demonstrates his liberal side when discussing the real effects of policy decisions. As I said, it's interesting.

People always seem to forget or ignore the fact that the Chinese are by any per capita metric a VERY poor country. Say Krugman gets his wish and policy actions were taken that saw US terms of trade improve relative to China's in a way that decreased US unemployment by a couple of percentage points. This doesn't happen in isolation.

If Chinese mercantile policy can 'take' jobs away from the American worker, the implication is that it does so to benefit the Chinese worker. If we look at this in terms of outcomes, Krugman is essentially arguing for a shift in jobs from China to the US.

This isn't a right or wrong judgement. But I think the outcomes we are advocating should be part of the conversation.

When we argue against the outsourcing of jobs, we are saying that we want to keep domestic jobs, and keep foreigners from doing that job. When we advocate against temporary foreign workers, we should acknowledge that we are saying that we prefer that Canadians work more then foreigners.

The story suggests that the foreign workers were set to make half of what the Canadians were to make. So they were willing to fly half way around the world and work for half the price of what we'd be making staying at home. What does that say about their options at home? Should that matter to us?

Think about out-sourcing jobs to India. Per capita income of $1,489 (world bank).... wait, how much does a welfare recipient get in Canada?And we're upset that we might be employing them rather then Canadians? It just seems odd to me.

I guess I'm a bit of a bleeding heart libertarian. Poor people getting richer. I would like that to be the baseline on arguments, with divergence bearing the burden of proof. I realize that'll never happen... but what do you do?

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