When the Royal Bank of Canada was recently caught up in a maelstrom of bad publicity over its use of temporary foreign workers, it led politicians and pundits to scrutinize and question the growing use by Canadian firms of imported, short-term labour. The Royal Bank was accused of misusing a system designed to help employers who could not find Canadian
workers by using it, instead, to find cheaper foreign labourers to replace higher-cost Canadians. But the incident raises a bigger question than simply how one bank makes use of Canada’s Temporary Foreign Worker Program (TFWP): Whether the program is, in fact, interfering with the natural supply and demand responses of the labour market. And if we want
to make better use of available Canadian labour, the time has come for the federal government to start cutting back on the use of TFWP.
The number of admissions under the TFWP has nearly tripled in 25 years, from 65,000 to 182,000 in 2010. The primary justification for the expansion of the program has been the widespread assumption that Canada is suffering from a growing shortage of labour. Yet, it is hard to find any evidence to support this belief.