A new economic analysis is shedding light on a contentious issue in Canada's labour market, revealing why many employers actively seek temporary foreign workers over available domestic employees. The study points to a workforce that is often more willing to work for less and under more demanding conditions, with broad implications for wage levels across the country.
The Employer's Preference: Longer Hours, Fewer Absences
The research, conducted by Canadian economists Pierre Brochu, Till Gross, and Christopher Worswick, provides a data-driven explanation for a common corporate refrain: the desperate need for foreign labour. The peer-reviewed analysis concludes that temporary foreign workers consistently work longer hours, have fewer absences, and face lower layoff rates compared to their Canadian counterparts.
This heightened level of effort and reliability is often paired with a willingness to accept lower compensation. The economists' model demonstrates that firms have a clear incentive to hire through temporary foreign worker channels, even when domestic workers are available at the same wage rate, due to these productivity differences.
Economic Drivers and Unintended Consequences
A primary driver behind this dynamic is the significant wage disparity between Canada and workers' countries of origin. Citing a London School of Economics study, the article notes that migrants from major developing nations like India, the Philippines, and Mexico can earn over 400% more in Canada, even in low-skill positions. This makes Canadian wages, which may seem low domestically, highly attractive.
The consequence for the domestic workforce, however, is a downward pressure on wages and employment opportunities. The study explicitly identifies the temporary foreign worker (TFW) program as having the unintended effect of lowering wages and employment for Canadian workers. This finding raises critical questions about the long-term impact of Canada's growing reliance on guest labour.
Scale of Canada's Guest Worker Population
The Liberal government has significantly expanded access to Canada's labour market for foreign nationals. Since the party first took office, the proportion of temporary residents in Canada has tripled, now accounting for 7.1% of the population. This is a stark increase from the 2.3% recorded in 2013.
While the Temporary Foreign Worker Program receives significant media attention, it represents only a fraction of the total guest worker population. The larger stream is the less-publicized International Mobility Program (IMP). A substantial number also arrive as international students, most of whom are eligible to work in Canada for up to three years post-graduation. Collectively, these groups form a pool of roughly three million motivated workers within the Canadian economy.
Business owners, particularly in sectors like hospitality, retail, security, and construction, frequently cite a brutal labour shortage as justification for these hires. While genuine shortages exist in areas like agriculture, the new research suggests that for many employers, the appeal of a more compliant and cost-effective workforce is a powerful factor shaping hiring decisions, with wide-reaching effects on the economic landscape for all workers.
