(Originally published in the August 2014 issue of the Nova Scotia Business Journal)
People have been building and using catapults for about 2400 years. The Temporary Foreign Worker Program (TFWP) and broader labour market policies seem to be taking a similar targeting approach.
Hitting a target with a catapult is pretty rudimentary. The first step is to fire a test shot. Catapults almost never hit the target on the first try, so you have to bracket the target and make adjustments based on whether the projectile lands long or falls short, or whether it drifts to the right or left. Projectiles vary in weight and impact so you have to adjust your projectile's weight. Bigger, heavier objects loft higher and fly shorter distances and land with a thud. Lighter objects fly flatter and faster but often land out of sight. You continue to adjust your release time or projectile weight until you have zeroed in upon your target. Then you can successfully deal with your target — unless of course it has moved while you were making adjustments.
The predominant labour market strategy over the last few years has focused on dealing with a “national” labour supply crisis. Early salvos in response to this crisis included changes to employment insurance in terms of tightened eligibility, duration of claims, and workforce re-entry requirements. The policy landed with a thud. Rural areas of most eastern provinces were particularly affected. Migration numbers suggest that many previously seasonally employed workers in the Maritimes have been heading west.
Strangely, this policy probably helped create labour shortages in seasonal and low-wage sectors. Time for another shot.
Enter the massive expansion of the Temporary Foreign Worker Program and its extension to seasonal and low-wage sectors. In 2005 the TFWP has its greatest use among highly skilled workers entering Canada to address labour shortages in professional and technical fields. By 2011 the majority of TFWs were unskilled. In 2012 more than half of TFWs were in rural areas where unemployment rates were still very high. Companies no longer able to attract Canadian workers because of previous policy changes still needed people on the production lines or at the fast food window.
Ten years ago there were 110,000 TFWs in Canada. In 2012 there were about 340,000. In Nova Scotia levels of TFWs jumped from 1,289 in 2003 to 4,363 in 2012. The big jump came in Alberta were TFWs jumped from 11,376 to 68,339 in 10 years. However the popularity of TFWs among employers and the apparent squeezing out of Canadian workers created a bit of a backlash. Time for another shot.
Newly announced policies will likely tighten the flow of TFWs to Canada. A key restriction was to limit TFW applications to areas where unemployment rates were below six per cent — mainly large cities. According to recent figures from Human Resources and Skills Development Canada, Halifax is one of the few eastern cities to qualify. More fine tuning and more shots will probably be required before policy zeroes in on the target. But the target is shifting.
Evidence of a national skill shortage has been difficult to establish. Most analysts and their leaders agree that the skill shortage exists in one or maybe two western provinces and in some sectors and occupations.
The other big news in recent weeks is that the government will begin to reinvest in labour market analysis. This is good news after years of ratcheting back on the collection of good data. This is important. We are, of course, facing some national labour market challenges in the long term because of our aging demographic and increasing international competition for talent. Better analysis of the situation should help improve our aim.
Fred Morley is the executive vice president and chief economist of the Greater Halifax Partnership. He has written over 100 articles on economic growth issues and presented his views to dozens of organizations and governments around the world. You can reach Fred at email@example.com.