Thursday, April 24, 2014

The Globalization of Local Labour

Much has been written in recent days about the Temporary Foreign Worker Program. Businesses, claiming a shortage of workers in Canada, are taking advantage of this program to bring in workers from other countries, to work everywhere from banks to coffee shops.

This is, in reality, simply an extension of what has been happening for years. Jobs have been transferred from high wage economies to low wage economies. Manufacturing in North America has been in decline, as workers in China & India will do the work for much lower wages. Service jobs, such as call centres, have also moved to Mexico, India, or even economically depressed areas in Canada. Companies save money, as the lower wages more than offset the increased transportation and telecommunications costs involved in moving operations to other countries.

However, there are some types of jobs that are inherently local. Serving coffee to customers cannot be moved offshore (though some fast food chains actually use offshore call centres to take orders at the drive thru & enter the orders into the restaurant's computer system). With the Temporary Foreign Worker Program, companies are now bringing the low wage expectations of other parts of the world to Canada to service these inherently local jobs.

The reason given by the companies is that they cannot find Canadians willing to do the work. But that's a simplistic argument. All employment is an economic transaction - the sale of labour for money. Canada does not have a shortage of people looking for work, and serving coffee does not require a specialized skill set that is absent among Canadian job seekers. What is really going on is the companies are not willing to pay Canadians enough to attract their labour.

What is curious to me is that the businesses, supported apparently by the Federal Conservative government, are using the Temporary Foreign Worker Program to subvert the free market that in other circumstances they claim to support. Without the Temporary Foreign Worker Program, the free market would force businesses to increase wages and benefits to the point where they could attract and keep Canadian workers. One might claim that they are simply taking a global view of the free market - that they are offering wages that do attract labour, just not Canadian labour. But that view requires a fundamental shift in our thinking about immigration policy. It would require us to essentially abandon immigration restrictions, and allow anyone who wished to come to Canada. And it would require the companies to admit that there's nothing "Temporary" about their use of this program.

Businesses lobby hard to ensure that they don't face unfair competition from foreign competitors who don't face the same safety standards, environmental standards, & labour standards. They push for import tariffs, and seek product standards that are directed more at stifling foreign competition than safety. Through complex free trade agreements and the World Trade Organization, they carefully regulate the access foreign companies have to Canadian markets.

Canadian corporations can't have it both ways. If a free market within the borders of Canada, protected from unfair foreign competition, is fair for their business, then they must also tolerate a free market for labour on the same terms. Like any other economic transaction, if you can't find someone willing to sell to you, increase how much you're willing to pay.