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B.C. case against Mac’s Convenience reveals broad bureaucratic failure

Armine Yalnizyan is a Toronto-based economist. Chris Grisdale is a Vancouver-based lawyer.

The game is rigged. When a B.C. court recently certified a class-action lawsuit on behalf of a group of temporary foreign workers against Mac's Convenience Stores, the focus was on this unique case of worker exploitation. Lift the hood, though, and you'll see how easily immigration rules can allow such manipulation to occur.

In 2012, Mac's hired agencies to recruit foreign workers for its stores across Western Canada, under the Temporary Foreign Worker Program (TFWP). But when the foreigners arrived, there was no work. Mac's said market conditions changed, but the case raises serious questions about the policies that brought them here in the first place.

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The TFWP is a program of last resort. For TFWP permits to be issued, Ottawa must be satisfied that no Canadians are available to do the work. Based on provided information, the federal government gave the green light to access foreign labour markets. In fact, Mac's got 450 green lights.

The workers allegedly paid up to $8,500 to recruiting agencies for the chance to work minimum-wage jobs in Canada for a limited time. But who decided they were needed? Young Canadians and new immigrants traditionally hold these jobs. It's difficult to believe they were suddenly unavailable. Youth employment rates remain significantly below prerecession norms. Data from the 2011 Census show that Canada's newest immigrants, who tend to be hardest-hit by recessions, had not fully recovered from the 2008 financial crisis.

Nevertheless, Ottawa concluded Mac's could not find Canadians to fill those jobs. It has made similar decisions with other chains, such as Tim Hortons, McDonald's and Canadian Tire. The approvals hinge on a process called the "Labour Market Impact Assessment" (LMIA), which seeks to ensure migrant workers only fill true labour or skills gaps. An accurate assessment is critical for skills development and labour market policies to function properly. When everything works, this system delivers a win for Canadian workers and employers. Inaccurate assessments, however, disrupt domestic labour markets and pay rates, or constrain economic output.

The term LMIA implies the government is doing the assessing. In reality, the process relies on employer self-assessments of foreign workers' impact on the workplace. Employers have clear incentives to produce assessments that advance their interests, which are relevant, but only one piece of the puzzle. The broader public interest hinges on the rigour of the assessment.

Attempts to strike a better balance have led to many changes in the TFWP, from the process for permitting migrant workers to the duration of their permits. What hasn't changed are the negligible penalties for supplying the government with inaccurate information, a situation that leads to unnecessary applications such as Mac's. One fix is to reform penalties so that employers have incentives to submit accurate assessments, coupled with increasing Ottawa's capacity to assess labour or skills gaps.

While such reforms are critical to a program that brought in 78,500 temporary foreign workers in 2016, use of the TFWP has dramatically fallen in the past few years. Employers are instead turning to programs that don't require LMIAs: working holiday programs for young foreigners, intra-company transferees, or international students who are permitted to work during their studies and for a limited time afterward.

Recent trade agreements have also expanded the list of eligible occupations for temporary entry without permits. For these broadened categories, trade agreements prohibit governments from applying any quotas or economic/labour market tests, raising questions about whether Canada is losing control over intake of newcomers. Justin Trudeau's Liberals have not substantively reversed these trends and it does not appear that renegotiating a more "progressive" North American free-trade agreement includes such objectives.

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The evolution of temporary-foreign-workers rules has made the system increasingly employer-driven, with little oversight. Canada now accepts more than twice the number of temporary foreign workers as permanent economic immigrants. This may work for businesses, but is a difficult way to grow a country and leads to new frictions. As the number of temporary workers who enter the country rises, the number of people with expired permits grows, leading to more undocumented residents. This is precisely the situation that leads to the rise of the toxic politics of "illegals." If the United States is any example of what happens next, we've been warned.

The Mac's story shows how the system is wired to let companies game it, with no repercussions. The result: both foreign and domestic workers face an increasingly precarious labour market because employers find it cheaper and easier to hire abroad, under temporary conditions.

The Mac's case also suggests how to make things right. But it's not just the TFWP that needs reform. Ottawa must review its full suite of permanent and temporary intake programs, including the International Mobility Program and labour rules embedded in trade agreements. They're all connected, and shape who benefits from the growing globalization of labour.

Group walks B.C.'s Highway of Tears en route to inquiry hearing (The Canadian Press)
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About the Author

Armine Yalnizyan is Senior Economist at the Canadian Centre for Policy Alternatives. She contributes to the Economy Lab blog. More

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