Ottawa hopes to fill the labour vacuum with a new foreign-worker program targeting skilled trades workers. This article appears in the April issue of Oilweek; photo from here
By Peter McKenzie-Brown
As 2013 began, the federal government
loosened up regulations allowing temporary foreign workers to come to Canada.
At first this seems odd, since both Canada and the United States have
unemployment rates north of 7%. But when you look a bit deeper, the changes
were necessary and even late.
Let’s begin by putting it all in
context. Last June, Parliament’s Standing Committee on Finance reported that
there would be a pre-budget consultation for Canadians to “share their
priorities” in anticipation of the 2013 budget. Two of the Canadians to respond
were the Canadian Association of Oilwell Drilling Contractors (CAODC) and the
Petroleum Services Association of Canada (PSAC). Both said they needed more
workers. In fact, the two groups were part of a coalition of nineteen Alberta
business associations seeking ways to address labour shortages.
According to the CAODC submission, “The
government needs to address the labour supply. (The petroleum sector) will
suffer without a complement of skilled labour. (It) operates in one of the most
expensive jurisdictions in the world. If the labour supply is not addressed it
could have significant cost implications through unsustainable wages and
inflation. The government needs to address market access.” For its part, PSAC tabled
recommendations to “ease the process of hiring from foreign labour markets.”
They and the other groups crying out for more foreign workers got their
collective wish well before the budget was announced.
In response, the federal government’s
first announcement of the new year unveiled a new Skilled Trades Program which “will
address serious labour shortages that some regions of the country are facing,
and will help grow Canada’s economy,” according to the minister responsible,
Jason Kenney. He described the new policy as “long-overdue,” and “part of the
government’s plan to build a fast and flexible immigration system that is
responsive to the needs of Canada’s economy.” He might also have described it
as a tempest in a teapot, since in the program’s first year the feds will
accept no more than 3,000 applications – and those only from people in about 40
categories.
The program applies to contractors and
supervisors in specific trades – for example, those with experience in oil and
gas well drilling or in petroleum processing. Other categories include
plumbers, pipefitters and heavy-duty equipment mechanics. The federal
government began accepting applications on January 2nd, the day of
the ministry announced the program.
For expert comment on the issues
involved, Oilweek spoke to Peter
Veress. Veress is president of Vermax Group, a privately held human resources
firm, which has done a lot of work with temporary foreign workers. “Over the
years we’ve recruited more than 2000 temporary foreign workers, according to
Veress. “We make sure they get their temporary work permits and so on, but we
also make sure that the companies understand their obligations to the workers.
The rules are quite complex and somewhat onerous, and we want to make sure that
the companies understand the implications of bringing foreign workers into
Canada.”
Resource Economics and a Demographic
Deficit
Veress describes Alberta and
Saskatchewan as an anomaly in North America. “We’re in a very privileged place.
There is a lot of economic activity, and unemployment is essentially zero.
Anything around 4% is essentially zero.” He explains this anomaly in terms of
resource economics. “Resource economies like those in Alberta and Saskatchewan
can’t outsource their jobs the way you can outsource manufacturing, for
example. Someone has to be here in the province to develop and produce from the
resources. We need to have bodies on site to extract and produce oil sands,
potash and those other resources. Furthermore, huge capital investments have to
be made to get these projects up and running, and we need skilled people to do
that. In some parts of Canada where we have unemployment, we still have
shortages in skilled labour. Right across Canada, we still get requests for
industrial mechanics and electricians from other parts of Canada and frankly,
across the world.”
According to Veress, there are two other
reasons other than Canada’s resource economy behind the country’s labour
shortages. One he calls a “demographic deficit” – a phrase that refers to
Canada’s low birth rate and the growing numbers of skilled people retiring from
the workforce: by some estimates, 40 per cent of the globe’s petroleum
engineers will retire within the coming decade. The other is a skills shortage,
pure and simple. Canadians are more likely to go to university than to technical
institutes and trade schools, which means industrial tradespeople aren’t being
trained in sufficient numbers. To compound matters, Canada’s system for
evaluating potential immigrants tends to favour migrants with academic credentials.
Government policy needs to balance all these
forces, Veress says, and loosening rules on temporary workers is an excellent
way to do it. This approach meets the needs of employers, but it also helps
politicians fend off such political pressures as public concern that the system
may somehow favour foreigners at the expense of those already living in Canada.
Because language plays such an import role in immigrant success and general health
and safety, the rules include a basic level of language proficiency. Those
seeking temporary permits also need valid offers of employment or qualifying
skilled trade certificates from a province or territory. Also, they must have
worked at least two years in the occupation within the last five years.
A Case Study
Venezuela provides a case study of how
this new system can benefit Canada. Industrial facilities in Venezuela, like
those clustered around the small city of Ciudad Guauyana, benefitted enormously
from the country’s energy policy prior to 2000. Located near Venezuela’s
Orinoco ultra-heavy oil belt (which probably has more oil-in-place than
Canada’s oil sands), development of these huge operations was greatly spurred
by policy regulations which demanded local processing of the oil before it
could be shipped overseas.
Much changed after 1999, when Hugo
Chavez was elected the country’s president. The charismatic socialist soon
began to dismantle the system which had worked so well – notably nationalizing
the operations of western companies. It was only a matter of time before employment
in that sector began to lose its appeal to local workers. The result was that numerous
workers began migrating to Canada from Venezuela just as the oil sands industry
was heating up. Today, there may be as many as 4,000 Venezuelan families living
in Fort McMurray alone. To the extent that Venezuelan workers arrive in Canada
with temporary work permits, blinkered views about “foreigners taking Canadian
jobs” are greatly diminished. Those skilled workers are here because Canadian
industry needs them.
At least in part, workers began
migrating from Venezuela’s Orinoco fields to the oil sands more than a decade
ago because temporary work permits are not that new an innovation.
“In some senses, things are not much
different than in the past,” says Veress. Both the federal and provincial
governments have long had programs which enabled people to immigrate to Canada,
and once they arrived “there were programs to train immigrants so they could
find a job. What policy-makers are trying to do now is the opposite. Bring
people into the country to take a job. They can become immigrants later on,
after they’re established. Increasingly, governments want people to be here on a
work permit basis before they become permanent residents. That’s the focus” –
and that focus makes sense.
The new regulations are labour-market
driven. “We need to have the right people at the right time in the right
numbers. “In the past, many people came to Canada with master’s or PhD degrees,
and then just couldn’t find a job in their profession. (Minister Kenney) used
to joke that the safest place to have a heart attack is in the back of a taxi,
because your driver was likely to be an immigrant doctor. I myself have seen
fairly accomplished professionals stocking shelves at London Drugs.”
Much of this waste of talent would
disappear under better labour rules, Veress suggests. He makes a compelling
case for the federal strategy of bringing skilled workers into Canada by
providing them with work visas. “We need to bring people into Canada, but it’s
best if they have been working before they get the permanent-resident option. If
they like it here, they can become immigrants. This is a better way of doing it
because the people who are here have already proved that they can get a job in
their own area. If you’re already working in your field, you must’ve jumped
through all the hoops you needed to get that job. You have certification from
the regulatory body, and so on.”
For many years the federal and
provincial governments have had parallel programs to deal with new arrivals. The
federal skilled trades program allows people to apply for a job in Canada from
outside of Canada, and checks to see that they could meet all of the
requirements of becoming a permanent resident. The provincial programs,
however, are mostly for people who are already Canadian residents. “The federal
program opens up the door a little bit more to someone from overseas who wants
to come to Canada but not necessarily as an immigrant.”
Bursting Bubbles
“I think the labour market in Alberta
and Saskatchewan is a bit like a bubble. I don’t like to say that, because
bubbles tend to burst,” Veress adds. “I’m no economist and no academic, but as
you know we are resource-based economy. We have to be able to sell what we
have. We are somewhat diversified, and not entirely reliant on oil, but what
would it take to burst the bubble? Any disruption in our markets or demand for
the oil we produce.”
Let’s assume that there is a bubble, and
that in the medium term it does burst. Certainly such an event would be
consistent with the report released last fall by the International Energy
Agency. Readers will remember that the IEA forecast that higher oil prices and technological
and geological ideas are likely to drive global oil production into the
stratosphere. Counterintuitively, the agency suggested that the United States
would be nearly self-sufficient in energy by about 2035.
While most of the large petroleum companies
seem to dismiss the extreme elements of the IEA scenario, there is much
medium-term concern in Canada – especially given the two-fold realities of
clogged pipeline capacity and rising production levels. If a bubble does exist
and it does pop, the rules for temporary workers are self-regulating. Applicants
without job offers would not receive work permits. Those whose jobs evaporate
would presumably find work elsewhere, return to their place of origin or apply
for permanent resident status in Canada. While Canadian experience would likely
work to the benefit of those submitting permanent residency applications, it
would not be a guarantee.
