By Vaughn Hammond
In the past five years or more, as everyone knows, the Newfoundland and Labrador economy has been robust relative to the other provinces. Our economy fared very well despite the recession of 2008-2009, from which many other provincial economies have yet to fully recover. With great economic prosperity also comes great economic challenge — there is a shortage of qualified labour in Newfoundland and Labrador and it is a significant and growing issue for small business.
According to the latest Canadian Federation of Independent Business (CFIB) research, 83 per cent of small businesses in Newfoundland and Labrador have found it very difficult or somewhat difficult to hire new employees in the last three years.
As a result, small business owners say that labour costs have increased, they are working more hours, they have had to offer fewer products and/or services, and customer service has suffered. Small business owners have also noted that they are seeing a lower quality of applicants (i.e. they do not possess the necessary knowledge and skills) for the jobs they advertise.
There appears to be a disconnect in the province’s labour market because unemployment is high and yet businesses are unable to find employees to fill their positions. For various reasons, people are choosing not to move to other parts of the province where employment can be found.
Some are leaving the province for good, while others are commuting for weeks on end to other parts of the country, primarily Alberta. This provides them with a lifestyle that they don’t seem to believe they could have by working in this province. And recruitment is not the only problem. Sometimes the problem is employee retention.
Many small businesses are willing to hire unskilled or inexperienced staff and provide the appropriate training, in addition to a generous wage.
However, once people gain the necessary experience or skills, the lure of a higher paying job, normally on a large development project, often leads them to what they see as greener pastures.
The small business then has to start the hiring process over again and invest additional resources in training. Not to say that any of this is bad, but it is a reality faced by small businesses and they have to do what is necessary to ensure they survive. What they are doing is relying more and more on out-of-province workers and when that option is exhausted, they are looking to other options like the federal Temporary Foreign Workers (TFW) program.
If small businesses are seeking to access the TFW program, they have no choice because they were unable to find suitable local or out-of-province employees.
According to federal government statistics, over 3,000 temporary foreign workers were employed in all regions of Newfoundland and Labrador in 2012. If not for the out-of-province employees, the number of temporary foreign workers would be even greater.
Nonetheless, there is a perception in this province that temporary foreign workers are taking jobs away from Newfoundlanders and Labradorians. Nothing could be further from the truth.
In fact, small businesses see the TFW program as a program of last resort, as it is expensive and time-consuming. They are often responsible for paying for return airfare, submitting work permit fees and paperwork, and providing suitable accommodations. It stands to reason that these businesses would prefer to hire more local people if they were available.
Recently, CFIB released “Making it Work: Real Stories of Small Business and Foreign Workers,” a collection of true stories that identify why some Canadian small businesses turn to foreign workers. It also tells of the positive impacts that the TFW program is having, not only on businesses, but also on their Canadian employees.
With all the negative attention around the program, these first-hand accounts truly show what the program means for small business owners and foreign workers.
However, last spring, the federal government made changes to the TFW program to address what it felt was apparent misuse of the program by some larger businesses, and introduced further changes at the end of July 2013.
These federal changes are more likely to penalize those who have been doing everything right, especially small businesses.
They will now face tighter regulations, more fees and increased delays. For example, the application fee is $275 per position and is non-refundable. A small business that may require three employees will have to pay $825 in fees, with no guarantee that the applications will be approved, while the fees will not be returned. This is likely going to discourage small businesses from applying through the TFW program, which will have an adverse effect on them.
The long-term solution to address the shortage of qualified labour is to ensure Canada’s permanent immigration system more closely aligns the needs of employers with the skills, qualifications and experience of the people immigrating to this country. In the interim, our federal and provincial governments have no choice but to co-operate on short-term solutions, like the Canada Jobs Grant, which is intended to ensure Canadian
workers have the skills employers require.
Yet, with the TFW program changes, a fish plant in rural Newfoundland, a restaurant in downtown St. John’s, a construction company in Labrador may now find it more difficult to run a viable business.
Clearly, that represents an unfortunate outcome for many of our province’s entrepreneurs.
Vaughn Hammond is senior policy analyst for Newfoundland and Labrador
with the Canadian Federation
of Independent Business.