N.L. businesses hit with loss of foreign workers

Restaurant closing as result of changes to federal program

Published on June 28, 2014
Lloyd Hillier, franchise operator for Jungle Jim’s restaurant in Happy Valley-Goose Bay, is closing shop Monday because he can’t hire the people he needs to run the business since changes to the federal temporary foreign workers program. — TC Media photo

For six months, Lloyd Hillier advertised for cooks for his Jungle Jim’s restaurant in Happy Valley-Goose Bay.

He expects not to have to worry about it again.

As of Monday, his doors will close for good.

Roughly 25 Canadian employees are expected to lose their jobs as a result of the closure, a move attributed to Hillier’s labour woes.

He said he believes the move will adversely affect the Hotel North, where the restaurant is located.

Restrictions on hiring

Hillier said he used temporary foreign workers to meet his labour needs in the past, but new restrictions on the federal temporary foreign worker program — announced earlier this month — put an end to that.

With enough local staff hired for positions like table waiting and bartending, he said cooks were still needed in the kitchen to keep the business running and are simply not locally available.  

“I’m only hounding about the cooks,” he said. “Right now, that’s what I need because I hire professional people … and the ones I have right now are leaving, because their two years are up. So they’re going away at the end of the month and I have no replacements.”

He hoped the problem would be solved when the federal government lifted a moratorium from new foreign workers for the food service industry. But when Employment Minister Jason Kenney announced new restrictions, it shut his business out of getting new workers.

The Jungle Jim’s franchisee is not alone in his troubles. Other businesses in the province face the choice of cutting hours or closing doors as a result of a lack of warm bodies both willing and able to fill available jobs.

According to advocates for business owners in the restaurant and seafood processing sectors, labour shortages in certain areas — especially for low-skill, low-wage and entry-level jobs — have been exacerbated by the federal foreign worker program changes.

One change is a restriction keeping employers in areas of high unemployment, six per cent or more, from tapping into the program. And for the purpose of program evaluations, Labrador communities like Happy Valley-Goose Bay are lumped in with Newfoundland’s Northern Peninsula and western region, where unemployment is notably higher.

The result?

“I think you’re going to see a combination of a shrinkage in hours and higher prices,” said Luc Erjavec, Restaurants Canada vice-president, responsible for Atlantic Canada.

“We’re very concerned with the fallout on a number of levels — on the business level, the employee level, the provincial level and, ultimately, on the customer level.”

He said restaurants in the province work with margins of about five per cent pre-tax profit. Paying more to attract labour, therefore, typically translates into higher bills for restaurant customers. And, goes the argument, fewer customers.

The unemployment rate in the province has fallen in recent years, but remains one of the highest in Canada, at 12.7 per cent last month. For St. John’s, it was 6.4 per cent in May — still not low enough for employers to be able to avail of

the temporary foreign worker program.

Changes in what have become standards of service should now be expected over time, he said. It may mean a loss of 24-hour fast food drive-thru operations or, in the case of full-service restaurants, shorter hours or closures on particular days of the week. “Ultimately, with some, it will be closure.”

That said, not everyone agrees the restrictions added to the program were the wrong way to go.

Numbering under 3,000, temporary foreign workers make up less than one per cent of the province’s total workforce. Yet, as noted in a neutral May report of the Atlantic Provinces Economic Council, a Halifax-based think tank, the number of temporary foreign workers in Atlantic Canada has grown more than threefold since 2005, from 3,500  to 10,900 in December 2012. The largest increases were in the food service and fish processing sectors.

As TC Media reported, the Newfoundland and Labrador Federation of Labour’s Mary Shortall pointed to those figures as an alarming trend.

“The issue is that these migrant workers are being used because they’ve created a low-wage economy and the government is just catering to the employers like Tim Hortons, like McDonald’s, who make huge profits, who are still going to be able to access temporary foreign workers, yet there's a million Canadians unemployed out there,” she said.

“What they did is they’ve killed a fly with a sledgehammer here,” said Sharon Horan with the St. John’s Board of Trade. “They basically made everyone who has played by the rules suffer because a few have not played by the rules.”

She said the Jungle Jim’s in Happy Valley-Goose Bay is a sign of things to come.

“This is what we think could be the first business fatality of this announcement,” she said.

“I’m standing right now in Goose Bay next to an A&W that has a sign on the door that says ‘We close 9 p.m. due to labour shortage.’”