Arthur Sweetman: High-Skilled Temporary Foreign Workers and International Students

8/11/2019 Arthur Sweetman: High-Skilled Temporary Foreign Workers and International Students

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IRPP TFW Roundtable 2012

HIGH-SKILLED

TEMPORARY FOREIGN WORKERS

AND INTERNATIONAL STUDENTS

Arthur Sweetman

Department of Economics([email protected])


2/22

Annual Flow of Temporary Residents

0

20000

40000

60000

80000

100000

120000

140000

160000

180000

200000

Year

Foreign workers Foreign students Humanitarian population Other

Aside: Note effect on refugee flows of safe 3rd

countryagreement with US.

Effective Dec 29, 2004


3/22

TFW-Entries Without LMO(Source: CIC)

Yearly sub-status

%

Professional 12,513 6.6

Intra company transferee 5,524 2.9

Trader and investor 58 0.0

Business visitor 416 0.2

NAFTA* 18,511 9.7

Professional 386 0.2

Intra company transferee 284 0.1

Trader and investor 7 0.0

Business visitor 15 0.0Other FTA** 692 0.4

International agreements 2,839 1.5

Provincial agreements 2,517 1.3

GATS*** 327 0.2

Workers - Internationalarrangements

24,886 13.0

Number

2011


4/22

International experience Canada 54,898 28.8

Reciprocal employment 2,510 1.3

Exchange professor 1,767 0.9

Reciprocal employment 59,175 31.0

Intra-company transfers 7,352 3.9

Significant benefit 4,571 2.4

Entrepreneur/self-employed 462 0.2

Emergency repairs 468 0.2

Employment benefit 12,853 6.7

Spouse/common law partner of a

foreign worker 9,128 4.8Spouse/common law partner of a

foreign student1,621 0.8

Spouse/common law partner 10,749 5.6

Post-graduate employment 858 0.4

Post-doctoral fellow and award 3,431 1.8Research, educational, training 5,424 2.8

Research and studies related 9,713 5.1

Charitable or religious work 1,960 1.0

Repair and service equipment 0 0.0

Other Canadian interests 1,960 1.0Workers - Canadian interests 94,450 49.5


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1) Trend or Cycle?

2) How relevant,

how much protection, is the LMO?

30

35

40

45

50

55

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Percent of TFW with an LMO


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BUT, also groups NOT labelled TFWs- Official TFWs underestimate total temporary foreign

workers with work permits- Even students with LMOs not classified as TFWs (small)

Work permits without LMO 7,040 Work permits with LMO 141

Students with work permits 7,181

Students without work permit 91,197

Foreign students 98,378

With work permits 10,320

Without work permit 14,991

Refugee claimants 25,311

With work permits 853

Without work permit 58 Other humanitarian population 911


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Canadian Experience Class(CEC)

introduced in 2008

Increases access for

Foreign students in Canadian post-secondaryinstitutions

High-skilled Temporary Foreign Workers

New skilled trades stream (just announced)

In part, following other countries example

esp., Australia & New Zealand

11


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Some Details

Temporary Foreign Worker precursor

Until recent announcement only high-skills TFWseligible

High skill defined by job actually obtained in Canada;in contrast, points system defined high skill asprediction based on characteristics

If no success, then TFW permit expires and departure

Definition of high skill is expanding Employer driven (major shift in policy)

Recent announcement of skilled trades version

13


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Requirements: French OR English language ability

Points system is French AND English

Higher standards for higher skilled applicants (new)

Standard health & security checks

Plus1. TFW: min 2 years FT Cdn work experience in 3 year,

BUT, recent reduction to 12 months in 36 month period

2. Foreign student:(paying foreign student fees) with 2years of FT Cdn schooling, plus1 year FT post-graduationwork experience

Work can be any of Managerial

Professional

Technical/skilled trades (differs from skilled worker)

It can be QUITE difficult to evaluate occupational status

14


11/22

Government Labour Market Opinion (LMO)

for TFW entry is supposed to protect the

domestic labour force

Unclear how effective it is

Recent administrative changes have weakened it

and related protective features

Motivated by industrys call for lower-cost andhigher skilled labour

15


12/22

Almost no immigrants yet under the

new program, but can look at previous

CEC-like immigrants

(under the old system)

Only have pre-CEC data, so ask: How do CEC-like immigrants with pre-immigration

TFW and foreign student experience fare in theCanadian Labour Market?

Compare esp. to Skilled Worker category

Does this new selection criteria do better than the pointssystem?


13/22

Predictions for new CEC based on previous

CEC-like immigrants

In all specifications the CEC-like immigrantsneverhave statistically significantly pooreroutcomes than Skilled Worker PrincipalApplicants (best outcomes under the old system)

Sometime MUCH better

However, there are certainly caveats given thelimited range of the analysis, and definition of

entry, etc. TFW side appears to have higher returns to pre-

immigration labour market experience

17


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Who are TFWs? (from Warman 2010)

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Recent

Immigrants TFWs

US 0.021 0.159

Central/South America 0.084 0.126

West/South/North Europe 0.151 0.205Eastern Europe 0.121 0.054

Africa/Middle East 0.121 0.141

Asia 0.498 0.310

Other 0.004 0.005

Males from 1991, 1996 & 2001 Census data.

Clearly, major differences in the source regions of immigrants and TFWs.

Also, TFWs predominantly males.

For new CEC, not clear which TFWs will apply (are eligible) to immigrate.


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19

But, who immigrates? (LSIC)Temporary

ForeignWorkers Students Other

Males

US, UK,West/North Europe 30.3 9.2 4.6

Asia 50.4 51.8 62.6Other countries 19.3 38.9 32.8

Females

US, UK,West/North Europe 44.7 12.3 4.1

Asia 33.9 41.5 64.4

Other countries 21.3 46.2 31.5

Policy Sample


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Hope: Canadian education/work experience

solves labour market outcomes decline

Foreign students in Canadian post-secondaryinstitutions and TFWs have Canadian skills

Hopefully can make transition into Canadian

labour market more smoothly/quickly

Likely to be fewer difficulties with experience,

language, credentials, networks, etc.

Also, foreign student entries may lower entry

age, given baby boom retirements

20


17/22

Fear: Wage/employment competition

with existing population

Among the range of plausible designs for a

Canadian immigration system, the CEC is likely to

have somewhat larger immediate (short run)

displacement effects (e.g., bidding downdomestic wages)

If there are any such net effects, recent immigrants

and others with skills/ characteristics similar to TFWs

are plausibly more negatively affected

Of course, the underlying TFW programs may also

have displacement effects of their own

22


18/22

Recent changes increasing fear side

For higher skilled groups, some concerns

Not concerned about traditional SAW & live-in-

caregiver programs on this front


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As fast & flexible, esp. with 15% below the

average being the target, gets going we may

need some costs to protect the domesticworkforce and permit some earnings growth

Aspects of TFW program seems designed to

stall or prevent worker earnings growth Of course, as is well known

The median earnings of Canadians employed on a

full-time basis for a full year changed little duringthe past quarter century, edging up from $41,348

in 1980 to $41,401 in 2005 (in 2005 constant

dollars). (Statistics Canada, Daily, May 1, 2008)


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Equally importantly, if recent immigrants are

most like TFWs, then they may be most

negatively affected

The average wages (price of labour) of new

immigrants has been declining for decades

which economists usually associate with over

supply, although we all know the situation is morecomplex

Should we be concerned about competition from

certain TWF streams aggravating this trend?


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Policy Proposal:

Could a LMO application fee

help assuage these fears?

Currently LMO process is free to applicant Though costly to taxpayer

Perhaps introduce cost-recovery fee for

employers Maybe two stage fee: normal and fast


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The End

Documents

Arthur Sweetman: High-Skilled Temporary Foreign Workers and International Students