Disposable workers: Bigger profits from lower wages

In her much-discussed Walrus profile of Jason Kenney, award-winning journalist Marci McDonald questions how well immigration policy designed as part of Harper Conservative political strategy is playing out.

Most observers of Canadian politics know about efforts led by Kenney to woo "hard-working Canadians" -- recent immigrants -- to expand the base of the governing party. McDonald lays out problems in the Kenney/Harper approach that could come back to haunt the Conservatives at election time.

The Temporary Foreign Worker (TFW) program has Kenney working overtime on damage control. The high-publicized replacement of Canadians by TFWs scared the minister into making changes to the program. This raised the ire of the Canadian Federation of Independent Business, a key backer of the Harper Conservatives.

Light shed on TFWs with no right to remain in Canada caused grief for companies such as McDonald's and the Royal Bank when it turned out TFWs displaced Canadians workers.

The program was instituted by the Liberals back in 1973. A low-skills component was added in 2002, and expanded by the Conservatives in 2006. Under its terms the Harper government makes these migrant workers sign contracts to leave in four years' time. Workers pay no income tax, receive no benefits, and work for below-market wages (Kenney just changed the rules to eliminate a 15-per cent gap). 

The TFW programs established a new class of indentured workers in Canada. According to the Canadian Council for Refugees, "there were 338,189 Temporary Foreign Workers in Canada on December 1, 2012, compared to 257,515 new permanent residents in 2012." John Ralston Saul in The Fair Country described Canada as a place where immigrants can become Canadians simply by choosing to stay here. Not true now.

The curious thing about the TFW program is why Canada's most faithful free market economics advocates consistently overlook the price mechanism when commenting on it.

If companies are trying to hire workers and not succeeding, the obvious reason is that the job does not pay enough to interest people. A solution lies ready at hand: offer more money to get Canadian workers to accept the jobs.

The TFW program was expanded by the Conservatives to do precisely the opposite. Instead of enticing business to pay Canadians decent wages to do difficult or unappealing or difficult unappealing work, TFWs keep wages low.

Lowering wages is the Economic Action Plan Conservatives keep promoting so annoyingly on television and billboards (your tax dollars at work paying for false and misleading advertising on behalf of the ruling party).

What we know for sure about the jobs market is that there are over six times more people looking for work than there are jobs to be had. The numbers crunched by Angella MacEwen of the Canadian Labour Congress are revealing. Canada is not short of workers: it is short of employers prepared to pay decent wages for difficult, demanding work.

For business, labour is a cost of production to be kept low. Business likes to say profits come from wise investments: money makes money.

Actually profits come from paying workers less than what they create in value for the company, much less in the case of low-wage earners in the "servant services" hospitality sector.

The TFW program helps keep the rate of exploitation of Canadian labour high through keeping wages low. Employers have an alternative source of labour, which makes it impossible to bargain gains with the boss without help from government say in promoting unionization. Instead the Conservatives like the Liberals before them are on the other side, working against a decent life for citizens.

Success in reducing business costs confronts reality: wages, salaries and benefits determine what quality of life people can expect.

For anyone of the nearly 50 per cent of Canadian workers in Toronto and Hamilton and those elsewhere -- the precariat -- earning unstable, low wages, means try and find affordable rental accommodation, and no retirement security.

Earn enough and you qualify for a mortgage. Have a pension with a guaranteed payout (defined benefit), and you do not have to sell your house to make ends meet when you retire.

As four-year non-renewable migrant work contracts come up, what will happen to the migrant workers who are enticed (or decide) to remain in Canada illegally with no status? In her eye-opening article, Marci McDonald asks how Canada is going to avoid the "racism and anti-immigration backlashes" that occur "wherever illegal immigrants become part of the political landscape."

Duncan Cameron is the president of rabble.ca and writes a weekly column on politics and current affairs.

Photo: Daily Xtra/flickr

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