Public Accounts Committee on Oct. 31st, 2017

[The Chair, Conservative, Kevin Sorenson]

Good morning, everyone. It is Tuesday, October 31, 2017. We are the Standing Committee on Public Accounts. We welcome you here this morning.

Pursuant to Standing Order 108(3)(g), we are studying report 5, “Temporary Foreign Worker Program”, of the spring 2017 reports of the Auditor General of Canada, part of the report that was referred to the committee on Tuesday, May 16.

This morning we have witnesses from the Office of the Auditor General: Mr. Michael Ferguson, Auditor General of Canada, and Mr. Glenn Wheeler, principal. We also have from the Department of Employment and Social Development, Ms. Louise Levonian, deputy minister, and Ms. Leslie MacLean, senior associate deputy minister and chief operating officer for Service Canada. As well, we have Mr. Paul Thompson, senior assistant deputy minister, skills and employment branch.

Thank you all for being here.

Typical of this committee, we will hear your opening comments and then we will move into questions from the members of the committee.

Welcome, Mr. Ferguson. The time is now yours.

[Michael Ferguson, Auditor General of Canada, Office of the Auditor General]

Mr. Chair, thank you for this opportunity to present the results of our audit of the temporary foreign worker program, which is managed by Employment and Social Development Canada.

The temporary foreign worker program is meant to help employers fill job vacancies when qualified Canadians are not available. Employment and Social Development Canada is supposed to make sure that employers use the program to respond only to real labour shortages.

Our audit focused on whether the department managed the program to allow employers to hire foreign workers on a temporary basis to fill labour shortages only when qualified Canadians were not available. The audit also focused on whether the department ensured that employers complied with program requirements. In addition, we assessed how well the department implemented the reforms that the federal government announced in June 2014.

Overall, the reforms introduced in 2014 contributed to a reduction in the number of temporary foreign workers. However, the department's implementation of these reforms did not ensure that employers hired temporary foreign workers only as a last resort.

For example, in many cases, the department just took the word of employers that they couldn't find Canadian staff. The department also didn't consider sufficient labour market information to determine whether Canadians could fill jobs. We found cases in certain sectors, primarily caregivers and processing plants for fish and seafood, in which the department should have better questioned whether temporary foreign workers were filling real labour shortages. In particular, there were indications that unemployed Canadians who last worked in a fish and seafood processing plant may have been available for work.

In addition, the department committed to requiring employers to demonstrate that they had tried to fill low-wage positions by recruiting from under-represented groups. In the files we reviewed to which this commitment applied, 65% of employers didn't make adequate efforts to appeal to under-represented groups before requesting temporary foreign workers. Nevertheless, the department approved most of these applications. For example, program officers approved applications for temporary foreign workers in some fish and seafood processing plants located near first nations communities even when efforts to recruit from these communities were not found on file.

We also found that the department had increased its enforcement activities since announcing program reforms. However, it did not use the information it had to focus its activities on employers of the most vulnerable workers or on employers that were most at risk of not complying with the program.

As well, most enforcement activities consisted of reviewing documents that employers were asked to provide to investigators by mail. The department conducted few on-site inspections and face-to-face interviews with employers or temporary foreign workers.

Finally, we found the department didn't measure the results or impact of the program and didn't know what impact the program had on the labour market. Appropriate analysis of results and impacts could have helped the department understand the underlying reasons why, for example, Canadians didn't appear willing to take some of the jobs that temporary foreign workers eventually filled.

We're pleased to report that the department has agreed with our recommendations and has prepared an action plan to address them.

Mr. Chair, this concludes my opening remarks. We would be pleased to answer any questions the committee may have.

Thank you.

[The Chair, Conservative, Kevin Sorenson]

Thank you very much, Mr. Ferguson.

We'll now move to the deputy minister, Ms. Levonian.

[Louise Levonian, Deputy Minister, Department of Employment and Social Development]

Thank you, Mr. Chair, and all the members of the Standing Committee on Public Accounts for giving me the opportunity to share with you the progress we are making to fully address the recommendations made in the Auditor General's report on the temporary foreign worker program.

I want to start by saying that this program plays an important role in supporting a strong Canadian economy by helping employers fill labour market gaps while ensuring that Canadians have first access to available jobs. This is a critically important balance to strive for, but in practice it can be quite difficult to achieve. There are national, regional, and industry-specific considerations, and along with these considerations, the program must also ensure the protection of the rights of foreign workers. All this is not an easy task, and we are continually working to improve on achieving the right balance.

Over the years, the program has evolved significantly to adapt to the realities of today's labour market. This includes placing a greater emphasis on ensuring that Canadians and permanent residents have first access to jobs. For instance, following program changes in recent years, we have seen a 75% decline in approved positions for low-skilled workers. This was between 2013 and 2016. Employers of high-wage workers are now required to develop plans for transitioning to a domestic workforce. These changes have been part of the evolution of the program, and we're committed to continuing to find new ways to improve it.

Mr. Chair, I want to assure you that the issues raised in the Auditor General's report are of the utmost importance to us. We have accepted all of the recommendations made in the report, and the department has already taken action on a number of fronts.

Let me begin by articulating some of the actions that have already been taken. On hiring Canadians first, we remain focused on ensuring Canadians are first in line for any available jobs. Employers must provide proof that they have been recruiting and continue to actively recruit Canadians. Employers must list every Canadian or permanent resident who has applied for the job and justify why they were not hired.

In response to the Auditor General's recommendations to strengthen the assessment of employers' recruitment efforts, new rules came into force on August 28 of this year. Employers in the low-wage stream must increase their recruitment efforts aimed at indigenous people, vulnerable youth, persons with disabilities, and newcomers. These are the four groups who are most under-represented in the labour force.

We are increasing our use of available technology by requiring employers to use the job bank and its job matching service as one of their three advertising requirements. There are nearly 40,000 domestic jobseekers using this service nationwide, and it is a valuable tool in connecting them with employers.

Later this fall, the department is launching automatic enrolment of EI clients in the job bank's job alerts service to connect even more Canadians with jobs. We are also working to increase the recruitment of Canadians in industries that are heavy users of the program to bolster domestic recruitment.

Our efforts are most advanced with the fish and seafood processing sector where we are finalizing a collaborative action plan.

This plan will identify resources and concrete actions for attracting, developing and retaining a domestic workforce.

On our assessment of employer applications, I am pleased to report that we have launched a new quality assurance pilot program to monitor the assessment of employer applications.

We will be launching the new quality assurance process across Canada in December.

On the use of labour market information, labour market information is an important tool for the program. For example, we use current regional unemployment rates to focus on processing applications for certain low-wage occupations.

In April of this year, the department increased its access to information on employer layoffs. Officers now have information from the last 12 months rather than 90 days, which was the case earlier, to check that employers are not laying off domestic workers and replacing them with foreign workers.

The department is also working to incorporate new sources of data into its assessment for applications. This includes making better use of data from Statistics Canada's job vacancy and wage survey. We're also incorporating private sector forecasts on sectors and regional labour market conditions into our assessment.

On wages, the Auditor General also flagged concerns in his report that the program may be negatively impacting Canadian wages. The program requires employers to advertise jobs at the median wage or higher for that occupation. Employers must therefore pay temporary foreign workers the same amount that Canadians would expect to be paid for the same job. Therefore, the program should not be putting downward pressure on Canadian wages, but we will continue to monitor this, as it is an important question.

On compliance and enforcement, the program has continued to strengthen its regime to help protect its workers from abuse and exploitation. Since April 1 of this year, we have undertaken a number of initiatives to improve the compliance regime. To better target our resources and efforts, we've launched a new risk-based predictive model to help identify who to inspect, prioritizing the highest-risk cases. More than 1,300 inspections that were launched this year have been identified using this model.

The department has also significantly increased its on-site inspections, strategically focusing on employers of the most vulnerable workers. So far this year more than 900 on-site inspections are either under way or have been completed. This is approximately five times more than last year. The investments we're making in on-site inspections are actually paying off. Of those completed this year, approximately 50% of employers needed to take some sort of corrective measure to be compliant. This is a 15% increase, more than were identified last year using primarily paper-based reviews, demonstrating that on-site inspections are an effective tool in identifying and correcting non-compliant behaviour.

Recognizing the important role that unannounced on-site visits could play in protecting foreign workers, we have accelerated our efforts and expect to complete work on this in the fall.

ESDC understands the importance of partnerships as well and is working with the provinces and territories to improve enforcement through information sharing. We have updated agreements with Ontario and Alberta that are already in place, and we are revising existing agreements with British Columbia, Saskatchewan, and Manitoba.

We have also held consultations with provinces and territories on enhancing worker protections to better prevent abuse and exploitation of workers.

Another issue I want to talk about a little is performance measurement and results. The Auditor General raised concerns about the department's lack of evidence of the program's impact on the labour market. This is a complex question requiring intricate analysis, complicated by the significant changes made by the program in recent years. ESDC will undertake an evaluation in 2018 to examine the medium- and long-term labour market impacts of the program.

In the meantime, we have completed our program information profile that enables the collection of performance indicators, including information on program trends. Notably, the performance measurement strategy for the new global talent stream will generate information on job creation and investment in skills and training by companies using the stream.

Mr. Chair, our department is working on many fronts to continue improving the temporary foreign worker program.

We have already made significant progress in addressing the recommendations made by the Auditor General.

I have asked my chief audit executive to undertake a follow-up audit in two years' time to confirm our progress.

I am confident that we will fully address all of the recommendations in the report within the timeframes detailed in the management action plan.

Thank you for inviting us today. Your suggestions and comments are welcome.

I will now be happy to answer any of your questions.

[The Chair, Conservative, Kevin Sorenson]

Thank you very much for your testimony.

We'll now move to Mr. Lefebvre for seven minutes.

[Paul Lefebvre, Liberal, Sudbury, ON]

Thank you, Mr. Chair.

Thank you, everyone, for being here this morning.

The program is certainly very important in my area, Sudbury, northern Ontario. This program is a job creator in the sense that if we didn't have these temporary foreign workers in northern Ontario.... It's very hard to recruit people from southern Ontario or the rest of Canada to come to northern Ontario. There are many challenges, so this is a very important program.

I was very interested in reading the report. I know the time frame that we're looking at is from 2013 to 2016. Certainly the angle was more about how we're looking at this, how we can reduce the abuse from employers and ensure they're doing their thorough due diligence to properly advertise and try to recruit across Canada. At the same time, in my reality, in my office, it's more on the other side, saying, “How can we help employers find temporary foreign workers because they can't fill the jobs?” It was very interesting to see the difference in my reality and the approach from the Auditor General's report.

That being said, I was certainly very interested in your comments, Ms. Levonian, with respect to under-represented groups. That has come up in the Auditor General's report. In the majority of the samples taken by the Auditor General's team, they “did not make adequate efforts to appeal to under-represented groups”, so the employers did not do a proper job between 2013 and 2016.

You've come to this committee this morning and told us that you are taking steps to require employers to do more to recruit in these under-represented groups, so I'd like to hear more about your plan to address this situation.

[Louise Levonian]

The government is continuing to take steps, as I mentioned, to ensure that under-represented groups are taken into consideration. As announced, also as part of the government's early actions in response to the HUMA report, as of August 28, 2017, low-wage employers are required to increase their targeted recruitment activities for under-represented groups in the workforce: indigenous peoples, vulnerable youth, persons with disabilities, and newcomers. Specifically, they will be required to demonstrate that, as of August 28, they have made efforts to recruit from at least two under-represented groups in the labour market to allow Canadians in these categories to have first access to available opportunities.

Furthermore, all employers seeking access to the program through the high-wage and low-wage streams will be required to advertise on the job bank and to use the job match service, which connects registered jobseekers with employers posting job vacancies on job bank.

[Paul Lefebvre, Liberal, Sudbury, ON]

How will that be evaluated in the sense that if they're trying to, through the job bank...? I'm thinking of northern Ontario where it's not easy to recruit to start with, so if they are in the job bank and they have another website or another effort, will that be sufficient to say they've tried to recruit in these under-represented groups?

If the officer determines that they haven't done a proper job of trying to address that or trying to recruit in those sectors, they can be refused. That could be detrimental to these businesses if they don't have these workers coming back. Any delays would be detrimental to the businesses because from what I've heard from a lot of these employers is that without these temporary foreign workers, the Canadians they are employing would not have jobs. I'm hearing that often, so what measures are you looking at to evaluate if they're actually doing that?

[Louise Levonian]

Employers are required to advertise to two under-represented groups. The officer looking at that file would then look to see how they've gone about doing that. Has there been appropriate outreach? If there hasn't been appropriate outreach, what happens is that their labour market information assessment is turned down. We say that there hasn't been enough advertising, enough outreach. Therefore, you won't get a positive LMIA, which is necessary.

The other thing that's required in assessing that is that employers are required to write down all the Canadians who have applied and justify why they didn't hire them, so there is rigour involved in doing that.

The one thing that I would say—and I think the Auditor General's report addresses this—is that, as with taxes, not every file is audited in the nth level of detail. There are many applications and there are risk-based audits and reviews of certain files, but there's a balance there, too. To administer every single review of every single application to the nth level of detail would require significant resources. There is a lot of risk-based assessment to ensure that we're evaluating the program. We're making sure that the program is addressing its requirements and that it's done in a efficient and targeted way.

[Paul Lefebvre, Liberal, Sudbury, ON]

This brings me to a comment in your opening statement, where you say that you are also working to increase the recruitment of Canadians in industries that are heavy users of the program. I want to bring that back to my reality. In rural areas, if we are working to increase the recruitment of Canadians and Canadians don't want to move to those areas, that is a constant challenge. Heavy users of the program require this program in order to meet their needs, in order to hire other Canadians.

What do you mean when you say you're working to increase the recruitment of Canadians in industries that are heavy users of the program? Certainly, agriculture is one of the heavy users of the program, because it's temporary.

[Louise Levonian]

We're undertaking sectoral reviews of those heavy users. We're working with partners, the industry, and labour groups to see what can be done to make that situation better.

[The Chair, Conservative, Kevin Sorenson]

Thank you very much, Mr. Lefebvre.

We'll welcome Ms. Rempel to our committee this morning.

[Michelle Rempel, Conservative, Calgary Nose Hill, AB]

Thank you, Mr. Chair.

Mr. Ferguson, it's my understanding that in your report you identified companies that were simultaneously laying off domestic workers and hiring temporary foreign workers. Is that correct?

[Michael Ferguson]

We looked at EI information and we found a number of people who had been laid off from fish plants and were collecting EI at the same time that fish plants were hiring temporary foreign workers. This indicated that perhaps there were people with the experience to work in the fish plants who would have been available in the market but were collecting EI.

[Michelle Rempel, Conservative, Calgary Nose Hill, AB]

Would you consider this a clear abuse of the program?

[Michael Ferguson]

We didn't identify it as an abuse of the program. There may be many different reasons why a Canadian worker might decide not to take a job that's available. We identified it as an indication that the department should be looking into these cases to try to find out how there can be Canadian workers with experience in a particular industry collecting employment insurance at the same time that employers are hiring temporary foreign workers. Really, we couldn't get any further down than just that indication. It's the role of the department to get further down into it.

[Michelle Rempel, Conservative, Calgary Nose Hill, AB]

Thank you.

Ms. Levonian, has there been any analysis done as to why this situation took place?

[Louise Levonian]

I can answer that at a reasonably high level, and if we need to get into detail, we can.

Employers seeking to hire TFWs—

[Michelle Rempel, Conservative, Calgary Nose Hill, AB]

Has an analysis of why people on EI are not being given jobs in this industry been completed within the department?

[Louise Levonian]

Yes, we look into—

[Michelle Rempel, Conservative, Calgary Nose Hill, AB]

In the interest of time, could you please table the results of that analysis with the committee?

[Louise Levonian]

We can provide information on that for sure.

[Michelle Rempel, Conservative, Calgary Nose Hill, AB]

Thank you.

From that analysis, was there any indication that the reason Canadian workers weren't taking these jobs was because of unfair compensation, lower compensation, or unsafe working conditions?

[Louise Levonian]

In these circumstances, the first step is that employers have to advertise for Canadian workers, and there's a rigorous—

[Michelle Rempel, Conservative, Calgary Nose Hill, AB]

That's not what I'm asking. In your departmental analysis, was there any indication that the reason Canadian workers weren't taking jobs was that the wages weren't deemed to be high enough to do the type of work that was indicated?