Auditor General Michael Ferguson has just found out the dangers of confusing cause and effect.
For those of you not familiar with cause and effect and the consequences of confusing them, consider this old joke recently revived by British politician Matt Ridley: I am not surprised Johnny comes from a broken home. His behaviour would be enough to break up any home.
Where the Auditor General trod on the cause-and-effect banana peel was in his study of the Temporary Foreign Workers Program. One major concern motivating his look at the TFWP was the criticism that not enough seemed to be done to establish that Canadian workers were unavailable to do the work that temporary workers were being brought in to do.
In seeking a test case for this study, the AG fastened on the fish processing industry in Atlantic Canada. Unsurprisingly, he found that there seemed to be a lot of Canadian workers, experienced in fish processing, collecting Employment Insurance. According to media reports, the AG discovered that more than four out of every five workers laid off by fish processors in the region were collecting EI while those very same companies were employing temporary foreign workers.
Shock. Horror. The obvious conclusion: the availability of cheap foreign workers was causing unemployment among Canadians who were being left idle against their will.
Or at least that’s the obvious conclusion for anyone who knows absolutely nothing about the cruel and damaging effects of EI on coastal communities throughout Atlantic Canada, effects that long predate the existence of an easily accessible TFWP.
Decades ago coastal communities in the region tumbled to the fact that many more people could live from the fishery and fish processing if everyone worked only the minimum necessary to get “stamped up” for full EI benefits. Once that number of hours worked, employers came under tremendous social pressure to lay off an existing employee onto EI and bring in another employee to be similarly cycled through the system. The same amount of work could thus be shared among many more people under what is essentially a “workfare” scheme; coastal workers are guaranteed a decent income for the year in exchange for a relatively brief period of work.
This represents a terrible tax on the efficiency of seafood processors, who not only must suffer the disruption of a constantly changing workforce, but who often must cease operations despite the availability of fish to be processed when their local work force has been fully cycled through the system and is happily claiming EI for the rest of the year.
Various schemes have been tried to entice workers on EI back into the workforce (including programs that offered to top up the wages that could be earned) but all have foundered on the rock of the established view that a worker on EI is not unemployed but is simply enjoying the paid “break” to which they are fully entitled.
If the AG had gone to Atlantic Canada 15, 20, or 25 years ago, before temporary foreign workers were easily available, he would have found exactly the same situation: large numbers of EI recipients co-existing with fish plants desperate to find the labour to keep operating as long as possible in the face of fierce community resistance once all workers had qualified for EI.
The only possible conclusion is that EI as it currently operates causes unemployment on a massive scale in Atlantic coastal communities. The demand for temporary foreign workers in fish processing, therefore, is one of the perverse effects of the EI system, not a cause of local unemployment. Complaints against foreign workers and their employers are chiefly motivated by resentment of outsiders who don’t play by the local rules. But portraying the foreign workers as the cause of the region’s unemployment rather than the logical consequence of a local culture corrupted by perverse EI incentives is to get it exactly backward.
Brian Lee Crowley is the managing director of the Macdonald-Laurier Institute, an independent non-partisan national public policy think tank in Ottawa. For nearly 20 years he ran a think tank on Atlantic Canadian issues.
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