New regulations lead to construction labor shortages

The construction labor market is struggling with Canada's recent restrictions on hiring foreign labor and the continuing trend of youth going to university instead of to work.

The construction labor market is struggling with Canada's recent restrictions on hiring foreign labor and the continuing trend of youth going to university instead of to work.

The GuelphMercury reported that Treasury Board President Tony Clement said that Canadian businesses will no longer be able to use the Temporary Foreign Worker Program to fill their empty positions with unskilled foreign workers. The Temporary Foreign Worker Program was created to mitigate the labor market woes faced by employers who could not find suitable employees for their open positions.

The revolving door of cheap labor
The changes to the program were officially rolled out in July, putting a cap on the number of unskilled foreign workers that companies can hire. The GuelphMercury stated that in the first half of 2013, 104,400 approvals were made for the hiring of temporary foreign workers.

Clement noted that since 2002 the number of temporary foreign workers hired grew 1,818 percent, which he deemed excessive. He said that companies were taking advantage of the program, relying on it to provide a revolving door of cheap, temporary unskilled labor. "What we don't want to have happen in our economy is that this unskilled Temporary Foreign Worker program becomes the business model," Clement said.

Employee training is the next step
This change has left a number of positions open in a variety of industries, particularly construction and natural resources, where employers simply cannot fill the positions. A study conducted by the Fraser Institute reported that the labor market for these industries has been dampened by the fact that more Canadian youth aspire to university studies rather than blue collar work, in addition to the recent restrictions on hiring foreign labor. 

One problem that the Fraser Institute also found that many companies are cutting back on their own in-house training programs, if they haven't already. The reason for this isn't readily apparent and several possible explanations present themselves. The study pointed out that cut-backs to company-sponsored training programs seemed to happen as university enrollment increased. It is possible that companies expected students to learn necessary skills in university and post-secondary school, so they cut their own training programs. 

Additionally, employers in the burgeoning construction and natural resources industry may be seeing a lack of general skills. Workers coming over from manufacturing have generally been trained in a firm-specific way, whereas construction and natural resources employers are looking for more general skills. 

The study suggested that companies looking to bridge this skills gap must provide adequate in-house training to give workers the skills needed. Private sector outreach to educational institutions could help these institutions provide industry relevant training and placement programs for youth who may take an interest in this type of career.