Canada’s economic immigration policy falls short in the competition for talent
The new Express Entry system is being bogged down by process, making it harder for Canadian companies to secure the skilled workers they need.
Competing for talent is a day-to-day business concern for growing companies. Without the skilled talent to scale up, Canada’s most innovative and high-value firms will face a roadblock. From small, highly specialized manufacturing firms to large high-technology multinationals, knowledge workers are a fundamental ingredient for success.
Last year, Canada’s new Express Entry system promised transformative change in economic immigration and the opportunity for employers to be involved in immigrant selection. Yet, after its first full year, the vision of more highly skilled immigrants arriving with job offers has been undermined as a result of a policy that is slowing up a system that was supposed to be nimble. As the new government pledges to cultivate an innovation economy, adjusting its immigration policy could be critical to its success.
Express Entry is an electronic application management system for skilled workers to seek permanent residency. It adds a competitive element by selecting candidates based on their scores in a comprehensive ranking system. Scores are assigned based on personal attributes such as education and Canadian work experience, with a critical number of points awarded to those with valid job offers. Those offers must be accompanied by a positive Labour Market Impact Assessment (LMIA) from Service Canada, which is where the problems arise.
An LMIA is a labour market test, also used in the Temporary Foreign Worker Program (TFWP), to determine that no Canadian or permanent resident is available to take the job. Without the assessment, a foreign candidate with arranged employment does not receive the 600 points that would likely result in an invitation from the department to apply for permanent residency through the Express Entry system.
This creates a scenario where the employer identifies the talent and makes a job offer, but the candidate is not selected to immigrate. Skilled foreign nationals have personal lives and families to consider, and for them as well as their prospective employers in Canada, the unpredictability of obtaining a positive assessment is highly problematic.
The department reports that last year, 47 percent of the invitations issued via Express Entry were to candidates with LMIA-backed job offers. This suggests that it is feasible to obtain the assessment. But based on the data in the report, it appears that about one third of the invited candidates were temporary foreign workers who were already working in Canada with an existing assessment in place, creating a kind of “two-step” immigration process. Only 10 percent of invitations were linked to approvals of new Labour Market Impact Assessments to support job offers through Express Entry.
The number of temporary foreign worker permits is declining rapidly, and this could also seriously impact the Express Entry system. The precipitous 56 percent drop in permits issued between 2013 and 2015 means far fewer TFWs will have the option to transition to permanent residency this year or in the future. In fact, the permit numbers in 2015 and 2014 were well below the annual average over the years 2010-2013.
Does the flow of temporary talent matter as much if Canada has a faster route for permanent residents? Yes, it matters in our competition for talent. Timely processing matters. Although Express Entry offers a service standard of six months in processing for 80 percent of the completed applications, it is a timeline that is too lengthy for many employers. They may turn to the TFWP as a faster alternative even though they may want permanent employees. An equally challenging factor is that, like the TFWP, Express Entry also has an LMIA requirement for job offers.
By inserting the LMIA process into Express Entry, the government has put two competing policy principles in play. On the one hand, the immigration department wants to facilitate employers’ access to a pool of international talent, and on the other hand, it does not want employers to look at international candidates because the government wants Canadians first in the jobs. In the past, the government had other ways to validate job offers for permanent residency applicants. The LMIA is the wrong policy tool for this purpose.
The Canadian Employee Relocation Council stated in November 2015 that a startling 70 percent of major Canadian companies surveyed reported that changes to the LMIA process have made it harder to recruit skilled workers through the economic immigration system.
Let’s put one fallacy to bed: it is not preferable for an employer to look abroad. It is always much more expensive to recruit internationally, and employers do so only when they cannot find qualified workers here. Industry and skills shortages drive employers in some sectors to go overseas; this is not a surprise in the information and communications technologies sector, where the unemployment rate is 2.6 percent nationally. In fact, information-technology-related occupations were in the top 10 list of invited occupations in Express Entry last year.
The lament of a Canadian start-up entrepreneur in the Globe and Mail reflects what is at stake with the current policy. When he found that the best candidate for a position was an American, he was disappointed that her LMIA application was turned down, and she could not work in Canada. As an alternative to bringing her into Canada, he hired her and let her set up shop and hire staff in the US. When the government refused to allow a foreign national to grow a Canadian firm, the firm ended up adding jobs in the US rather than at home.
The LMIA enforcement and penalty regime has also created a chill among employers. They face the threat of punitive fines imposed at the discretion of public servants, and no appeal process is available to them if they are found noncompliant with the conditions of the LMIA. “No company today is going to allow someone to submit an LMIA and open itself up to the rigidity and severity of compliance reviews,” said a human resources executive with global recruiting responsibility who was interviewed for a Canadian Chamber of Commerce report on international talent. His company’s legal department has forbidden staff from requesting LMIAs for international employees. What a Canadian conundrum!
The new government can simply and effectively adjust the system by bringing back a demand-driven focus to immigrant selection. The Canadian Chamber recommends that the government award points in the Express Entry process for a job offer, without requiring a Labour Market Impact Assessment. Instead of an LMIA, the department could build on the Arranged Employment Opinion (AEO) approach that was used in the Federal Skilled Worker Program until May 2013. (For additional recommendations to improve our immigration system for highly skilled talent, see the Canadian Chamber’s January 2016 report Immigration for a Competitive Canada: Why Highly Skilled International Talent Is at Risk.)
Canadian businesses face an unprecedented level of competition. In order to create jobs and contribute to our country’s standard of living, they must have access to the best possible talent. Improving the current process will increase Canadian competitiveness and ensure that newcomers more successfully integrate into the Canadian economy.