Countries Want to Hold on to Their Jobs
Canadians and others in the developed world do not like to see jobs that could be given to their own citizens disappear to other countries. From China to India, developing countries are enticing companies from developed countries like Canada and the United States to take advantage of their cheap and skilled labour forces in areas from call centre operators to computer and pharmaceutical industry experts. English linguists and culturalists are busy at work teaching the “right English” and colloquialisms to call centre employees in developing countries around the world, but the rumblings of discontent are heard frequently in home markets. In Canada, labour unions decry the loss of jobs to foreigners and pin the blame for outsourcing and Canadian plant closures on lowercost foreign competitors. And in the United States, President Donald Trump was able to tap into the feelings of many Americans that their jobs were being lost to other countries, and in particular China.
A recent controversy shows that the replacement of Canadian workers will almost always generate headlines. A few years ago the Royal Bank terminated 45 employees in its technical operations centres. One former bank employee made the allegation that the Royal Bank was bringing in workers from India to replace the fired high-tech workers. This was supposedly done under Canada’s temporary foreign worker program, which is a program meant to fill jobs for which no Canadians are available. The Royal Bank denied that it hired foreign workers, and the outsourcing company, iGate, said that it complies with all Canadian laws. iGate supplies employees to companies all around the world, including General Electric, Honda Europe, and HP. This particular story faded from the headlines as quickly as it emerged.
In reality, low-paid jobs in other countries have been in existence for a long time, since well before the WTO agreements and NAFTA. The fact of cheap labour alone, although attractive, is not conclusively enough for a company to uproot and head to a new destination. According to some, high taxes, overbearing labour legislation, and unrealistically restrictive environmental regulations are the real culprits of job loss and, if given the choice, many Canadian companies will take flight to other business climates.
Oftentimes, the road to curbing job losses and making businesses less motivated to seek greener pastures abroad might not lie in the reduction of personal income taxes, but instead in the further reduction of corporate taxes. Jobs leave the country because of competitiveness issues, and one take on resolving this is through lower corporate taxes. Historically speaking, lower corporate taxes pave the way for more research and development, but the issue of jobs going to foreigners does not stop there.
The notion of foreigners “taking away” jobs from one country can quickly become highly emotional. This issue will not disappear anytime soon. As the world increasingly becomes one marketplace, perhaps it might be best to expect the job markets to follow suit.
1. Should a country “hold onto its jobs”? How can it do this in a rapidly changing and increasingly global world?
2. What else, besides labour costs, influences a company to move or change locations?