The Temporary Foreign Worker Program has ballooned into a problem that's hurting not only unemployed Canadians but those coming here from abroad for short-term jobs as well, one labour expert says.

"The irony is we had a model that worked and we scrapped it," said Jason Foster, the coordinator for Athabasca University's industrial relations program. It went from a "small, nimble" program to a large-scale one that the government "lost the capacity to manage."

The Temporary Foreign Worker Program is under intense parliamentary scrutiny at the moment, following a series of allegations about the system being abused, including by the Royal Bank of Canada, three McDonald's franchises in Victoria, B.C., and a Weyburn, Sask. pizza restaurant.

Canada introduced the TFW program in 1973 with the goal of bringing in highly-specialized workers like academics and engineers to fill gaps here.

In 2002, the program morphed into something else under the Jean Chretien Liberals as it was opened to low-skill workers. It expanded further in the following years under the Liberals and Conservatives as a system came into place to expedite bringing workers into dozens of sectors, including food and construction, following pilot projects in Alberta and B.C.

The result was that it tripled in size within a decade, rising from 101,000 temporary foreign workers in 2002 to 338,000 in 2012. The fastest growing area has been low-skill workers.

'Everybody's impacted'

Though foreign workers rotate in and out under the program, with a four-year maximum stay, they've become a permanent feature of the labour market that some sectors now rely on.

"In a way, everybody's impacted by this," says Foster.

Canadians lose out, and so can the foreign workers. Locals potentially miss out on jobs, wages are kept artificially low for everyone and the size of the program makes it hard to monitor for abuses.

Indeed, a C.D. Howe Institute report in April suggested that a pilot project that accelerated the approval process for companies to use low-skill temporary foreign workers increased unemployment levels here.

"The costs of a weakly designed TFW program can be quite high," wrote Dominique M. Gross, the report's author.

The problem lies at the very core of the program, she suggested. Though it is intended to fill labour shortages, the government doesn't even have enough data to understand what shortages exist.

Earlier this week, the Alberta Federation of Labour showed what the impact looks like on the ground.

The AFL revealed how companies were paying temporary foreign workers up to $5 less than the "prevailing" local market wage for their job — and the federal government was approving it. The figures were based on access-to-information requests.

That suggests the program can also lower wages for the foreign workers.

Lessons not learned

Last year, the restaurant industry rose to the top slot of occupations given so-called labour market opinions (LMOs), basically approvals to hire temporary foreign workers. Six years ago, restaurants didn't even appear in the top 10.

"What it says to me, quite bluntly, is they have become dependent upon temporary foreign workers to meet their labour supply needs," said Foster.

"I'm not very surprised," he added. "That is exactly what we saw in Europe."

Foster points to the first-generation foreign worker programs in Europe following the Second World War, when some countries were struggling with extremely low unemployment rates of around two per cent.

"Europe is now paying the price of those programs a generation later," said Foster, pointing to the riots in France where the creation of so-called second-tier of citizens, the temporary foreign workers, was partly blamed for fuelling innercity tensions.

Many European countries later narrowed the scope of their programs, limiting the intake of foreign workers to highly-skilled professions.

Foster argues that Canada has moved toward the old, flawed European model, instead of maintaining the small, more focused program that other countries are now moving toward.

But not everyone agrees that the situation has worsened.

'Window dressing'

Chris Ramsaroop, an organizer for the Ontario and B.C.-based non-profit group Justicia for Migrant Workers, said there's also been improvements in recent years.

"It's only in the last decade or so" that the conditions endured by some temporary foreign workers have been exposed, he said.

But he also believes the program, in its current form, is flawed, and he doesn't hold out much hope for the federal government's promised reforms.

Employment Minister Jason Kenney said the federal government will unveil another set of reforms for the TFW program in the coming weeks. Among them will be greater audit powers, which addresses a key concern of critics. Both New Democrats and Liberals want the Auditor General to investigate the program.

Recent changes by the Conservatives have amounted to mere "window dressing," claims Ramsaroop, when what's needed is a revamp.

He says the government should allow these short-term foreign workers to apply for residency and give them flexible work permits instead of tying them to a single company.

"It's not simply looking at migrant workers as the problem here," he said.