OTTAWA — A new report by the C.D. Howe Institute is harshly critical of the federal government’s controversial temporary foreign workers program, saying it has spurred a higher unemployment rate in western Canada.

The study by C.D. Howe, a non-partisan public policy think-tank, points out that changes to the program enacted between 2002 and 2013 made it much easier for employers to hire temporary foreign workers.

“These policy changes occurred even though there was little empirical evidence of shortages in many occupations,” writes the report’s author, economist Dominique Gross.

“When controlling for differences across provinces, I find that changes to the TFWP that eased hiring conditions accelerated the rise in unemployment rates in Alberta and British Columbia.”

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The Conservative government has since tightened the regulations, but there have been a spate of high-profile allegations in recent months about an array of employers, particularly restaurant operators, abusing the program.

Fast-food giant McDonald’s has announced it is freezing its participation in the program pending a third-party audit after it found itself in hot water for hiring temporary foreign workers in B.C.

Hundreds of Canadian companies and governmental departments employ temporary foreign workers, according to data compiled by Employment Minister Jason Kenney’s department. But there’s been an especially dramatic increase in the number of hotels and restaurants accessing the program under the Conservatives.

The initiative was originally designed to address shortages of skilled workers, not menial labour.

Kenney is vowing to lower the boom on any companies found to be abusing the program, and a spate of new rule changes is expected to be announced soon.

The C.D. Howe study, however, says that although the government’s 2013 crackdown on the program was a welcome move, it’s probably insufficient because of the absence of solid data about the state of Canada’s labour market.

That echoes concerns raised by Don Drummond, a respected economist who has given the Tories 69 recommendations to vastly improve the quality of the information on Canada’s labour markets. He said earlier this week that most of them have yet to implemented.

In response to the C.D. Howe report, a Kenney spokeswoman cited a Statistics Canada finding that the impact of temporary foreign workers on employment estimates is negligible, representing just two per cent of overall employment.

Alexandra Fortier also repeated what is becoming a common refrain from the government as criticism of the program mounts.

“Canadians must always be first in line for available jobs,” she said in a statement.

“Our message to employers is clear: We will not tolerate any abuse of the temporary foreign worker program. We have made reforms to the temporary foreign worker program to ensure that Canadians are first in line for available jobs and to ensure that employers do not take advantage of foreign workers.”

Both the federal Liberals and the NDP are demanding the government take serious action on the temporary foreign workers program.

Liberal MP John McCallum has written to the auditor general asking for an audit of the program as soon as possible. The NDP’s Jinny Sims was slated to hold a news conference on Thursday in Victoria outside of a McDonald’s accused of abusing the program.

One expert on temporary foreign workers says she doubts many of the Canadian companies routinely accessing the program are seriously trying to find domestic workers.

“Instead of recruiting in India, you could recruit in some parts of rural Ontario, or among First Nations in western Canada,” said McMaster University’s Catherine Connelly, who was recently awarded a four-year grant to study the program.

“If you look at unemployment rates among young Canadians or among people with disabilities — I really question some of the recruiting practices.”

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