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October 2014, Volume 21, Number 4

Canada, Mexico

Canada's program to admit low-skilled temporary foreign workers was debated in summer 2014. The Employment Ministry in June 2014 announced that fast-food, retail and hotel industries could not obtain new low-wage, low-skilled temporary foreign workers if the jobless rate in their region exceeds six percent. Canadian employers can have a maximum of 30 percent temporary foreign workers in 2014, 20 percent in 2015, and 10 percent in 2016.

Some 25,000 Canadian employers hire temporary foreign workers, and migrants are half or more of the employees in 1,100 Canadian workplaces.

By August 2014, some firms were asking for exceptions. Whistler, Canada's busiest ski resort, complained that it would lose business without easy access to Cantonese- and Russian-speaking foreign workers for hotels and restaurants. In Whistler, many businesses rely on temporary foreign workers for a third or more of workers.

Canada is preparing for federal elections in 2015. The slogan of Conservative PM Stephen Harper, in power since 2006, is "We're better off with Harper," a reference to the relatively good economy. The slogan of the opposition Liberal party led by Justin Trudeau is "Hope and hard work," while that of the New Democratic Party led by Tom Muclair is "change that's ready." The Green Party and the Bloc Quebecois are expected to receive very small shares of the vote.

An estimated 2.8 million Canadian citizens lived abroad, about eight percent. Of those, 40 percent were the US and 10 percent in Hong Kong. The US State Department estimated that 7.8 million US citizens or 2.5 percent lived abroad in 2013. Almost half of Canadians abroad are naturalized Canadian citizens who returned to their countries of origin.

Mexico. Remittances to Mexico are falling because fewer Mexicans are leaving to work in the US. Remittances were under $22 billon in 2013, down slightly from 2012.

The approval ratings of President Enrique Pena Nieto fell below 40 percent in summer 2014, the lowest in modern Mexican polling. Over 60 percent of respondents described the Mexican economy as bad, and two-thirds were dissatisfied with the ways things were going in Mexico.

Despite record levels of foreign investment, especially in autos, Mexico's economic growth has been less than two percent a year, half the four percent promised by Pena Nieto, who pushed reforms of education, energy and telecommunications through the Mexican Congress in 2013 and 2014 after taking office in 2012.

Mexico appears to be caught in a middle-income trap, unable to raise per capita income above $10,000 per person or $14,000 at PPP. The most common explanation for slow productivity and income growth is that Mexico has a two-tiered economy, with productivity and incomes rising only in the formal sector that is integrated into global markets, such as autos.

Mexico is expected to produce over three million vehicles in 2014, surpassing Brazil to become the world's seventh largest car maker and fourth largest exporter after Japan, Germany, and Korea. A sixth of Mexican manufacturing jobs are in autos. In August 2014, Kia announced that it would build a $1 billion auto plant in the Monterrey suburbs.

However, productivity is stagnant in the informal sector that employs up to half of the labor force in often family-owned businesses with fewer than 10 workers and little access to capital. The informal sector employs most Mexican workers, but at relatively low wages.

Mexico has several minimum wages, but the most common is 67 pesos or $5 a day. An estimated 6.5 million workers, an eighth of the 50 million-strong labor force, earn the minimum wage. Mexico has the lowest minimum wage among OECD member countries, and some economists support efforts to raise the minimum wage in order to spur firms to increase productivity.

The 500 seats in Mexico's lower house, the Chamber of Deputies, are the focus of July 2015 elections. Over 80 percent of Mexicans say that public schools are of poor quality, and most support Pena Nieto?s education reforms that would make teachers more accountable. Most Mexicans also support Pena Nieto's efforts to reduce drug-related violence, and 90 percent favor using the army to fight drug traffickers. The number of drug-related killings has decreased since Pena Nieto took office 2012, but kidnappings for ransom have increased.