Canada's largest bank, the Royal Bank of Canada is this week painfully demonstrating what happens when companies that are offshoring jobs or making use of temporary foreign workers focus too much on cost savings and not enough on public perception.
In RBC's case it is taking a double hit because the backlash the bank is facing this week involves RBC, through a third-party supplier, making use of temporary foreign worker visas to train foreign workers to take over the jobs of Canadian IT workers before those jobs are offshored to India.
The public response and the bank's handling of the growing furore serves as a case study for the broader issues facing Australian firms making use of temporary foreign workers or offshoring jobs.
The number of RBC jobs at stake is relatively small – about 45 – but when one of the workers went public to claim that not only were the jobs being offshored but that the soon-to-be redundant Canadians were being forced to train the foreign workers replacing them, RBC quickly found itself spiralling into a public relations nightmare.
In the span of less than 48 hours, the bank found itself facing a federal government investigation on its use of the temporary foreign worker visas and an intense public backlash that has thousands of RBC customers threatening to take their banking business elsewhere.
RBC's Facebook page has been hit with thousands of negative comments, many from customers, and a separate Facebook page has been set-up calling for a boycott of the bank that has so far attracted more than 7,000 “likes” and features a play on RBC's “Advice you can bank on” slogan that has been changed to “Your child's future outsourced – lost Canadian jobs you can bank on”.
The Canadian government says it is investigating whether the law was broken when at least one temporary foreign worker visa was used when RBC subcontracted work to an offshoring firm, iGate Corp, that plans to use foreign workers abroad to replace Canadian staff.
Canada's Human Resources Minister Diane Finley said the temporary foreign worker program “was never intended as a means to bring in temporary foreign workers in order to replace already employed Canadian workers” and said the government is investigating whether RBC, iGate or both companies, broke the law.
In Canada, temporary foreign workers have not been nearly the headline-grabbing, political-hot-potato issue they have been in Australia. But the influx of foreign workers and the loss of Canadian jobs are not often so directly linked as they have been by the RBC scandal.
The loss of Canadian jobs is a growing issue. The latest figures show Canada lost 54,500 jobs in March, boosting the unemployment rate to 7.2 per cent.
Under Canada's temporary worker legislation, employers are allowed to hire workers from abroad only if they can prove they have genuinely tried to recruit Canadians and that those efforts failed to produce the necessary workers, either in skill or quantity.
In March, Canada's government pledged to restrict the use of low-skilled temporary foreign workers and instead increase access to permanent citizenship status for foreign workers.
The reforms were promised as the Canadian government warns that a growing number of employers are using temporary foreign workers to plug “long-term, structural labour gaps” instead of the short-term needs the legislation is targeted for, according to a government background paper.
“Some employers are using the program as a substitute for necessary adjustments such as investments in capital and (re)-training workers, or adjustments in wages,” the background paper says.
“Concerns have been raised regarding employers' efforts to genuinely recruit and/or invest in training opportunities for Canadians prior to hiring [temporary foreign workers].”
There are more than 300,000 temporary foreign workers in Canada - triple the number a decade ago - and more than 190,000 temporary foreign worker visas were granted in 2012. More immigrants are arriving into the country through temporary visas than through skilled worker visas.
Compare that to Australia, where figures show there were 107,510 temporary foreign worker visa-holders in Australia at the end of February. Though that figure is up over 20 per cent from the same time last year, it pales in comparison to the number of temporary foreign workers in Canada.
In the case of the RBC offshoring scandal, the fact that the issue was represented by a face, rather than just numbers, also helped it explode in media, social media and political circles.
That face was the IT worker, Dave Moreau, who was among the 45 or so RBC staffers being made redundant (though in its response to the backlash, RBC has said it will try to find jobs within the bank for many of the affected workers).
“They are being brought in from India, and I am wondering how they got work visas,” Moreau told the Canadian Broadcasting Corporation.
“The new people are in our offices and we are training them to do our jobs. That adds insult to injury.”
Moreau going public has personalised the issue, and his circumstances have further sparked an emotional response against RBC that would be hard for any firm to effectively contain.
“I am going to go broke,” Moreau told the CBC.
“I don't have enough money to live on... I have a wife that works part-time at a very low wage.”
With a face to the story and an intense backlash from customers and the broader public, the issue is likely to cost RBC far more than it ever could have saved by offshoring 45 jobs, and stands as a warning to Australian firms that sometimes the true cost of such decisions is not restricted only to dollars and cents.