McDonald’s Canada Freezes Use of Foreign Workers

Author: Julie Gordon, Reuters

Title of article: McDonald’s Canada freezes use of foreign workers

Name of publication: Toronto Sun

Date: WEDNESDAY, APRIL 23, 2014 07:32 PM EDT | UPDATED: WEDNESDAY, APRIL 23, 2014 07:39 PM EDT

Url: http://www.torontosun.com/2014/04/23/mcdonalds-canada-freezes-use-of-foreign-workers

Summary of the Article:

• After a McDonald franchise favoured foreign workers over qualified Canadians in Victoria, McDonald’s Corp froze all temporary foreign worker program applications. The company employed a third-party to audit all its franchised restaurants that hire foreign workers.
• McDonald’s press release statement:

1. McDonald’s voluntarily halts all “Labour Market Opinions (LMO)” for the mean time.
2. It is being audited by a third party to ensure all corporate and franchised restaurants do not abuse the program.
3. Roughly 4% of total workforce is temporary foreign workers.
4. It clearly stated that temporary foreign worker program is their last resort in dealing labour shortages
5. Foreign workers with work permits who are already employed won’t be affected by the McDonald’s action to freeze.

• Royal Bank of Canada has gone through same criticisms last year about outsourcing temporary foreign workers to replace laid off staffs in its Investor & Treasury Services business segment.
• Canada’s employment minister, Jason Kenney said that misuse of temporary foreign worker program will not be tolerated. Moreover, Canadians are the first priorities when hiring for vacant jobs.

What is the major Human Resource function that is relevant to this article?

• Human Resources Planning – McDonald’s should forecast demand and supply for employees in every region to ensure there is no labour shortage. In case of labour shortage, there are ways to deal with it. McDonald’s can the following strategies while ensuring they abide legal requirements ethically: outsourcing, internal temporary pools, part-time workers using agencies or full-time workers, promotions, transfers and/or promotions.
• Compensation – McDonald’s uses a low-cost strategy to operate. It offers low prices to attract customers. In order to keep the prices low, it has to maintain its expense at a low rate. One way of reducing expenses (e.g. decreasing wages expense of the company) is utilizing temporary foreign workers program because it benefits them through low payroll expenses and no obligation to entitle benefits.

Who is affected?

• McDonald’s is affected because this issue results in a bad reputation. Abusing an implemented program by the government is like disobeying laws and regulations. The public responses to companies’ social responsibility directly. For example, Nike experienced consumer boycott when it abused its labour practices back in 1990s.
• Recently, restaurants are banned from using temporary workers in Ottawa. Areas where there is an actual shortage in labour will be most affected. Labour shortage can result inefficient operations that can affect company’s profit.
• McDonald’s franchise employees are affected because their hours get cut. Some of them are forced to quit their jobs to find a new one that can support their financial needs or they become unemployed.  Also, surrounding community is affected since McDonald’s favoured hiring temporary foreign workers to replace their former employees, unemployment is increasing and unemployed Canadians don’t have access to jobs vacancies.

Why the news item is interesting to HR students and /or professionals?

• In order to achieve organizational success, companies need to draw their attention to human resources. Without its employees as the back bone of a company, it could hurt company’s operations that could lead to losing profit. HR professionals can use this incident to gain competitive advantage from human capital. Also, if companies are having a hard time to attract domestic employees, then maybe they have to change their compensation system such as increasing the wage, giving them more benefits, offering permanent jobs, and supporting their needs. Companies should integrate different HRM strategies to achieve success.
• This article is interesting to HR professionals because it opens up other related issues such as the abuse of domestic temporary worker. Companies have abused this program as well. Some temporary workers have been working in a company for more than 3 years but still never recruited as a full-time employee. HR government officials should take into considerations the consequences of the programs they implement or much better if they add some guidelines and policies for companies to comply.
• HR students should be aware of events like this. When restaurants hire temporary foreign workers, many students are left unemployed. What’s the impact of this? Every year, students’ loans are drastically increasing. Many students are having a hard time financing their programs fees and most of them are unable to pay off their debt. Students could have worked in restaurants to pay off tuition fees instead of getting the loan from the government.

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