Royal Bank’s top executive moved to salvage the bank’s reputation Thursday, issuing a public apology over a week-long outsourcing controversy that has also rebounded on the federal Conservative government.
Speaking to reporters in Calgary, Prime Minister Stephen Harper said his government will bring in a series of reforms “in very short order” to the Temporary Foreign Worker Program to ensure there are no more abuses.
While not commenting on the specific RBC issue, Harper said he has been concerned about media stories of abuses of the program, as well as the ballooning numbers of foreign workers that have been brought into the country.
“I think it is important for Canadians and all businesses to understand that the purpose of this program is to provide temporary, temporary help in cases where there are absolute and acute labour shortage. It does not have broader purposes than that,” he said.
The mea culpa by RBC chief executive Gord Nixon and move by the government follows a backlash after Canadian information technology workers at the bank complained they were being replaced by foreign workers, some of whom were being brought to Canada for training.
Nixon said in an open letter, to be published in Friday newspapers, that the bank is also reviewing its supplier arrangements and policies to balance its desire to be a successful business and a “leading corporate citizen.”
He repeated assurances that all of the affected workers — about 45 people — will be offered comparable job opportunities at the bank, which is Canada’s largest bank by assets.
“RBC has been in the news this week in a way no company ever wants to be,” Nixon said in a letter distributed Thursday afternoon.
“While we are compliant with the regulations, the debate has been about something else. The question for many people is not about doing only what the rules require — it’s about doing what employees, clients, shareholders and Canadians expect of RBC. And that’s something we take very much to heart.”
But critics were not letting RBC (TSX:RY) off the hook so easily, nor the federal government under whose Temporary Foreign Workers Program the bank’s contractor, iGate, received permission to use foreign workers to replace Canadian ones.
IGate brought its own employees into Canada on temporary foreign worker visas so they could be trained for the services they’ll be providing to the bank.
Online reaction on Facebook and Twitter was scathing.
“(Y)our apology first sounds like ‘sorry we got caught’ and second, we are shifting blame to the supplier. Disingenuous dirtbags,” tweeted one user from the @securityintern account.
“Would this have happened if the public wasn’t aware of the hiring practice in the first place?” read another from @MINITee.
The United Steelworkers, which represents workers employed by chartered banks across Canada, said it was launching a legal challenge in Federal Court over the federal government’s approval for iGate to use temporary foreign workers.
The Steelworkers argued the conditions were not met in the iGate case.
NDP finance critic Peggy Nash called on the federal government to also apologize and close the loopholes that allowed iGate to obtain the visas.
She noted that in a soft labour market, where the unemployment rate remains more than a full point higher than it was before the 2008-09 recession, the number of foreign temporary workers being brought into the country exploded. According to Immigration figures, the number of temporary foreign workers in Canada as of Dec. 1 was 338,189, more than double the figure seven years earlier.
“The reality is Canada has lost hundreds of thousands of good paying jobs in manufacturing, IT, (and) some value added services in processing industries in a race to the bottom,” Nash said.
Queens University law professor Sharry Aiken called the RBC apology a damage control exercise, saying the company likely made the calculation the public relations black eye wasn’t worth it. In earlier statements and an interview that Nixon gave to CBC, the bank had said it expected and believed that its outsourcing supplier had complied with all relevant Canadian rules.
“I think it became increasingly clear over the past 48 hours that the bank had a major public relations fiasco on its hands because Canadians were irked in the extreme to hear than in a region like Toronto, where the unemployment rate is not insignificant, jobs were being outsourced,” she said.
In March, Toronto’s jobless rate stood at 8.4 per cent, well above the 7.2 per cent national average.
“Mr. Nixon is an intelligent individual and no doubt came to appreciate quite quickly that maintaining the line was actually damaging the reputation of the bank.”
Aiken said the optics appeared to violate the spirit of the federal program, which was designed to allow firms to fill a temporary need for workers, not replace permanent jobs.
“If in fact these jobs are not temporary, but permanently outsourced, fine let them outsource. But you don’t need to hire them through the Temporary Foreign Workers Program.”
Human Resources Minister Diane Finley has asked officials to review documents submitted by iGate after apparent discrepancies appeared between public statements made by RBC and information previously provided to the government by iGate.
Harper’s pledge to fix the program was first announced in the March budget, which promised to “take action to reform Canada’s Temporary Foreign Worker Program to ensure that Canadians are given the first chance at available jobs.” As well, it said it will introduce user fees for employers applying under the program.
A spokeswoman for Finley said in an email that the program is only intended to allow foreign workers when no Canadians are available to fill the job.
“Employers cannot pay temporary foreign workers less than a Canadian would earn in the same job,” said Alyson Queen.
“It is a requirement of the program that employers will only be able to pay temporary foreign workers 15 per cent less than the average prevailing wage if there are Canadians being paid 15 per cent less. Therefore, no Canadians will be undercut.”
In his letter, Nixon issued four commitments, starting with the apology.
“All will be offered comparable job opportunities within the bank,” he said.
He also committed to a review of the bank’s supplier agreements and to keep its call centres that support the bank’s domestic and U.S. business in Canada.
“Fourth, we are preparing a new initiative aimed at helping young people gain an important first work experience in our company, which we will announce in the weeks ahead,” Nixon said.