The big picture: Canada’s relocation trends

Canada, and by extension its mobility sector, is going through a tumultuous time. The collapse in the price of oil has hit the country’s economy hard, while the recent election victory of the Liberals promises to rock the boat further. Mark E Johnson explores the macro-level trends affecting mobility to, and within, Canada.

Canadian relocation
The headline for the Canadian economy over the last year has been the dramatic fall in the price of oil, which has slid from highs of over USD100 to lows of between USD40 and USD50.Neil Gascoigne, business development director of Hays Oil & Gas, says that, in North America, "the prolonged downturn in the price per barrel of oil is really two stories. On one side, you have the oil industry itself, with the prolonged downward spiral of the oil prices resulting in significant expenditure cuts by the exploration and production companies."This, in turn, has affected oil services companies. With little new drilling or exploration taking place, in many cases they have had to restructure their businesses and cut costs to ensure survival. It has been well publicised that oil and gas companies have been downsizing their operations, and tens of thousands of people have lost their jobs due to the decline in oil prices and the global oversupply in the system that has driven this decline."

Implications for mobility

Paul Coleman, president and CEO of Montreal-based TERN Financial Group, which provides financial services to the global mobility industry, says that Alberta is feeling the impact and the mobility sector is feeling the pinch."The recent announcement by the US government that the heavily-debated Keystone XL pipeline won't be proceeding, the price of oil going down to USD35 per barrel, and the international backlash against the environmental impact of the oil sands have all served to put the brakes quite forcefully on the industry out there – and that, obviously, is a huge element of the international mobility sector."I think we saw that this year in Montreal, where, at the Canadian Employee Relocation Council (CERC) conference, firms and organisations which had been perennially participating and dispatching large numbers of delegates to the conference were just not in attendance. And that equally affects the service sector. The relocation management companies are rationalising and closing down offices."So we're seeing an exodus, we're seeing house prices falling, we're seeing the turning back of services offered. Obviously, as buyers of relocation services, these organisations are experiencing a period of very low productivity and expenditure, which is felt throughout the industry."Cindy Mulhall, former chair of the CERC board and a relocation specialist with decades of experience in the Canadian energy sector, agrees. "From what I can see, there are fewer assignments. Companies are shutting in wells, because if it's costing them more to get the gas out of the ground than they can sell it for, they're just not going to operate there."She adds, "There are significant lay-offs in the industry, so many people are out of work. That's putting more pressure on the individuals who are remaining behind. There may be fewer relocations and long-term assignments, but there are more business travellers, and that's causing quite an impact. I don't think employers recognise or fully understand the impact from a tax perspective, particularly on cross-border travel."Companies don't have structures in place to deal with that. If you're on an assignment, they have programmes and they have tax advisers, but I don't think many companies fully appreciate the impact the additional business travel is going to have on the business as well as the individuals."Cuts to in-house staff are having an effect on how business is being done in the Canadian mobility industry. "I think there's going to be more reliance on consultants or outsourcing of processes to vendors and suppliers, rather than using internal resources. They've had to lay off staff because they just don't have the numbers in need of relocating any more, and they're relying on the expertise of the relocation providers or the experts outside the company," says Ms Mulhall.While external providers are benefiting, they can't understand the full extent of the implications of assignments from the company perspective as far as payroll and benefits go."They can help you organise and get the people," says Ms Mulhall, "but you need to have someone internally who understands what needs to be looked at, what aspects need to be considered, and what the cost impact and return on investment will be to the company, because it's a huge cost to companies to be relocating people."And maybe they don't see it now if they're doing more business travelling, but when the industry picks up again, they will need people to stay on short-term or longer-term assignments in various locations, and they need to have that expertise. The external providers can't hold all of that knowledge and have all of the systems in place to manage that."

Immigration centre stage

Temporary Foreign Worker visas have become a hot topic for Canada over the last few years, with the previous, Conservative government taking steps to crack down on the number being issued."Temporary foreign workers were this massive political issue, because the people who were serving you at your AMT or your Tim Hortons are from all over the world," says Paul Coleman. "And it turns out that they're here on Temporary Foreign Worker visas. It's easy for a politician to jump up on a soapbox and say that these people are taking our jobs."While clamping down on the programme gained some support, it wasn't popular with business. "There are some specialised skills and knowledge where we don't have sufficient resources in Canada to fill those roles, and the government was putting barriers up to businesses looking to bring people in with those skill bases."From a business perspective, it was becoming quite difficult, because the government wasn't really taking business into account. That was the opinion at the time," Cindy Mulhall notes. There was work being done by the CERC, and in particular its president, Stephen Cryne, to address these issues, but there was a change to the set of requirements for getting foreign hires into Canada nonetheless.Mike Wilson, a Regulated Canadian Immigration Consultant for Canada Immigration Solutions, says, "Hiring or transferring temporary workers to Canada has undergone wholesale changes during the past year, with the clear demarcation of foreign worker recruitment as either requiring a Labour Market Impact Assessment (LMIA) or, increasingly, entrance through an LMIA-exempt International Mobility Program."He notes, however, that it's not all bad news. "While LMIAs appear fraught with delays, refusals and prohibitive costs, International Mobility Programs, such as Canadian Interests, the North American Free Trade Agreement (NAFTA) and the General Agreement on Trade in Services (GATS), have doubled foreign-national LMIA-exempt numbers over the last ten years."These programmes are aimed at providing economic and cultural benefits for Canada, and are based largely on reciprocity. Additionally, most work permits are generally 'open', giving more freedom of mobility to foreign workers."Recent changes mean that employers hiring through the International Mobility Programs now benefit from a direct online portal to Citizenship and Immigration Canada, the government body that deals with immigration matters."With the recent change of government, however, the future for temporary foreign workers is up for grabs. "We don't know what decisions they're going to make from an immigration perspective," Cindy Mulhall says. For now, it's a waiting game as the new government builds relationships with business and organisations such as the CERC so policy can be worked out.

New opportunities

While the low oil price presents a gloomy outlook for segments of the Canadian economy and mobility sector, it brings opportunities elsewhere.
Paul Coleman points out that the low price of oil drives down the value of the Canadian dollar, which, in turn, makes Canadian exports much more competitive."The non-oil-based industries, manufacturing producers, sellers of international commoditised products, and the people who are collecting US dollars, which is most Canadian operations – if you sell on the international markets, then you collect in US dollars and your operating base is Canadian dollars – have seen their operating costs go down, relatively speaking, and their revenues go up, because they're selling products in a stronger dollar unit. Cities like Montreal are experiencing an unprecedented boom."For the mobility sector in particular, Cindy Mulhall says, opportunities will spin out of changes to the way in which companies move talent around.
"I think the growth areas will be around the increased business travel as companies wrap their heads around what that means and what the tax implications are," she explains."Tax advisers are going to have to be a little more savvy and aware of the differences between the tax regimes and how the treaties work. "There are plenty of organisations that do that, but they typically do it from the perspective of expat assignments. So when you have individuals who are travelling a lot and maybe their personal tax adviser doesn't understand the differences, they're going to be having a huge tax impact and paying dual taxes."There will be scope for new technology to play a role. "I believe that there are going to be opportunities for companies to build mobile apps to help businesses track individual travel and see where it's going to be triggering an event, like how many days someone has been in the country, where it's getting close to that dollar threshold," says Cindy Mulhall.Looking a little further ahead, she adds, "I think that, when the industry picks up, there's going to be a huge need for temporary accommodation. Just before everything crashed, companies were doing oil drilling in remote locations, and they just don't have the resources there to support the individuals and their families."There will be a need for people to help find things, or even set up mobile infrastructure and facilities, bringing in trailers and setting up communities."Despite the slowdown, Ms Mulhall says, "There are some groups that are picking up. It generates opportunities to create small businesses when people are losing their jobs and they have that expertise to become consultants, or to help in underserved niches."So, while the problems presented to Canada by the low oil price won't go away overnight, there's more to the country's economy and mobility sector than the energy sector.

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