The job action by Canada's foreign service officers is causing a slowdown in visa applications, which could result in big costs to the economy.

The federal government and the union representing diplomats and immigration officers abroad have been locked in a contract negotiation battle for months. As part of escalating job action measures, diplomats at key visa application centres — including Beijing, Delhi, Sao Paolo and Mexico City — have withdrawn their services.

"The applications are just piling up," said Tim Edwards, head of the the Professional Association of Foreign Service Officers. The number of visas issued from offices in major centres abroad dropped 60 to 65 per cent in June, he said, and overall, the issuance rate is down 25 per cent.

Across the board, the backlog is growing five per cent per week, and in the bigger centres, it's 10 to 20 per cent per week, said Edwards. At more than half of the 51 foreign visa application centres, the processing times are exceeding the immigration department's 14-day target.

Citizenship and Immigration Minister Jason Kenney's office says all visa offices remain open and are providing services and that the department is "closely monitoring the situation."

Kenney was asked about the visa situation on Tuesday while making an announcement about passports.

'The crunch is coming for September admissions, [foreign students] will need their visas by early to mid-August'—Paul Brennan, Association of Canadian Community Colleges

"In the last federal budget, the government dedicated an additional $22 million a year to improving visa processing, so while we are seeing some short-term slowdowns as a result of the strike, we hope to see mid- to long-term recovery because of the investments that we are making," he said.

The slowdown has the tourism and education sectors worried. People who need a visa to come to Canada, including tourists from big markets such as China, Mexico and India, are being warned to apply as far in advance as possible and to apply online to cut down wait times.

Kenney's office said every visa office has core staff that have been deemed "essential" and are not participating in the job action, and there are other staff who are not part of the union because they are "locally engaged" hires.

But those staff members don't have the authority to approve or decline a visa application, according to the union, and adding that staff, in some cases retirees who are being sent abroad, is not making up the shortfall caused by striking workers.

Summer is the peak season for travel, and the Tourism Industry Association of Canada is warning of huge losses because of the labour dispute. The group's president, David Goldstein, said in a statement last week that travellers are abandoning their plans to visit Canada because they were told about visa delays and that the visa system is "being held hostage."

"No matter what side of this labour dispute you find yourself on, there is clearly one loser — the Canadian tourism industry that stands to lose over a quarter of a billion dollars of business this year," he said.

Goldstein pegged the potential price tag at $280 million for 2013, but said the cost to Canada's reputation will be much higher, "as there are plenty of other more accessible countries happy to welcome their business."

Students worried about visas

The education sector is also taking a hit because the visa slowdown is affecting international students who are preparing to come to Canada.

"The crunch is coming for September admissions, they will need their visas by early to mid-August," said Paul Brennan, vice-president of international partnerships at the Association of Canadian Community Colleges. "We're quite worried that unless this is resolved or special measures are taken students will not get their visas in time."

International students are a growing economic contributor and it's a sector that the federal government and education community have been working hard to promote. The efforts are paying off, as the number of students from India alone, just studying at colleges, not universities, has jumped from 1,500 to 8,000 over the last four years.

The ACCC has an estimate that international education is worth $8.1 billion to the Canadian economy per year.

Foreign service officers are involved in the marketing efforts and are great allies, Brennan said, but they've scaled back on that work because of their job action. He's worried progress made in recent years will suffer a setback if the dispute drags on much longer.

Brazil is set to send 1,200 students to Canada on government scholarships in the coming year and a lot of them are anxious about getting their visa on time, Brennan said. If the delays persist, they may end up abandoning Canada and going to the U.S. or elsewhere, he said.

'Fair' offer on the table

Even if the government takes measures to speed up the visas, he's worried word-of-mouth about the slowdown will cause lasting damage to Canada's reputation as an education destination.

The union says the service withdrawals are a direct result of the government's refusal to engage meaningfully with its employees and to put a fair offer on the table.

The union is advocating for "equal pay for equal work," asking for salary increases to keep foreign service officers on par with other public servants who do comparable work.

But Treasury Board, the department responsible for contract negotiations, says the government has put forward a fair offer, one that is "fair to employees and fair for taxpayers," according to a spokesman for Treasury Board President Tony Clement.

"It is unfortunate that the union is attempting to take their labour demands out on Canadians," press secretary Matthew Conway said. "The foreign service is a well-paid and highly sought after posting. In addition to salaries that often go into six figures, foreign services workers enjoy generous benefits worth tens of thousands of dollars per individual."

The union disputes the government's claims about the benefits, and Edwards said if the government was really being fair, it would be willing to discuss the wage gap issue.

The last time the two sides sat down was June 5, and the government presented the exact same offer as it did 20 months ago, said Edwards. There are no new talks scheduled.