New restrictions on foreign workers spark fears of exacerbated labor shortages across critical Canadian industries.
In a significant policy shift, Prime Minister Justin Trudeau has declared that Canada will impose strict regulations on its Temporary Foreign Worker (TFW) program, making it more difficult for businesses to hire low-wage workers abroad.
Impact of New Regulations on Key Canadian Industries
The new measures, set to take effect on September 26, 2024, include:
- Rejecting applications for low-wage TFWs in regions with unemployment rates of 6% or higher.
- Reducing the maximum percentage of TFWs in a company’s workforce from 20% to 10%.
- Limiting low-wage TFW contracts to one year instead of two.
- The changes exempt specific sectors, including agriculture, food processing, construction and healthcare.
With changes from earlier this year, the new measures will reduce the number of temporary foreign workers by about 65,000.
While Canada faced acute labor shortages during the pandemic, with job vacancies reaching one million and unemployment dropping to a record-low 4.9%, the situation has shifted.
Job vacancies have decreased significantly, and the unemployment rate has climbed to 6.4% as of July 2024, partly due to high interest rates constraining economic growth.
The government’s decision to tighten regulations addresses criticisms from economists who argued that the relaxed rules discouraged innovation and suppressed wages.
Statistics show the impact of the previous policy: temporary foreign worker permits increased by 88% from 98,025 in 2019 to 183,820 in 2023.
Trudeau acknowledged the program’s role in helping businesses recover from the pandemic but emphasized that economic conditions have changed.
Government Justification for Slashing the Temporary Foreign Worker Program
“We need Canadian businesses to invest in training and technology and not increase their reliance on low-cost foreign labor,” Trudeau told reporters.
“It’s not fair to Canadians struggling to find a good job, and it’s not fair to those temporary foreign workers, some of whom are being mistreated and exploited,” he said.
“To those who would complain about worker shortages, here’s my message: there is no better time to hire and invest in Canadian workers,” Trudeau said.
The Temporary Foreign Worker program allows employers in Canada to hire foreign nationals to fill temporary jobs when qualified Canadians are not available.
The program has come under criticism by labor advocates and, most recently, the UN, which called it “a breeding ground for contemporary forms of slavery” in a report this month.
UN special rapporteur Tomoya Obokata, a professor of human rights law at the University of York in the UK, said he received reports of abuse and of workers being underpaid, among other complaints.
Concerns Raised by Business Groups Over Worker Shortages
Some business groups, though, are worried that the move could deal another blow to sectors such as tourism and the restaurant industry, which are still facing labor shortages, reported the Financial Post.
“We agree that the unemployment rate has been growing,” said Diana Palmerin-Velasco, a senior director at the Canadian Chamber of Commerce, a group that represents 200,000 businesses.
“The issue is that those statistics do not look the same across the country. For sure, Toronto, Vancouver and Montreal are very likely to be saturated, but that doesn’t mean it is the same in Sudbury or Thunder Bay.”
She reiterated the need for the government to engage with employers and hear their concerns.
Dan Kelly, who heads the Canadian Federation of Independent Business (CFIB), representing more than 97,000 small businesses, said the announcement was worrisome and would take a toll on small businesses.
Just before Trudeau’s announcement this week, Canada’s Commissioner for Employers, Nancy Healey urged the government to maintain the number of workers admitted to the country under the Temporary Foreign Worker (TFW) program, improve processing times, simplify application processes and requirements, and provide the option of multi-employer work permits.
“Labor shortages persist and will continue in the next decade. More people are set to retire than enter the labor force.”
“Canada’s declining fertility rate leaves us with the lowest number of young people to enter the labor force and take on entry-level jobs,” Healey said in a letter to cabinet ministers.
Her letter, supported by the Canadian Chamber of Commerce and the Canadian Federation of Independent Business, among others, reflects the concerns of the broader business community.
Potential Long-Term Effects on Canada’s Labor Market
Healey pointed out that small businesses face a particularly acute problem; sector after sector has raised alarm bells about labor shortages.
“Labor is the backbone of a thriving economy, and the careful integration of both domestic and foreign workers into the Canadian workforce is essential for sustaining growth and innovation.” a labor immigration specialist, Charanpreet Kaur, said.
The Sach Immigration consultants added, “As we navigate economic fluctuations, we must prioritize creating opportunities for Canadians while recognizing the vital contributions of temporary foreign workers in sectors where their skills are indispensable.”
“The narrative around Canada’s Temporary Foreign Worker program is being driven by unsubstantiated anecdotes,” said Healey.
“The facts prove that the Temporary Foreign Worker Program has the necessary controls in place to protect foreign workers and to ensure that these foreign workers complement Canadian workers and sustain viable business operations.”
“Employers are doing their part to drive the Canadian economy and would greatly benefit from a federal government that enhances coordination between departments and champions evidence-based public policy.”
Healey called for better immigration pathways that allow newcomers to stay in Canada, emphasizing that immigration streams linked to job offers tend to result in better outcomes for both employers and workers.
The influx of temporary residents, including international students, foreign workers, and asylum seekers, has contributed to Canada’s population growth rate of 3.2%, one of the highest globally.
The Canadian Press reported that many temporary workers are employed in low-wage, unskilled positions in sectors such as retail and hospitality.
The top five jobs that saw the most significant number of TFW approvals last year were:
- General farm workers – 81,500
- Nursery and greenhouse workers – 15,400
- Cooks – 12,000
- Food service supervisors – 10,400
- Food counter attendants, kitchen helpers and related support occupations – 8,300
