Overview
In an effort to preserve domestic job prospects and calm worries about wage suppression, Canada is taking action to limit the employment of low-paid temporary foreign workers (TFWs),
Starting September 26, 2024, Ottawa will cap the number of low-wage TFWs that companies can hire, particularly in regions with unemployment rates of 6% or higher.
This follows the announcement last week by Quebec of its own restrictions on low-wage temporary foreign workers, including a six-month ban in Montreal that will go into force next month.
It represents a significant shift in the country’s approach to managing the Temporary Foreign Worker Program (TFWP).
Prime Minister Justin Trudeau made the announcement on Monday in Halifax, where the Liberal cabinet is meeting for a summer retreat.
“We are tightening the rules and restricting eligibility to reduce the number of low-wage, temporary foreign workers in Canada, with exceptions in certain industries like health care, construction and food security,” Trudeau said.
Background on the Temporary Foreign Worker Program
The TFWP was first created to help firms who were unable to find suitable Canadian workers during short-term labor shortages in Canada by enabling them to hire foreign workers. The program has expanded dramatically over time, and TFWs currently hold a growing number of low-wage jobs.
This has led to discussions on the program’s effects on the labor market in Canada, raising issues such as worries that it might be abused to drive down wages and prevent hiring Canadians.
New Restrictions and Their Implications
The new measures, announced by the Canadian government, place a cap of 10% on the number of employees that companies can hire through the low-wage stream of the Temporary Foreign Worker (TFW) Program.
Additionally, the maximum duration of employment for workers in this stream will be reduced from two years to one. These changes, effective September 26, 2024, aim to limit the reliance on foreign labor.
However, sectors such as healthcare, construction, and food security will be exempt from these restrictions, acknowledging the critical demand in these industries.
These changes mean that employers will need to adjust their hiring strategies, especially in regions with higher unemployment rates, and could face increased costs if they need to attract more Canadian workers. The cap and reduced duration also aim to prevent the TFWP from being used as a long-term solution to labor shortages, ensuring that it remains a temporary measure as intended.
On the other hand, these measures could also have positive effects on the economy by promoting fair wages and reducing the potential for exploitation of foreign workers. By limiting the number of low-wage TFWs, the government is taking steps to protect vulnerable workers from being subjected to poor working conditions and unfair treatment. This aligns with broader efforts to promote social justice and equity in the labor market.
All things taken into account, these new limitations are an important component of the government’s larger immigration and labor policy reforms, which aim to safeguard domestic workers and advance ethical employment practices nationwide.
Reasons Behind This Reform
Prime Minister Justin Trudeau stated that the recent changes to the Temporary Foreign Worker (TFW) Program were driven by shifts in Canada’s economic landscape.
“Right now, we know that there are more Canadians qualified to fill open positions,” Randy Boissonnault
During the pandemic, the government eased TFWP restrictions to help businesses facing labor shortages, with nearly one million job vacancies and a record-low unemployment rate of 4.9% in 2022. However, the situation has since changed, with job vacancies declining and unemployment rising to 6.4% by July 2024.
Trudeau emphasized that Canada no longer needs as many temporary foreign workers and that businesses should focus on investing in training and technology instead of relying on low-cost foreign labor.
“We need Canadian businesses to invest in training and technology, not increasing their reliance on low-cost foreign labor,” Trudeau said at a press conference.
He also pointed out concerns about the mistreatment and exploitation of TFWs, further justifying the need to reduce reliance on this labor source.
The announcement comes after criticism from a UN official, who described Canada’s TFWP as a “breeding ground for contemporary forms of slavery,” urging for permanent resident status to be granted to migrant workers to prevent exploitation. However, some critics, like activist Chris Ramsaroop, argue that the changes do not adequately protect the rights of migrant workers and may lead to further issues, such as deportations. Despite the government’s efforts, industries like agriculture, construction, and healthcare, which heavily rely on TFWs, remain unaffected by these changes.
Looking ahead, Immigration Minister Marc Miller hinted at further measures and discussions on adjusting the number of permanent residents, indicating that the government is still exploring options to address these complex issues.
Miller said “options are currently on the table,” but “it’s not a discussion that’s been had by cabinet yet.”
Upcoming Changes and Policy Reviews
Prime Minister Justin Trudeau announced that his government is also considering adjustments to the high-wage stream of the Temporary Foreign Worker (TFW) Program and other related policies. This includes a potential reduction in the annual targets for permanent residency, signaling a significant shift in the Liberal government’s immigration strategy.
This fall, Ottawa plans to unveil a comprehensive immigration plan that will address both permanent and temporary residents, with Employment Minister Randy Boissonnault exploring further modifications to the high-wage stream of the TFWP.
“We’re making sure that the entire package makes as much sense as possible for the needs of Canadians and for the needs of our economy,” Trudeau said.
To ensure that these changes align with the needs of Canadians and the economy, a 90-day review will be conducted, focusing on unemployment rates and other economic indicators.
Economist Mike Moffatt from the Smart Prosperity Institute views these moves as a positive first step but suggests that more extensive and faster actions are necessary. “But only a first step,” Moffatt said.
He pointed out that there has been a significant rise in high-wage administrative assistants being hired from abroad, indicating the need for further restrictions on various streams of foreign workers.
Trudeau emphasized that the government aims to ensure that all changes make sense for both the Canadian economy and the workforce, with a focus on long-term benefits.
The use of low-wage temporary foreign workers will be restricted by Ottawa, which represents a major change in immigration and labor laws for Canada. The new regulations are an essential step in safeguarding Canadian workers, guaranteeing fair salaries, and advancing social fairness, even though they may provide difficulties for employers. The government’s ongoing implementation of more comprehensive immigration policies is anticipated to have a significant impact on how the Canadian labor market develops in the future.
