On August 26, 2024, the federal government announced new restrictions on the hiring of low-wage temporary foreign workers in Canada. This is a significant shift at policy targeting the low-wage stream of the Temporary Foreign Worker Program (TFWP).
Under the federal TFWP, low-wage jobs are those which pay below the median hourly wage for the province in which the job is based. This move aims to encourage businesses to prioritize hiring Canadians, something that is not possible in every industry. Ottawa is also contemplating lowering its immigration targets for permanent residents – signaling a broader second look at Canada's immigration policies.
Effective September 26, 2024, the government will refuse applications for low-wage temporary foreign workers in regions with an unemployment rate of 6% or higher. Additionally, employers will now be limited to hiring a maximum of 10% of their low-wage workforce through the TFWP. This is a significant reduction from the previous allowance of 20% cap applicable to low-wage Labour Market Impact Assessments (LMIAs). Workers hired under the low-wage stream will also see their maximum employment duration reduced from two years to one year.
Many of these changes mirror the TFWP rules in place prior to the COVID-19 pandemic. The government emphasized that the economic landscape has changed since the pandemic, and it believes Canada no longer needs as many temporary foreign workers. This type of cyclical expansion and contraction of the TFWP has happened several times for similar stated reasons. As businesses struggle to fill positions, it is likely we will see another phase of expansion in the future. For now, the TFWP will become more difficult to access in the low-wage stream.
Implications for employers
The announcement has significant implications for employers who rely heavily on low-wage temporary foreign workers. Sectors such as health care and construction, which will have some exceptions to the new rules, may still face challenges in meeting their labour needs. Employers in other industries will need to adjust their hiring practices and immigration planning. This announcement will require businesses to significantly rethink their workforce strategies.
Since its inception, the TFWP has been a critical tool for Canadian employers to address labour shortages. As the federal government continues to restrict the TFWP, employers will need to find new ways to meet staffing demands. There are many businesses that rely on low-wage temporary foreign workers to meet labour needs as Canadians are just not available in the industry or region. Those businesses will struggle while these restrictions remain in place.
Key takeaways
The new restrictions on low-wage temporary foreign workers represent a significant policy shift aimed at reducing reliance on foreign labour and encouraging businesses to invest in the Canadian workforce. Whether these policy changes will achieve that goal is yet to be seen. It is very likely Canada will see a shift back to these programs as labour shortages continue to impact certain industries and the current Canadian workforce ages to retirement. As the government continues to review immigration policies, further changes may be on the horizon for both temporary and permanent immigration streams.
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