Feds plan to sharp cut low-wage stream of temporary foreign worker program, sources say

The federal government is planning to sharply cut the low-wage stream of the temporary foreign worker program back to prepandemic levels, government sources say, amid criticism of its growing use by Canadian employers.

 

Reliance on the low-wage stream has shot up since 2022, when Ottawa agreed to ease access to the program in response to calls from restaurant owners and other employers who said they were struggling to find staff after months of pandemic restrictions.

 

The 2022 changes included increasing the cap on the proportion of low-wage temporary foreign workers that an employer can hire to 20 per cent, or even 30 per cent in some sectors such as accommodation and food services, up from 10 per cent. It also shelved a rule that barred employers in retail and hospitality from hiring certain low-wage workers when the local unemployment rate was 6 per cent or higher.

 

Federal Employment Minister Randy Boissonnault announced several measures and proposals last week that he said were aimed at reducing the use of temporary foreign workers in Canada, including higher fees and stronger enforcement of caps.

Government records show Ottawa approved 83,643 temporary foreign worker positions in the low-wage stream in 2023, up from 28,121 in 2019 prior to the pandemic.

 

Two senior government officials told The Globe and Mail Wednesday that the announcement should be viewed as the initial steps, with more moves to come.

 

The Globe is not identifying the two officials as they were not authorized to comment publicly on the plans. The timing of when further restrictions will be announced has not been decided, they said.

 

The temporary foreign worker program was singled out for criticism in a recent United Nations report, which described it as a “breeding ground for contemporary forms of slavery.”

 

Business groups are pushing back this week on that criticism, rejecting the UN report as an over-the-top analysis that plays down the fact that the vast majority of placements are successful.

 

Immigration has emerged as a top political issue, with Conservative Leader Pierre Poilievre regularly accusing the Liberal government of mismanaging the file, leading to countrywide housing pressures. He has vowed to link annual immigration targets to the number of homes being built. Mr. Poilievre has also criticized the government’s handling of the temporary foreign worker program, saying it should not be used to suppress Canadian wages.

 

During the first quarter of 2024, employers received government approval to hire 28,730 people through the low-wage stream of the temporary foreign worker program, an increase of 25 per cent from a year earlier, according to figures from Employment and Social Development Canada.

 

Statistics Canada reported last month that the job vacancy rate declined to 3.1 per cent in May, 2024, in line with prepandemic levels, after reaching a peak of 5.7 per cent in early 2022.

 

Business leaders acknowledge that labour shortages are not as dire as they were two years ago, but insist that the low-wage stream should continue in some form.

 

“The Canadian Chamber of Commerce is very supportive of addressing the misuse of the program,” said Diana Palmerin-Velasco, the chamber’s senior director for the future of work. “But that doesn’t mean that the existence of the program – that is vital for so many sectors of the economy – is a problem.”

 

Ms. Palmerin-Velasco said critics fail to appreciate the fact that the program is often used to fill job vacancies in regions of the country that do not have a large pool of available labour.

 

She also takes issue with the assumption that employers are hiring foreign workers to save money, noting that employers are on the hook for travel and other expenses.

 

Dan Kelly, president of the Canadian Federation of Independent Business, said temporary foreign worker programs have been around for decades and have frequently been tightened or loosened over the years based on evolving labour-market needs.

 

He said the government’s moves to ease access to the program in 2022 were entirely justified at the time.

“There’s absolutely no question that coming out of the pandemic, the labour market was broken. There were hundreds of thousands of vacant positions, particularly in lower-skilled occupational categories, that desperately needed filling,” he said.

 

Mr. Kelly said he understands that Ottawa is now under pressure to cap access to the low-wage stream, but also urged the government to find the right balance.

 

“The challenge for government is I think most of them know that the politically popular solution is at odds with the economically viable solution,” he said. “Yes, the labour market has cooled a bit in Canada, but if we take out the temporary foreign worker program, then you better not complain about the line at the local restaurant or the increase in menu prices.”

 

Mike Moffatt, an assistant professor of business, economics and public policy at Western University who has previously advised the Liberal cabinet, said the 2022 changes went too far. He said reducing the use of the temporary foreign worker program would be good for wages in Canada, would help students find work and would encourage businesses to innovate.

 

He said he questions why fast-food restaurants in college towns such as London, Ont., are using the program.

 

“We’ve got thousands of students, thousands of international students, and we can’t find somebody to work at a Dairy Queen next to a college? It just doesn’t seem reasonable to me,” he said. “I think we have lost the plot here.”

 

 

 

 

This article was first reported by The Globe and Mail