Despite Ottawa’s plan to limit migration to the country, employers continue to turn to low-wage foreign workers

Canadian employers continue to ramp up their recruitment of low-wage workers through the Temporary Foreign Worker Program this year, a trend at odds with the federal government’s plans to restrict migration to the country.

 

During the first quarter of 2024, employers received government approval to hire 28,730 people through the low-wage stream of the TFW program, an increase of 25 per cent from a year earlier, according to figures from Employment and Social Development Canada (ESDC). It was the highest quarterly number for such approvals in government records that date to 2016.

 

Over all, employers were authorized to hire more than 71,000 workers across all streams of the program between January and March – down from the previous quarter but up 13 per cent from the same period a year earlier.

 

“We’re seeing this incredible growth in the program at the same time as unemployment is just steadily rising,” said Catherine Connelly, a professor at McMaster University and the author of Enduring Work: Experiences with Canada’s Temporary Foreign Worker Program. “I’m quite sure that there are [local] people who could fill at least some of these positions.”

 

In March, the federal government said it would reduce the share of temporary residents to 5 per cent of the total population over the next three years over concerns that rapid population growth is straining access to housing and health care.

 

But since that announcement, the numbers have continued to climb. The number of temporary residents – a mix of workers, international students and asylum claimants – has grown to 2.8 million, or 6.8 per cent of the population, according to the most recent estimates from Statistics Canada. (The TFW program accounts for a small share of visa holders.)

Because of recent developments, the Bank of Canada suspects it will take longer than planned for the government to hit its 5-per-cent target. Last week, the central bank raised its population growth projections (for those 15 and older) to an average of 1.7 per cent in 2025 and 2026 from 1 per cent. (The bank needs to account for population growth as part of its economic forecasts.) It expects growth of 3.3 per cent this year, similar to the soaring expansion observed in 2023.

 

“Considerable uncertainty continues to surround the future path of net [non-permanent resident] flows,” the bank’s Monetary Policy Report said.

 

Economists on Bay Street have also expressed doubts about Ottawa’s timeline for lowering the temporary resident population. “Continued rapid growth of temporary worker and international student admissions suggests the first reductions may not come until late 2024 or even later, making it more difficult to meet the plan’s already-ambitious targets,” Marc Desormeaux, principal economist at Desjardins Securities, said in a recent client note.

 

The federal government will formally outline its plans this fall, alongside its usual targets for permanent resident admissions. To date, Ottawa has brought in a temporary cap on the issuance of study visas and has tightened some aspects of the TFW program.

 

Still, that program is more employer friendly than it was a few years ago. After changes made in 2022, companies in most industries can hire up to 20 per cent of their staff from the low-wage stream of the TFW program; the previous cap was 10 per cent. And employers in the hospitality and retail industries can use the program when local unemployment rates are 6 per cent and higher; previously, they could not.

 

The labour market was tight in 2021 and 2022, prompting the government to broaden access to temporary foreign workers. But the situation has changed drastically over the past two years. The number of job vacancies has fallen 44 per cent from a peak of roughly one million, and the unemployment rate has risen to 6.4 per cent from a record low of 4.8 per cent. The jobless rate is especially high for young people and recent immigrants.

 

Even so, the TFW program remains popular with employers. In some quarters, companies are authorized to hire more workers via the low-wage stream than in the agriculture stream. Cooks and food counter attendants are among the most sought after low-wage workers.

The ESDC numbers refer to the employer portion of the hiring process. To get an approval, companies must demonstrate that they can’t find a Canadian citizen or permanent resident to fill the position. After this, foreign workers need to get permits to begin their employment.

 

Dr. Connelly expects people will become angrier with the program if companies are relying on foreign workers when labour conditions are worsening.

 

“It’s such a contrast with everything that we were told previously about the Temporary Foreign Worker Program only being used when employers are desperate to hire and could not find Canadians,” she said.

 

 

 

This article was first reported by The Globe and Mail