Canadian businesses face new restrictions on hiring low-wage temporary foreign workers, part of a federal effort to encourage companies to prioritize local workers. The changes aim to shift hiring practices towards employing Canadians, permanent residents, and other local workers already in the country.
Under these new regulations:
- Employers can only hire up to 10% of their workforce through the low-wage stream of the Temporary Foreign Worker (TFW) program.
- Employers in regions with unemployment rates above 6% will not be allowed to hire through this program.
- Contracts for low-wage positions are generally capped at one year.
Exceptions are in place for specific industries, including healthcare and construction, where there is an acute demand for skilled labor.
Background on the Policy Shift
The federal government has tightened the rules of the TFW program after loosening them during the COVID-19 pandemic to address labor shortages. Since 2018, the low-wage stream has expanded significantly, with approved positions rising from 21,394 in 2018 to 83,654 in 2023.
The low-wage stream applies to positions where the offered wage is below the provincial or territorial median hourly wage. Employers are required to pay temporary foreign workers wages comparable to those paid to Canadians and permanent residents doing similar jobs with the same level of experience.
Economists, like Christopher Worswick from Carleton University, have expressed concerns that the TFW program may be limiting wage growth by allowing businesses to hire foreign workers rather than raising wages to attract local talent. Worswick supports the new restrictions but believes the program should eventually be phased out in favor of prioritizing high-skilled permanent immigration.
Impact on Businesses
Some business owners argue that the TFW program is essential for filling positions they struggle to staff locally. Michael Aitken, owner of El Mariachi Tacos and Churros in Mississauga, Ontario, says his restaurant relies heavily on the program, employing 14 cooks, two bartenders, and a food service supervisor from Mexico. Without these workers, Aitken fears his restaurant might close its doors.
The hospitality industry has become a significant user of the TFW program. In addition to agriculture, restaurants have been among the top employers of temporary foreign workers, with roles such as cooks, food service supervisors, and food counter attendants being highly sought after.
A Call for a New Approach
Restaurants Canada, an advocacy group for the industry, supports moving away from the TFW program but calls for more government support during the transition. The organization has proposed a “matching” program that would connect newcomers and asylum claimants with vacant positions in restaurants, providing the necessary training to help them succeed.
Maximilien Roy, Vice-President of Restaurants Canada, emphasized that the restaurant industry still faces a significant labor shortage, with approximately 73,000 job vacancies. The group is urging the government to help integrate more local workers into the workforce.
Meanwhile, critics from the Migrant Workers Alliance for Change argue that reducing the number of migrant workers won’t address their exploitation. Instead, they advocate for granting migrant workers permanent resident status to ensure they have equal rights and protections.
With Canada’s unemployment rate reaching 6.6% in August, including a sharp rise in youth unemployment to 14.5%, the federal government insists businesses should invest in local workers. The government has committed over $3 billion annually for skills training and continues to work closely with industry groups like Restaurants Canada to address labor shortages.
