2024 Updates to Canada’s Temporary Foreign Worker Program: What You Should Know

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LMIA.ca Editorial

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The Temporary Foreign Worker (TFW) Program has long been a key pillar in Canada’s immigration and labour market strategy, offering employers a legal route to hire foreign workers when qualified Canadians and permanent residents are not available. Introduced as an exceptional measure, the TFW Program is meant to address short-term labour shortages, enabling Canadian businesses to continue operating and meeting demand.

However, the program has not been without controversy. In recent years, critics have argued that some employers misuse the TFW Program as a means to bypass hiring local talent, thereby reducing opportunities for Canadians and driving down wages. This misuse has prompted the Government of Canada to consider implementing tighter restrictions and enhanced compliance measures to protect the integrity of the program and ensure it is used as intended.

Earlier this month, Randy Boissonnault, Minister of Employment, Workforce Development, and Official Languages, met with various business organizations to convey the government’s concern over the TFW Program’s misuse. He indicated that the government was contemplating reducing access to the program and enhancing compliance efforts to prevent fraud and inappropriate use. As a result of this consultation and considering the current labour market conditions, Minister Boissonnault announced new measures aimed at reducing employers’ reliance on the program and combating its misuse, which will take effect by September 26, 2024.

This blog post will delve into the recent changes to the TFW Program, the reasons behind these reforms, and what they mean for Canadian employers, foreign workers, and the broader Canadian workforce.

Recent Changes to the TFW Program

As of September 26, 2024, the Government of Canada will implement three significant changes to the TFW Program, specifically targeting the Low-Wage Stream, which has been the focus of much scrutiny due to concerns about wage suppression and exploitation of foreign workers. These changes are:

1. Refusal to Process LMIAs in Areas with High Unemployment Rates

A key requirement for employers looking to hire foreign workers through the TFW Program is the Labour Market Impact Assessment (LMIA), a document that demonstrates the employer’s inability to find suitable Canadian candidates for the position. Moving forward, the government will refuse to process LMIAs for the Low-Wage Stream in census metropolitan areas where the unemployment rate is 6% or higher.

This measure aims to ensure that employers in regions with a sufficient pool of unemployed local workers are incentivized to hire domestically rather than rely on foreign labour. However, certain industries critical to Canada’s food security and infrastructure will be exempt from this restriction. Specifically, seasonal and non-seasonal jobs in primary agriculture, food processing, fish processing, construction, and healthcare will not be affected by this change, recognizing the essential nature of these sectors in maintaining Canada’s economic and social stability.

2. Limit on the Proportion of TFWs in the Workforce

The government has introduced a new cap limiting the number of temporary foreign workers an employer can hire to 10% of their total workforce in the Low-Wage Stream. This is a further reduction from the March 2024 limit, which already reduced the allowable percentage of foreign workers. The exceptions to this rule, similar to the LMIA changes, apply to seasonal and non-seasonal jobs in sectors crucial to food security (agriculture and food processing), healthcare, and construction.

This cap is designed to encourage employers to look first to Canadian workers when filling vacancies. Employers will need to explore alternative recruitment strategies, such as targeting underrepresented groups in the Canadian workforce, including young people, newcomers, and persons with disabilities, who have historically been underutilized in the labour market.

3. Reduction of Maximum Employment Duration for Low-Wage Stream Workers

Previously, temporary foreign workers employed through the Low-Wage Stream could work for up to two years before needing to reapply. Starting in late September, this maximum duration will be cut to just one year. This change reflects the government’s objective of making the TFW Program truly “temporary,” reinforcing the notion that employers should not rely on foreign labour as a long-term solution for staffing challenges.

Reducing the duration of employment for foreign workers is also intended to prompt employers to invest in training and upskilling their existing workforce, so they can fill gaps internally. Canadian employers must take more responsibility for developing their workforce, and not solely depend on external sources of labour.

Why Are These Changes Necessary?

Canada is currently facing a paradoxical labour market scenario. While certain regions and sectors continue to experience significant labour shortages, other areas of the country are dealing with high levels of unemployment. The purpose of the TFW Program is to bridge temporary labour gaps without displacing Canadian workers or compromising wage levels. However, its misuse by certain employers has undermined this goal, leading to situations where Canadians, especially those in low-wage jobs, are passed over in favour of foreign workers who may be willing to work for less.

By imposing tighter restrictions, the government hopes to:

  • Protect Canadian Workers: Ensure that Canadians and permanent residents are given priority for job opportunities and that employers actively seek to hire from the domestic labour pool before turning to foreign workers.
  • Prevent Wage Suppression: Limit the possibility of wage suppression by ensuring that foreign workers are not used as a source of cheap labour that undercuts local wage levels.
  • Address Regional Disparities: Ensure that the TFW Program is used only in regions that genuinely face labour shortages, rather than in areas where local workers are available but overlooked.

These new changes also come in response to the broader social and economic challenges Canada faces, including demographic shifts and increasing global competition for talent. To remain competitive in a global economy, Canada must invest in its workforce by supporting training, education, and skills development initiatives that help Canadian workers adapt to evolving labour market needs.

Impact on Canadian Employers and Foreign Workers

For Canadian employers, these new restrictions will mean reevaluating their hiring practices and focusing on recruiting and retaining local talent. Employers may need to invest more heavily in workforce development, offering training and upskilling programs to ensure that Canadian workers are equipped with the skills necessary to meet their business needs.

In sectors where foreign workers are essential, such as agriculture, food processing, healthcare, and construction, the exemptions to the new rules will provide some relief. However, employers in these sectors will still need to demonstrate a genuine labour market need to qualify for the TFW Program.

For foreign workers, particularly those in the Low-Wage Stream, these changes could lead to reduced opportunities for long-term employment in Canada. While the TFW Program will still provide a pathway for foreign workers to gain experience and income, it will be under tighter restrictions, with a greater emphasis on ensuring that temporary foreign workers are truly a last resort for Canadian employers.

Looking Ahead

The Government of Canada has made it clear that it will continue to monitor the labour market and make further adjustments to the TFW Program as needed. In the next 90 days, a review will be undertaken to assess potential changes to the High-Wage Stream, as well as existing LMIA applications that have not yet been filled. Additional restrictions may also be introduced for certain sectors or rural areas, depending on the outcomes of this review.

Canada’s approach to temporary foreign workers is evolving, with a renewed focus on balancing the needs of employers with the protection of local workers. As the country navigates these changes, the government remains committed to ensuring that the TFW Program serves its original purpose—addressing genuine labour shortages—while encouraging employers to invest in Canada’s workforce and reducing long-term dependence on foreign labour.