Canada to Tighten Low-Wage Foreign Worker Rules, Weighs Reducing Immigration Targets

In response to mounting criticism over the surge in temporary foreign workers, Prime Minister Justin Trudeau is urging Canadian businesses to prioritize hiring locally. As his government rolls out new restrictions to limit the intake of low-wage temporary foreign workers, the focus shifts to bolstering the domestic workforce.

Speaking during the Liberal cabinet retreat in Halifax, Trudeau emphasized that the economic landscape in Canada has evolved since the pandemic, rendering the previous leniencies on hiring foreign workers less necessary. “We need Canadian businesses to invest in training and technology and not increase their reliance on low-cost foreign labor,” Trudeau stated, highlighting the importance of fair opportunities for Canadians and the ethical treatment of foreign workers. He added that while the relaxed rules were initially a response to labor shortages during the pandemic, the current economic climate necessitates a shift in approach.

As part of the new measures, which will take effect on September 26, the government will reject applications for low-wage temporary foreign workers in regions where the unemployment rate exceeds six percent. Additionally, the proportion of temporary foreign workers that businesses can hire will be capped at 10 percent of their workforce, down from the previous 20 percent. Workers brought in through this program will now be limited to a one-year stay, a reduction from the previous two-year term. Exceptions to these rules will be made for sectors like health care and construction, where labor shortages remain critical.

Trudeau’s announcement is the latest in a series of efforts by the federal government to curb the number of temporary workers entering the country, a move partly driven by concerns over the impact on Canada’s labor market and housing affordability. The influx of foreign workers has been a contentious issue, with some arguing that it depresses wages and dissuades businesses from investing in innovative practices.

When the federal government eased restrictions on the temporary foreign worker program in 2022, the country was grappling with nearly one million job vacancies, and the unemployment rate had plummeted to a historic low of 4.9 percent. However, the economic situation has since changed, with the unemployment rate climbing to 6.4 percent in July, fueled by high interest rates and slower economic growth. This shift has led economists to question the continued relaxation of these rules, suggesting that it may have discouraged businesses from investing in Canadian workers and innovation.

As for the broader immigration targets, Trudeau indicated that discussions are ongoing. The possibility of reducing immigration targets for permanent residents is being considered, although no definitive decisions have been made. This comes amid growing concerns about housing affordability, which has been exacerbated by Canada’s strong population growth in recent years.

The latest data from Immigration, Refugees and Citizenship Canada reveals that 183,820 temporary foreign worker permits were issued in 2023, marking an 88 percent increase from the 98,025 permits issued in 2019. This significant rise has fueled debates about the long-term sustainability of such a high influx of foreign workers, particularly in an economy that is beginning to show signs of strain.

Trudeau’s call to action is clear: now is the time for Canadian businesses to pivot towards investing in local talent. “To those who would complain about worker shortages, here’s my message: there is no better time to hire and invest in Canadian workers,” Trudeau affirmed, signaling a decisive shift in the government’s approach to managing Canada’s labor market.