'Every CEO is going to look to his or her HR team and say, 'Okay, please explain to me what that means'"
With the federal government announcing more restrictions to the use of temporary foreign workers in Canada, employers are being advised to start planning “right now” for significant labour market changes.
Prime Minister Justin Trudeau announced Wednesday a raft of new limits to the temporary foreign worker (TFW) immigration stream, including a lower cap on how many TFWs employers may hire and for how long.
"We are tightening the rules and restricting eligibility to reduce the number of low-wage, temporary foreign workers in Canada, with exceptions in certain industries like health care, construction and food security,” Trudeau said at a press conference in Halifax, adding that TFWs “being mistreated and exploited” is contributing to the move.
‘Instability and uncertainty’: TFW limits in Canada
Starting Sept. 26, the federal government will not process Labour Market Impact Assessments (LMIAs) in the low-wage stream, applicable to metropolitan areas with an unemployment rate of 6% or higher, the government announced.
The current national unemployment rate is 6.4 per cent.
It is also reducing how much an employer’s workforce may consist of TFWs, from 20% to 10%, and the length of time a TFW may be employed to one year, down from two.
“Right now, I think [employers] need to plan … these changes are coming in pretty quickly, without much study or review,” says Robert Russo, lecturer in labour and immigration law at the Peter A. Allard School of Law at U.B.C.
“I think probably there's a misconception here that low-wage work and ‘unskilled work’ go together. These TFW low-wage positions, many of them are filled by restaurant workers who are food preparation handlers — that's not unskilled work, that takes a lot of training, it takes safety training.”
Additionally, the shorter allowable length of employment for low-wage TFWs will add “an element of instability and uncertainty” to an already difficult situation for employers, who will now have to adjust their hiring strategies to shorter timelines, Russo says.
“It's going to create some bureaucratic delays to have to go through the process every year,” he adds.
Montreal targeted for TFW freeze
The announcement from the federal government follows a six-month cap on TFW worker hires in Montreal that came down last week, adding to an already contentious labour market situation in the province.
The freeze includes extensions to current TFWs working within the island of Montreal.
“I expect that every CEO is going to look to his or her HR team and say, ‘Okay, please explain to me what that means.’ And it's not that simple,” says Michel Leblanc, president and CEO of the Chamber of Commerce of Metropolitan Montreal.
Leblanc points to housing as a main driver of the freeze on TFWs in Montreal.
“In Montreal, the question of housing became very problematic … we have this shortage of housing, and it became clear about two years ago that we could not talk about immigration, temporary workers, without getting pulled into the housing shortage question, and in a sense, we could not talk about the need for talent because it led us to talk about the need for housing.”
Legault needs to 'regain control' of immigration with creation of new office: Quebec Liberals https://t.co/HN2kyijV24
— CTV Montreal (@CTVMontreal) August 28, 2024
While larger organizations can move TFWs away from Montreal to avoid the freeze on permit extensions, as well as more resources in general to alleviate the blow of the limits on hiring, Leblanc says smaller employers in Montreal will have difficult waters to navigate.
“It means that you have to look at your human resources, you have to identify who's on that type of permit and whether those permits have to be renewed over the next six months,” he says. “If you are a larger business and you have facilities outside of the Montreal Island … you can move those people, you're going to keep them. But if you cannot, you're going to lose those people.”
Unemployment in Canada not a ‘zero-sum game’
Leblanc is sceptical that the freeze on low-wage TFW applications will alleviate any shortages of labour, even in Montreal where the unemployment rate is 6.6 per cent. If an employer hired an employee through the TFW program, he says, that would indicate it was unable to find the talent it needed locally.
“This thought that, suddenly, because the employment rate reached 6.4%, those people are available, around on the market, we don't believe that that's the case. We believe that not only will you lose the person that you had hired for various reasons, but you will not necessarily be able to fulfill the opening that letting that person go will create.”
Even if an organization could raise wages for TFWs, that in itself could introduce further complications, says Leblanc: “If you increase the wages for one employee, how will you explain to the other employees that you do not increase [their] wages?”
Russo points out what he says is a misconception that when TFWs arrive in Canada, they are directly depriving a Canadian of that job. This is “empirically” untrue, he says, as many low-wage positions that TFWs typically fill are not desirable by Canadians — for example, jobs in agriculture, which are exempt from the limits anyway, along with construction and health care.
Recommendations for Canadian employers with limits on TFW program
The service industry is not exempt, however — the sector that Russo predicts will be hardest hit.
“Canadians don't want to do that work — it's not easy work, it's hard work. The pay, the environment, isn't good,” he says.
“It would be great if you could just get Canadians to fill these jobs but the evidence I've seen is that, yes, you will get some uptick in employment, for maybe, particularly younger Canadians who might fill this work, but it's not going to fill in all of it. It's going to cause a lot of hardship for these industries, and I think one of the unintended impacts is going to be a rise in prices.”
As the federal and provincial limits on hiring TFWs do not leave much room for employers to manoeuvre, Russo says tapping into other government programs is the closest alternative. However, options such as the Provincial Nominee Program and other immigration streams are more expensive and more restrictive than the TFWP.
“Obviously, they can try to fill those jobs with Canadians or permanent residents,” he says. “[They can] try to offer appealing wages or some other benefits that might bring in some Canadians to the work, but to get an LMIA, you already have to do that, to qualify to get a TFW. So that's not really a practical solution for the problem.
“In the end, I think they're going to take a hit from these changes.”
