Businesses wary as Trudeau announces tighter rules for low-wage temporary foreign workers

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Business groups are raising concerns about Ottawa’s decision to restrict the number of temporary foreign workers coming to Canada, warning that certain industries that are struggling to find workers could be adversely affected.

On Monday, Ottawa announced that employers will not be able to bring in foreign workers through the low-wage stream of the Temporary Foreign Workers Program (TFWP) in regions where the unemployment rate is six per cent or higher from Sept. 26 onwards.

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The low-wage stream includes cleaners, hotel attendants, food servers and administrative assistants and the move is expected to affect the retail, restaurant and hospitality sectors the most.

The government will make exceptions for food security sectors, such as agriculture, food processing and fish processing, as well as construction and healthcare.

Some business groups, though, are worried that sectors such as tourism and the restaurant industry, which are still facing labour shortages, could be dealt another blow by the move.

“We agree that the unemployment rate has been growing,” said Diana Palmerin-Velasco, a senior director at the Canadian Chamber of Commerce, a group that represents 200,000 businesses. “The issue is that those statistics do not look the same across the country. For sure, Toronto, Vancouver and Montreal are very likely to be saturated, but that doesn’t mean it is the same in Sudbury or Thunder Bay.”

She reiterated the need for the government to engage with employers and hear their concerns.

Dan Kelly, who heads the Canadian Federation of Independent Business (CFIB), which represents more than 97,000 small businesses, said the announcement was worrisome and would take a toll on small businesses. He added that the move seemed political.

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“The government is in a difficult position,” he said. “They are having to satisfy the politics of this with the economic realities and those are two things often difficult to square.”

On Monday, Trudeau said that “severe labour shortages” in the aftermath of the pandemic led the government to expand the temporary foreign workers program to help businesses through a tough time.

“They helped the economy and helped businesses make it through a challenging moment in our economic recovery,” Trudeau said at a press conference. “But today’s economy is different from two years ago. Inflation has started to come down, employment is higher, we no longer need as many temporary foreign workers.”

The prime minister urged Canadian businesses to invest in training and technology instead of increasing its reliance on “low-cost foreign labour.”

“For those who complain about worker shortages, here is my message, there is no better time to hire and invest in Canadian workers,” he said.

Aside from limiting the use of low-wage workers, the government is also capping the share of workforce any single company can hire through TFWP at 10 per cent, half the previous limit of 20 per cent. Low-wage workers hired through this program will also have their permits cut from two years to one.

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Monday’s announcement comes as the number of temporary residents in Canada — including students, workers and asylum seekers — has drastically increased in recent years, leading to calls from some quarters to tighten restrictions.

The steps announced Monday could lead to 65,000 fewer people participating in the TFWP, Employment Minister Randy Boissonnault said in a different press conference.

That figure represents just a small fraction of the 2.8 million non-permanent residents in the country, according to Statistics Canada.

Only about nine per cent or 250,000 entered the country through the TFWP.

In contrast, about 42 per cent of the total number of non-permanent residents are students and 44 per cent include post-graduate work permit holders, spouses of students, students of exchange programs and others. The remaining five per cent are asylum seekers.

Aside from temporary residents, Canada also has separate programs that admit about 500,000 permanent residents on an annual basis.

Many temporary residents who are already inside the country look to become permanent residents through those programs.

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“When we look at the number of people who came through the TFWP, it’s not this massive number that people are trying to make us believe,” said Canadian Chamber of Commerce’s Velasco.

When asked if the government has plans to reduce Canada’s overall immigration numbers, Trudeau said: “These are ongoing conversations that we are having and we are taking extremely seriously.”

“We are making sure the entire package makes as much sense as possible for the needs of Canadians and the economy,” he added.

He said that reducing the number of low-paid temporary workers is the “first step” that the government is taking.

The government might also bring changes to the high-wage stream of the temporary foreign workers program following a review in the coming months, he added.

Employers can use the temporary foreign workers program to hire foreign workers, but they often need to prove that they aren’t able to find a worker for that specific position in Canada. In order to do that, they must receive a federal government document called the Labour Market Impact Assessment (LMIA).

About 71,300 LMIAs were approved by the government in the first quarter, compared to 63,300 during the same period last year. Most applications were for farm workers, cooks, food-counter attendants, truck drivers and construction labourers.

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Some groups, however, illegally sell LMIA-approved jobs at extremely high rates to foreigners who are either outside the country or are already in Canada and are looking for ways to boost their immigration score in order to transition to a permanent resident from a temporary one.

One government officer that processes LMIA applications anonymously told the Financial Post last month that there weren’t enough checks and balances in place to properly assess the applications. The federal government, though, said it has increased inspections in this area in recent years.

Earlier this month, the TFWP was described as a breeding ground for slavery in a United Nations report.

Industry insiders say the demand for LMIAs has increased in recent years because recent changes to Canada’s points-based immigration system for skilled workers have made it tougher for prospective immigrants to qualify.

An LMIA-approved job provides applicants with extra points. As such, LMIAs are reportedly being sold at a higher price than before, ranging from $10,000 to about $70,000 in some cases.

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