Canada’s New Temporary Foreign Worker Policy: A Shift Towards Canadian Labor

Today Prime Minister Justin Trudeau announced that Canada will reduce the number of low-wage temporary foreign workers that businesses can hire, urging employers to prioritize Canadian workers instead. This change marks a major adjustment in the country’s approach to labor, reflecting evolving economic conditions and a renewed focus on strengthening the domestic workforce.

A Reduction in Temporary Foreign Workers

As part of the new policy, the federal government will cut participation in the Temporary Foreign Worker (TFW) program by approximately 65,000 workers. Employment Minister Randy Boissonnault, speaking at the Liberal cabinet retreat in Halifax, highlighted the government’s intent to limit the use of low-wage foreign labor in regions with unemployment rates exceeding six percent. For most sectors, this means that employers will now be restricted to hiring a maximum of 10 percent of their workforce from the TFW program, a significant reduction from the previous cap of 20 percent.

Additionally, the duration of employment for workers hired through the low-wage stream will be halved, allowing them to work for a maximum of one year instead of the previous two years. These changes will come into effect on September 26, with exemptions for critical sectors such as healthcare, construction, and food security.

The Economic Context

This policy shift is a response to changing economic realities. When the federal government eased restrictions on the TFW program in 2022, Canada was grappling with nearly one million job vacancies and a historically low unemployment rate of 4.9 percent. However, the economic landscape has since shifted, with job vacancies declining and unemployment climbing to 6.4 percent in July 2024.

Prime Minister Trudeau emphasized the need for Canadian businesses to invest in training and technology rather than increasing their reliance on low-cost foreign labor. “It’s not fair to Canadians struggling to find a good job, and it’s not fair to those temporary foreign workers, some of whom are being mistreated and exploited,” Trudeau stated.

Future Implications

While these changes are a clear signal of the government’s intention to reduce reliance on temporary foreign workers, the policy’s full impact remains to be seen. Immigration Minister Marc Miller hinted at additional measures in the pipeline, indicating that the government is actively exploring further adjustments. When asked about potential changes to the number of permanent residents admitted to Canada, Miller noted that options are on the table, though no final decisions have been made by the cabinet.

There is no doubt further policy decisions to reduce immigrants across numerous visa streams will continue.