As of May 1, 2024, the federal government will shrink the number of temporary foreign workers that employers can legally hire in certain sectors over the next three years.
In April 2022, Ottawa rolled out temporary measures to allow employers in sectors facing labour shortages, including the accommodation and food services sectors, to hire up to 30% of their workforce through the Temporary Foreign Worker program for low-wage positions. On March 21, 2024, Employment Minister Randy Boissonnault announced that the cap will be decreased to 20% for most sectors, other than the construction and health care sectors, which will remain at 30%. Additionally, agriculture, fishing, tourism and other seasonal industries will remain cap-exempt during peak seasons.
Temporary residents made up 6.2% of Canada’s population in 2023. Ottawa aims to reduce that figure to 5% by 2027, amounting to a 19% decline from Canada’s 2.5 million temporary residents in 2023.
“This is not a historical low,” said Immigration Minister Marc Miller, “but it is something that has to be done well.” Post-pandemic, Canada has welcomed a spike in international students, foreign workers and other temporary residents to fill labour shortages and drive the nation’s economic growth. However, the government is taking the position that Canada’s housing stock has been unable to keep pace. Concerns regarding housing and essential services availability were cited as a key reason for Ottawa’s recently-imposed cap on international student intake. “We need to ensure the number of temporary residents entering the country is at a sustainable level,” said Minister Miller.
It is unclear that temporary foreign workers are a significant contributor to shortfalls in housing and essential services, with many seeing this group as the government’s latest scapegoat to much more complex issues. This reduction may have the opposite effect of creating negative economic consequences.
Labour market challenges for certain sectors
This is the federal government’s latest attempt to address the housing shortage and stretched essential services. In November 2023, Ottawa reported it would stop ramping up immigration for permanent residents after 2025. As noted above, in January 2024, the government announced a two-year cap on international student admissions and that it would cease granting work permits to some students after graduation.
Although the government hopes that a reduction in temporary residents will help address housing and essential services challenges, it may create new problems for employers in sectors that have been relying on the international labour market to fill workforce gaps. This should be a specific concern for the food services and accommodation sectors as many employers will be over the new 20% cap and be unable to hire further low-wage temporary foreign workers. As these business struggle to fully staff, they may not be able to remain open all intended hours, reducing overall economic output and the availability of part-time and full-time jobs for Canadians.
According to Statistics Canada, Canada’s population increased by more than 430,000 during the third quarter of 2023, the fastest increase since 1957. Between July and September 2023 alone, about 313,000 non-permanent residents arrived in Canada, mostly those holding work and study permits. Temporary foreign nationals in Canada make up a significant portion of the Canadian workforce, especially in sectors such as accommodation and food services, and these reductions may have unintended economic consequences.
Though Minister Miller will hold a meeting with provincial and territorial counterparts in May to finalize the latest plan, employers (particularly in accommodation and food services sectors) should take note of these the coming reductions and plan ahead. The new limits may negatively impact the Canadian labour market, which has been suffering significant gaps and relying on foreign workers in many sectors. This is particularly true when the workforce effects of this policy are considered together with the workforce effects of the recently announced international student cap.
While these foreign worker reductions are being planned, the Canadian government is doubling down its efforts in attracting workers to the agricultural and food sector. Also, full-time international students already in Canada and who submitted a study permit application before December 7, 2023 can continue to work full-time off-campus until April 30, 2024 (this was extended from December 31, 2023).
To learn more about how these policy changes could impact you and your organization, contact a member of the MLT Aikins Immigration team or Labour & Employment team today.
Note: This article is of a general nature only and is not exhaustive of all possible legal rights or remedies. In addition, laws may change over time and should be interpreted only in the context of particular circumstances such that these materials are not intended to be relied upon or taken as legal advice or opinion. Readers should consult a legal professional for specific advice in any particular situation.