New temporary foreign worker pilot program to speed up approvals for some employers

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The federal government is making it easier for businesses to bring temporary foreign workers into Canada, announcing a new “recognized employer” program aimed at speeding up the approval process for companies with a track record of using foreign labour.

The three-year pilot program is designed to reduce the amount of paperwork companies need to submit to justify bringing in outside workers.

It’s the latest expansion of the temporary foreign worker (TFW) program, whose use has exploded over the past year as the federal government has eased restrictions on short-term foreign labour. And it comes alongside a record surge in immigration, which is increasing the country’s labour supply but also adding demand to Canada’s overheated housing market and public services.

Randy Boissonnault, the new Minister of Employment, Workforce Development and Official Languages, said the change to the TFW program would “cut red tape” and help companies manage widespread labour shortages.

The move was applauded by the Canadian Chamber of Commerce, which has long lobbied for a trusted employer carveout in the TFW program.

Some labour economists, however, warned that further expansion of the program could undercut wages in Canada and make it more difficult to identify companies that are exploiting vulnerable workers.

“It could be a good thing for addressing kinds of critical labour shortages,” said Rupa Banerjee, the Canada Research Chair in economic inclusion, employment and entrepreneurship of Canada’s immigrants at Toronto Metropolitan University.

“But if this kind of a system is not really closely monitored, scrutinized, audited, it’s easy for sort of mundane and everyday examples of abuse and exploitation to kind of become even more rampant in the system,” she said.

As it stands, companies need to submit a Labour Market Impact Assessment (LMIA) before applying to hire temporary foreign workers. The purpose of the LMIA is to show that there are no Canadians or permanent residents who are able to fill the job.

Under the new system, employers who can demonstrate “a history of complying with program requirements” will be given a three-year approval to bring in temporary foreign workers, and won’t have to submit an LMIA before each application. Eligible employers will need to have had three successful LMIAs in the past five years for workers who are deemed to be “in-shortage,” and will be subject to a “more rigorous upfront assessment,” the government said in a news release.

The pilot program will be open to agriculture businesses in September and employers from all other industries starting in January.

Demand for low-wage foreign labour is surging

This is the second notable change to the TFW program in just over a year. Last spring, the federal government said companies could hire up to 20 per cent of their staff through the program’s low-wage stream, up from the previous 10-per-cent cap. And in seven industries with acute labour shortages – such as restaurants, construction and hospitals – the cap was moved to 30 per cent for a year, then extended to this fall.

The TFW program is largely used as a recruitment tool for farm workers. During the first quarter of this year, employers were approved to hire more than 25,000 workers through agriculture streams, according to figures published by Employment and Social Development Canada, which decides on LMIA applications. General farm workers are easily the most sought-after role in the TFW program, with more than 22,000 approved positions in the first quarter.

But as Ottawa has eased access to foreign labour, employers have ramped up their recruitment of low-wage employees from abroad. Companies were approved to fill about 22,000 roles through the program’s low-wage stream in the first quarter, an increase of about 275 per cent from four years earlier. Cooks are the No. 2 occupation of highest demand, with nearly 3,000 positions approved from January through March. Truck drivers, food counter attendants and seafood plant workers are also in high demand.

Diana Palmerin-Velasco, senior director of the future of work at the Canadian Chamber of Commerce, welcomed the announcement and said it could improve access to the TFW program for smaller employers.

“There are whole sectors of the economy that are dependent on temporary foreign workers,” Ms. Palmerin-Velasco said. “What we have heard from our members is that it’s not that easy for employers. There is a lot of administrative burden, it can be a very complex application process. And when we think about small businesses, it’s not really accessible.”

Mikal Skuterud, an economics professor at the University of Waterloo, questioned the government’s rationale for expanding the program. The Canadian labour market has been exceptionally tight over the past year-and-a-half, as demand for workers has outstripped supply. However, in recent months, job vacancies have been trending down and the unemployment rate has risen.

“We’ve had a 25-per-cent reduction in job vacancies since May, 2022, and if you measure labour market tightness, that’s also been dropping,” Prof. Skuterud said.

He added that recent research into temporary foreign workers suggests that they tend to suppress wage growth within companies that use them. “And so we’re going through a period where real wages for low skilled workers in this country are not increasing. The most recent data looks like they’re decreasing. And so it’s all about where this government’s priorities are,” he said.