Prime Minister Justin Trudeau and members of his cabinet arrive at the retreat in Halifax on Aug. 26.Kelly Clark/The Canadian Press
Ottawa will reverse its expansion of the low-wage temporary foreign worker program and is considering whether to reduce the number of permanent residents that Canada accepts annually, the latest moves to restrain population growth that has soared in recent years.
Prime Minister Justin Trudeau unveiled the changes on Monday, the second day of his cabinet’s retreat in Halifax, where ministers are crafting the fall agenda with just one year to go until the next federal election. Mr. Trudeau said the government will update its immigration plan with targets for temporary and permanent residents by the fall.
The federal government has faced mounting criticism over its immigration policies, particularly as residents have struggled to find affordable housing and the unemployment rate has risen. Canada’s population grew by nearly 1.3 million people or 3.2 per cent in 2023, the quickest pace since the late 1950s and almost entirely driven by immigration.
Ottawa has made a series of changes this year aimed at curbing the inflow of newcomers, including a temporary cap on foreign student visas. It has also adjusted the temporary foreign worker (TFW) program several times in recent months, and just last week, it approved a Quebec request to curb employers’ access to low-wage foreign labour in the Montreal region.
Monday’s announcement largely winds the low-wage stream of the program back to rules that existed before an expansion in April, 2022.
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“We need Canadian businesses to invest in training and technology, not increasing their reliance on low-cost foreign labour,” Mr. Trudeau said at a news conference.
“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.”
Three changes to the program’s low-wage stream will take effect on Sept. 26. Ottawa will reduce the share of low-wage temporary foreign workers that employers can hire to 10 per cent of their total work force, down from 20 per cent and in line with previous rules.
It will also no longer process employers’ applications to hire workers via the low-wage stream in census metropolitan areas with an unemployment rate of 6 per cent or higher. Previously, this rule applied only to certain roles in retail and hospitality, but was scrapped in 2022.
Employers in construction, health care and food production – such as farms and food processors – will be exempt from those changes.
Lastly, the government is cutting the maximum time workers can be employed through the low-wage stream to one year, from two years.
“It’s a great first step, but only a first step,” said Mike Moffatt, an economist who was invited to speak at the cabinet retreat. Mr. Moffatt has previously called for the low-wage stream to be abolished and for the overall TFW program to be drastically reduced by about 80 per cent to 90 per cent.
The government said in a press release that it will conduct a 90-day review of the program, which could result in additional changes, including to the high-wage stream.
“I’m hopeful that they issue a very aggressive set of reforms aimed at not just the low-wage stream, but all of the streams,” Mr. Moffatt said.
Mr. Trudeau said his cabinet is taking its broader review of permanent resident numbers “extremely seriously.” Last fall, Ottawa said it was targeting the intake of 485,000 permanent residents this year, along with 500,000 in each of 2025 and 2026.
“We’re looking at the various streams to make sure that as we move forward, Canada remains a place that is positive in its support for immigration, but also responsible in the way we integrate and make sure that there’s pathways to success for everyone who comes to Canada,” Mr. Trudeau said.
Mr. Moffatt added that it would be appropriate to “substantially” reduce permanent resident targets for a few years, which would help the country build capacity in the housing and health care sectors.
Strong immigration and population growth has been a key priority for the federal Liberals, who have argued that these newcomers are sorely needed to counter demographic aging and labour issues.
In 2022, the government made sweeping changes to the TFW program, saying it was crucial to fill a glut of job vacancies as pandemic restrictions were being eased.
One of those changes allowed employers to hire up to 20 per cent of their staff through the low-wage stream of the TFW program, up from 10 per cent, and in some industries, the cap was set at 30 per cent.
After the changes, employers ramped up their recruitment of foreign workers. In 2023, the government approved employer applications to hire more than 83,000 people through the low-wage stream – an increase of 197 per cent from 2019, according to federal numbers.
Employment Minister Randy Boissonnault said the changes to the TFW program that the government has unveiled since March will lead to about 65,000 fewer people participating in the program.
“It’s important because we want to see Canadians and permanent residents have access to entry-level jobs,” Mr. Boissonnault told reporters in Halifax.
Many labour economists criticized the expansion of the TFW program in 2022. “At its core, it’s about undermining the functioning of a healthy labour market,” said Rob Gillezeau, an economics professor at the University of Toronto.
The TFW program has come under fire recently as the unemployment rate has risen to 6.4 per cent, with young people and recent immigrants especially struggling to find work. The program is meant to be a last resort for employers who can’t find Canadians or permanent residents to fill jobs.
Business lobby groups pushed back on some of Monday’s rule changes.
“It is good that the government didn’t shut the program off, as some were fearing they might do,” said Dan Kelly, president and chief executive officer of the Canadian Federation of Independent Business. “Nevertheless, the changes are pretty deep and will for many employers cause some real pressures.”
Mr. Kelly added that “regardless of the rate of unemployment, there are an increasing number of jobs that Canadians are just not keen to take.”
In March, Ottawa said that it would reduce the temporary resident population to 5 per cent of the total. According to the most recent numbers, temporary residents – a group that includes international students, people here on work permits and asylum seekers – have grown to 2.8 million, or 6.8 per cent of the total.
The TFW program accounts for a small share of foreign workers in Canada. International students and people here via the International Mobility Program play much larger roles in the labour market.
Immigration Minister Marc Miller said on Monday that more restrictions are needed to hit targets for temporary residents and those will be announced early in the fall.
“The era of uncapped streams of ways to get into Canada is coming to an end,” he said.