Victor IngEffective November 8, 2024 it will cost Canadian employers 20% more to hire foreign workers under Canada’s Temporary Foreign Worker Program’s (TFWP) High-Wage Stream. The latest announcement made on October 21, 2024 by the Minister of Employment, Workforce Development and Official Languages, the Honourable Randy Boissonnault, is intended to further drive down overall temporary immigration levels in Canada.
Under the TFWP, Canadian employers must apply for a Labour Market Impact Assessment (LMIA) for authorization to offer Canadian jobs to non-Canadians. LMIAs are considered a “last resort measure” to allow employers to fill job vacancies when it can be shown that there are no Canadian citizens or permanent residents who are willing and able to perform the role.
To deter Canadian employers from misusing the system, government rules require them to pay foreign workers the “median wage”, which represents the amount that Canadians would be expected to be paid to perform the work. This ensures that the use of the TFWP will not suppress Canadian wages and incentivize Canadian employers to hire cheaper labour from abroad.
Under the TFWP, employers can hire ‘Low-Wage’ and ‘High-Wage’ workers, which are categorized based on the hourly wage offered to them and the intended location of their work. For example, British Columbian employers who currently offer a wage of $28.85 or more per hour can hire High-Wage foreign workers to fill a job vacancy. This is important because, unlike Low-Wage foreign workers, there are currently no limitations on how many High-Wage foreign workers an employer can hire in Canada. Starting November 8, however, Canadian employers will have to pay a 20% premium to keep or bring new High-Wage workers to Canada, which amounts to an increase of about $5 to $8 per hour, depending on the location of work. Using British Columbia as an example, local employers will soon need to offer at least $34.62 per hour in order to apply for an LMIA under the TFWP’s High-Wage stream.
The latest announcement continues the trend of reducing employer access to the TFWP. In September 2024, Minister Boissonnault described the TFWP as an “accordion”, because it is meant to flex with the economy to allow more temporary workers to come to Canada when there are a high number of job vacancies and to reduce their access when there are fewer vacancies. This is meant to ensure that Canadian citizens and permanent residents, especially young workers, have every opportunity to compete for Canadian jobs. In reality, however, many young workers in Canada simply do not have the experience or skill set to perform roles that attract a higher wage and, therefore, it is questionable whether these latest LMIA changes will actually result in a meaningful increase in employment for Canadians.
By increasing the cost of retaining and hiring new High-Wage workers, the Minister is now compressing the TFWP accordion to further reduce the total number of foreign workers in Canada, but this will come at a significant cost to employers who are ill-prepared to adjust to the constant changing of rules. Just as recently as last month, Canadian employers had their access to Low-Wage workers cut in half, based on a rule change that took effect on September 26 to cap the hiring of Low-Wage workers to a maximum of 10% (down from 20%) of an employer’s total workforce. Now, Canadian employers are being asked again to adjust on the fly to a life without relying on foreign workers. With virtually no notice, it is hard to imagine that this transition for employers will be as seamless as the government seems to believe is possible.
In a matter of six months, our government has aggressively cut favourable foreign worker hiring policies and introduced new and onerous rules intended to discourage Canadian employers from accessing the TFWP. These constant changes have destabilized the business environment for employers who have historically relied on the TFWP. They will now need to reassess their business operations and chart a new path forward over the next few years to successfully navigate the changing immigration currents.
