The number of temporary foreign workers (TFWs) in Canada has seen a significant rise in recent years, becoming an important source of labor across various sectors. These workers include individuals holding work permits, study permits, and asylum claimants. A new research series, Research to Insights, aims to shed light on this growing workforce, offering policymakers and Canadians valuable insights into economic, social, and health issues in an ever-changing world.
Defining Temporary Foreign Workers
Temporary foreign workers are non-permanent residents who earn income in Canada through various permits. These workers may hold permits for work, study, or other purposes.
Work permit holders fall under two main programs: the Temporary Foreign Worker Program (TFWP) and the International Mobility Program (IMP). Not all IMP permits are for work purposes, though.
In 2021, about 87% of TFWP work permit holders and 69% of IMP work permit holders had earnings.
Of those holding both work and study permits, 58% worked in 2021, while 34% of those holding only study permits were employed.
Surge in Temporary Foreign Worker Numbers
Canada saw a dramatic increase in temporary foreign workers over the past decade. In the third quarter of 2024, the number of non-permanent residents in Canada reached 3 million. If employment trends from 2021 continue, half of these individuals will have income from work.
The number of temporary foreign workers grew from 356,000 in 2011 to 845,000 in 2021.
Study permit holders, both with and without work permits, accounted for 46% of this increase, while the IMP, mainly through the Post-Graduation Work Permit (PGWP) program, contributed 47%.
Shifting Demographics of Temporary Foreign Workers
The composition of temporary foreign workers has shifted significantly. In 2011, 35% of TFWs were part of the TFWP, including agricultural programs. By 2021, this share had dropped to just 15%.
Study-related permit holders (including those holding work permits for study purposes and those applying for the PGWP) made up 60% of the temporary foreign worker population in 2021, up from 24% in 2011.
Low Earnings and Part-Time Work Among Many Temporary Foreign Workers
Many temporary foreign workers are only weakly attached to the labor market. Restrictions tied to their permits and the length of their stays often mean they work part-time or only during certain parts of the year.
In 2021, nearly three-quarters of work permit holders earned less than the median annual earnings of Canadian workers ($42,000).
About half of study permit holders earned $6,000 or less, indicating a weaker attachment to the labor force.
Employment Trends: A Shift Toward Low-Wage Sectors
Temporary foreign workers are increasingly employed in lower-paying sectors. In 2021, nearly 140,000 temporary workers were employed in accommodation and food services, making up 17% of the total TFW workforce.
The share of workers in low-wage sectors like retail trade and administrative services rose from 34% in 2011 to 42% in 2021.
This shift is largely driven by the increase in study permit holders, many of whom are employed in these low-wage industries.
Temporary Foreign Workers: A Growing Source of Labour in Various Sectors
Temporary foreign workers now make up a larger proportion of the workforce in several key industries. In 2021, they accounted for:
4.1% of all paid workers in Canada, up from 1.9% in 2011.
18% of all paid workers in agriculture, forestry, fishing, and hunting.
Around 10% of workers in accommodation and food services, and in administrative and support services.
Pathways to Permanent Residency for Temporary Foreign Workers
Employment plays a key role in the transition to permanent residency for temporary foreign workers. In fact, 31% of work permit holders who arrived in Canada after 2010 had gained permanent residency by 2022.
Work permit holders with intermediate or lower skill levels had higher transition rates compared to those in managerial or professional occupations.
The main pathways to permanent residency are the Provincial Nominee Program (PNP) and Canadian Experience Class (CEC), with the PGWP program playing a significant role.
Industry and Provincial Retention of Former Temporary Foreign Workers
Once former temporary foreign workers obtain permanent residency, most remain in the province where they worked.
Over 90% of those in the 2020 cohort stayed in the same province one year after becoming permanent residents.
However, many switch industries within two years, with significant movement out of sectors like agriculture and caregiving.
Temporary Foreign Workers: A Key Source of Economic Immigration
The transition of temporary foreign workers to permanent residency has become a vital component of Canada’s economic immigration system. Between 2000 and 2022, the share of new economic immigrants who were former temporary foreign workers rose from 8% to 49%.
By 2022, 38% of these immigrants had pre-immigration earnings above the national median, up from just 24% in 2000.
This “two-step immigration” process, where temporary workers are initially selected for jobs and later chosen for permanent residency, has contributed to improving the labor market outcomes for new immigrants.
Conclusion
Temporary foreign workers have become a cornerstone of Canada’s labor market, filling critical roles across various industries, particularly in agriculture, accommodation, and food services. As these workers transition to permanent residency, they increasingly form a significant portion of Canada’s economic immigrants. With many of them staying in Canada long-term, this growing workforce plays a pivotal role in shaping the country’s future labor market and economic landscape.
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