Liberal Government Reinstates Stricter Rules for Temporary Foreign Workers Amid Labour Shortage Debate.
Prime Minister Justin Trudeau’s announcement on Monday about reinstating stricter regulations for temporary foreign workers has sparked a heated debate over the role of government in addressing labour shortages.
At a Liberal cabinet retreat in Halifax, Trudeau explained that the government is tightening the rules on low-wage temporary foreign workers. He urged businesses to focus on hiring and training Canadian employees instead.
“Two years ago, following the pandemic and facing significant labour shortages, we adjusted the program for temporary foreign workers. This change was necessary for the business community,” Trudeau said. “But now, the economy has evolved. Inflation is decreasing, employment is up, and the need for as many temporary foreign workers has diminished.”
While business groups have supported increased immigration and the use of temporary foreign workers to address labour gaps, some economists argue against government intervention.
Christopher Worswick, an economics professor at Carleton University, believes that ideally, governments should refrain from intervening. “It’s challenging for governments to remain passive when employers are dissatisfied,” he said. Worswick argues that a tight labour market benefits workers and the economy by driving up wages and encouraging businesses to invest in technology.
Worswick questioned the notion of labour shortages, suggesting that businesses are seeking more workers at lower wages, which he says is not how economies function.
Public data from Immigration, Refugees and Citizenship Canada shows that the number of temporary foreign worker permits issued in 2023 was 183,820, up from 98,025 in 2019—an 88 percent increase.
Following the announcement, Worswick has called for the temporary foreign worker program’s low-wage stream to be eliminated, merging the high-wage stream with the economic immigration program. Economist Mike Moffatt, who attended the retreat, agrees with Worswick’s call for abolishing the low-wage stream.
Diana Palmerin-Velasco, senior director for the future of work at the Canadian Chamber of Commerce, warns against such recommendations. She highlights the need for low-skilled workers in various sectors and communities facing demographic challenges.
Palmerin-Velasco also critiques the argument that higher wages suppress business profitability. “If businesses need to raise wages significantly, the increased costs will likely be passed on to consumers, which is problematic given the current economic situation,” she said.
Regarding skilled immigration, Worswick supports attracting top talent but believes economic immigration should not be used to address labour shortages due to the unpredictability of these shortages.
Worswick suggests focusing on skill-based immigration and advises firms to raise wages or invest in training if they struggle to fill positions. “The government should not focus on labour shortages but rather on skill-based immigration and encourage firms to adjust their wage offers,” he added.
The federal government’s response to labour shortages post-pandemic was broadly endorsed by business associations and politicians. Ontario Premier Doug Ford, among others, supported increased immigration to address job vacancies.
In the spring of 2022, the federal government relaxed rules for the temporary foreign worker program and later announced an increase in the annual permanent residency target to 500,000 by 2025.
Despite this shift, Trudeau had previously criticized the temporary foreign worker program under the Harper government. In a 2014 op-ed, he called for a reduction in the program and a return to its original purpose of filling jobs only when no Canadian workers are available.
As for whether the Liberal government’s policy shift signals a change in approach to labour shortages, Worswick remains uncertain. “The housing crisis might be influencing this shift,” he noted. “While the discussion on labour shortages continues, the capacity to absorb immigrants is now a key issue.”