Canada will try to break its rising dependence on low-wage, temporary foreign workers (TFWs). This week the Government of Canada (GoC) announced it will freeze processing of TFWs in some regions with elevated unemployment. Despite rising unemployment, the program has seen explosive growth with annual volumes rising 300% over the past five years. Just the first quarter of 2024 has already processed more than the annual total for 2018.
Canada To Slow Low-Wage Foreign Workers In Major Cities
Canada’s low-wage TFW program is getting quite a few changes over the next few weeks. Starting September 26, 2024, Canada will temporarily freeze the processing of applications for census metropolitan areas (CMAs) with an unemployment rate of 6% or higher. Sponsoring companies will also be limited to 10% or fewer employees from the program, and the approved term will be lowered from two years to one.
The move extends a recently announced policy in Quebec. Last week, the GoC announced they would be restricting low-wage TFWs in the Montreal area, at the province’s request. As mentioned, the latest update extends the policy to all CMAs across Canada.
It’s worth emphasizing that not all cities are CMAs, since this may be the source of a new problem later. A CMA is a multi-city region with at least 100,000 people and a shared economic zone. Canada currently defines 41 regions, including Toronto and Vancouver, as CMAs.
A region with over 10,000 people but fewer than 100,000, is called a Census Agglomeration (CA). Canada has 111 CAs, which include cities like Prince George (BC), Cape Breton (NS), Kawartha (ON), and Grand Prairie (AB). As the policy was presented in the GoC release, CAs and rural regions are not covered by restrictions on TFWs intended to work in these regions.
Canada’s Use of Low-Wage Foreign Workers Soars 300% In 5 Years
Temporary foreign workers (TFWs) in the low-wage stream.
Source: Government of Canada; Better Dwelling.
The use of Canada’s TFW low-wage stream has exploded in use over the past few years. Low-wage TFW positions climbed 7% to 83,654 workers in 2023. Growing at twice the rate of the general population is already fast, but that’s actually a slowdown. Last year’s annual volume was a whopping 291% higher than 2018, just five years ago.
If that wasn’t big enough growth, this year was on track to demolish last year’s record. Only the first quarter of data is available today, but Canada has already seen 28,730 low-wage TFW positions, or 34% of last year’s total volume. Over the first three months of 2024, there have already been more low-wage roles created than Canada saw in all of 2018.
Quebec & Ontario Were The Biggest Destinations For Low-Wage Foreign Workers
Low-wage temporary foreign workers (TFWs) per year, broken down by province.
Source: Government of Canada; Better Dwelling.
A look at the provincial breakdown, and it’s clear why Quebec asked the country to curb the problem first. It’s the largest destination for companies using the low-wage TFW program, with the province receiving 25,499 workers in 2023. That represents about 30% of the total for the year.
Emphasizing just how concentrated the demand has been, Ontario was a distant second with 17,610 workers in 2023—21% of the annual total. Alberta and BC were similar with both provinces handling a respective 18% each. Somewhat surprising to see the two provinces only 3 points below Ontario. They have significantly smaller populations, so the impact will likely be much more noticeable.
Even Low-Wage Foreign Workers Are Fleeing Ontario For Alberta & BC
Low-wage temporary foreign workers (TFWs) by province in Q1 2024.
Source: Government of Canada; Better Dwelling.
A point worth noting in the provincial data is the shift emerging in 2024. Quebec was still the largest in the first quarter, but it was followed by BC (6,483 workers) and Alberta (6,079). Ontario (5,021) is notably missing from the top three. It may sound like Ontario is finally buckling down, but this more likely reflects the migration trend of young adults, increasingly fleeing for greener (Prairie) pastures.
Canada’s TFW program was designed to help fill vacant job roles in areas hard to obtain work. The low-wage stream saw rapid expansion as the country began looking to fill a brief shortage of general labor, observed during a period of record stimulus. That period is long over, and has been for at least two years.
The sudden halt of a program with huge growth comes amidst increased criticism. Canada’s domestic young adult workers have recently seen their unemployment rate surge. Recent immigrants from more traditional programs are also struggling to find work, with the low-wage TFWs now filling many of the roles they would traditionally land. The toxic program was even called “modern slavery” by the UN recently, as workers attracted by the program have few rights and a residency tied to a happy employer.
On that note, it’s important to emphasize that Canada isn’t eliminating its low-wage TFW program. It’s only implementing a temporary freeze in major metropolitan regions where the unemployment rate is elevated. An applicant’s “intended destination” may not necessarily be the location of their work, which may be an intentional loop hole in the process.
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