Canada Tightens Rules on Low-Wage LMIA Processing: What You Need to Know

As of September 26, the Canadian government is introducing significant changes to the Labour Market Impact Assessment (LMIA) process for the Low-Wage stream of the Temporary Foreign Worker Program (TFWP). These changes are designed to prioritize Canadian workers and address concerns about the overreliance on temporary foreign labour in regions with higher unemployment rates.

Key Changes to LMIA Processing

Halting LMIA Processing in High Unemployment Areas

Starting September 26, Employment and Social Development Canada (ESDC) will no longer process LMIAs for the Low-Wage stream in census metropolitan areas (CMAs) with an unemployment rate of 6% or higher. This policy change means that employers in affected regions will no longer be able to hire foreign workers for low-wage positions through the TFWP if their local unemployment rate is above the 6% threshold.

While the government has yet to release a specific list of the cities impacted, it’s crucial for employers to monitor their local unemployment rates and be prepared for how this change might affect their hiring plans.

Exemptions to the New Restrictions

Despite these new limitations, there are important exemptions to the LMIA restrictions:

• Food Security Sectors: Seasonal and non-seasonal jobs in primary agriculture, food processing, and fish processing are exempt from the new LMIA rules. Recognizing the critical importance of maintaining a robust food supply chain, the government will continue to process LMIAs in these sectors, even in regions with higher unemployment rates.

• Construction and Healthcare Sectors: The construction and healthcare industries are also exempt. Both sectors are facing labour shortages that cannot be met by domestic workers alone. As such, LMIAs for these industries will continue to be processed under the Low-Wage stream, ensuring that essential services and infrastructure projects remain staffed and operational.

Stricter Limits on Employers

In addition to stopping LMIA processing in certain regions, the government is introducing further restrictions on employers using the Low-Wage stream of the TFWP:

1. Cap on TFWP Workforce: Employers will now be limited to hiring no more than 10% of their total workforce through the Low-Wage stream of the TFWP. This cap is designed to ensure that Canadian citizens and permanent residents are given priority for job opportunities.

1. Reduced Employment Duration: The maximum duration of employment for temporary foreign workers in the Low-Wage stream has been reduced from two years to one year. Employers will need to reapply for LMIAs if they wish to retain foreign workers beyond this one-year period, assuming their region is not subject to the new restrictions.

Government's Rationale Behind the Changes

According to Randy Boissonnault, Minister of Employment, Workforce Development and Official Languages, these changes are meant to address Canada’s growing reliance on temporary foreign workers.

“The Temporary Foreign Worker Program was designed to address labour shortages when qualified Canadians were not available to fill those roles,” Boissonnault stated. “Right now, we know that there are more Canadians qualified to fill open positions. The changes we are making today will prioritize Canadian workers and ensure the program is meeting the needs of our economy.”

This shift comes as Canada's unemployment rate has been rising steadily, reaching 6.4% as of June 2024, according to the Labour Force Survey. With over 1.4 million Canadians currently unemployed, the government’s new restrictions are aimed at encouraging employers to focus on the domestic labour market first.

Addressing TFWP Misuse and Fraud

The Minister also highlighted that these new rules would help combat misuse and fraud within the TFWP. In recent years, there have been concerns about some employers taking advantage of the program to hire cheaper foreign labour at the expense of Canadian workers.

Moreover, Boissonnault emphasized that Canadian employers have a responsibility to retrain and upskill their current employees, ensuring they can adapt to the evolving demands of the workplace.

Potential Changes to the High-Wage Stream

Over the next 90 days, ESDC will be reviewing the High-Wage stream of the TFWP. This review could lead to further changes, such as modifying existing LMIA applications for positions that have not yet been filled, altering sectoral exceptions, or even refusing to process other LMIA applications, including those in rural areas.

Impact on Temporary Foreign Workers and Employers

For employers, these changes mean that hiring through the TFWP will become more challenging in certain regions. It will be essential for businesses to explore other recruitment strategies, such as increasing local hiring efforts or investing in employee training and development.

For temporary foreign workers, these changes could reduce job opportunities in specific areas, especially in regions where the unemployment rate is above 6%. However, there will still be opportunities in the food security, construction, and healthcare sectors, where demand for workers remains high.

Recent Developments in Quebec

The new federal rules align with recent changes announced in Quebec. On August 20th, Quebec Premier François Legault introduced temporary restrictions on the TFWP in the “administrative region” of Montreal. Starting September 3rd, both the Quebec provincial government and the federal government will suspend the processing of LMIA applications for certain occupations within the Low-Wage stream of the TFWP. This suspension, which applies to jobs paying less than the Quebec median hourly wage, is expected to last for six months.

A Broader Government Strategy

These changes to the TFWP are part of a broader government strategy to manage the levels of temporary residents in Canada, including those on work permits, study permits, and visitor visas.

In March, Immigration Minister Marc Miller announced the inclusion of temporary resident levels within the annual Immigration Levels Plan. This move aims to better manage the pressure that a growing temporary resident population places on Canadian social services and infrastructure. As part of this strategy, Canada has also introduced a cap on study permits for international students, which will be in place until 2026.

Conclusion

The new restrictions on the Temporary Foreign Worker Program's Low-Wage stream reflect the Canadian government’s commitment to prioritizing its citizens and permanent residents in the job market. While these changes may pose challenges for employers relying on foreign labour, they also present an opportunity to invest in the local workforce and contribute to Canada’s economic resilience.

As the situation evolves, both employers and temporary foreign workers should stay informed and adapt to these new regulations. By understanding the changes and their implications, stakeholders can navigate the TFWP more effectively and continue to support Canada’s diverse and dynamic economy.