Canada to Curb Foreign-Worker Influx After Jobless Rate Jumped

(Bloomberg) -- Canada will restrict a program that allows companies to recruit low-wage foreign labor after the government was criticized for letting it grow too quickly, and for failing to stop the abuse of temporary workers. 

The government is reversing two major changes it made in 2022 to address labor shortages, Prime Minister Justin Trudeau said Monday. Businesses are permitted to hire temporary foreign employees to fill low-wage jobs in at least 20% of their workforce. That limit will soon drop to 10% for most sectors, where it was before April 2022. 

The government is also bringing back a previous rule that bans the hiring of new temporary foreign workers for low-wage jobs in regions where the unemployment rate is 6% or higher. A handful of industries in which workers are hard to get — including farming, fish processing, health care and construction — will be exempt. 

The changes two years ago — which the government deemed necessary at the time to help companies deal with a surge of vacant positions — have been blamed for an explosion in the number of temporary workers in the country. The economic situation is “very different” now than it was two years ago, Trudeau said at a news conference in Halifax, Nova Scotia. 

The unemployment rate, which was around 5% in mid-2022, has risen to 6.4%, and it’s 14.2% for younger workers — the highest level in more than a decade outside the pandemmic.

“It’s not fair to Canadians struggling to find a good job, and it’s not fair to those temporary foreign workers, some of whom are being mistreated and exploited,” Trudeau told reporters in Halifax. 

“To those who would complain about worker shortages, here’s my message: There is no better time to hire and invest in Canadian workers.”

The maximum length of employment for workers hired through the low-wage stream of the program will be reduced to one year from two. The government is also considering changes to another part of the foreign-worker program that deals with higher-wage jobs, Employment Minister Randy Boissonnault said. 

A surge in temporary migration to Canada — including foreign workers, international students and asylum seekers — pushed the country’s population growth rate last year to 3.2%, one of the world’s fastest. It has exacerbated a housing shortage and strained the social safety net, helping sink Trudeau’s popularity.

Bloomberg News reported earlier this month that unscrupulous immigration consultants and employers are taking advantage of the temporary foreign worker program to sell jobs to desperate newcomers. A government investigation that was never publicly released found jobs were sold for between C$10,000 ($7,400) and C$180,000, according to a summary viewed by Bloomberg. 

A job linked to the program boosts an individual’s chance of obtaining permanent residency in Canada, creating an incentive to pay for one. 

It also ties the employee to an individual employer, making it hard to switch jobs — tilting the balance of power so much that a United Nations official said the program allows modern forms of slavery to take place.

--With assistance from Jay Zhao-Murray, Randy Thanthong-Knight and Brian Platt.

(Revises with details from Trudeau news conference, news release throughout.)

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