Canada's cap on Temporary Foreign Workers begins: What it means for Indians

"Indian workers need to make a dispassionate assessment of the kind of life that they are likely to have in Canada," said Darshan Maharaja, a Canada-based immigration analyst

Starting today, Canadian businesses will be restricted to filling only 10% of their workforce with low-wage foreign workers, down from the previous limit of 20%. Earlier this month, Prime Minister Justin Trudeau announced that the government was tightening rules around its Temporary Foreign Worker (TFW) Programme, particularly for low-wage jobs.

The TFW Programme was originally created as a short-term solution for businesses struggling to find qualified Canadian workers. It allows companies to hire foreign workers for up to two years, but employers must prove that they’ve made efforts to hire Canadians first before being allowed to bring in foreign workers.

Why is Canada limiting foreign workers?

"When they announced this policy, temporary residents accounted for 6.8% of the population. As per the latest data, this has increased to 7.3%. As a result, I expect a further tightening of foreign worker visas," said Darshan Maharaja, a Canada-based immigration analyst.

He added, "So, it is very likely that opportunities in Canada for Indian workers will dwindle."

The move comes amid growing frustration among Canadians, who feel shut out of the job market by the excessive use of foreign workers. The rising unemployment rate is adding to this pressure. Canada’s Ministry of Employment, Workforce Development and Official Languages reported that the national unemployment rate has risen to 6.4%, while the unemployment rate for younger workers has reached 14.2%, the highest in over a decade, excluding the pandemic period. The size of the TFW Programme has also nearly doubled between 2021 and 2023, with 240,000 permits issued last year, many of them in sectors like restaurants and retail.

Moreover, Trudeau’s government has faced political challenges, with his popularity dipping due to rising prices, a housing crisis, and criticism over his immigration policies. Recently, he survived a confidence vote, but the pressure to act on domestic issues has mounted.

What changes are being made?

In response to these challenges, the government is introducing several changes to the TFW Programme:

Processing limits: Labour Market Impact Assessments (LMIAs) for low-wage jobs won’t be processed in regions with unemployment rates of 6% or higher. However, certain sectors like agriculture, food processing, healthcare, and construction are exempt from this rule.

Cap on foreign workers: Employers are now limited to hiring up to 10% of their workforce through the TFW Programme for low-wage positions, down from the previous 20%. Again, sectors like agriculture and healthcare are exempt.

Shorter employment duration: The maximum employment period for low-wage foreign workers has been reduced from two years to one year.

"The Temporary Foreign Worker programme was designed to address labour market shortages when qualified Canadians were not able to fill those roles. Right now, we know that there are more Canadians qualified to fill open positions. The changes we are making today will prioritise Canadian workers and ensure Canadians can trust the programme is meeting the needs of our economy," said Randy Boissonnault, Minister of Employment, Workforce Development and Official Languages, in a press release.

How much do low-wage foreign workers earn?

Wages for low-wage foreign workers in Canada vary by province, industry, and job. As of 2024, the rates generally range from CAD 13 (Rs 809) to CAD 16 (Rs 996) per hour, depending on the region. Here are some examples:

Ontario: minimum wage is CAD 16.55 per hour and will rise to CAD 17.20 per hour on October 1, 2024.

Alberta: minimum wage is CAD 15.00 per hour.

British Columbia: minimum wage is CAD 17.40 per hour from June 1, 2024.

Manitoba: minimum wage is CAD 15.30 per hour, with a planned increase to CAD 15.80 in October 2024.

Nunavut: has the highest minimum wage, at CAD 19.00 per hour as of January 1, 2024.

While foreign workers are entitled to the same labour rights as Canadians, such as overtime and holiday pay, enforcement can be inconsistent. The TFW Programme has also faced criticism for fostering exploitative conditions. A United Nations report published on July 22, 2024, highlighted issues like underpayment, wage theft, excessive work hours, and even sexual harassment.

"The special rapporteur retains the view that the temporary foreign worker programme serves as a breeding ground for contemporary forms of slavery, as it institutionalises asymmetries of power that favour employers and prevent workers from exercising their rights," said UN investigator Tomoya Obokata in his final report.

What about Indian workers?

India was one of the top contributors to Canada’s TFW Programme, with 26,495 temporary foreign workers in 2023. But with the new restrictions, Indian workers may need to reconsider their options.

"In the current economic scenario in Canada, Indian workers need to make a dispassionate assessment of the kind of life that they are likely to have in Canada," Maharaja said.

He pointed to the severe housing shortage, rising cost of living, and overburdened healthcare system, cautioning that it’s not uncommon for four individuals to share a single rented room.

"Indian workers would be well advised to look for opportunities in other countries," Maharaja suggested.