Canada Enforces New Rules Against Foreign Worker Exploitation Starting September 26

Canada is set to implement stricter regulations on its Temporary Foreign Worker (TFW) Program, particularly targeting low-wage positions. Prime Minister Justin Trudeau announced that beginning September 26, 2024, businesses will be restricted to filling only 10% of their workforce with low-wage foreign workers, a significant reduction from the previous cap of 20%. This shift marks a departure from the more lenient measures introduced in 2022, which were aimed at addressing labour shortages during the Covid-19 pandemic.

The Rationale Behind the New Limits

The decision to impose tighter restrictions on the number of low-wage foreign workers comes in response to a rising unemployment rate in Canada. According to the Ministry of Employment, Workforce Development, and Official Languages, the national unemployment rate has climbed to 6.4%, with youth unemployment reaching a concerning 14.2%—the highest level outside of the pandemic period in over a decade.

At the same time, the TFW Program has experienced rapid growth, nearly doubling in size between 2021 and 2023. In 2023 alone, 240,000 permits were issued under the programme, with a significant number of these positions concentrated in sectors such as restaurants and retail, where wages are often low and job opportunities are plentiful. The rapid expansion of the programme, coupled with the high unemployment rate, has raised concerns that the influx of foreign workers may be exacerbating domestic unemployment issues.

Understanding the Temporary Foreign Worker Program

The TFW Program is designed to serve as a temporary solution for businesses that struggle to find qualified Canadian workers to fill job vacancies. Under the programme, companies are permitted to hire foreign workers on a short-term basis, typically for up to two years. However, businesses are required to demonstrate that they have made substantial efforts to hire Canadians before being granted permission to bring in foreign workers.

Despite its intended purpose, the TFW Program has faced criticism for creating conditions ripe for worker exploitation. Reports of underpayment, wage theft, excessive work hours, and even sexual harassment have plagued the programme, leading to calls for reform.

New Measures to Address Misuse and Fraud

In response to these concerns, the Canadian government has introduced several new restrictions aimed at curbing misuse and fraud within the TFW Program:

1. Processing Limits: Labour Market Impact Assessments (LMIAs) for the Low-Wage stream will no longer be processed in regions where the unemployment rate is 6% or higher. Exceptions will be made for specific sectors such as agriculture, food processing, healthcare, and construction.
2. Cap on Foreign Workers: Employers will now be limited to hiring up to 10% of their workforce through the TFW Programme for low-wage positions, down from the previous 20%. Certain sectors like agriculture and healthcare are exempt from this rule.
3. Shorter Employment Duration: The maximum period of employment for workers hired through the Low-Wage stream has been reduced to one year, down from two years.

“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,” stated Randy Boissonnault, Minister of Employment, Workforce Development and Official Languages, in a press release.

Wage and Employment Conditions for Low-Wage Foreign Workers

The wages for low-wage foreign workers in Canada vary depending on the province, industry, and specific job. As of 2024, these rates typically range from CAD 13 (Rs 809) to CAD 16 (Rs 996) per hour, according to Canada’s Minimum Wage Database. For instance:

• Ontario: The minimum wage is CAD 16.55 per hour, with an increase to CAD 17.20 per hour set for October 1, 2024.
• Alberta: The minimum wage stands at CAD 15.00 per hour.
• British Columbia: Effective from June 1, 2024, the minimum wage is CAD 17.40 per hour.
• Manitoba: The minimum wage is CAD 15.30 per hour, with a planned increase to CAD 15.80 in October 2024.
• Nunavut: The highest minimum wage in the country, at CAD 19.00 per hour as of January 1, 2024.

These wages are slightly higher than those in the United States but lower compared to countries like the United Kingdom, New Zealand, and Australia. Despite their low wages, foreign workers are entitled to the same labour rights as Canadian citizens, including overtime pay and holiday pay. However, enforcement of these rights can be inconsistent, as highlighted in a United Nations report published on July 22, 2024.

Controversy Surrounding the Programme

The TFW Programme has been under scrutiny for fostering conditions that allow for worker exploitation. A report by UN investigator Tomoya Obokata described the programme as a “breeding ground for contemporary forms of slavery,” citing issues such as 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,” Obokata stated in his final report. The report also highlighted instances of physical, emotional, and verbal abuse, as well as the confiscation of documents and arbitrary reductions in working hours.

The Impact on Indian Workers

The number of temporary foreign workers in low-wage positions across Canada has been steadily increasing, with a significant portion of these workers coming from India. In 2023, India contributed 26,495 temporary foreign workers to Canada under the TFW Programme, making it one of the top ten countries of origin for these workers.

At the time of writing this report, Business Standard’s query to the press secretary at the Office of the Minister of Employment, Workforce Development and Official Languages regarding the exact number of Indians in Canada under the Temporary Foreign Worker programme remained unanswered.