(Bloomberg) -- Canada is taking initial steps to limit businesses’ use of a program that allows them to bring in temporary foreign workers after it exploded in size, sparking allegations of fraud and exploitation.
Employment Minister Randy Boissonnault met with business groups on Tuesday and pledged stricter oversight, especially in “high-risk” sectors — and said he’s mulling banning some industries altogether from using the scheme to hire foreign workers for low-wage jobs.
Prime Minister Justin Trudeau’s government significantly expanded the ability of companies to hire temporary foreign workers in response to complaints from businesses about labor shortages in 2022. It doubled the proportion of staff that most firms were allowed to hire under the program to 20%; a 30% limit still applies in construction and health care.
But the government has faced criticism for letting the program grow too quickly. As new arrivals have streamed into the country, labor market conditions have changed. The unemployment rate has risen to 6.4% — higher than it was before the pandemic — and the jobless rate for the youngest workers has shot up to 13.5%.
Boissonnault and Immigration Minister Marc Miller began tightening the foreign-worker program earlier this year, and Miller has also pledged an overall limit on the number of temporary residents, including students.
The government is not shrinking the 20% hiring cap, however — instead, it will enforce “consistent application” of it. It also promised more rigorous oversight in high-risk areas that are remote or prone to abuse, though it offered few details beyond pledging more scrutiny of applications and during inspections.
The minister also said he’s considering raising the C$1,000 ($725) fee that employers pay when applying for a foreign worker and limiting eligibility — by requiring a minimum number of years of operation, for example.
Miller has accused Canadian businesses of being “addicted” to cheap foreign labor and said the program helps drive down wages. The system has also been blasted by critics for fostering fraud and abuse. The temporary work permits tie the employee to a single employer, making it challenging for the worker to switch jobs in the case of exploitation.
Christina Santini, director of national affairs at the Canadian Federation of Independent Business, said the virtual meeting on Tuesday was 10 minutes long and didn’t offer business groups a chance to respond.
She said the vast majority of firms that use the program are compliant and her group will urge the government to move carefully with any changes. “It all comes down to the details, because it could be making it difficult for some small business owners with real needs, who really haven’t been able to identify labor.”
The program is designed as an “extraordinary measure” to be used when a qualified Canadian is not able to fill a job vacancy and cannot be used to circumvent hiring talented domestic workers, Boissonnault said in a news release.
“Bad actors are taking advantage of people and compromising the program for legitimate businesses. We are putting more reforms in place to stop misuse and fraud from entering the temporary foreign worker program,” he said.
--With assistance from Jay Zhao-Murray.
(Adds reaction from small business group in paras 9-10.)
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