Ottawa is introducing new measures to let rural employers hire more low-wage workers through the temporary foreign worker program, a move businesses say is needed to address ongoing labour shortages but economists and advocates warn is a step in the wrong direction.
Employers in “eligible rural regions” will be permitted to staff up to 15 per cent of their workforce with low-wage, temporary foreign workers, up from 10 per cent, the federal government announced Friday. The new measures will be implemented as early as April 1, 2026, until March 31, 2027.
“Some rural communities continue to face acute labour shortages due to low unemployment rates, and ongoing difficulties attracting, recruiting, and retaining workers,” said a statement from Employment and Social Development Canada (ESDC), which oversees the temporary foreign worker (TFW) program.
“In these regions, employers are struggling to find the workers needed to keep essential businesses operating and local economies moving.”
Eligible rural regions are defined as areas outside Census Metropolitan Areas, the federal department said in an email. Participation in the measures will be determined by individual provinces and territories, with updates on participating regions and implementation timelines to be posted on the TFW Program website, it added.
The federal government in 2024 capped the percentage of low-wage foreign temporary workers a company could hire at 10 per cent in most sectors, except for those grappling with chronic labour shortages including health care, construction and food processing, which are subject to a 20 per cent cap. As a result, some companies feared they would lose employees.
More than a year later, businesses say they are feeling the strain, particularly in service-heavy industries still struggling to recover from the pandemic, as many workers left for higher earnings and job security.
While unemployment remains high, industry groups say labour shortages persist in these sectors, especially in rural areas where aging populations, declining birth rates and limited local labour pools make hiring increasingly difficult. But economists and labour advocates say employers’ continued reliance on migrant workers highlights Canada’s troubling dependence on labour that is temporary and can be exploitable, rather than implementing changes to business models like better wages and working conditions.
Demand for temporary foreign workers has surged in recent years, and many employers have grown accustomed to the continuous supply of TFWs and international students to fill low-wage jobs in fast-food restaurants, retail, warehouses, factories and gig work. The number of foreign workers in Canada’s $100-billion food service sector shot up by more than 4,000 per cent between 2016 and 2023.
The TFW program’s new rules are “a step in the wrong direction,” said Christopher Worswick, an economist at Carleton University in Ottawa, adding that the federal government is giving into pressure of employer groups when the focus should instead be on permanent immigration. In 2024, Ottawa started reining in immigration after years of rapid population growth largely driven by a surge of international students and temporary foreign workers who arrived during the pandemic.
Leaning on low-wage TFWs reinforces a system where short-term labour fills permanent needs, leaving deeper challenges in attracting and retaining workers unaddressed, Worswick said. Migrant workers whose status is tied to a single employer often fear speaking out about low wages and poor conditions, creating a power imbalance that benefits employers seeking a compliant workforce.
Without the program, businesses struggling to hire would have to raise workers’ wages and improve working conditions to attract applicants, or invest in new technology to save money, he added.
“When there’s a shortage of a good, demand is greater than supply so you should see upward pressure on price until demand equals supply,” he said. “The labour market is basically the same thing.”
In other words, “if you can’t hire somebody, then what economics would say is you should re-advertise at a higher wage.”
But industry groups maintain that restricting access to TFWs could force businesses to scale back or shut down entirely, particularly in rural and remote areas where hiring challenges are most acute. They say the new rules will give employers more flexibility to fill persistent labour gaps and keep operations running when local workers are not available.
“If the required domestic workforce is not available — particularly in rural and remote regions — Canadian businesses should be able to look to other sources of labour to keep their doors open,” said David Pierce, the Canadian Chamber of Commerce’s vice-president of government relations in a statement.
The Canadian Federation of Independent Business also welcomed the government’s announcement last week as “many small businesses across Canada are struggling to keep their doors open.”
Restaurants Canada — the industry’s largest lobby group, representing nearly 30,000 members across the country — said that while TFWs make up only three per cent of their workforce, they have been vital in keeping many businesses operational.
“While the measures announced today are only temporary, they are a step in the right direction to help some restaurants address labour shortages in the near term,” said the association’s CEO, Kelly Higginson.
However economist Jim Stanford, director of the think tank Centre for Future Work, said there is “simply no evidence of a general labour shortage,” calling it an employer-driven narrative in a country where unemployment remains high.
“Many employers are refusing to acknowledge their responsibility … to mobilize a labour force that is viable for them, and that means paying workers better,” Stanford said.
He pointed to the low wages in accommodation and food services, which average $18.55 an hour according to data from Statistics Canada.
“That’s $10 below the economy-wide average,” Stanford said.
By yo-yoing immigration rules, raising and lowering the number of TFWs, these workers are treated as “numbers and cogs in a machine — it’s inhumane,” said Syed Hussan, executive director of the Migrant Workers Alliance for Change, which has long called for migrant workers to have permanent resident status, giving them the same rights as Canadian workers.
“If there is an actual labour shortage, why not bring people who can stay permanently and give them benefits that encourage long-term work?”
Canada saw a marked increase in its reliance on TFWs in the wake of the pandemic. Employers were given the green light to hire almost 240,000 temporary foreign workers in 2023, according to data from ESDC, more than double the number in 2018. According to public data from Immigration, Refugees and Citizenship Canada, 183,820 temporary foreign worker permits became effective in 2023. That was up from 98,025 in 2019 — an 88 per cent increase.
