Canada Plans Major Overhaul of Temporary Foreign Worker Program to Target Key Sectors and Regions

Changes in the Works for the Temporary Foreign Worker Program, Carney Says

Prime Minister Mark Carney has announced that the Canadian government is preparing to introduce significant changes to the Temporary Foreign Worker Program (TFWP), aiming to make the system more targeted and responsive to specific sectors and regional labor needs.

In a speech delivered to the Liberal caucus on September 10, Carney emphasized that the future direction of the TFWP will prioritize “a focused approach that targets specific, strategic sectors, and needs in specific regions.” While the details of these planned changes have not yet been released, the announcement signals a shift in how the program will operate moving forward.

Overview of the Temporary Foreign Worker Program

The TFWP is Canada’s primary mechanism for issuing work permits to foreign nationals. For an employer to hire through this program, they must first undergo a Labour Market Impact Assessment (LMIA) conducted by Employment and Social Development Canada. The LMIA process ensures that hiring foreign workers will have a neutral or positive effect on Canada’s job market, meaning it should not reduce opportunities for Canadian citizens or permanent residents.

Recent Changes and Policy Shifts

Since 2024, the federal government has implemented several significant changes to the TFWP, particularly aimed at reducing the intake of temporary residents. Key changes include:

• Reducing the LMIA validity period from 12 to 6 months.
• Lowering the workforce cap for employers, from 30% to 20% for most sectors, and from 20% to 10% under the TFWP low-wage stream.
• Limiting the maximum employment duration in the low-wage stream to one year, down from two.
• Placing a moratorium on new low-wage LMIA applications in metropolitan areas with high unemployment (6% or higher).
• Increasing the minimum wage threshold for high-wage TFWs, requiring employers to offer at least 20% above the local provincial or territorial median wage.
• Implementing stricter employer eligibility checks, requiring formal assessments of job offers rather than relying on attestations from lawyers or accountants.
• Conducting annual reviews of wages to ensure employers pay prevailing wages based on government data.

There is also a specific 10% cap on the proportion of low-wage TFWs in the workforce for most sectors, with exemptions for primary agriculture, institutional healthcare caregiving, and short-term or seasonal jobs.

Political Debate and Opposition

The TFWP has become a contentious political issue, with the Conservative Party, led by Pierre Poilievre, calling for the program’s abolition. Critics argue that the program has led to fewer job opportunities for Canadians by allowing businesses to access cheaper labor, thereby suppressing wages and employment for local workers. Poilievre has also highlighted that youth employment rates are at their lowest levels in decades, outside of the pandemic period.

In response to these criticisms, Prime Minister Carney has acknowledged the TFWP’s economic role but has reiterated the government’s commitment to ensuring the program operates effectively for both employers and Canadian workers.

Demographic and Economic Context

These policy changes are part of a broader effort to reduce the share of temporary residents in Canada, including international students. The government aims to lower the share of temporary residents from 6.5% of the population to less than 5% by 2026. Recent data reflects a sharp decline in new arrivals under the TFWP, with a 50% drop in the first half of 2025 compared to the same period in 2024. Overall, temporary resident numbers are forecasted to shrink by about 445,900 in both 2025 and 2026.

While the government is actively developing targeted reforms to the TFWP to address strategic labor shortages without undermining Canadian job opportunities, the program remains subject to ongoing political and public debate, with calls ranging from fine-tuning to outright abolition.

As of September 10, Prime Minister Carney has not presented specific details about the next set of reforms. However, it is clear that significant changes are under consideration to make the TFWP more targeted and responsive to regional and sectoral needs.

Source

Political Debate and Opposition

The TFWP has become a contentious political issue, with the Conservative Party, led by Pierre Poilievre, calling for the program’s abolition. Critics argue that the program has led to fewer job opportunities for Canadians by allowing businesses to access cheaper labor, thereby suppressing wages and employment for local workers. Poilievre has also highlighted that youth employment rates are at their lowest levels in decades, outside of the pandemic period.

In response to these criticisms, Prime Minister Carney has acknowledged the TFWP’s economic role but has reiterated the government’s commitment to ensuring the program operates effectively for both employers and Canadian workers.

Demographic and Economic Context

These policy changes are part of a broader effort to reduce the share of temporary residents in Canada, including international students. The government aims to lower the share of temporary residents from 6.5% of the population to less than 5% by 2026. Recent data reflects a sharp decline in new arrivals under the TFWP, with a 50% drop in the first half of 2025 compared to the same period in 2024. Overall, temporary resident numbers are forecasted to shrink by about 445,900 in both 2025 and 2026.

While the government is actively developing targeted reforms to the TFWP to address strategic labor shortages without undermining Canadian job opportunities, the program remains subject to ongoing political and public debate, with calls ranging from fine-tuning to outright abolition.

As of September 10, Prime Minister Carney has not presented specific details about the next set of reforms. However, it is clear that significant changes are under consideration to make the TFWP more targeted and responsive to regional and sectoral needs.

Source

Conclusion

The Temporary Foreign Worker Program (TFWP) is undergoing significant transformations as the Canadian government aims to create a more targeted and responsive system. Prime Minister Mark Carney’s announcement highlights the need to balance addressing sectoral and regional labor shortages with protecting opportunities for Canadian workers. While the program has faced political and public scrutiny, the government remains committed to refining it to meet economic needs while ensuring fairness for domestic labor.

The recent changes, including reduced LMIA validity periods, stricter workforce caps, and higher wage thresholds, reflect a shift toward a more regulated and equitable approach. As the program evolves, it will be crucial to monitor its impact on both employers and employees, ensuring it aligns with Canada’s long-term economic and demographic goals.

Frequently Asked Questions (FAQ)

What is the Temporary Foreign Worker Program (TFWP)?

The TFWP is Canada’s primary program for issuing work permits to foreign nationals, allowing employers to hire foreign workers when Canadian citizens or permanent residents are not available.

What are the recent changes to the TFWP?

Recent changes include reducing the LMIA validity period, lowering workforce caps, stricter wage requirements, and limiting employment duration in the low-wage stream. These changes aim to make the program more targeted and responsive to labor needs.

Why is the TFWP controversial?

The program is controversial because critics argue it suppresses wages and reduces job opportunities for Canadian workers. Political parties like the Conservative Party have called for its abolition, citing concerns about youth employment rates and labor exploitation.

How will the TFWP changes affect employers?

Employers will face stricter regulations, including shorter LMIA validity periods, lower workforce caps, and higher wage requirements. These changes may increase compliance costs and reduce reliance on temporary foreign workers.

What is the government’s goal for temporary residents?

The government aims to reduce the share of temporary residents from 6.5% of the population to less than 5% by 2026. This includes reforms to the TFWP and other programs like international student visas.

What’s next for the TFWP?

Prime Minister Carney has announced that further changes are under consideration to make the program more targeted and responsive to regional and sectoral needs. Specific details are expected in the coming months.