New limits on TFWs now in effect with significant impact on hospitality sector

The changes, initially announced by Randy Boissonnault, Minister of Employment, Workforce Development and Official Languages, come amid a shifting labour market and are expected to have substantial implications for industries facing chronic labour shortages, including hospitality.

The modifications, effective as of September 26, 2024, introduce several new measures aimed at tightening the TFW Program, particularly for employers under the Low-wage Stream. Notably, a 10 per cent cap on the number of temporary foreign workers that businesses can hire now applies nationwide, including in Quebec under the Traitement Simplifié process. However, exemptions will be made for employers in healthcare, construction, and food processing, who will retain a 20 per cent cap on foreign worker hires.

This new policy comes at a time when the hospitality sector, which has long relied on temporary foreign workers to fill critical positions such as housekeeping, kitchen staff, and front desk workers, is already grappling with a challenging labour market. With the national unemployment rate inching upward to 6.6 per cent in August 2024, the government has made it clear that Canadian workers should be prioritized. The rising unemployment has prompted these measures to ensure that businesses first seek qualified domestic candidates before turning to foreign labour.

Under the updated guidelines, Labour Market Impact Assessments (LMIAs) approved for Low-wage Stream positions will be valid for a maximum of one year, a reduction from previous allowances. This change is also applicable in Quebec under the Traitement Simplifié, except for positions in the Primary Agriculture Stream.

The hospitality sector, already hit hard by post-pandemic workforce shortages, may see increased pressure to attract and retain local talent under these restrictions. Employers will now have to further invest in hiring, training, and upskilling Canadians, particularly from traditionally underrepresented groups such as young people, newcomers, and people with disabilities.

Moreover, a key addition to the program's tightening measures is the expansion of the Refusal to Process (RTP) policy, which will now apply to all Census Metropolitan Areas (CMAs) with an unemployment rate exceeding 6 per cent. This means that in regions where unemployment rates are high, employers may face restrictions on their ability to hire temporary foreign workers, again except for critical sectors such as healthcare and food processing.

Minister Boissonnault emphasized that these changes reflect a broader goal of rebalancing the workforce post-pandemic. "The Temporary Foreign Worker program 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," he says. "The changes we are making today will prioritize Canadian workers and ensure Canadians can trust the program is meeting the needs of our economy."

For the hospitality industry, this could signal both challenges and opportunities. On the one hand, the sector may struggle to meet staffing needs without the same level of access to foreign labour. On the other, there will be a renewed focus on developing the skills of Canadian workers, including investments in training and upskilling programs aimed at ensuring the current workforce is equipped to handle the demands of the evolving economy.

Additionally, the government has signalled that further changes could be coming. Over the next 90 days, the TFW Program will undergo further review, with potential adjustments on the horizon for the High-Wage Stream, sectoral exceptions, and LMIAs for rural areas.

As the hospitality industry continues to adapt to these policy shifts, hotel businesses will need to carefully navigate the regulatory environment to meet their staffing needs while aligning with the government's objectives of reducing foreign worker dependency.

With labour market conditions in flux, the sector must explore new avenues to attract domestic talent to sustain operations and deliver the level of service expected by guests across Canada.

Key takeaways

• As of September 26, 2024, a 10 per cent cap on temporary foreign workers under the Low-wage Stream is in place nationwide, with exceptions for healthcare, construction, and food processing.
• LMIAs approved for Low-wage Stream positions are now limited to a maximum of one year.
• The Refusal to Process (RTP) policy applies to regions with unemployment rates over 6 per cent, updated quarterly.
• Canada’s unemployment rate rose to 6.6% in August 2024, with 1.5 million people unemployed, a 4.3 per cent increase from July.

Sources: Labour Force Survey, Government of Canada