Many employers using foreign workers because they work more for less money, not because Canadians are unavailable
For many Canadian employers and HR leaders, temporary foreign workers have become a key part of workforce strategy. A recent peer‑reviewed study makes clear why — low‑skill foreign workers tend to work longer hours, have fewer absences, and accept lower pay than comparable domestic workers.
From a narrow firm perspective, that can look like a win. But the study by Canadian economists Pierre Brochu, Till Gross, and Christopher Worswick, published in The Canadian Journal of Economics and reported by the Vancouver Sun, also shows how this approach can depress wages across the board and undermine productivity growth in Canada’s economy.
For employers and HR leaders, there’s a strategic and ethical choice here — use foreign labour primarily as a wage‑disciplining tool, or as a carefully governed complement that supports innovation, fair pay, and long‑term competitiveness.
Foreign workers work more for less
The study’s core message is that many firms aren’t using temporary foreign workers (TFWs) because Canadians are unavailable, but because these workers behave differently on the job.
According to the study, TFWs tend to work longer hours than comparable Canadian workers, are absent from work less often, and “put out more effort for lower earnings than domestic employees.”
From an HR perspective, that combination is powerful. It creates a workforce that appears more reliable and cost‑effective on basic metrics like attendance and hourly labour cost. The study gives empirical backing to what many employers experience informally — TFWs often feel they have more to lose if they underperform, which can translate into greater effort and fewer breaches of workplace rules.
The study says this offers a “possible explanation for why firms might prefer to hire temporary foreign workers, even when domestic workers are available and paid the same wage.”
Surge of temporary foreign worker population
Foreign workers accept lower compensation because even low-skill jobs in Canada pay significantly more than comparable positions in their home countries. A London School of Economics study, reported by The Economist, found that temporary migrants from developing nations including India, the Philippines, and Mexico can earn more than 400% higher wages by securing employment in North America compared to their countries of origin.
The proportion of foreign workers in Canada has increased dramatically. Temporary residents now account for 7.1% of the population, up from 2.3% in 2013, according to the Vancouver Sun. In British Columbia, temporary residents represent 9.1% of the population.
Ben Rabidoux, founder of North Cove Advisors, meanwhile raised the issue that Canada now has the same share of businesses reporting labour shortages as there were back in 2020, during the COVID-19 crisis.
“The handful of businesses still screaming that they need more cheap foreign workers can pound sand. Pay more and hire Canadians,” he said via social media platform X.
Foreign worker programs can be misused
Most foreign workers in Canada operate under the International Mobility Program (IMP) or arrive as international students permitted to work for at least three years following graduation, according to the Vancouver Sun. These categories represent the majority of foreign workers, substantially outnumbering those in the Temporary Foreign Worker Program.
Some Canadian employers have also engaged in criminal fraud to access foreign workers. Previously, a British Columbia-based immigration consultant reported that fraudulent Labour Market Impact Assessment (LMIA) documents falsely listed her company as a third-party representative, according to a report.
The fraud became sufficiently widespread that Immigration, Refugees and Citizenship Canada cancelled the low-skill LMIA program in March in regions with unemployment rates exceeding 6%, the Vancouver Sun reported.
Recently, Ontario suspended its fast-track immigration stream for skilled tradespeople after an internal review recently “identified systemic misrepresentation and/or fraud,” according to the provincial government.
Economists push for program overhaul
Labour economists are advocating for fundamental reform of Canada's guest worker programs. University of Waterloo labour economist Mikal Skuterud, who advises Parliament on labour economics, told the C.D. Howe Institute that guest worker programs require "drastic reform," according to the Vancouver Sun report.
He recommends that the federal government "stop tying migration policy so closely to temporary fluctuations in the labour market—and start ignoring the often-exaggerated claims of shortages made by some companies and lobby groups."
Skuterud has proposed phasing out “low-skill streams, including in agriculture and caregiving, over three to five years,” according to the report.
The economist argued that a long-term approach would “give viable businesses time to make productivity-enhancing training and technological investments. (That will) reduce reliance on low-wage foreign labour, while supporting wage growth and productivity gains in the domestic workforce.”
With the 2026-2028 Immigration Levels Plan, Ottawa is reducing Canada’s temporary population to less than 5% of the total population by the end of 2027. Targets for new temporary resident arrivals are set at 385,000 in 2026, and 370,000 in both 2027 and 2028.
The study found that the growth in TFWs workers has contributed to lower wages for many workers in Canada, particularly in the private sector. It connects these wage effects to a larger productivity problem.
The OECD projects that Canada is on track to have the lowest growth in GDP per capita among a group of 37 mostly rich nations over the coming decades. One reason is that employers too often “rely on paying low wages to offshore workers, rather than innovating and increasing productivity,” the study said.
