Report cites downsides for employers around LMIAs, disruptions, over-dependence
Canada’s Temporary Foreign Worker Program (TFWP) and the International Mobility Program (IMP) have become key mechanisms by which Canadian employers address persistent labour and skills shortages.
The programs allow employers to bring in foreign workers when it is demonstrated that qualified Canadian citizens or permanent residents are not available, a task overseen through the Labour Market Impact Assessment (LMIA) process for the TFWP stream.
But are these initiatives more of a hindrance than a help for employers? A report from the Fraser Institute recently explored the nuances of the program.
TFWP: filling gaps and breaking bottlenecks
In analysing the impact of temporary foreign work permits on business operations, the study notes that these programs can help mitigate short-term labour and skill shortages that might otherwise slow or halt economic activity.
For example, the high-wage and global talent streams can help employers recruit highly skilled professionals necessary for expansion, while agricultural and caregiver streams can fill essential jobs that historically have seen few Canadian applicants.
“The foreign academics stream… enhances productivity by expanding the pool of qualified academics,” says the report’s author, Morley Gunderson, professor at the University of Toronto, and lower-end streams “can obviously break bottlenecks by doing the jobs Canadians are not prepared to do.”
When temporary foreign workers fill roles domestically, they may also enable other workers to transition to higher-productivity positions, freeing up employers to allocate labour more efficiently, he writes.
For employers contending with tight margins and competitive pressures, the program’s flexibility is often cited as a pragmatic advantage. By accessing labour through LMIAs or IMP categories that do not require LMIAs, firms can respond quickly to market demand without protracted recruitment delays.
Unintended consequences for employers
Despite these potential upsides, the study points to several structural and economic concerns that could affect Canadian businesses. One such issue relates to how the LMIA process is administered.
While intended as a safeguard to protect the domestic labour market, the report notes that the LMIA “can also be subject to the subjective assessment of an immigration officer” and in some cases may be regarded as “a sham or a token gesture,” raising questions about consistency and fairness in employer access.
There’s also the concern about disruptions in labour supply: “The reliance on temporary foreign workers, especially in seasonal agricultural programs, can create risks if the supply of such workers is cut off by events such as the COVID-1.”
The report also highlights potential long-term distortions.
“The readily available supply of cheap temporary foreign workers may discourage Canadian employers from investing in capital and technology by suppressing the price of labour relative to the price of capital,” the study warns, suggesting that dependence on temporary workers could dampen incentives for productivity-enhancing innovation.
Additionally, the analysis discusses concerns that workers tied to a specific employer may work longer hours, have lower absenteeism, and be less likely to quit, a dynamic that can reduce turnover costs but also potentially suppress wage growth for comparable Canadian-born workers.
The Fraser Institute report also underscores the complexity of Canada’s temporary worker system — comprised of more than 100 pathways and subprograms — and cautions that this complexity makes it difficult for employers and workers alike to fully navigate rights, responsibilities, and compliance obligations.
‘Win-win’ for all involved
Gunderson concludes by saying there is a wide range of pros and cons to Canada’s Temporary Foreign Worker Program and International Mobility Program — but it should not end.
“Overall, the negative aspects do not appear sufficiently strong to merit scrapping the programs, as the positive aspects have strong elements of win-win for all parties.”
The report also advocates for better data collection and monitoring to support evidence-based decision-making around these programs, particularly to assess their long-term effects on labour markets and employer practices.
With some politicians suggesting that the Temporary Foreign Worker Program (TFWP) should be put to an end, Canadians are divided on the matter, according to an earlier survey.
