Temporary Foreign Workers Replaced Canadians in Some Sectors: Bank of Canada

Temporary foreign workers are taking the place of locally-born workers in some sectors of Canada’s workforce, including accommodation and food services, business, building and other support services, and retail trade, a recent Bank of Canada report suggests.

Canada has experienced a surge in immigration since the COVID-19 pandemic that has mostly consisted of non-permanent residents who are now making up a large portion of the country’s workforce in low-skilled occupations, “replacing Canadian-born workers who moved out of these jobs,” the May 9 report says.

“Public data suggest that this surge in temporary immigration mostly reflects a sharp rise in the International Mobility Program work permits, which are generally granted without any requirement for labour market impact assessments, and a pick-up in international study permits,” says the report, which was first covered by Blacklock’s Reporter.

Exemptions from providing labour market impact assessments result in some inconsistency with “commitments to consider Canadian workers first,” a July 2024 report from Immigration, Refugees and Citizenship Canada said. The government’s 2015 budget called for prioritizing Canadians for available jobs and using foreign workers as a “last and limited resort.” Yet, the use of temporary workers has significantly increased, largely through the International Mobility Program, the report said.

Immigration, Refugees and Citizenship Canada issued more than 1 million work permits under the program in the first three quarters of 2023—nearly double the number during the same period in 2022.

The Bank of Canada report indicates that non-permanent residents have replaced permanent residents as the main contributor to population growth, following the substantial increase in immigration over 2023 and 2024.

Canada’s population increased from 38 million in July 2020 to an estimated over 41.7 million in October 2024. A July 2024 Statistics Canada report said 96 percent of the population growth in the second quarter of 2024 was almost entirely due to immigration.

“Between 2015 and 2024, temporary workers have become younger, less experienced and more likely to migrate from lower-income countries,” the Bank of Canada report reads, comparing to past waves of immigration that reported more temporary foreign workers in skilled occupations.

Temporary foreign workers surged after the pandemic following federal policy changes made to “facilitate employers’ access to temporary foreign workers,” the report says.

The Bank of Canada examined how wages of temporary foreign workers compared to Canadian-born workers.

From 2015 to 2024, the wage gap between temporary and Canadian-born workers widened, the Bank says. On average, non-permanent residents’ wages were 9.5 percent lower than locally-born workers in 2015, which rose to 22.6 percent lower by 2024.

An Employment and Social Development Canada report in 2021 said that wage suppression may be occurring in low-wage or lower-skilled occupations where “foreign workers are willing to work for lower wages than what a Canadian or permanent resident would consider acceptable.”

Immigration Targets Adjusted

Then-Prime Minister Justin Trudeau announced on Oct. 24, 2024, that the federal government would cut the number of permanent residents allowed in Canada over the following three years.

“We are acting today because in the tumultuous times as we emerged from the pandemic, between addressing labour needs and maintaining population growth, we didn’t get the balance quite right,” Trudeau told reporters on Parliament Hill.

Prime Minister Mark Carney has acknowledged that too many immigrants were brought into Canada in the last few years. Throughout his campaign, he said that he would cap immigration until it returns to its sustainable, pre-pandemic trend.

During his Speech from the Throne in Ottawa on May 27, King Charles III told Canadians that the government will “cap the total number of temporary foreign workers and international students to less than five percent of Canada’s population by 2027.”

“By doing this, the Government will attract the best talent in the world to build our economy, while sending a clear message to Canadians working abroad that there is no better time to come home,” King Charles III said.

“Canada’s immigration system has long been a source of pride for Canadians and of dynamism for the economy. The Government is dedicated to rebuilding the trust of Canadians in immigration by restoring balance to the system.”

Andrew Chen and Matthew Horwood contributed to this report.