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The federal government is extending a measure that allows Canadian companies in certain sectors to hire more of their staff at low wages through the Temporary Foreign Worker Program, citing hiring challenges in some industries.

Employment and Social Development Canada (ESDC) said on Thursday that employers in seven sectors “with demonstrated labour shortages” can continue to hire up to 30 per cent of their staff through the low-wage stream of the TFW program. The cap is 20 per cent in most other industries, after Ottawa permanently raised the limit from 10 per cent, part of a broader revamp of the program last year.

The temporary cap, which was set to expire on Oct. 30, now runs to Aug. 30, 2024. The seven sectors that benefit from the extension include accommodation and food services, construction, food manufacturing and hospitals.

“Temporary foreign workers are essential to Canada’s economy, and many sectors continue to rely on their contribution when faced with persistent job vacancies amid acute labour shortages,” Minister of Employment, Workforce Development and Official Languages Randy Boissonnault said in a statement. “That is why we are extending these temporary measures for an additional 10 months.”

Ottawa overhauled the TFW program in April, 2022, through a mix of permanent and temporary changes that were intended to help employers, who complained about persistent labour shortages as the economy was recovering from the pandemic.

Among the permanent moves, the government scrapped a policy that forbade companies in the retail and hospitality industries from hiring TFWs in low-wage occupations when the local unemployment rate was 6 per cent or higher. As well, Ottawa removed a limit on the number of low-wage positions that companies in seasonal industries, such as fish and seafood processing, can fill through the program.

The expansion of the TFW program was cheered by business lobby groups, particularly as job vacancies were climbing to record highs. But the moves were panned by some labour economists, who raised concerns about wage suppression in the economy and the weaker labour rights of foreign workers tied to a single employer.

Economists have also lamented that federal policies are encouraging companies to hire cheap labour, rather than make productivity-enhancing investments. Canada’s real gross domestic product per capita – a popular measure of living standards – has effectively stagnated for years, leading to a vigorous debate on how to juice economic growth.

Canadian companies are increasingly turning to the TFW program to fill positions, especially those paying low wages. During the first three months of 2023, employers were approved to hire around 22,000 roles through the low-wage stream, an increase of roughly 275 per cent from four years earlier, according to figures published by ESDC. (This dataset excludes some employers, such as those with business names that include personal names.)

The ESDC numbers show that cooks, cashiers and cleaners are among the positions in high demand. TFWs hired through the low-wage stream are paid less than the median hourly wage in their province or territory of work.

To hire a TFW, companies are required to file a Labour Market Impact Assessment with the government that successfully demonstrates they can’t find a Canadian or permanent resident to fill the job in question.

As part of Thursday’s changes, ESDC said that assessments would be valid for a maximum of 12 months, down from 18 months, to “better respond to the labour market.” Before the pandemic, assessments were valid for six months.

In a statement, the Canadian Federation of Independent Business said it welcomed some of the extensions announced on Thursday. “However, maintaining the LMIA validity period at 18 months would also have been welcomed,” said Christina Santini, CFIB’s director of national affairs.

“Temporary foreign workers contribute to the viability of the food-service industry,” Kelly Higginson, president and CEO of Restaurants Canada, said in a statement. The lobby group said it wants a “dedicated stream” for the food-service industry in the TFW program that paves the way for foreign workers to become permanent residents.

The government said on Thursday that employers would be required to annually review the wages of TFWs to ensure they reflect increases to prevailing wage rates in their given occupation and region of work.

“Employers must understand that the Temporary Foreign Worker Program should be supporting wage growth in this country, not preventing it,” Mr. Boissonnault said.

Canada’s labour market has softened in recent months as higher interest rates weigh on consumption and business investment, leading to weak economic growth.

Statistics Canada reported on Thursday that Canada had roughly 682,000 vacant jobs in August – a sizable drop from more than one million at peak levels last year.

Editor’s note: A previous version of this article incorrectly attributed a statement from Restaurants Canada to a spokesperson for the organization. The statement is rightly attributed to Kelly Higginson, the organization's president and CEO. This version has been updated.

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