The Labour Market Impact Assessment (LMIA) Low-Wage Stream has long been a cornerstone of Canada’s Temporary Foreign Worker Program (TFWP). It has enabled Canadian businesses to hire foreign workers for roles that offer wages below the provincial or territorial median. With the government’s decision to close the Low-Wage Stream, many employers, industries, and even foreign workers are now left wondering how this change will affect Canada’s labour market in 2024.

The LMIA Low-Wage Stream has been a key component in filling gaps in industries facing chronic labour shortages. As this stream comes to a close, the impact will ripple through various sectors of the Canadian economy. In this blog, we will explore the likely effects on employers, domestic workers, and foreign workers, and how Canada’s labour market may adjust to these significant changes.

1. Why Is the LMIA Low-Wage Stream Closing?

Before diving into the potential impacts, it’s important to understand why the LMIA Low-Wage Stream is closing. The Canadian government has cited several reasons for this decision, including:

• Protecting Canadian Workers: One of the main objectives is to ensure that Canadian citizens and permanent residents have access to available jobs before foreign workers are brought in. By closing the Low-Wage Stream, the government hopes to encourage employers to prioritize hiring domestic workers.

• Improving Labour Standards: The closure is part of a broader effort to improve working conditions and wages for low-wage positions in Canada. Many critics have argued that the LMIA Low-Wage Stream has enabled employers to keep wages low, relying on foreign workers instead of offering competitive wages to attract local talent.

• Addressing Concerns About Worker Exploitation: There have been concerns about the treatment of foreign workers in low-wage roles. Closing the Low-Wage Stream is seen as a step towards reducing the potential for exploitation of foreign workers, while also improving conditions for all workers in these industries.

With these goals in mind, the government is pushing employers to adapt their hiring practices and focus more on domestic recruitment.

2. Impact on Employers: Rising Labour Costs and Recruitment Challenges

The most immediate and obvious impact of the LMIA Low-Wage Stream closure will be felt by employers. For businesses in sectors such as agriculture, retail, hospitality, and construction, the loss of the Low-Wage Stream means they will no longer have access to a reliable source of foreign labour for low-wage positions.

a) Labour Shortages in Key Sectors

Many industries in Canada have historically relied on foreign workers to fill positions that domestic workers are either unwilling or unable to fill. For example, agriculture is an industry where foreign workers have been essential, especially during peak harvest seasons. The same is true for hospitality and retail, where low wages and high turnover have made it difficult for employers to retain local staff.

Without the LMIA Low-Wage Stream, businesses will likely face significant labour shortages, especially in these key sectors. Employers will need to quickly find alternative solutions to fill positions that are essential to their operations.

b) Increased Labour Costs

One of the major effects of the closure will be the pressure on businesses to raise wages to attract domestic workers. Employers will no longer be able to hire foreign workers at lower wage levels, forcing them to offer more competitive salaries to attract local talent.

This could result in higher operating costs for businesses, particularly in industries where profit margins are already tight. Employers will need to adjust their budgets and operations to account for the increased costs associated with hiring and retaining domestic workers.

c) Pressure to Improve Working Conditions

In addition to raising wages, businesses may also need to improve working conditions to attract and retain local talent. This could include offering benefits such as health insurance, paid time off, and more flexible work arrangements. While these changes could lead to higher labour costs, they could also help businesses build a more stable and satisfied workforce in the long term.

3. Impact on Foreign Workers: Fewer Opportunities and Alternative Pathways

For foreign workers, the closure of the LMIA Low-Wage Stream represents a significant reduction in opportunities to work in Canada. Many foreign workers have relied on the Low-Wage Stream as a pathway to gain employment in Canada, and its closure will make it more difficult for them to secure work in the country.

a) Limited Access to Low-Wage Jobs

Foreign workers looking for opportunities in low-wage positions will face significant barriers with the closure of the Low-Wage Stream. Many of the industries that have traditionally hired foreign workers under this stream, such as agriculture, hospitality, and retail, will no longer have a straightforward pathway to bring in foreign labour for low-wage roles.

This could result in fewer job opportunities for foreign workers in Canada, particularly for those who do not qualify for higher-wage or skilled positions.

b) Shift to Other Immigration Pathways

With the LMIA Low-Wage Stream closing, foreign workers will need to explore alternative pathways to work in Canada. Some of these options include:

• LMIA High-Wage Stream: For foreign workers who can secure higher-paying jobs, the LMIA High-Wage Stream remains an option. However, this will be limited to positions offering wages at or above the provincial or territorial median wage, which may be out of reach for many foreign workers currently seeking low-wage positions.

• Provincial Nominee Programs (PNP): Some provinces may offer streams under their Provincial Nominee Programs that cater to specific industries or regions facing labour shortages. Foreign workers could explore these programs as an alternative to the LMIA Low-Wage Stream.

• Temporary Foreign Worker Program (TFWP): The broader TFWP remains an option, though it comes with stricter regulations and oversight. Employers will need to prove that they have made every effort to hire Canadian workers before turning to foreign workers under this program.

4. Impact on Domestic Workers: Increased Job Availability but Higher Expectations

For domestic workers, the closure of the LMIA Low-Wage Stream presents both opportunities and challenges.

a) Increased Job Opportunities for Canadians

One of the primary goals of the LMIA Low-Wage Stream closure is to create more job opportunities for Canadian citizens and permanent residents. With fewer foreign workers available to fill low-wage positions, employers will be forced to turn to the domestic labour market. This could lead to an increase in job openings for Canadians, particularly in sectors like agriculture, retail, and hospitality.

b) Pressure to Meet Higher Job Expectations

While the closure of the Low-Wage Stream may increase job availability, domestic workers may also face higher expectations from employers. As businesses raise wages and improve working conditions to attract local talent, they may also raise their expectations for worker performance and productivity. Domestic workers could find themselves in a more competitive job market, with employers seeking candidates who can meet higher standards.

5. Long-Term Effects on Canada’s Labour Market

The closure of the LMIA Low-Wage Stream will have lasting effects on Canada’s labour market. In the long term, we can expect to see shifts in how businesses approach hiring, wages, and worker retention.

a) A More Competitive Labour Market

As employers adapt to the loss of foreign labour in low-wage roles, we may see a more competitive labour market, particularly in industries facing chronic labour shortages. Employers will need to invest in attracting and retaining local talent, which could lead to higher wages, better working conditions, and more job security for workers.

b) Greater Focus on Domestic Recruitment and Training

The closure of the Low-Wage Stream will likely encourage businesses to focus more on domestic recruitment and training. Employers may need to invest in job training programs, internships, and partnerships with local employment agencies to develop a pipeline of qualified candidates. This could result in a more skilled and engaged domestic workforce in the long term.

c) Changes in Immigration Policy and Labour Regulations

As the Canadian government continues to focus on protecting domestic workers, we may see further changes in immigration policy and labour regulations. Employers will need to stay informed about these changes and adapt their hiring practices to remain compliant with the evolving regulatory landscape.

6. Conclusion: Adapting to a New Labour Market in 2024

The closure of the LMIA Low-Wage Stream is a significant shift in Canada’s labour market and will have wide-ranging effects on employers, foreign workers, and domestic workers. While the immediate impact may be challenging for businesses that rely on foreign labour, the long-term effects could lead to a more competitive and resilient workforce.

To thrive in this new environment, employers must act quickly to adjust their recruitment strategies, improve working conditions, and explore alternative immigration pathways. With the right approach, businesses can continue to meet their labour needs while contributing to a stronger, more sustainable Canadian labour market.

If your business is affected by the LMIA Low-Wage Stream closure and you need help navigating the changes, consulting with an immigration lawyer or employment specialist can help you explore all available options and ensure compliance with Canadian labour laws.