Canada’s Foreign Worker Cuts Are Now Hitting Businesses Harder

Last Updated On 22 December 2025, 10:41 AM EST (Toronto Time)

A&W franchise owners in Quebec’s bustling fast-food scene are warning that without sufficient access to temporary foreign workers, some restaurants may have to close or reduce their operating hours.

Business leaders across Canada are increasingly echoing this dire warning as recent federal reforms tighten restrictions on the Temporary Foreign Worker Program (TFWP).

Arrivals under the program have plummeted to a two-year low, leaving employers scrambling to fill essential roles in sectors like hospitality, agriculture, and retail.

As Canada grapples with these changes, the reductions aim to address concerns over housing, wages, and youth employment—but at what cost to the economy?

TFWP has long been a lifeline for industries facing labour shortages, as it helps Canadian employers hire international workers when no suitable local candidates are available.

However, with new caps set at 82,000 in 2025, and now reducing the admissions further to 60,000 in 2026, and further to 50,000 annually in 2027 and 2028, businesses are feeling the pinch.

These measures are part of a broader strategy to bring temporary resident levels to more sustainable figures, targeting a decline in the overall temporary population to below 5% of Canada’s total by the end of 2027.

At the same time, critics of the program argue that it has expanded beyond its original intent and may be suppressing wages or crowding out young Canadians in a historically weak youth job market.

The question of whether the program is a necessary economic lifeline or a structural problem has become one of the most divisive labour policies in the country.

The Sharp Decline in Temporary Foreign Worker Arrivals

Canada’s labour market has undergone a seismic shift recently, with TFWP arrivals reaching their lowest point in nearly two years.

Data from Immigration, Refugees and Citizenship Canada (IRCC) reveals a dramatic slowdown, with only 3,215 new workers entering under the program in October 2025—a stark contrast to previous highs.

This drop aligns with broader trends: between January and September 2025, the country saw approximately 308,880 fewer arrivals of new students and temporary workers compared to the same period in 2024, marking a 53% reduction.

Experts attribute this decline to a combination of policy changes, including a moratorium on low-wage Labour Market Impact Assessments (LMIAs) in certain regions and heightened scrutiny of applications.

The LMIA process has become more stringent, requiring employers to prove that no Canadian or permanent resident is available for the job and reflecting the government’s push to prioritize domestic hiring.

This shift signals a departure from the rapid expansion of the TFWP in prior years, when approvals surged to meet post-pandemic demands in sectors like food services and agriculture.

The two-year low in arrivals is not isolated; it’s part of a deliberate strategy to curb overall temporary resident inflows.

In 2025, projections indicate Canada may end the year with around 202,900 foreign worker admissions—45% below the initial target of 367,750, which included 82,000 under the TFWP and 285,750 under the International Mobility Program (IMP).

As these numbers contract, businesses reliant on seasonal or low-skilled labour are left vulnerable, prompting warnings of operational disruptions and economic fallout in rural and remote areas.

Capping Targets for Sustainability

The federal government’s 2026-2028 Immigration Levels Plan marks a pivotal turn in policy, emphasizing reductions to foster a more balanced immigration system.

For the first time, specific caps were introduced for TFWP admissions: 82,000 in 2025.

Now, as per the new immigration levels plan, these numbers are dropping to 60,000 in 2026, and stabilizing at 50,000 for both 2027 and 2028.

These figures are embedded within broader temporary resident targets, which will fall from 673,650 in 2025 to 385,000 in 2026, and 370,000 in 2027 and 2028.

Year	Total Temporary Resident Arrivals	Total Workers (TFWP + IMP)	TFWP Target	IMP Target	Study Permits
2025	673,650	367,750	82,000	285,750	305,900
2026	385,000	230,000	60,000	170,000	155,000
2027	370,000	220,000	50,000	170,000	150,000
2028	370,000	220,000	50,000	170,000	150,000

Source: IRCC Supplementary Information

The government has also ramped up enforcement, with penalties for non-compliant employers more than doubling to $4,882,500 in the first half of 2025, resulting in 36 bans from the program.

Proponents argue these steps will alleviate pressures on housing and public services, while critics contend they overlook the program’s role in sustaining key industries.

Additional changes, such as reducing the validity of low-wage stream work permits from two years to one, aim to prevent exploitation and encourage employers to invest in local talent.

However, as arrivals continue to lag, the gap between policy intent and economic reality widens, particularly in provinces where labour shortages are acute.

Closures and Cutbacks Loom Across Provinces

The cuts have sparked urgent pleas from business owners, who warn of shutdowns and reduced services without foreign labour.

In Quebec, A&W franchisees in cities like Sept-Îles and Baie-Comeau have petitioned the House of Commons, stating that restrictions make it impossible to find local staff for fast-food roles.

They argue that without restoring access to temporary foreign workers, closures or hour reductions are inevitable, potentially affecting community economies.

This sentiment extends beyond Quebec. In northern British Columbia, employers in Prince Rupert report jobs going unfilled due to the crackdown, with business groups calling for regional exemptions.

Leaders there emphasize that smaller towns lack the population base to meet labour demands in hospitality and retail, leading to operational strains that could force closures.

Ontario businesses echo these concerns. An Ontario resort, for instance, struggles to hire enough staff, attributing the shortfall to TFWP restrictions.

In a broader legal push, 23 Quebec business owners have launched a $300 million lawsuit against the federal government over the cuts, claiming they threaten viability in sectors dependent on migrant labour.

Nationwide, industries like agriculture and food processing face similar threats.

A mushroom plant closure in Ontario left temporary workers facing job loss and deportation, highlighting the program’s fragility.

Restaurants Canada has raised alarms, noting that reductions could exacerbate staffing crises in an already challenged sector.

These stories illustrate a common thread: while the TFWP requires LMIAs to ensure no displacement, employers insist local applicants are scarce for low-wage, demanding jobs.

The economic implications are profound. Restrictions have hit companies hard, with some warning of broader slowdowns in rural economies.

As one business leader put it, the program is key to survival and reduces the risk of turning labour shortages into full-blown crises.

The Dark Side of Reliance on Foreign Labor

Beneath the surface of these labour debates lies a troubling pattern of exploitation within Canada’s food and hospitality sectors, where some employers have been accused of leveraging vulnerable international students and temporary foreign workers to cut costs and boost profits.

Reports from across the country reveal instances where these workers are paid below the minimum wage, often in cash, to evade taxes and regulations while being required to work beyond legally permitted hours—practices that are illegal under Canadian labour laws but have persisted as a shadowy norm in certain businesses.

In the Greater Toronto Area, for example, a popular restaurant chain faced allegations of withholding wages from international students and refugees, including unpaid training periods that violated Ontario’s employment standards requiring at least minimum wage for all work performed.

Such underpayments, sometimes facilitated by off-the-books cash transactions, allow employers to sidestep payroll taxes and overtime premiums, effectively reducing labour expenses while maximizing margins.

International students, restricted to 24 hours of off-campus work per week during academic sessions, are particularly susceptible.

This limit on working hours often pushes some toward illegal cash jobs to make ends meet, exposing them to further exploitation like unfair deductions and excessive shifts.

Temporary foreign workers in the food industry face similar vulnerabilities.

Investigations have uncovered cases where fast-food employers, including major chains, use the TFWP to hire at suppressed wages, with some workers receiving less than advertised rates through intermediary agencies that skim off portions of their pay—resulting in earnings below provincial minimums.

In Alberta, companies were ordered to repay nearly $165,000 to underpaid temporary workers, including cooks who earned $12-$13 per hour despite agencies charging employers $17, a practice that not only undercuts wages but also encourages illegal overwork to compensate for low hourly rates.

Amnesty International’s reports highlight systemic issues in the TFWP, including excessive hours beyond visa limits and discriminatory treatment, which tie workers to abusive employers through closed permits, making it difficult to report violations without risking deportation.

Canadian citizens and permanent residents, who typically work under a Social Insurance Number (SIN), expect at least the legal minimum wage and adhere to standard hours, only allowing overtime when necessary, often at 1.5 times the regular rate.

Citizens are less likely to accept cash-only arrangements, which evade tax reporting and benefits like employment insurance, preferring formal payroll systems that ensure compliance and protections.

Critics argue that this disparity incentivizes some food businesses to favour migrant labour for its perceived cost advantages, perpetuating a cycle where illegal practices become commonplace to maintain slim profit margins in competitive industries.

While enforcement has led to fines and repayments, advocates call for stronger oversight to dismantle these abusive models, emphasizing that true labour shortages should not rely on exploitative shortcuts.

Are TFWs Displacing Young Canadians?

At the core of the TFWP controversy lies a heated question: Are temporary foreign workers edging out young Canadians from entry-level jobs?

Canada’s youth job market has endured one of its weakest periods since 2010, with unemployment rates for those aged 15-24 climbing to 14.7% in September 2025—the highest since September 2010 outside pandemic peaks.

July 2025 marked the toughest month for youth employment since 2010, with a net loss of 34,000 positions and an employment rate dipping to 53.6%.

Critics, including British Columbia Premier David Eby and Conservative Party of Canada (CPC) leader Pierre Poilievre, point fingers at the TFWP for exacerbating this trend.

Eby has called for the program to be scrapped or overhauled, arguing it undermines confidence in the immigration system by prioritizing foreign labour over domestic workers.

He highlighted cases like a Vancouver Starbucks relying on foreign hires, suggesting it erodes opportunities for locals.

Poilievre echoes this, claiming the program floods the market with cheap labour, making it harder for young Canadians to find work.

“Canadian jobs for Canadian workers,” he has sloganized, framing the TFWP as a barrier to youth success.

However, defenders argue that TFWs fill roles young Canadians often avoid, such as agricultural labour, caregiving, and low-wage service positions—all requiring LMIAs to confirm no domestic availability.

Statistics Canada data supports this, noting that temporary foreign workers are not the primary driver of high youth unemployment, which stems from broader economic factors like slowing growth.

Young people, particularly Gen Z, face structural challenges, including a mismatch between skills and job requirements, with unemployment hitting decades-high levels outside the pandemic.

The debate underscores systemic issues: while critics see displacement, others view the TFWP as a necessary bridge for undesirable jobs.

Reforms like shorter permit durations aim to address exploitation, but questions linger about the LMIA system’s efficacy in protecting Canadian opportunities.

A Split on Temporary Foreign Workers and Youth Jobs

Canadians remain divided on the TFWP’s role in the labour market.

A recent Angus Reid poll reveals that 52% hold a negative view of the program, with 61% believing it harms young workers by limiting their access to jobs.

Additionally, 54% say it negatively impacts the overall labour market, and half (50%) feel TFWs are treated unfairly by employers, highlighting concerns over power imbalances.

Yet, nuance emerges in perceptions of job types. Nearly half of respondents in a Leger poll—particularly among immigrants—agree that temporary foreign workers fill positions Canadians, especially youth, are unlikely to want, such as gruelling agricultural or service roles.

Many say that TFWs are directly taking jobs from young people, suggesting many see the program as complementary rather than competitive.

This split reflects broader uncertainty: 44% support scrapping the TFWP entirely, per another survey, amid frustrations over housing and wage suppression.

However, acknowledgment of labour gaps persists, with polls indicating skepticism about whether the LMIA process effectively safeguards domestic employment.

As youth unemployment lingers at elevated levels, public sentiment could sway further policy tweaks.

Calls for TFWP Abolition and Exemptions

The TFWP has become a political flashpoint. Conservatives, led by Pierre Poilievre, advocate for major reforms, aligning with Eby’s provincial stance.

Shadow Immigration Minister Michelle Rempel Garner amplified this on December 21, 2025, stating, “No business in Canada should have a business model that is predicated on unlimited low-skilled, temporary, indentured foreign labour. Abolish the TFW program now.”

Her comment responded directly to the Quebec A&W warnings, underscoring the party’s push to eliminate what they see as exploitative practices.

Provincially, Quebec Immigration Minister Jean-François Roberge has pleaded with the federal government for leniency amid public outcry over policy shifts affecting non-permanent residents.

In a Facebook post, he requested a “grandfather clause” to allow temporary workers outside Montreal and Laval—impacted by the Quebec Experience Program (PEQ)—to renew permits while awaiting immigration decisions.

Roberge criticized Ottawa’s insensitivity, noting the federal government’s failure to respond despite the distress caused.

This comes as Quebec itself plans a 13% cut in temporary workers and students by 2029.

Federally, the focus remains on sustainability, with Budget 2025 signalling reductions to ease infrastructure strains.

Yet, as provinces like BC and Quebec push back, the divide highlights tensions between economic imperatives and immigration controls.

Balancing Labor Needs and Domestic Priorities

As Canada navigates these cuts, the TFWP’s future will test the nation’s ability to reconcile business viability with fair labour practices.

While reductions address youth unemployment and exploitation concerns, the warnings from Quebec’s A&W owners, northern BC employers, and Ontario resorts signal potential economic disruptions.

With arrivals at a two-year low and caps tightening, stakeholders urge targeted exemptions for high-need areas.

Ultimately, reforms could foster investment in local training and wages, but success hinges on effective implementation.

As polls show a public wary yet divided, and politicians clamour for change, Canada’s immigration strategy must evolve to support both newcomers and citizens alike.

The path forward demands nuance—ensuring the TFWP serves as a tool for growth, not division.

Frequently Asked Questions (FAQs) On TFWP

Can a temporary foreign worker apply for permanent residence from Canada?

Yes, but there is no automatic pathway from the Temporary Foreign Worker Program to permanent residence. Eligibility depends on the worker’s occupation, work experience, language ability, education, and the immigration programs available at the time. Some workers may qualify through Express Entry, Provincial Nominee Programs, or regional pilots, while others may not meet the criteria at all. Holding a TFW permit does not guarantee or prioritize permanent residence.

What happens to a temporary foreign worker if they lose their job?

If a temporary foreign worker loses their job, their work permit may become invalid if it is employer-specific. In most cases, they must either find a new employer willing to obtain a new LMIA, switch to another valid immigration status, or leave Canada. Recent policy changes have introduced limited grace periods, but job loss can still put workers at risk of losing legal status.

Are temporary foreign workers allowed to change employers freely?

No, most temporary foreign workers hold employer-specific work permits that restrict them to one employer, location, and job role. Changing employers usually requires a new LMIA and a new work permit. This limitation has been cited by labour advocates as a factor that can increase worker vulnerability, as quitting a job may jeopardize legal status.

Do temporary foreign workers pay Canadian taxes?

Yes, temporary foreign workers are required to pay income tax and, in many cases, contribute to CPP and EI, depending on their employment situation and tax residency status. Paying taxes does not automatically grant access to all social benefits, and eligibility varies by program and length of residence in Canada.

Why does Canada use the Temporary Foreign Worker Program instead of training Canadians?

The program is intended to address short-term labour shortages when employers demonstrate they cannot find Canadian workers. Critics argue that greater investment in training, wages, and working conditions could reduce reliance on temporary labour. Supporters counter that demographic shifts, regional labour gaps, and the time required to train workers mean that temporary foreign labour remains necessary in certain sectors.

Kamal Deep Singh, RCIC

Kamal Deep Singh, RCIC (Regulated Canadian Immigration Consultant) licensed by CICC (formerly known as ICCRC) with member number R708618. He brings extensive knowledge of immigration law and new changes to rapidly evolving IRCC.