As of July, employers can have no more than 20 per cent of their workforce as low-wage temporary foreign workers. The number must drop to 10 per cent starting in July 2016.
In the West — especially Alberta, where temporary foreign workers made up 1.74 per cent of the workforce at the end of 2013 — the impact of the new policy could be dramatic, says a Canada West Foundation report entitled Work Interrupted.
"The impact of the changes could be severe," says the report, which was prepared by senior policy analyst Farahnaz Bandali.
"Ironically, this policy change will hit the provinces with low unemployment hardest and will only slightly affect provinces with higher unemployment rates where there are more potential workers to fill jobs vacated by foreign workers."
Two-thirds of reduction of low-wage foreign worker entrants will come from Alberta and British Columbia, according to the report.
The downturn in the oil and gas sector could soften the impact for Alberta by freeing up potential workers, but it’s too soon to predict how much, Bandali says.
And with the second lowest unemployment rate in the country, Alberta employers are likely to have a hard time finding replacements for the temporary foreign workers, she says.
Impact on Saskatchewan, B.C.
In Saskatchewan, an increased difficulty filling jobs could have a negative impact on economic expansion and investment in that province, the report says.
"With the lowest unemployment rate in the country, Saskatchewan will find it especially challenging to manage the limits on low-wage temporary foreign workers," Bandali said.
In British Columbia, where businesses also rely heavily on temporary foreign workers, a higher unemployment rate might reduce the impact, she says.
"Nonetheless, it is possible that not all unemployed people are willing to take any available job," she said.
Bandali says the revamped TFWP’s chief aim — preventing employers from hiring foreign workers over Canadians — would be better served if it reduced the number of foreign workers where unemployment is high and provided flexibility in areas where there are fewer available workers.
"If all things remain equal, the limits on low-wage temporary foreign workers will generally leave western Canadian employers with no alternatives for labour in the short term," she said.