The Corporate “Labour Shortage” Myth

In March, the Carney government announced a relaxation of rules for the Temporary Foreign Worker (TFW) program in rural Canada. At the request of any premier, the allowable share of low-wage TFWs in rural workforces can be increased from 10% to 15%. So far, Manitoba, New Brunswick, and Nova Scotia have opted in.

It is notable that most provinces have not chosen to avail themselves of the federal government’s offer to boost TFW numbers. The Canadian public’s support for immigration restriction shows few signs of cooling, and provincial governments are to some extent behaving accordingly.

The business lobby has emerged as the only voice in support of the Carney government’s loosening of foreign labour rules. Restaurants Canada – the national foodservice lobby – is sounding the alarm bells over “labour shortages” in the restaurant sector, and is “calling on all provincial governments to sign on to the temporary cap increase for temporary foreign workers in rural regions”. Restaurants Canada is often blunt in its immigration advocacy, in one case circulating a document titled “Foreign Labour Is Essential To Canada’s Foodservice Industry”.

The idea that Canada is experiencing such a dire shortage of workers that we need to import people to cook and bus tables in restaurants flies in the face of all available evidence. In April, youth unemployment in particular rose to 14.3%. A recent study by the Fraser Institute found that last year 437,000 people in Canada aged 15-24 looked for a job but could not find one. This figure is up 57% since 2022.

The study explains that “the rate at which youth unemployment climbed after 2022 has no historical precedent when Canada’s economy is growing: for teenagers, the increase in unemployment exceeded that during recessions starting in 1981, 1990, and 2008”. Further, “the surge of youth unemployment is specific to Canada: while unemployment for Canada’s youths was at a level associated with recession, the US rate remained close to historic lows”.

The statistical evidence backs up the anecdotal evidence. Increasingly, Canadian youth are reporting that finding a simple summer job is next to impossible. In one recent case, 5,000 young Canadians lined up at a Calgary job fair, with one young man saying he has sent 100 applications and not heard back.

The post-2022 rise of youth unemployment which the Fraser Institute notes is without “historical precedent” in Canadian history coincided with the massive influx of temporary residents in the waning years of the Trudeau government. This brief excerpt from Tony Keller’s book Borderline Chaos gives a sense of the scope of the influx:

“Between the start of 2022 and the end of 2024, the number of immigrants who entered the United States minus the number who left is estimated to have been 8.8 million. In Canada over the same period, the number was more than 3 million. Given Canada’s smaller population, it was equivalent to the United States welcoming about 26 million immigrants in the space of thirty-six months.

The US experienced the largest immigration surge in its history, and it blew up American politics. Canada’s surge had been three times as big.”

The widespread recognition on the part of Canadians that the domestic labour market has been veritably flooded with cheap foreign labour is pushing the federal government to act, with two successive immigration cuts (in 2024 under Trudeau, and again in 2025 under Carney).

Nevertheless, the tap remains on. This year alone, the Carney government will approve 230,000 new foreign worker permits. In September, PM Carney responded to Poilievre’s call to scrap the TFW program by citing pressure from the business sector: “When I talk to businesses around the country…their number one issue is tariffs and their number two issue is access to foreign workers”.

If, as the statistical and anecdotal evidence demonstrates, there is no general labour shortage in Canada, what does the business lobby mean when it claims there is such a shortage? Firstly, it means that some businesses are not receiving what they consider to be the optimal amount of interest from workers at the wages they are offering. Here is a brief excerpt from a relevant exchange I posted on Twitter in which economics professor Christopher Worswick startles Liberal MP Peter Fragiskatos by suggesting that businesses trying to find workers raise their wages:

Fragiskatos: “So that’s the answer to this, just increase wages and everything will magically fall in place?”

Worswick: “That is the answer. That’s what we did in Canada for the first 100 years.”

In certain cases, businesses struggle to fill labour gaps because their positions require relocation to a remote location. In October, Maclean’s ran a piece titled You Can’t Run a Tourist Town Without Foreign Workers by the owner of Wickaninnish Inn in Tofino, Vancouver Island. This Relais & Châteaux luxury hotel often charges around $1,000 or more per night for a room, yet we are led to believe that without foreign labour it would collapse.

The reality is that, if the tourism sector was deprived of foreign labour, the industry would simply be forced to create an incentive structure to bring in domestic labour – good wages, training, benefits, and opportunities for promotion. Businesses that fail to do so would go under – this is the reality of a market economy in which entrepreneurial ventures carry the possibility of both risk and reward.

If certain sectors require specific skills that Canadians do not have, the go-to solution from the business lobby is typically to demand access to foreign workers with the desired skillset. This is definitely the option that requires the least investment on the part of employers, but the more advantageous course of action for Canadian workers is to train up our own labour force. If deprived of the option to draw on foreign labour, businesses in search of specific skillsets would have no choice but to offer generous training opportunities to Canadians.

In some cases, governments can help to train up the nation’s workforce – the Carney government is embarking on a “$6 billion nationwide effort to recruit, train, and hire 80,000 to 100,000 new Red Seal trades workers in the next five years”. Surely that is a better idea than hiring 100,000 trades workers from overseas?