Liberal immigration pivot forces Canada to reckon with approach to labour shortages

The Liberal government's decision to reel in the temporary foreign worker program after loosening the rules to help businesses find workers after the pandemic is sparking a contentious debate about whether governments should even try to address labour shortages.

The Liberal government's decision to reel in the temporary foreign worker program after loosening the rules to help businesses find workers after the pandemic is sparking a contentious debate about whether governments should even try to address labour shortages.

Prime Minister Justin Trudeau announced on Monday that his government is bringing back stricter rules to stem the flow of low-wage temporary foreign workers, and he urged businesses to hire and train Canadian workers.

"Two years ago, in the aftermath of the pandemic and facing severe labour shortages, we adjusted the program for temporary foreign workers. That's what the business community needed," Trudeau said at the Liberal cabinet retreat in Halifax.

"But today's economy is very different from it was two years ago. Inflation has started to come down. Employment is higher. We no longer need as many temporary foreign workers."

Business groups have been in favour of more immigration and temporary foreign workers to help with labour shortages, but economists are pushing back against the notion that governments should intervene.

"Ideally they should do nothing, but it's hard for governments to do nothing when employers are upset," said Christopher Worswick, an economics professor at Carleton University.

Many economists argue that a tight labour market is good for workers and the economy because shortages force businesses to raise wages and invest more in productivity-enhancing technology.