Recent LMIA Changes

In 2024, Canada implemented several changes to its immigration policies, including stricter rules for international students and temporary workers. A key focus is the Labour Market Impact Assessment (LMIA) process. This article examines LMIAs, the reasons behind these policy shifts, the specific changes, and their potential consequences.

What is an LMIA?

A Labour Market Impact Assessment (LMIA) proves that an employer cannot find a qualified Canadian worker or permanent resident for a job opening and, therefore, must hire a foreign worker. As part of the requirements, employers must demonstrate that they advertised the position for a specific duration and in a particular manner. Currently, receiving a job offer supported by an LMIA adds 50 points to an applicant’s Comprehensive Ranking System (CRS) score in Express Entry, while LMIA-supported job offers in senior management positions contribute 200 points. This can significantly enhance an applicant’s chances of obtaining permanent residency. Moreover, LMIAs are not work permits. Once an LMIA has been obtained and a foreign worker secures the job, they can then apply for an employer-specific work permit. Check out our CLMIA course to learn more about the process.

Reasons Behind the Changes

The new LMIA measures are part of the government’s recent efforts to reduce the number of temporary residents in Canada, combat fraud, and enhance the integrity of Canada's immigration system. The aim is to create a more sustainable, transparent, and fair system aligned with the country’s long-term economic needs. Achieving this is a delicate balancing act that involves introducing stricter TFWP regulations, addressing systemic vulnerabilities, and tackling acute labour shortages in essential sectors.

Change is necessary due to Canada’s record-high immigration numbers, especially among temporary residents like workers and students. This rapid population increase strains infrastructure and essential resources, including health and social services, as well as the availability and affordability of housing. Consequently, this has led the public’s support for immigration to plummet.

The government also aims to reduce the labour market’s reliance on temporary foreign workers. It encourages businesses to recruit and retain local talent, particularly underrepresented groups such as Indigenous people, youth, women, and individuals with disabilities. It urges employers to adopt productivity-enhancing technologies like AI and invest in upskilling domestic workers.

Additionally, the prevention of foreign worker exploitation and LMIA fraud are cornerstones of the government’s efforts. This includes the sale of fraudulent job offers to vulnerable foreign workers, who pay anywhere from $15,000 to $75,000 to obtain additional CRS points. This situation has undermined the credibility of Canada’s immigration system and must be addressed.

Which Measures Have Been Taken?

The LMIA program consists of the low-wage and the high-wage stream. While both categories have been affected, the restrictions imposed on the low-wage stream are more significant. Below, we will outline recently introduced measures:

Low Wage Stream

1. In most industries, the maximum percentage of temporary foreign workers (TFWs) in a business's workforce has been reduced from 30% to 10%. However, in essential sectors like construction, agriculture, and healthcare, where labour shortages are significant, the limit is 20%.
2. The length of low-wage LMIA work permits has been reduced from two years to one year. As a result, employers must reapply more often to retain their workers.
3. The median wage threshold for classifying jobs as low- or high-wage has increased. Jobs with wages below 20% above the provincial or territorial median wage will now be considered low-wage.
4. LMIA applications in census metropolitan areas with an unemployment rate of 6% or higher will not be processed unless an exemption applies.
5. Employers must take additional steps to prove that no Canadian or permanent resident is available for a vacant position. For instance, besides advertising on the Canada Job Bank, employers must utilize at least two additional recruitment methods and target underrepresented groups.
6. Businesses can no longer rely on attestations from lawyers or accountants when proving their legitimacy. Instead, they must submit detailed financial records, such as tax filings and active business licenses.
7. Employers must continue to ensure suitable and affordable housing and transportation assistance for foreign workers.

High Wage

While the high-wage stream is less impacted, some changes have occurred. For instance, stricter requirements to demonstrate business legitimacy are in effect. Moreover, the recently established wage threshold for high-wage LMIA applications significantly raises the bar for employers seeking to qualify under this stream. As a result, many positions may be reclassified into the low-wage stream if employers are unwilling or unable to pay higher wages for foreign workers.

Other Considerations

A recent announcement eliminated CRS points for LMIA-supported job offers. Immigration Minister Marc Miller made this decision to combat fraud and promote a more comprehensive evaluation of candidates based on their skills, experience, and language abilities. Removing this factor aims to discourage fraudulent LMIA applications. Although some individuals relying on these points may be adversely affected, it will create a level playing field for legitimate applicants. The timeline for implementing this change remains to be determined. Authorities will monitor the impact of existing measures, which may lead to further adjustments.

Benefits

Tightening access to the TFWP may reduce the reliance on foreign workers and address critical issues like housing shortages and affordability. It improves opportunities for Canadian workers, permanent residents, and underrepresented groups, which also eases unemployment. Additionally, the new measures will likely reduce the exploitation of foreign workers and fraud and improve fairness. Exempted industries experience more relaxed regulations, which benefits the economy and addresses labour shortages.

Challenges

The changes present multiple challenges for the economy, businesses, and foreign workers. For instance labour shortages may increase. This may be particularly true in remote, economically disadvantaged regions or areas with high unemployment. Labour shortages can disrupt daily operations and service delivery, thereby affecting the wider community and economy.

Non-exempt businesses reliant on foreign workers, like food services and retail, may face significant impacts. Employers will encounter increased administrative tasks and costs to prove legitimacy. Operating costs may also rise from new wage thresholds for high-wage foreign workers, stricter local recruitment efforts, and more frequent LMIA reapplications due to their shorter validity. This could slow down hiring processes and increase audits. Long-term workforce planning may also become difficult. Overall, the perception of hiring foreign workers will grow more complex, which may discourage applications.

The 2024 announcements can complicate matters for foreign workers who often already live in Canada and, therefore, do not increase pressure on infrastructure when starting an LMIA-backed job. In fact, many have been contributing to Canada’s economy for years. The continuous stream of announcements and restrictions fosters uncertainty and anxiety among these foreign workers.

Despite the challenges, immigration expert Al Parsai (MA, LL.M, RCIC-IRB) is cautiously optimistic about the future of LMIAs: “While these changes will undoubtedly impact many individuals negatively and require a transitional adjustment period, they are also a step toward a potentially improved Temporary Foreign Worker Program.”

Conclusion

The recent LMIA changes reflect Canada’s efforts to balance economic needs with system integrity. While the new measures aim to reduce reliance on temporary foreign workers, address fraud, and prioritize local talent, they also pose significant challenges for businesses and foreign workers. Industries heavily dependent on low-wage foreign labour, like hospitality and manufacturing, will face increased costs and administrative burdens. As the government monitors the impact of these updates, further adjustments may follow. While the policy updates bring uncertainty, they also offer opportunities to create a more resilient labour market and fair immigration system that benefit both Canadian workers and the broader economy.