Mexican and Guatemalan workers pick strawberries at a farm in Pont Rouge Que. A study says when temporary foreign workers are allowed to move jobs across industries, they are more likely to go to higher-paying firms and climb the career ladder.Jacques Boissinot/The Canadian Press
Temporary foreign workers in Canada who are granted permanent residency tend to achieve greater economic mobility – moving up the career ladder more quickly and securing wage increases – in the years after settling, according to new research.
The paper, which was published in December by the National Bureau of Economic Research in the United States, analyzes the impact of closed work permits in Ottawa’s Temporary Foreign Worker Program, which ties the immigration status of those workers to a single employer.
Numerous groups including labour advocates, migrant rights organizations and the federal Conservative Party have criticized this feature of the program, which they say perpetuates employer mistreatment of workers and suppresses wages.
The research, which was conducted by economists at universities in Toronto and Chicago, found several benefits for workers who transitioned to permanent residency status.
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Temporary foreign workers who were granted permanent residency in Canada between 2004 and 2014 – and thus were no longer on closed work permits which tied them to a single employer – saw an earnings increase of 5.7 per cent three years after they obtained PR status.
The workers directly benefited from being able to switch positions, the researchers found. There was a “sharp” and “immediate” increase in the probability of a job-to-job transition of 21.7 percentage points over the three years, the paper estimates. And many of those workers switched into better-paying industries.
“Our main question of interest when we began this research was: what is the effect of being on a closed permit relative to an open permit?” said Kory Kroft, a professor of economics at University of Toronto, and one of the paper’s authors.
“The main takeaway is once you relax the restrictions, you see a big increase in job mobility. You find that immigrants who were clustered at low-wage jobs quickly sorted themselves into higher-wage jobs.”
The TFW program is a key immigration stream in Canada that allows employers to hire mostly low-wage foreign workers on a temporary basis in sectors where the government determines there is a shortage of domestic labour, such as agriculture.
Workers who enter the country through the low-wage stream of the program often struggle to remain in Canada for the long run because pathways to permanent residency for this group of workers are limited and competitive. Many remain stuck in a cycle of moving from one low-wage job to another, usually in the same industry, relying on sponsorship from employers who have been granted government approval to hire foreign labour.
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A June, 2024, a research paper from Statistics Canada found that approximately one-third of temporary foreign workers obtained permanent residency within five years of receiving their initial work permit.
Prof. Kroft said that he and his co-authors – Profs. Isaac Norwich and Matthew Notowidigdo at the University of Chicago’s Booth School of Business and Stephen Tino of Toronto Metropolitan University – used data from Immigration, Refugees and Citizenship Canada that linked visa records for roughly 200,000 temporary foreign workers who arrived between 2004 and 2014 to Statistics Canada’s database that matches employers to employees.
Part of the reason why they used data updated only to 2014 was because they wanted to understand job outcomes for workers years after they had obtained permanent residency.
“When a temporary foreign worker has the ability to move jobs, we find, on average, they are more likely to go to higher-paying firms,” Prof. Kroft noted. “This is evidence that these workers can climb the career ladder, if allowed to.”
The study also found that it was not enough for workers to move to other companies in the same industry in order to achieve wage gains. What was really driving an earnings increase was moving across industries, Prof. Kroft said.
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Internal documents from Employment and Social Development Canada that were made public last July by Migrant Rights Network, an advocacy group, showed that the ministry had floated the idea of introducing new stream-specific work permits for temporary foreign workers in the agricultural and fish-processing industries.
The permits would allow workers to move between employers in the same sector as long as they had a job offer. Migrant Rights Network criticized the proposal as a cosmetic change that would maintain employer control, but create the illusion of mobility for workers.
In November, 2024, a parliamentary committee on citizenship and immigration recommended that Ottawa get rid of the closed work permit system entirely and introduce regional- or sector-specific work permits that would define sectors broadly, and provide workers with access to a wide range of employers.