The federal government says this week's decision to suspend restaurants from accessing the temporary foreign worker program is a wake-up call to all businesses in Canada that Ottawa expects them to raise wages and improve working conditions.

Federal Employment Minister Jason Kenney made the comments in Vancouver Friday as he spoke for the first time about his surprise decision the previous evening to impose a moratorium on the controversial program for the food-service industry.

Mr. Kenney said the government is acting in response to allegations of abuse in that sector, but also out of a more fundamental concern about wages in Canada.

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"I've said many times that we are distressed that wage rates have barely kept pace with inflation since the global downturn, which is not indicative of a tight labour market," said Mr. Kenney. "We expect Canadian employers to do better, to raise wages, to increase salaries and improve working conditions, to invest more in training, to increase labour force participation particularly amongst groups of our population who are underrepresented. That is part of the message that we sent last night."

The temporary foreign worker program is more popular with employers in Western Canada, where the unemployment rate is below the national average. Canada's restaurant sector expressed shock at the government's decision and warned Friday that it could force businesses to reduce their hours or possibly even shut down.

Uttam Dey, who owns the Green Chili chain of six Indian restaurants in Calgary, said almost all of his 22 cooks are temporary foreign workers – mainly with experience working in New Delhi and Dubai. With plans to open three new locations in the next year, the news that Ottawa is imposing a moratorium on restaurant hires of temporary foreign workers came as a shock.

"If I don't get the visas, how am I going to open?" Mr. Dey said Friday.

He said it's almost impossible to find someone in Canada with skill as an Indian cook who's not timid around his blisteringly hot 75,000 BTU clay ovens used to make naan bread and kabobs. He understands the concern if there's abuses in the system, but said he plays by the rules and pays his workers fairly.

"I'm not McDonald's. I'm not Tim Hortons," Mr. Dey said. "I've tried my level best to find Canadian cooks. I can't find them."

Joyce Reynolds, executive vice-president of government affairs for Restaurants Canada, said restaurant shutdowns and long lineups were a reality in Alberta before Ottawa approved the program and those problems are now likely to return.

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"We're getting calls from members saying we don't know how we're going to be able to keep our restaurants open," she said in an interview.

"We're expecting that we may return to the days when restaurants close due to lack of staff and huge lineups out the door and hours of operation curtailed and parts of the operation shut down. We can only serve you on the patio. We're going to have to close our restaurant inside. Those are the types of things that happened in Alberta and we anticipate that these types of things are going to start happening again."

Alberta's Minister of Jobs, Skills, Training and Labour, Thomas Lukaszuk, issued a terse response to Ottawa's decision, arguing that with unemployment below 5 per cent, its labour market is unique.

"It's the reality of Alberta's labour market: when jobs remain unfilled, workers are recruited from other sectors, customer service declines, or Canadians already on staff lose shifts or jobs when restaurants close or reduce their hours. Albertans want restaurant services, and companies need temporary foreign workers to provide them," he said in a statement. "Alberta feels it is unfair to freeze an entire sector because there are problems with a few players. We encourage the federal government to clarify the timelines of its review, so that Albertans can continue to get the food services they need."

Mr. Kenney's comments about how slow wage gains show there is not a tight labour market contradict a report Finance Canada released in February as a companion to the 2014 budget, which warned that "Canada's labour market has tightened over the recovery" with the job vacancy rate "increasing steadily since 2009."

The Globe reported last month that Finance Canada's figures were thrown off by a software program that scanned online job postings, including on the classified site Kijiji, where the same job often appeared in many sections of the site.

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No government official has defended the Finance Canada data. Instead, Mr. Kenney has maintained that he has always limited his concern to labour shortages in specific categories and regions.

Mr. Kenney did not give a timeline as to how long the moratorium will last. He noted that the government has been working on further reforms to the program and that the moratorium will serve as a "cooling off" period while Ottawa finishes its proposals and investigates the allegations of abuse.