The federal government has reversed course on its temporary foreign worker program, upsetting business groups – and Alberta – with measures to make it tougher, and less economically attractive, to import short-term labour.

Calling it the biggest change to the program in over a decade, Ottawa announced several measures aimed at addressing criticism that the program is suppressing wages and allows employers to skip over Canadians in favour of foreign workers. But labour groups say the changes don't go far enough.

Ottawa is temporarily suspending the Accelerated Labour Market Opinion process, which allowed approved employers to bring in foreign workers more quickly.

Story continues below advertisement

It is also eliminating the most controversial aspect of that program, which allowed employers to pay foreign workers up to 15 per cent less than the average comparable wage in the region, provided the firm could show it also pays that lower wage to their Canadian workers.

Business reaction to the changes was swift and scathing. The new reforms are "the worst decision this government has made since taking office," said Dan Kelly, president and chief executive officer of the Canadian Federation of Independent Business, which plans to fight the announced changes. The Canadian Chamber of Commerce was similarly critical, warning that the tighter rules will hurt smaller firms, particularly in Alberta and Saskatchewan – and that those higher costs could result in firms cutting jobs or even moving offshore.

And the Alberta government said it is worried the province's economy could be hurt if its retail and food services sectors are deprived of foreign workers.

The impetus for the government's changes to the program was the revelation last fall that a company planned to import as many as 200 Chinese miners to work a proposed project in northeastern B.C., sources say. "The proximate cause was HD Mining," a source said. "The government was not happy that situation had happened."

The government was puzzled why Chinese miners were needed in British Columbia. The HD Mining story hit national headlines last October, prompting public outrage. By early November, Human Resources Minister Diane Finley had announced last November that she would review the foreign worker program.

This was the genesis of the reforms promised in the 2013 budget last month and finally unveiled Monday, a package that has been steered by the Prime Minister's Office since late 2012.

Public anger over foreign workers flared again several weeks ago when Royal Bank of Canada employees complained that they were being asked to train foreign workers who were taking over their jobs. One of the early warning systems for this government is what its MPs are hearing from constituents. One Conservative MP, speaking on condition he not be identified, said the volume of constituent response after the Royal Bank story was the biggest since anxiety over the H1N1 virus in 2009. "It really touched a nerve … there was a suspicion that Canadians are being displaced."

Story continues below advertisement

The public anger over the RBC case prompted the government to speed the reforms already in motion. It also triggered a round of stories on alleged abuses of the temporary foreign worker program. Sources say the these cases "confirmed our suspicions that the program wasn't quite working" and had morphed away from its intended use.

Federal Immigration Minister Jason Kenney and Human Resources Minister Diane Finley had long defended the 15-per-cent rule since it was introduced in April, 2012, claiming that its goal was to prevent employers from having to pay foreign workers more than Canadians at entry-level positions.

The changes increase the government's disciplinary powers to prevent fraud and promise new user fees for employers and foreign workers. The amounts will be set later.

The reforms comes after the government made it easier for employers to recruit temporary foreign workers in recent years. A total of 446,847 foreign workers came to Canada in 2011, including agricultural workers, more than double the levels of a decade ago. The program is now heavily used across all sectors of the economy, from fast-food restaurants and hotel owners to oil patch firms that say they can't find enough Canadians to fill vacant positions.

The expanded use of the program has courted controversy. Many businesses say they rely on temporary foreign workers to fill positions that Canadian won't do, while economists have cautioned that the program's growth dampens wages and acts as a disincentive for both on-the-job training and labour mobility.

The federal government sees the reforms as rebalancing competing imperatives: labour shortages and the need to give Canadians the first crack at jobs. There are also new measures to ensure the program is not being used "to facilitate the outsourcing of Canadian jobs" and employers that use the program must produce a plan for transitioning to a fully Canadian work force over time. The agricultural branch of the program is exempt from the main changes because Mr. Kenney said it's clear that farm owners genuinely can't find Canadians to perform farm labour.

Story continues below advertisement

With files from reporters Andy Hoffman in Vancouver and Josh Wingrove in Edmonton

THE HIGHLIGHTS

Changes announced Monday to the federal government's temporary foreign workers program include:

– Employers must now pay temporary foreign workers at the prevailing wage, rather than up to 15 per cent less than the average for the same job;

– The "accelerated labour market opinion" process, which fast-tracked the ability of some companies to bring in workers from outside Canada, has been temporarily suspended;

– The government has more authority to suspend and revoke work permits and labour market opinions (LMOs) if the program is being abused;

Story continues below advertisement

– Specific questions will be asked of employers that are applying for LMOs to ensure the program is not being used to facilitate outsourcing;

– Requiring employers who rely on temporary foreign workers to have a "firm plan" in place to transition to a Canadian work force over time;

– Introducing new fees for employers for LMOs, and increasing the existing fees for work permits;

– Allowing only English and French as languages that can be used as a job requirement.

The Canadian Press

Are you an employer upset with changes to the Temporary Foreign Workers program? Send your comments to community@globeandmail.com.