Labor Market Impact Assessment: How does this affect international talent mobility?

  • group of workers
Published on 2022-08-03 at 11:00 by Asaël Häzaq
In Canada, employers are required to conduct a Labor Market Impact Assessment (LMIA) before hiring foreign nationals. In other words, they must show that they have not been able to hire Canadians, despite all their efforts. Other countries have similar rules. But do such assessments stand in times of labor shortages? 

The Canadian Labor Market Impact Assessment (LMIA)

Rest assured, the LMIA is not mandatory for hiring foreign professionals. This system only allows the company to prove that it hasn't been able to find a Canadian or a permanent resident for the position offered. The Canadian government states that only "employers of certain types of temporary workers require an LMIA," which is necessary when a foreign national applies for a work permit for this particular job type. 

Employers hiring under the "Temporary Foreign Worker Program (TFWP)" must first complete an LMIA. However, employers hiring through the International Mobility Program do not need it.

The LMIA determines whether a company is hiring a foreign national to address a labor shortage or to fill a specific skill needed in a particular field. However, in the face of the health and economic crisis, Canada is more than ever in need of human resources. However, this assessment is paid, and the price has been rising over the past years. Today, a company must spend $1,000 for an impact study, compared to $245 a few years ago. In addition, the duration of the process can vary depending on the type of job, the industry, and the company's location. On average, it takes between a few weeks and a few months. LMIA for highly skilled jobs or for highly paid positions and for very short work permits (120 days maximum) are processed within shorter delays (within 10 days). But is this study still useful in times of labor shortage?

Which other countries require labor market assessments?

In France, for example, public or private companies wishing to hire foreigners must first request a work permit. Foreigners holding a residence permit, a work permit, or a Working Holiday Permit are exempt from this requirement. Employers have to publish their job offer with the public service for 3 weeks, along with their application for a work permit. If the vacancy is not filled within 3 weeks, the employer's application is studied by the prefect, considering the local workforce and the employer's needs, and responds within 2 months. In case of no response within 2 months, consider that the application has been refused. 

Other countries, such as Spain, also require such assessments. Spanish employers have to apply for a work permit to hire a foreign professional after considering the state of the local labor market. In the United States, employers need to obtain a certificate from the Department of Labor. Here again, employers have to prove that no American worker has the skills for the job offered. 

But considering current labor shortages in many countries, there are questions about whether labor market assessments are still required. In Canada, labor shortages have been observed in most sectors. In February, 337,000 new jobs were created. The following month, some 73,000 additional jobs were created. The government facilitated access to the Temporary Foreign Worker Program (TFWP) following employers' complaints about the administrative burden, which was not compatible with their urgent needs. The TFWP requires using the Labor Market Impact Assessment (LMIA). Sean Fraser, Minister of Immigration, Refugees and Citizenship, promised more "flexibility" and "support for employers who want to expand their workforce and grow."

When the labor market adapts to the economic emergency

Governments are attempting to adapt, faced with recent crises and labor shortages. For instance, in the American hotel and restaurant industry, there is reportedly a shortage of more than one million workers. Some companies have opted for robotization to fill these positions. The US economy relies massively on foreign workers. Between 2010 and 2018, foreign manpower accounted for nearly 60% of growth in the US workforce, according to a report from Goldman Sachs. However, former President Trump's policies and the Covid pandemic have undermined international mobility in the United States. 

Although governments keep prioritizing local talent and foreign residents already in the country before considering foreign workers, it is very unlikely that labor market assessments will disappear. However, such assessments are expected to be made more flexible in response to labor needs. Sectors facing labor crises, for example, are more likely to benefit from these adjustments to facilitate the hiring of foreign employees. And this is particularly true, especially in times of economic emergency when countries compete to attract international talent. At the same time, Immigrant advocacy organizations tend to remind governments to intervene in the area of rights as well. In their views, global mobility must go hand in hand with better protection for foreign workers.