The Conservative government’s overhaul of the temporary foreign worker program got a thumbs-down from business associations Friday who say the changes will hurt the service industry.

Employment Minister Jason Kenney unveiled the program changes Friday, which include a cap on the number of low-wage temporary foreign workers at each worksite and strict penalties for employers who break the rules.

Under the new rules, employers in places with high unemployment rates won’t be allowed to hire temporary foreign workers in the lowest wage and skill groups in the accommodation, food service and retail sectors.

Companies will also be required to re-apply each year to hire low-wage TFWs, instead of every two years. The cost of that will rise to $1,000 per employee, up from $275.

In a statement, the Canadian Federation of Independent businesses called it “the most small-business-unfriendly move ever made by this government."

Joyce Reynolds, Restaurant Canada’s vice-president of government affairs, said that although temporary foreign workers represent only two per cent of the restaurant industry, they are still a “critical” part of the workforce.

She told CTV’s Power Play Friday that reforms will make the TFWP “cost-prohibitive and inaccessible” to most restaurants in areas of critical labour shortages.

Reynolds said the changes will lead to “casualties” in the restaurant business, such as job losses and reduced hours for everyone -- including Canadian workers.

For example, she said, if short-order cook positions -- often filled by temporary foreign workers -- are cut, that will have a domino effect on waiters, waitresses, hostesses and other restaurant staff.

At a news conference Friday, Kenney acknowledged there will be "adjustment costs.”

"Yes, undoubtedly, there will be some businesses in that sector that end up paring back their operating hours," he said. "That we fully anticipate."

Syed Hussan of the Migrant Workers Alliance for Change, said the expiry limit on migrant workers will create a “revolving door system” and is “inhumane.”

He also said the changes don’t address abuse and exploitation of TFWs in the workplace.

Kenney defended the program’s makeover, saying it’s necessary to curb abuse of the system and give unemployed Canadians a first crack at the available jobs.

He told Power Play Friday that the government wants to return the TFWP to its original objective -- to be the “last, limited and temporary resort for employers who absolutely cannot find qualified Canadians to take jobs at the Canadian wage rate.”

Kenney said some employers, “probably a few thousands in the Canadian economy, primarily out West, have begun building a business model around this program.

“As opposed to it being a last resort, in too many cases it’s become a first or only resort.”

Kenney said the government is aware of 1,100 businesses where half of the workforce is made up of temporary foreign workers.

“That is unacceptable,” he said. “I don’t care how tight the local labour market is, you shouldn’t be setting up a business and spending money on capital for business if you don’t have the human capital to staff it.”

Kenney said the government is asking its bureaucrats and officials to “apply some common sense” when reviewing applications from businesses to hire TFWs.

He also said businesses should make more effort to hire Canadian employees by reaching out to groups with high levels of unemployment -- young people, aboriginals and new Canadians, among others.

With files from The Canadian Press