Canada’s Immigration Levels Plan: Navigating the New Landscape for Individuals and Businesses.

Canada has implemented new immigration caps and policy changes directed at international students, temporary residents, and foreign workers. There are more to come, though. Understanding these changes in tone and recent political statements will help you better prepare yourself and your business for the next 3-5 years.

Read this article as a personal attempt to foresee the good and bad implications of Canadian immigration policy changes.

Understanding Canada’s New Immigration Program Targets

Remember, when it comes to immigration, there are 2 main categories of residents in Canada: permanent and non-permanent. Citizens are not in either category because they are citizens and are no longer part of immigration per se.

For the past two decades (or at least since the current Liberal Party came to power in 2015), Canada has steadily increased immigration numbers. These increases occurred across all immigration categories, permanent and non-permanent. However, the country has been tracking and setting new targets for permanent residents (PR) it plans to welcome each year. This PR target increased from 310,000 in 2018 to now set to reach 500,000 in 2026.

Canada has never set targets for or limits to the number of non-permanent residents (non-PR, temporary) it welcomes yearly. This category includes, as of 2024, international students (~1,050,000), foreign workers under the Temporary Foreign Worker Program TFWP (~225,000), foreign workers under the International Mobility Program (IMP) (~1,100,000, including around 286,000 CUAET-holders from Ukraine), and asylum seekers (~125,000) as of 2024.

Reports mention that 2.5 million non-PRs are living in Canada as of this writing. That is roughly 6.2% of Canada’s population of 41 million. But Canada’s Prime Minister Justin Trudeau has been quoted as saying a different percentage:

“To give an example, in 2017, two per cent of Canada’s population was made up of temporary immigrants. Now we’re at 7.5 per cent of our population comprised of temporary immigrants. That’s something we need to get back under control.”

Whether it is 6.2% or 7.5% of Canada’s population, the number of non-PRs in Canada is big, and it has recently been the centre of immigration reforms and public criticism. Canada now wants to track and have fewer non-PRs in the country. At least, that’s the current political rhetoric in Ottawa. Can it afford to have fewer non-PRs?

The Great Canadian Pivot on Immigration: How and Why?

The federal government adopted changes to address Canada’s sudden, chaotic population increase. For me, as an immigration lawyer, this is the “Great Canadian Pivot” on immigration, consisting of three major sets of changes. Suddenly, the country’s attitude towards temporary immigration changed, as if Canada did not know about the issue it had been nurturing for some time. In any case, the play between the words “non-permanent” and “permanent” is just a formality—the issue I will cover at the end of this piece.

The first set of changes aimed to decrease the number of international students and, by extension, their spouses and dependent children arriving in Canada. An annual cap of 364,000 new international students is set for the next 2 years to achieve a “net-zero increase“ in international student numbers in the 2024-2025 and 2025-2026 academic years. It is a one-student-out-one-student-in approach, which means we will maintain the same number of in-Canada international students in the coming years. Thus, Canada’s international student population will remain around 1 million. We shall see what happens after this two-year measure is over.

The second set of changes aims to decrease the number of temporary residents in Canada – a broad category of immigrants that includes international students – from 6.2% (or 7.5%) of the population to 5% by 2027. This wider approach can result in a 20% decrease in the temporary resident population. The two hardest-hit categories of temporary residents will be international students (almost 37% overall decrease) and temporary foreign workers under the IMP (nearly 14% overall decrease).

The government recognized that it cannot touch the foreign workers in the construction and healthcare sectors too much, but these sectors cannot function in isolation, as argued below.

The third set of changes or reversing previous changes focused on sectors.

Back in April 2022, Canada allowed businesses in the following sectors to hire up to 30% of their workforce from among foreigners. It was originally limited to 20%.

• Food Manufacturing (NAICS 311);
• Wood Product Manufacturing (NAICS 321);
• Furniture and Related Product Manufacturing (NAICS 337);
• Accommodation and Food Services (NAICS 72);
• Construction (NAICS 23);
• Hospitals (NAICS 622); and
• Nursing and Residential Care Facilities (NAICS 623)

But in March 2024, just two years after the above-noted flexibility, Canada wants to bring back the 20% cap with an exception for the construction and healthcare sectors. It will also bring back the 6-month validity of the Labour Market Impact Assessment—a document one needs to hire a foreign worker—that was allowed to be used for 12 months.

Can we now assume we have enough Canadian workers for the non-exempt sectors above? I don’t think so. These changes force the sectors’ employers to hire from among in-Canada job applicants and bring fewer workers from outside the country. 

These changes will directly hit non-exempt sectors, and the affected sectors will indirectly influence those exempted by the government: the construction and healthcare sectors. When we have fewer workers in wood product manufacturing, accommodation, food manufacturing, furniture manufacturing, and related product manufacturing, the effects will also be felt in the construction and healthcare sectors. Workers from labour-intensive and demanding sectors will switch to other sectors ready to pay equal or more hourly rates because those other sectors cannot hire foreign workers easily due to limitations. All these are just temporary band-aid solutions.

The Population Trap of Canada: A Holistic View

With political, infrastructural, economic and societal challenges in Canada caused by inflation, the housing affordability crisis, high bank rates, the ageing population, low birth rates, global conflicts, the war on talent and decreased productivity, I feel challenged to isolate immigration as a lone culprit. I see immigration as an omnipresent, complexly intertwined issue faced by Canada.

Take the housing affordability issue, for instance.

Statistics Canada notes that 278,264 housing units were completed in 2022. For the sake of the argument, let’s assume conservatively that:

• the unit numbers will increase slightly to around 300,000 in 2024 (no statistics are available, but this is a very optimistic (unrealistic) number).
• the temporary foreign workers under TFWP and IMP were around 1.3 million when the 2022 units were built.
• Canada welcomed 437,180 permanent residents in 2022, as per CBC News.

As you can see, the units built in 2022 were not enough to meet the demand of permanent residents. Let alone temporary residents who came to Canada in 2022 and subsequently. In that year, Canada’s population grew by 1 million!

“In 2022, there was a total of 550,187 study permit holders compared to 445,776 in 2021, which is an increase of 23%.”

2023 Annual Report to Parliament on Immigration

So, in 2024 and beyond, when Canada tries to decrease the number of non-PRs, including foreign workers, and (in)directly affect the construction sector, how will we build more housing units with fewer foreign workers to make housing more affordable for Canadians? Canada wants to build 3.87 million new homes by 2031 with fewer construction workers and a constant wave of retiring construction workers and related skilled trades.

How will we solve the ageing population issue and the need for their care if we don’t rejuvenate Canada’s population with younger, skilled people? How will we grow locally and attract internationally the best talent to Canada when housing is so expensive, our birth rate is so low, and the global and Canadian talent are looking elsewhere to move?

You can similarly connect immigration to all other issues we face in Canada.

These dilemmas indicate what’s been referred to as “a population trap” caused by (1) a constantly ageing population, (2) a low birth rate, (3) high dependency on immigration, and (4) regional population disparities.

The government seems to be trying to resolve numbers 3 and 4 only by:

1. pushing international students to less popular provinces using new provincial quotas, thus increasing the population therein and
2. forcing businesses to invest in new technologies, methods and equipment to increase productivity instead of relying on cheap foreign labour.

But how will we solve problems 1 and 2 without bringing in more well-suited immigrants? All problems 1 to 4 must be addressed immediately and simultaneously. It cannot be done separately or step-by-step.

We still have the inertial force of population growth from previous years, and the increased population is still here in Canada today. Not many temporary residents in Canada will board an aircraft and leave Canada tomorrow. The one-in-one-out mechanism introduced for new international study permits for 2024 does little to decrease Canada’s population. So, we need solutions that can have an effect today, not in 2-3 years.

How Do New Immigration Policies Affect You?

In the next 2-3 years, businesses that rely on cheap international student labour or foreign labour in Ontario and British Columbia will be significantly affected.

Based on the government-suggested distribution of study permits across Canadian provinces, the biggest decrease in international student numbers (read as “cheap labour force”) will be in Ontario (-62%) and British Columbia (-47%). So, one can conclude that if you establish a business that relies on a cheap labour force or targets students as customers, you must consider other provinces more seriously. Less problematic provinces from this specific perspective would be Manitoba (-16%), New Brunswick (-20%), Nova Scotia (-28%) and Prince Edward Island (-22%).

Provinces and territories such as Nunavut, Northwest Territories, Yukon, Newfoundland and Labrador, Quebec, Alberta, and Saskatchewan will benefit from increased international student numbers, increasing the available labour force and future locally educated talent pool.

Businesses that don’t or cannot upgrade their technology and equipment quickly will suffer in the medium and long term. Senior Deputy Governor Carolyn Rogers of the Bank of Canada highlighted the low productivity problem in Canada.

If your business model relies on cheap labour and not on new technology or equipment (which could decrease reliance on humans and foreign workers and improve productivity), you should worry about your business’s survival in the next 5 to 10 years.

Tough Dilemmas and Practical Solutions

The current flow of non-PRs to Canada consists of those seeking better economic opportunities who are young, not highly skilled, but ready to work in any job, legally or illegally. The Canadian market (especially in big metropolitan areas) is full of cheap labour for employers who can afford not to buy new equipment or adopt new technologies. They can employ cheap labour instead – a fact highlighted during my private conversations with several small and medium business owners in Canada.

A recent personal survey of employers in the trucking industry gathered at Truck World 2024 in Toronto reveals some worrying trends, too. All trucking companies I have talked to mentioned that many experienced Canadian truck drivers in the job market are looking for jobs. They said the trucking industry has been in recession for almost 2 years, and there is no need to attract new (foreign) drivers from abroad. In the meantime, Immigration Canada invited more than 1,500 transportation specialists, including truckers, during its Express Entry draws in December 2023 and March 2024.

Metropolitan areas are the magnets for immigrants because most jobs are there, and these areas are becoming less affordable. We need skilled immigrants, but we need those who can afford to live in areas where we need them to build more houses. If we need construction workers, nurses, and personal support workers in Toronto – the most populated Canadian city – these people should be able to afford to live and work in Toronto or the Greater Toronto Area.

If they cannot afford to live in these areas, will they even be interested in moving to Canada now when economic conditions are less than ideal? Will those currently in Canada return home? Yes, but only if they can afford to travel back home. Most probably, like many international students in Canada who are increasingly seeking asylum, these workers may choose to stay in Canada legally or illegally and become undocumented. It seems that the Canadian government is aware of the (growing) problem of undocumented people in Canada and is contemplating opening a pathway to official status for such people.

If the Canadian government wants immigrants to move to less popular provinces and localities, there should be a clear and unambiguous incentive, such as a clear pathway to permanent residency, which seems not to be the case in Prince Edward Island, for example.

Recommendations for Moving Forward

Canada faces a complex problem that requires a comprehensive all-fronts solution.

In addition to 6 recommendations by the RBC Thought Leadership, I recommend the following steps to address Canada’s population-related and immigration-related issues:

1. To address an immediate need for construction workers, create a seasonal construction worker program (SCWP) to procure the needed labour force from diverse countries with many young people. Canada’s Seasonal Agricultural Worker Program, covering 12 source countries, is a good model to imitate.
2. To address the low birth rate problem and encourage both parents to enter the workforce, significant cash incentives should be given to each newborn child so that families can use the “baby cash” to buy their first homes and cover daycare.
3. Free college programs should be offered to permanent residents and citizens to educate in-demand workers within Canada.
4. Significant tax and immigration incentives and other incentives should be given to immigrants living in less populated provinces, towns, and locations to sustainably spread immigration benefits across Canada.
5. Establish a new investor immigration program for businesses related to home-building, elderly care, child daycare, and medical clinics across Canada that create jobs in rural and less popular locations that attract immigrants to such locations.
6. To address the low productivity problem, interest-free loans should be offered to Canadian small and medium businesses that want to invest in technology upgrades to increase productivity.

What other solutions would you offer? Connect with me on LinkedIn, and let’s continue our discussion.