Concerns have been growing since the Canadian government announced substantial cuts to immigration targets for the coming years. The initial announcement, made in January 2024, has been followed by further reductions, raising questions about the potential impact on Canada’s economy and workforce.
On October 24, 2024, Prime Minister Justin Trudeau and Immigration Minister Marc Miller revealed a revised immigration plan that significantly reduces the number of new permanent residents Canada will accept over the next three. The target, which was previously set at 485,000 new arrivals in 2025, has been cut to 395,000, with further reductions to 380,000 in 2026 and 365,000 in 2027. This is a marked change from the initial plan, which had projected annual admissions of 500,000 for both 2025 and 2026.
A government press release stated that this decrease in immigration is expected to result in a 0.2 percent decline in population growth over the next two years. However, some economists caution that even a small decline in population could have noticeable effects on the economy. Rebekah Young, an economist at Scotiabank, pointed out that a shrinking population could reduce GDP growth, with potentially significant economic consequences.
Economic Implications
Business advocates and economists warn that curtailing immigration levels could have a detrimental effect on Canada’s economy. Diana Palmerin-Velasco, Senior Director of the Future of Work at the Canadian Chamber of Commerce, voiced her concern that the reductions send a discouraging signal to potential foreign investors. “If we want more foreign investment, we need to have the people,” she explained in a Reuters interview, emphasizing the importance of a skilled workforce to attract international business.
The Canadian Federation of Independent Business (CFIB) has also raised alarms. In a statement, CFIB noted that many small business owners are panicked by the possibility of losing skilled foreign workers due to visa expirations. The organization has already received calls from business owners who are heartbroken over having to let go of employees they rely on.
A Scotiabank report suggests that if Canada were to meet its temporary resident target by 2027, the labour force size could decrease by 200,000 people, given the high number of temporary workers that are part of the workforce. “Dealing with a sudden drop in the number of workers could pose a substantial challenge to businesses,” the report said.
Stephen Brown, an economist at Capital Economics, added that the lowered immigration targets will require a downward revision of Canada’s projected GDP growth, which he initially forecasted to reach 2 percent in 2024 and 3 percent in 2025.
Impact on Housing and Infrastructure
One area expected to benefit from reduced immigration is housing. According to government estimates, the cuts in immigration will help reduce Canada’s housing supply gap by approximately 670,000 units by 2027. This reduction, analysts at BMO Bank suggest, will alleviate some pressure on Canada’s infrastructure and housing market, which have struggled to keep pace with rapid population growth in recent years.
However, Mike Moffatt, Senior Director of the Smart Prosperity Institute at the University of Ottawa, cautioned that these cuts could lead to workforce shortages in critical sectors, including healthcare. He emphasized the need for the government to maintain robust immigration pathways to ensure that essential services are not adversely affected.
Shifting Public Opinion
The government’s decision to reduce immigration targets may reflect shifting public sentiment. Recent polls reveal that Canadians’ attitudes toward immigration have become less favorable, with an Abacus survey finding that more than half of respondents view the immigration system negatively. This change in public perception could be driving the government to adopt a more cautious approach to immigration.
Consequences for International Students and Education
The cuts are also generating concerns within the education sector. Savvy Papayiannis, Director of Student Recruitment at Concordia University, noted that inquiries from prospective international students are decreasing, and numbers are expected to fall further. Papayiannis reported that students are anxious about what the changes mean for their future in Canada, but university staff do not have all the answers.
Larissa Bezo, President of the Canadian Bureau for International Education, criticized the immigration cuts as “short-sighted.” Bezo argued that international students represent a significant source of global talent, bringing valuable skills and bilingual capabilities to Canada’s workforce. She expressed concerns that reduced immigration could push talented graduates to seek opportunities in other countries.
David Agnew, President of Seneca Polytechnic, echoed these sentiments, stating that “a whole series of announcements have done real damage to the Canada brand.” Due to declining enrollments, Seneca has decided to temporarily close its Markham campus, which serves many international students. Agnew urged Canada to “get our house in order” to avoid further damaging its reputation as a destination for international education.
Personal Stories Highlight Real-World Impact
The impact of Canada’s immigration changes extends beyond statistics to individual lives. For instance, Jubin Thomas, an international student in Canada, shared his struggle after the government introduced category-based immigration draws that prioritize specific job sectors. Thomas’s field was excluded, leaving him uncertain about his future. Despite being a strong candidate, he now faces challenges to stay in Canada and is considering alternative opportunities elsewhere. His story highlights the uncertainty and hardship that Canada’s new immigration policies are creating for skilled international students.
Balancing Growth and Infrastructure Needs
Canada’s recent immigration changes underscore a complex balancing act between economic growth and the pressures on housing and infrastructure. While these cuts may ease strain on resources in the short term, business leaders, economists, and educational institutions argue that reducing immigration could hinder Canada’s long-term economic resilience and global competitiveness. With talent moving elsewhere and sectors like healthcare potentially facing shortages, Canada’s future growth may require a re-evaluation of these policies to attract and retain the skilled individuals who contribute to the nation’s prosperity.
FAQ on Canada’s Immigration Levels
Why has Canada reduced its immigration targets for the coming years?
Canada’s government revised its immigration targets due to concerns over infrastructure, housing supply, and shifting public opinion. The government aims to reduce population growth pressure, especially in housing and public services, and to address concerns from citizens who feel the current pace of immigration is unsustainable. This policy shift aims to balance population needs with infrastructure capabilities, though some economists worry about long-term impacts on economic growth.
How will reduced immigration impact Canada’s economy?
Economists predict that lowering immigration could slow Canada’s GDP growth and reduce the labor force. Businesses worry about potential workforce shortages, with small business owners concerned over losing skilled workers. Foreign investment may also decrease due to fewer available skilled workers. Despite some housing relief, economists caution that reduced immigration could hinder Canada’s long-term economic resilience, affecting overall growth and competitiveness globally.
Will lower immigration targets help with Canada’s housing crisis?
Yes, the government expects that reduced immigration will ease housing demand, potentially alleviating some pressure on the housing market. Government estimates suggest a reduction of 670,000 housing units needed by 2027 due to these immigration cuts. However, some experts worry that limiting immigration could lead to shortages in other areas, like healthcare, as skilled immigrants contribute to essential sectors that rely heavily on foreign workers.
How do these immigration cuts affect international students in Canada?
The education sector is concerned about a potential decline in international student enrollments, which provide significant economic contributions. Educational leaders fear that immigration policy changes could discourage prospective students, affecting university finances and reducing the number of talented graduates entering Canada’s workforce. Some institutions, like Seneca Polytechnic, have already responded by closing campuses due to decreased enrollment, highlighting the impact on Canada’s reputation for international education.
What are the broader implications of Canada’s immigration policy changes?
Canada’s recent immigration changes reflect a complex balancing act between population growth, economic needs, and public sentiment. While reduced targets may provide short-term relief for infrastructure and housing, there are concerns about the long-term effects on economic growth and global competitiveness. Business leaders and economists argue that skilled immigrants are essential to Canada’s workforce, warning that restrictive policies could prompt talented individuals to seek opportunities in other countries, affecting Canada’s prosperity.
