Prime Minister

Mark Carney

’s government is expected to announce its first Immigration Levels Plan in early November, amidst controversies surrounding

temporary foreign workers

and a rising

unemployment rate

that isn’t expected to peak anytime soon.

There has been a lot of speculation from analysts, but Immigration Minister Lena Diab hasn’t given any hint about what the government plans to do. Will Canada decrease its targets again, or will it just follow last year’s goals? An increase, in the current environment, seems unlikely.

From the state of the economy and the

aging population

to inviting people on humanitarian grounds, there are a lot of factors under consideration to help ensure that Canada brings in the right number of people each year.

The question is, what is that number, and how does the government figure it out?

What is Canada’s Immigration Levels Plan?

Each year, the federal government lays out the number of permanent residents it wants to bring in. These residents receive five-year permits to live in Canada and can eventually become citizens after they meet certain conditions, such as being physically present in the country for three of those five years.

Since last year, the federal government has for the first time also started providing targets for temporary residents, such as international students and foreign workers, after there was a huge increase in the number of such residents after the pandemic. The government set a target of reducing the number of temporary residents to five per cent of the overall population.

“As global conditions change, as our 

labour market tightens

and as the types of skill sets we look for in our future workforce evolve, so should our policies,” former immigration minister Marc Miller said at a press conference in March 2024. “We need to be more strategic in how we assess demand and the international students and temporary foreign workers that we are welcoming.”

The Immigration Levels Plan is important since Canada has traditionally relied on

immigration

to help the economy. Immigrants account for 32 per cent of all business owners with paid staff, nearly 38 per cent work in the transportation and warehouse sectors and more than 20 per cent work in construction, according to Statistics Canada.

The plan provides a forward-looking snapshot of immigration targets for the next three years, and works as a guide for the federal government and elaborates on immigration activities of the past year.

To create the plan, Ottawa consults a variety of stakeholders, including businesses, economists and various government levels. Last year, it consulted about 6,772 organizations, which was higher than the 4,780 consulted in 2023.

How have Canada’s targets and policies changed?

For most of the past decade, the annual immigration targets were either stable or reported minor increments. For example, the targets ranged between 250,000 and 350,000 newcomers each year between 2015 and 2022.

From 2023 onwards, however, the targets jumped to between 450,000 and 500,000 because Canada was going through a labour shortage following the pandemic and had to fill hundreds of thousands of jobs.

But with the number of available jobs declining and all the talk about a housing crisis, the federal government last year decided to pause population growth and reduce the permanent residency targets to 395,000 in 2025, 380,000 in 2026 and 365,000 in 2027. The plan said Canada would have a net reduction of a million temporary residents by 2027.

“Our economy is in a different place,” former prime minister Justin Trudeau said in October last year. “We need to let our communities, infrastructures, catch up to the population. That’s why we’re pausing

population growth

 by reducing immigration numbers for the next two years, so we can get back pragmatically to a place where Canada can once again grow.”

What kind of immigrants does Canada want?

Broadly, Canada aims to bring in four categories of permanent residents: economic, family, refugees and protected individuals, and for humanitarian and compassionate reasons. Of these groups, skilled immigrants under the economic category dominate the numbers.

About 230,000 places, or roughly 60 per cent of the 395,000 target for this year, have been reserved for people under the economic category. These are generally young, skilled workers. About 20 per cent are reserved for their family members, while the rest are for refugees and people trying to come to Canada for other humanitarian reasons.

Do all immigrants come in from outside of Canada?

No, the percentage of people receiving permanent residencies who are already in Canada has gradually increased over the years. The government expects more than 40 per cent of the immigration targets in 2025 to be filled by people who are already in the country. These include students and foreign workers looking to transition to becoming permanent residents from being temporary residents.

There are many immigration programs, but most temporary residents and foreigners living outside the country either immigrate as skilled workers or get nominated by a province under the economic category.

These programs are managed by an online system called Express Entry, which started about a decade ago and provides prospective immigrants with points for their education levels, work experience, English and French language proficiency, age and other factors.

The higher applicants score — the maximum is 1,200 — the higher the chance they have of becoming permanent residents, which eventually leads to citizenship.

The system is designed to attract young, skilled people, with applicants below the age of 30 receiving the highest possible number of points in the age category. Applicants also receive points for Canadian educational degrees and for working in Canada. In addition, people can receive 600 points if they get nominated by their respective province under the Provincial Nomination Program (PNP).

As such, many temporary residents, such as students, come to Canada and invest three to six years of their lives — while they study and earn a post-graduate work permit — with the hopes of receiving those additional points to make the cut and become permanent residents.

Since 2023, the federal government has also been conducting category-based invitations. Under this policy, Immigration, Refugees and Citizenship Canada (IRCC) can pick and choose applicants belonging to certain in-demand occupations or groups.

For example, the federal government on Oct. 15 invited applicants from the health care and social services occupations to apply for permanent residency. Similarly, on Oct. 6, applicants from the French language proficiency category were invited.

What is the right number for Canada?

That depends on who you ask. An economist’s point of view will be different from that of an employer struggling to fill jobs. The federal government also needs to balance the economic needs with non-economic needs.

For example, the current government, like previous ones, wants to increase the number of French-speaking people in Canada, so there is a separate category to bring in people who are fluent in French. They don’t necessarily have to be as skilled as some of their competitors.

Rebekah Young, an economist at Bank of Nova Scotia, said she factors in aspects such as declining birth rates, the number of people retiring and the aging population.

“The right number should be enough to meet the growing labour demand needs, but not too much that it leads to high unemployment,” she said. “How do we fill a labour market need, but not flood it so that businesses are still investing in the tools to boost productivity and not just taking a shortcut and bringing in cheap labour to depress wages?

Young said another factor is how much capacity Canada has to absorb the newcomers, meaning to educate, house and provide them with health care.

In March 2024, when Canada’s population was growing by more than a million each year — primarily due to the rise in temporary residents — she estimated that restricting the annual population growth to 350,000 could have theoretically prevented Canada’s productivity from declining.

Fast-forward to the present, and Young believes the new number could be slightly lower due to the rising unemployment rates and a slowing economy.

“Households and businesses still had a lot of excess cash from the pandemic-era stimulus,” she said. “But now, obviously, we’re in a much different situation, where labour markets are almost frozen, where people aren’t really being laid off, but they’re not being hired.”

Similarly, the C.D. Howe Institute, a think tank, last month said its Immigration Target’s Council, which includes a mix of academics and economists, expects the new targets to slightly decrease.

The group said there’s a need to focus on the earnings potential of immigrants as opposed to just focusing on “meeting numeric” targets.

What do businesses want?

Business associations in Canada are not necessarily asking for higher targets, but are highlighting the unequal distribution of the labour force in the country because there are certain regions, especially rural areas, that are finding it hard to fill open positions despite the high unemployment rate.

“The reality is that there are many jobs that are just not attractive to our domestic workforce,” Diana Palmerin-Velasco, a senior director at the Canadian Chamber of Commerce, which represents more than 200,000 businesses, said last month. “Night-shift jobs, hard physical labour, meat processing — these are just not attractive.”

Some regions have always struggled to attract local labour, she said, and many of these communities rely on foreign workers. She said approximately 10 per cent of the country’s business chambers have expressed concerns about their need for foreign workers, and that need shows up in every province.

“We need to keep that in mind,” she said.

Palmerin-Velasco isn’t ruling out the possibility of another decline in the immigration targets considering that the situation has become “very politicized,” referring to recent calls for the closure of the temporary foreign workers program (TFWP) by Conservative Leader Pierre Poilievre and others.

What about the TFWP?

The temporary foreign workers program does not fall under the rule of the IRCC, but Employment and Social Development Canada.

This program has been under scrutiny lately. Last month, Poilievre said he wanted the program scrapped and blamed it for flooding the market with cheap labour, which has made it harder for Canadians to find work.

Some analysts, however, feel that the blame on the TFWP is misplaced because people coming through this program make up less than ten per cent of the overall number of temporary residents, according to a statement by former immigration minister Marc Miller in 2024.

Of the rest, 42 per cent are students and 44 per cent are workers under the International Mobility Program (IMP), which includes postgraduate work permits and spousal work permits for students and workers arriving through inter-company transfers, or through humanitarian pathways, including those fleeing Ukraine.

In other words, for every four work permits that come under the IMP, there’s one permit under the TFWP, Palmerin-Velasco said.

“If people are concerned about big numbers of temporary foreign workers, let’s look at the international mobility program as well,” she said.

What’s the current situation?

The caps announced on temporary residents last year and the reduction in the overall immigration targets have clearly slowed Canada’s population growth rate.

The country’s population grew at a rate of 0.1 per cent from April to July, compared to the growth rate of the first three months of the year, according to Statistics Canada estimates made in September. This was the lowest growth rate recorded during the second quarter, excluding 2020, which was impacted due to the pandemic.

Yet, the slowdown isn’t happening as fast as the government had hoped, Anthony Bambokian, an economist at the Bank of Nova Scotia, said in a report published on Thursday.

“Non-permanent residents, while declining in number, remain off track from the five per cent target originally set for 2026 — with the aim of reaching their goal deferred to 2027,” he said, adding that declines in the international student population, along with low student arrivals, contributed materially to the slowdown.

This is an aspect that Bambokian’s colleague Young feels that the government may need to focus on in the near future.

Young said the government needs to be more transparent and predictable about the pathways available to students to become permanent residents.

“As we consider the right number, don’t just think about today’s needs, but tomorrow’s as well,” she said. “If you invest in the right people who have high potential, three, four or five years from now, they will likely be able to fit many different labour market needs.”

  • The thorny dilemma of Canada’s temporary foreign workers
  • Canada should drop immigration levels even further, think tank says

• Email: nkarim@postmedia.com