Canada’s Immigration Shift: Balancing Growth, Infrastructure, and Economic Prosperity
At Skills for Change, we know firsthand the essential role immigrants play in Canada’s economic productivity. They fill critical labour shortages, drive innovation, and sustain key industries like healthcare, construction, and transportation (to name a few). Immigrants account for 23% of general contractors and residential builders, helping to close the housing supply gap. Additionally, their participation in the workforce supports the tax base, which funds vital programs such as Employment Insurance (EI), public pensions, and healthcare services.
On October 24, 2024, the federal government announced the 2025–2027 Immigration Levels Plan, which reduces permanent resident admissions to 395,000 in 2025, 380,000 in 2026, and 365,000 in 2027. This plan also aims to reduce the temporary resident population—such as international students and temporary foreign workers—by 5% of Canada’s population by 2026. The intent behind these measures is to ease pressure on housing, infrastructure, and social services. However, these changes raise important concerns about their impact on economic growth and social sustainability.
Why Immigration Matters for Canada’s Social Programs
Sustaining the Tax Base and Social Services:
Immigrants are vital for funding public services such as pensions, EI, and healthcare. These programs rely heavily on tax revenue generated by a working-age population. With fewer immigrants contributing to the tax base, the financial sustainability of these programs may become compromised. According to Statistics Canada, immigration accounted for 98% of Canada’s population growth in 2023, ensuring that public services could be maintained despite an aging population. A shrinking workforce would lead to reduced tax contributions, potentially forcing future governments to raise taxes or cut benefits. (Source: Government of Canada)Impact on the Workforce and Retirement:
With 5 million Canadians set to retire by 2030, immigration plays a crucial role in maintaining a healthy worker-to-retiree ratio. A decline in immigration could lead to fewer workers supporting a growing number of retirees, increasing pressure on pension plans such as the Canada Pension Plan (CPP) and healthcare services. Without an influx of young, working-age immigrants, the dependency ratio would rise, placing further financial strain on public programs.Labour Market Gaps in Essential Sectors:
Canada relies heavily on immigrants to address labour shortages, particularly in healthcare and construction. As announced, restricting international student permits and tightening temporary foreign worker eligibility may reduce the talent pool needed to meet these demands. Healthcare workers and skilled tradespeople will be essential as the population ages, and policies that limit the supply of these professionals could exacerbate existing shortages.
Balancing Growth and Economic Prosperity
While the government’s goal is to stabilize population growth and manage infrastructure capacity, reducing immigration may limit economic growth at a critical time. Immigrants not only contribute to GDP growth but also boost entrepreneurship, with 32% of business owners in Canada being immigrants. Reducing both temporary and permanent immigration volumes could hamper economic productivity and reduce the pool of skilled labour available to sustain critical industries.
As Canada strives to balance growth with infrastructure constraints, it is essential to ensure immigrants and international students remain central to the workforce. Thoughtful, forward-thinking immigration policies are crucial to maintaining long-term economic prosperity and inclusive growth. We must continue advocating for policies that reflect the economic value of immigrants, ensuring Canada remains a thriving, inclusive society for generations to come.
In the weeks to come, I’ll delve deeper into the invaluable contributions of immigrants to Canada, exploring and breaking down topics like entrepreneurship and sector-specific expertise.
Read the full announcement from the Government of Canada:
Government of Canada – 2025-2027 Immigration Levels Plan.
Surranna Sandy, CEO
Skills for Change