With Non‑permanent Residents Expected to Decline, Who Will Fill Their Jobs?

If the federal government follows through with its plan to reduce the number of non‑permanent residents (NPRs) admitted to Canada, our analysis suggests it will weigh on real GDP growth and inflation, notably shelter costs. At the same time, fewer NPRs should boost per capita GDP and real wage growth.

Some have argued that higher wages will persuade people to return to the labour force, but there is little evidence of people waiting on the sidelines to work. Underemployment is near an all-time low currently, as is the share of Canadians who aren’t in the labour force but who want to work. Of that latter group, the majority are of prime age and have been sidelined largely due to illness or personal/family responsibilities—considerations best addressed with public policy.

With labour likely to become scarcer and wages expected to rise, this should put more pressure on sectors of the economy most likely to employ NPRs, specifically accommodation and food services and retail trade. Unfortunately, these are also among the sectors most likely to be struggling coming out of the pandemic and to have experienced a surge in insolvencies at the start of 2024. Reducing the availability of low-cost, temporary labour will only increase their challenges. However, it may also force these low-productivity sectors to innovate quickly.