In recent years, Canada’s immigration has been the cornerstone of its labour force growth, filling gaps left by an aging population and declining birth rates. However, while immigration has served to alleviate immediate workforce shortages, Canada faces a larger, structural challenge: aligning immigrant skills with the country’s long-term economic needs. This misalignment not only impedes newcomers’ prospects but also weakens the national economy. For recruiting companies like Arlyn Recruiting, this issue is crucial as it impacts both the job market and the potential for successful workforce integration.
Immigration in Canada: A Double-Edged Sword
Canada’s population grew by 3.3% in the year leading up to July 2023, primarily due to increased immigration. This increase helped to temporarily bolster the workforce, particularly with over 1.2 million temporary work permit holders entering the job market. However, the challenge lies in the nature of the roles filled, as most newcomers are concentrated in lower-skilled sectors, such as food service and accommodation, where acute labor shortages remain since the pandemic. This approach, although valuable in the short term, reduces incentives for businesses to invest in automation and innovation, vital elements needed for long-term economic resilience.
Skill Mismatches and Economic Strain
For Canada’s immigration strategy to truly benefit the economy, a greater alignment of immigrant skills with projected long-term demands is essential. Today, nearly half of all anticipated job openings do not require post-secondary education, and the structural shortages are most severe in skilled trades and healthcare. However, international students and newcomers tend to focus on fields like business management and STEM, where job opportunities may not align with future market needs. The result? A workforce heavily concentrated in specific skills, leaving other critical areas, particularly healthcare and trades, perpetually under-resourced.
This misalignment is exacerbated by Canada’s “two-step” immigration system. Many international students gain temporary work experience in Canada with the hopes of transitioning to permanent residency. This pathway has allowed a high volume of international graduates to enter the workforce, yet it often funnels them into entry-level positions far from their area of expertise, leading to underutilization of skills. While international students bring much-needed diversity, the focus must shift to ensure that their education and experience are aligned with the nation’s structural economic needs.
Pressure on Infrastructure and Social Services
The federal government’s push to increase immigration levels has put immense pressure on infrastructure, housing, and social services. As newcomers cluster in urban centers like Toronto, Vancouver, and Montreal, these high-demand areas experience surges in housing demand and heightened competition for social services. Although measures such as federal GST rebates on new rental construction have been introduced, the infrastructure and social systems must expand at a rate that matches the growing population. Otherwise, this imbalance can lead to housing shortages, longer healthcare wait times, and strained public support for immigration—issues that only serve to weaken the potential economic contributions of newcomers.
Recommendations to Improve Canada’s Immigration Strategy
To optimize the benefits of immigration, Canada must evolve its policies to meet both short- and long-term needs. Here are some strategies to ensure that newcomers are better equipped to fill critical roles and achieve sustainable success:
- Update the Comprehensive Ranking System (CRS)
The CRS, used to select permanent residents, could benefit from updates that prioritize applicants with skills matching projected economic needs and higher earning potential. By focusing on candidates who can make significant economic contributions, Canada can support sustainable growth and better prepare the workforce for future challenges. - Increase Work Opportunities for International Students in Relevant Fields
Canadian post-secondary institutions should provide more targeted work-integrated learning opportunities. Supporting international students in gaining practical experience in sectors like healthcare and skilled trades would help align their skill sets with the country’s labor needs, increasing their chances of transitioning to permanent residency in meaningful roles. - Drive Recruitment in Priority Sectors
Provinces could focus recruitment efforts on countries with skilled professionals in fields like healthcare and skilled trades. Enhanced pre-arrival support and credential recognition could make the integration process smoother, ensuring that newcomers can quickly and effectively contribute to Canada’s economy. - Incentivize Student Housing Construction
To alleviate housing pressure, provinces and post-secondary institutions could collaborate on building student housing, particularly in high-demand areas. Aligning housing availability with immigration targets could ease the strain on urban centers and foster a more stable environment for newcomers. - Reevaluate Funding for Post-Secondary Institutions
With many universities relying heavily on international student tuition fees, Canada must address this imbalance. Long-term funding frameworks could include provisions for domestic student tuition and public funding, ensuring that institutions aren’t over-reliant on international tuition for financial stability. - Credential Recognition for Key Occupations
Canada can streamline labour market integration by recognizing credentials from select countries, especially in healthcare and skilled trades. Standardized credential recognition would reduce integration barriers, allowing skilled newcomers to contribute sooner and more effectively.
Moving Forward
Canada’s immigration strategy has great potential to shape a prosperous future. But achieving long-term success will require balancing the immediate needs of the labour market with policies that foster sustainable, high-skilled growth. By modernizing the CRS, increasing relevant work opportunities, incentivizing housing, and supporting funding reforms, Canada can build a robust, dynamic workforce aligned with its economic future.
At Arlyn Recruiting, we’re dedicated to helping both job seekers and employers thrive in today’s dynamic job market. Whether you’re seeking a role that matches your skills and aspirations or looking to attract top talent to your organization, our team provides personalized support to meet your goals. Let us be your partner in navigating this ever-evolving landscape and support your success—reach out to learn how we can assist in achieving your goals!
