On March 21, Canada announced it will begin to cap temporary resident levels.
Immigration, Refugees and Citizenship Canada (IRCC) unveils a new Immigration Levels Plan each year which contains targets for permanent residence levels as well as the categories under which these immigrants will be welcomed. Now, beginning this fall, the plan will also contain targets for temporary residents for the first time.
Canada’s temporary resident population has nearly doubled over the past two years and now stands at nearly 2.5 million people. This represents 6.2 per cent of the population. The minister says Canada will look to decrease this figure to 5 per cent over the next three years. To say this is a major development is an understatement.
There are few certainties in Canadian immigration policy these days but I am quite certain this development will have major ramifications for years to come. I’d like to use this article to outline why the government is doing this, how we got here, and what the implications of the cap are.
Why is Canada introducing a cap on temporary residents?
Immigration Minister Marc Miller says the cap is needed to make the immigration system “more efficient and sustainable.” Given the significant growth in temporary residents, the minister would like Canada to be more strategic in achieving the goals of its various temporary resident streams and also strengthen the alignment between temporary and permanent resident programs. He says programs that bring in temporary workers need to reflect the needs of the evolving labour market, and as such, he has asked IRCC to review temporary worker streams to support this aim.
In addition, Miller does not want to see the labour market so heavily dependent on temporary residents and will be coordinating with the provinces to identify how to facilitate more temporary to permanent resident (“TR to PR”) transitions.
The minister stressed twice during his remarks the changes are being made with the view that temporary residents are assets to Canada and the federal government remains committed to welcoming and supporting them. He concluded by stating “Our ultimate goal is to ensure a well-managed, sustainable immigration system built on needs rather than profitability at the cost of integrity and sustainability.” The “profitability” remark is aimed at the employers the minister has characterized as being “addicted” to foreign workers as well as the provinces and higher education sector for becoming more reliant on international students for financial gain.
How did we get here?
Miller was thorough in outlining how Canada’s temporary resident population has grown so rapidly. His speaking notes share the relevant figures:
- 44 per cent are temporary workers under the International Mobility Program. They are divided as follows:
- 26 per cent are Post-Graduation Work Permit (PGWP) holders
- 9 per cent are spouses of students
- 10 per cent fall under the International Experience Class (IEC) which offers working holiday visas to youth from peer countries
- 12 per cent are the spouses of skilled workers
- 26 per cent are here for humanitarian purposes
- 17 per cent are for intra-company transfers and free trade agreements
- 42 per cent are international students
- 9 per cent fall under the Temporary Foreign Worker Program (TFWP)
- 5 per cent are asylum claimants awaiting a hearing from the Immigration and Refugee Board (IRB)
The minister’s figures underscore the point I recently made, which is that the spike in temporary residents is predominantly due to policies being pursued by the Government of Canada. To start with, even though Miller and Employment Minister Randy Boissonnault have implied the TFWP is being abused, it represents just 9 per cent of the 2.5 million temporary residents in the country. For the sake of discussion, if Canada shut down the TFWP completely, we would still have nearly 2.3 million temporary residents, a figure which would remain an all-time high. So, it is clear that restricting the TFWP will not make much of a dent in getting temporary resident figures down.
By the same token, despite the recent increase in asylum claims, the overall level of them representing 5 per cent of temporary residents is also relatively small, and restrictions here will also have a negligible impact on temporary resident levels.
This leaves us with international students and the International Mobility Program (IMP), both of which were already set to dip.
Canada’s temporary resident levels were likely going to decline anyway
Missing in the announcement was the acknowledgment that the spike in TR figures was largely driven by several exceptional circumstances and that TR levels were likely set to decline anyway due to policy measures announced by the federal government dating back to last year.
Canada has welcomed nearly 250,000 Ukrainians for humanitarian purposes since the start of the war with Russia in 2022 and many of these Ukrainians have gotten work permits under the IMP. In July 2023, Canada set a deadline of March 31, 2024 for interested Ukrainians to come to Canada via the special policy known as the Canada-Ukraine Authorization for Emergency Travel (CUAET). Canada has already begun to offer permanent residence pathways to Ukrainians and more are likely on the way, since it will be inhumane to ask them to leave once their temporary permits expire. As Canada offers Ukrainians more PR options, this will naturally result in the size of the Ukrainian temporary resident population decreasing.
Temporary resident levels were also set to decline due to Canada ending various time-limited policies introduced during the pandemic. One of them was allowing international students to pursue distance learning and still be able to apply for a PGWP and work here. This was done to limit disruptions for international students and the Canadian higher education sector while the pandemic made travel difficult. With this policy ushered out, Canada was poised to see TR levels fall.
Similarly, prior to the pandemic, it was IRCC’s policy that a PGWP could not be renewed and once it expired, an international student would either need to transition to another temporary resident visa, become a permanent resident, or leave Canada. However, IRCC introduced three 18-month extensions for PGWP holders since the pandemic on the premise of harnessing their talents to support the labour market at a time of historic job vacancies and to give them more time to potentially transition to permanent residence. In December 2023, IRCC said it would no longer be providing extensions to PGWP holders, which, in effect, will see TR levels drop.
Another major driver of temporary resident levels falling are the international student reforms introduced by IRCC in recent months. The combination of more than doubling the proof of funds requirement that international students need to demonstrate to get a Canadian study permit, plus the new 2-year cap on international students, will play a big role in getting TR levels down.
Finally, as I’ve alluded, TR to PR transitions result in attrition among the temporary resident population, and Canada has facilitated more of these transitions since the pandemic. As an example, Canada dedicated 2021 to facilitating as many TR to PR transitions as possible through the economic class due to concerns it would be hard to welcome skilled immigrants from overseas amid the pandemic. Facilitating these transitions has remained a priority and the share of them remains higher than prior to the pandemic. What is new, however, from Miller’s recent announcement, is his stated desire to facilitate even more TR to PR transitions over the coming years to help bring TR numbers down.
With all this out of the way, let’s take a look at the implications of the new cap.
It’s a soft cap, not a hard cap
The new cap on temporary residents will be a soft cap, rather than a hard cap. The Immigration Levels Plan is illustrative of how the temporary resident cap will work. Each year, IRCC enumerates three different ranges for each permanent residence category. The final numbers each year depend on Canada’s policy objectives, visa processing capacity, as well as factors out of our control (e.g., the pandemic). Moving forward, IRCC will outline targets for various temporary resident categories, but it will have tremendous discretion to exceed, meet, or fall short of its targets. Unlike a hard cap, where the government does not issue more visas than the target, a soft cap allows the government to issue more visas than its target if it so desires. Interestingly, we have seen this recently play out in Quebec. Despite the provincial government’s stated desire to keep permanent residence landings to around 50,000 per year, Quebec has used its discretion to see this figure reach nearly 70,000 in 2022.
Needless to say, it is going to be very tricky for IRCC to figure out how to implement the cap, as it will result in difficult decisions, as well as navigating unforeseen circumstances. For example, the government may lay out a temporary residence plan with the best of intentions, only to see it curtailed by a new humanitarian crisis that compels Canada to act. As another example, a political crisis in another country may compel Canada to offer temporary visa extensions to nationals here from said country. There are also some elements of the immigration system that IRCC is less prone to touch. For example, on the permanent residence side, IRCC has kept family class targets stable for over a decade, at around 25 or so per cent of total immigrant admissions. In practice, this has resulted in a zero-sum game between economic and humanitarian immigration categories. Increases in humanitarian admissions have come at the expense of economic admissions, and vice versa. I suspect we will see a similar dynamic play out with the new temporary residence cap as it will be very difficult for IRCC to justify limiting temporary visas to the loved ones of Canadians and foreign nationals.
Winners and losers
The cap is set to create winners and losers, and we’re also already starting to see this unfold. The winners will be the increasing number of TRs who will successfully transition to PR. Conversely, many will also need to leave Canada since the unfortunate reality is we do not have enough PR spots to satisfy the demand among TRs.
In addition, if well-executed, the cap will support efforts across Canada to ensure the effective delivery of services we all value and cherish such as health care and education as well as infrastructure such as much-needed housing. Planning our total number of foreign national arrivals each year is viewed as a good thing on the permanent resident side of our immigration system, so similarly, it should also be viewed positively on the temporary resident side.
There is skepticism however on how the government will execute the new cap given the difficult decisions that have to be made as well as shortcomings by the government itself. For example, the new cap on international students continues to create significant uncertainty for students themselves, as well as provinces and the higher education sector, since government policies and procedures have yet to be finalized. The last thing we want to do with the temporary resident cap is create even more uncertainty for foreign nationals themselves, as well as employers, families, and others.
With respect to employers, Miller continues to acknowledge we have labour shortages in areas such as health and the trades, something which his department looks to address via economic class immigration policies, such as category-based Express Entry draws. Hence, it stands to reason that we do not want to impose overly restrictive policies that cut down on Canada’s access to much-needed labour in critical sectors and occupations. This is an area that does not require much guessing and we can harness existing resources to continue to inform our temporary resident policies moving forward. Statistics Canada produces a litany of labour force analysis on a regular basis, such as which sectors have the highest levels of job vacancies. All this to say, it is crucial for the federal government to avoid one-size-fit-all policies that end up unnecessarily penalizing sectors and employers with a genuine need for foreign talent due to domestic worker shortages.
Canada is not shutting its doors
In closing, calls for a cap on temporary residents had been made for several years, especially as the temporary resident ecosystem became increasingly complicated with Canada pursuing so many broad policy objectives. I do not think it is a bad thing for Canada to be more deliberate in planning its temporary resident arrivals, and if done well, the cap can prove beneficial for the greater good. It is also important to emphasize once again that because this will be a soft cap, the federal government will maintain tremendous latitude over temporary resident levels. That means in times where the labour market is tight, the federal government can increase foreign worker arrivals. Similarly, once IRCC feels like the higher education sector is on a more sustainable path, it can issue more study permits.
Despite the headline, and as Miller emphasized in his remarks, Canada is not shutting its doors to newcomers, but rather, is seeking to identify how to welcome and treat them more hospitably.