Feds scale back immigration to tackle housing crisis, sparking debate among business leaders

Immigration Minister Marc Miller’s announcement of the 2025–2027 Immigration Levels Plan outlines reduced targets for both permanent and temporary residents. The plan, aimed at easing pressures on housing, infrastructure, and social services, is part of a broader effort toward “well-managed, sustainable growth” in response to Canadians’ concerns over housing affordability and workforce stability.

The plan reduces permanent resident targets from the previous goal of 500,000 to 395,000 in 2025, then to 380,000 in 2026, and finally to 365,000 in 2027. The government forecasts a modest population decline of 0.2 per cent for both 2025 and 2026, with growth resuming at 0.8 per cent in 2027, a measure intended to reduce housing pressures and infrastructure strain, as per Statistics Canada’s recent housing data. Miller says these adjustments will “make immigration work for our country so that everyone has access to the quality jobs, homes, and supports they need to thrive.”

In addition to adjusting permanent resident levels, the policy caps the temporary resident population at 5 per cent of Canada’s total population by the end of 2026. This change is expected to reduce the temporary resident population by nearly 450,000 over the next two years, driven by stricter eligibility requirements in the Temporary Foreign Worker (TFW) Program, including new wage standards, according to Immigration, Refugees and Citizenship Canada (IRCC). While these changes are designed to support long-term economic stability, they have raised concerns among industry representatives who fear significant workforce shortages, particularly in hospitality.

Dan Kelly, president of the Canadian Federation of Independent Business (CFIB), criticized the abrupt modifications to the TFW Program and reduced permanent resident targets, noting that many small business owners are already struggling to retain foreign workers whose visas are expiring. He added that recent wage adjustments are misaligned with the economic realities of small businesses, potentially worsening workforce shortages (CFIB). In sectors like hospitality, where staffing gaps are prominent, limited access to temporary foreign workers could exacerbate labour shortages, especially in regions such as Atlantic Canada and parts of rural Ontario, where hospitality and tourism drive local economies.

Economists and labour analysts have also expressed concern, warning that the policy could create unintended economic effects. Economist Armine Yalnizyan suggested that “overly restrictive immigration levels could undermine Canada’s ability to meet future workforce demands, especially in healthcare and construction,” fields where immigrant labour is critical. According to Statistics Canada, immigrants make significant contributions in critical sectors; for instance, they account for 23 per cent of all general contractors and residential builders.

The federal government acknowledges that immigration drove nearly 98 per cent of Canada’s population growth in 2023, with temporary residents making up about 60 per cent of that figure, according to IRCC data. While the policy intends to alleviate housing and infrastructure pressures, some business leaders argue that Canada’s 379,000 private sector job vacancies reflect the need for continued immigration to maintain workforce capacity.

Restaurants Canada, which represents restaurant and food service owners, noted that without access to skilled foreign workers, many businesses may face closure. The organization highlighted that reliance on foreign workers has grown, especially as the industry contends with post-pandemic recovery challenges in high-demand regions like Ontario and Alberta.

Economists also caution that while reduced immigration could alleviate housing demand and improve affordability, it may slow GDP growth and weaken Canada’s competitive position in the long term. A report from the Conference Board of Canada warned that “a too-rapid reduction in immigration could create a lag in Canada’s long-term economic growth,” especially as the country faces an aging workforce and limited domestic labour supply.

In an effort to balance economic priorities, the government has introduced initiatives to transition more temporary residents, especially those in healthcare and skilled trades, into permanent residency. This measure aims to address critical labour demands while facilitating smoother integration for newcomers (Government of Canada). The plan also includes increased targets for Francophone immigration, with a goal of 10 per cent of total admissions by 2027, intended to support French-speaking communities outside Quebec.

As Canada’s hospitality industry navigates these new immigration limits, stakeholders continue to urge the government for flexibility, arguing that a more adaptive approach would allow for better alignment with evolving economic needs. Many in the sector hope that the government remains responsive to future labour demands to support continued economic growth and stability across Canadian industries.

The 2025–2027 Immigration Levels Plan underscores Canada’s complex balancing act in immigration policy—seeking to address housing and social pressures while ensuring a workforce that can sustain economic momentum. For now, the hospitality sector remains cautiously optimistic but attentive, hoping the government will adjust targets as labour demands require.