By Mata Press Service

Canada’s unprecedented reliance on temporary immigration—including more than one million foreign students—has had a profound effect on the country’s labour market, suppressing wages, displacing Canadian workers in low-skilled sectors, and potentially weakening national productivity.
That’s the stark conclusion of a new Bank of Canada report titled The Shift in Canadian Immigration Composition and Its Effect on Wages.
The paper is one of the clearest official analyses yet of how Ottawa’s dramatic post-pandemic immigration surge, particularly through temporary pathways, has reshaped workforce dynamics across the country.
“Recent Canadian immigration has been driven mostly by non-permanent residents that have different socio-economic characteristics compared with previous waves,” write authors Julien Champagne, Mallory Long and Antoine Poulin-Moore.
“These compositional changes have led to a widening of the wage gap between non-permanent residents and Canadian-born workers.”
Between 2015 and 2024, the report found, temporary workers became younger, less experienced, more likely to come from lower-income countries, and more concentrated in low-skilled occupations than ever before. Most critically, the average wage gap between these temporary workers and Canadian-born employees more than doubled, from 9.5% in 2014 to 22.6% by 2024.
That growing divide, the report warns, is not simply a matter of personal hardship—it is an economic drag. The authors estimate that had the characteristics of temporary workers remained consistent with past norms, aggregate wages across Canada would have been 0.7% higher in 2023–24.
Canada’s current immigration structure marks a sharp departure from past trends. Historically, permanent residents—selected for their skills and long-term integration potential—were the primary drivers of population growth. But since 2015, the flow has reversed. Non-permanent residents (NPRs)—including international students, temporary foreign workers and asylum seekers—now make up the majority of new arrivals.
According to Immigration, Refugees and Citizenship Canada, Canada hosted 2.3 million non-permanent residents in 2023, including over 1 million foreign students, 766,000 migrant workers, and nearly 500,000 recent asylum claimants. Many entered through the International Mobility Program, which often bypasses traditional labour market assessments.
“Public data suggest this surge in temporary immigration mostly reflects a sharp rise in international mobility program work permits…and international study permits,” the Bank of Canada study notes.
Much of this growth began after 2022, when pandemic-era restrictions were lifted and Ottawa implemented policies that expanded access to post-graduate work permits and eased hiring limits on low-wage workers.
While foreign labour has supported some industries facing labour shortages, the report finds that it has also altered the composition of Canada’s workforce, particularly in the accommodation, food services, retail, and low-wage support sectors.
“They accounted for a larger share of workers in low-skilled occupations, replacing Canadian-born workers who moved out of these jobs,” the report states, echoing a 2022 federal study that flagged foreign labour as a factor in wage suppression.
From 2016 to 2023, the number of temporary foreign workers in Canadian restaurants surged by 634%, according to a separate King’s Trust Canada report. As a result, many entry-level jobs traditionally filled by students or recent graduates are now held by temporary visa holders.
In 2024, 16.4% of all NPR workers were also enrolled in school, many juggling low-wage jobs in fast food, retail or delivery while attending college or university.
Not only has the nature of temporary work changed, so has the composition of who fills these roles.
Between 2006 and 2014, most non-permanent residents came from wealthier regions such as Western Europe or the United States. Today, India is the largest single source, accounting for more than a quarter of all NPRs. Substantial increases have also come from sub-Saharan Africa, the Middle East, and Eastern Europe.
This shift, the Bank of Canada notes, has a direct link to earnings:
“Wages of non-permanent residents born in lower-income regions have been substantially lower. The region of birth is now the single most important factor explaining wage disparities.”
And this gap has real economic consequences. Because wages often reflect productivity, the study suggests that Canada’s over-reliance on lower-wage, lower-skilled foreign labour is limiting overall economic performance.
“The productive capacity of the Canadian economy grew less than it would have if recent newcomers had the same socio-economic characteristics as in the past,” the authors write.
Interestingly, permanent residents (PRs) who arrived within the last five years fared better than their temporary counterparts. Although they too faced an initial wage gap compared to Canadian-born workers, that gap has narrowed—from 22.5% in 2014 to just 13.1% in 2024.
Unlike temporary workers, PRs are chosen through a points-based system that prioritizes education, language ability and work experience.
“This partly reflects diverging patterns in average observable characteristics,” the study concludes. “Recent PRs experienced an improvement in their characteristics…contrasting with the deterioration among non-permanent residents.”
With Canadian fertility rates plummeting and net births nearly zero, immigration has become the primary source of population growth. But the Bank of Canada warns that the structure and quality of that growth matter.
Canada’s population grew by 6% between 2019 and 2023, outpacing every other developed country and tripling the U.S. rate. Yet productivity growth is falling. Wage gaps are widening. And domestic youth are being pushed out of traditional starter jobs.
The authors stop short of making policy recommendations, but their conclusion is unmistakable:
“These results have important implications for Canada’s productive capacity and thus potential output.”
With a federal immigration reset underway, the report offers a sobering data point: quantity alone does not guarantee prosperity.