Canada to cut immigration to ease housing, social services strain

By Anna Mehler Paperny

TORONTO (Reuters) – Canada went too far in its response to a labor shortage following the pandemic, Prime Minister Justin Trudeau said on Thursday as his government unveiled a plan to slash the number of immigrants to ease pressure on housing and social services.

While Canada has long prided itself as a place that welcomes new immigrants, public opinion in the country has recently soured on immigration, which has been blamed for reducing housing affordability.

“We are acting today because in the tumultuous times as we emerged from the pandemic, between addressing labor needs and maintaining population growth, we didn’t get the balance quite right,” Trudeau told reporters.

The government and some economists hope the policy reversal will ease pressure on housing and social services while some industry groups worry smaller migration numbers will kneecap sectors starved for labor. Migrant advocates have decried the move.

Canada is set to bring in 395,000 new permanent residents in 2025, 380,000 in 2026 and 365,000 in 2027, down from 485,000 in 2024, in the first multi-year reduction since Ottawa started laying out multi-year immigration levels in 2018.

Canada had planned to bring in 500,000 next year and the same amount in 2027. A government source told Reuters the new levels on Wednesday, and Trudeau and the immigration minister confirmed them on Thursday.

At the same time Canada is reducing the number of temporary residents by hundreds of thousands a year, the immigration department said in a statement. The government hopes that more than 1 million people whose visas are set to expire in the coming years will leave of their own accord.

Polls show a growing number of Canadians think Canada is bringing in too many immigrants.

The federal Liberal government, trailing in polls ahead of an election that must be held by next October, has sought to clamp down on immigration.

The measures are expected to result in a population decline of 0.2% in both 2025 and 2026 before returning to growth in 2027, the government said.

In a note on Thursday analysts at BMO bank said the move “will take stress off the economy and infrastructure that has become almost debilitating in recent years.”

The immigration cuts are expected to reduce Canada’s housing supply gap by about 670,000 units by the end of 2027, according to the government.

But Diana Palmerin-Velasco, Senior Director of the Future of Work with Canada’s Chamber of Commerce, expressed concern with a potential reduction in the labor pool.

“I think we were able to officially avoid a recession because of immigration,” she said.

“There’s concern in the business community about the message that we are sending. You know, if we want more foreign investment, we need to have the people.”