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Recent changes to Canadian immigration policy, including the Temporary Foreign Worker (TFW) Program, are positive overall, but they could have negative consequences that need addressing.

March 10, 2016 - Recent changes to Canadian immigration policy, including the Temporary Foreign Worker (TFW) Program, are positive overall, but they could have negative consequences that need addressing, according to a new C.D. Howe Institute report. In “Moving Parts: Immigration Policy, Internal Migration and Natural Resource Shocks,” authors Michel Beine, Robin W. Boadway and Serge Coulombe note that changes to the TFW Program have limited the kinds of workers companies can bring in, made the applications more rigorous, and set an employer-specific cap on the use of TFWs.

“Under the previous TFW system and its enforcement, temporary foreign workers were in competition with some Canadian residents, resulting in a major political backlash,” note the authors. “The 2014 reforms to the TFW program will improve the labour market for existing Canadian residents.”

The previous federal government also modified the traditional points system for permanent immigration and created the Express Entry System. This system rewards workers who have skills that the federal government determines the labour market needs. “Permanent immigrants now will meet employer needs more closely than permanent immigrants did in the past,” state the authors.

However, the report finds that changes to Canada’s immigration system may have some unintended consequences:

  • First, it will be difficult for international students at Canadian universities to become permanent residents.
  • Second, whereas TFWs were the main source of labour-market competition for Canadian residents, new permanent immigrants will increasingly compete with Canadian residents.
  • Lastly, the permanent immigration policy prioritizes skills currently in demand, and that preference may decrease the immigration of workers whose skills may be more important in the longer term.

Although the recent changes are an improvement to Canadian immigration policy, the authors recommend that the federal government address these potential negative consequences as it moves forward with its reforms. Those refinements would entail:

  • Better incorporating recent international graduates of Canadian universities into the permanent immigration system;
  • Creating more permanent immigration opportunities for immigrants with skills the Canadian economy may need in the future, although they are not in demand in today’s labour market; and
  • Addressing the concern that permanent international immigrants will reduce the incentive for Canadian residents to move among the provinces to seek better opportunities.

Click here for full report.

The C.D. Howe Institute is an independent not-for-profit research institute whose mission is to raise living standards by fostering economically sound public policies. Widely considered to be Canada's most influential think tank, the Institute is a trusted source of essential policy intelligence, distinguished by research that is nonpartisan, evidence-based and subject to definitive expert review.

For more information contact: Michel Beine, Full Professor in International Economics, University of Luxembourg; Robin W. Boadway, Emeritus Professor of Economics, Queen’s University; Serge Coulombe, Full Professor, Department of Economics, University of Ottawa; or Benjamin Dachis, Associate Director, Research, C.D. Howe Institute: 416-865-1904 or email: amcbrien@cdhowe.org