Canada is holding the number of permanent residents it aims to bring in each year at 380,000, but halved the number of temporary residents in its new

immigration targets released along with its federal budget on Tuesday. As per the immigration targets last year, Canada aimed to bring in 395,000 permanent residents in 2025, 380,000 in 2026 and 365,000 in 2027. That has now changed to 380,000 for each year through 2028. Permanent residents will have a chance to apply for Canadian citizenship after living in Canada for at least three years.

The target for temporary residents , which includes foreign students and workers, will decline from 673,650 in 2025 to 385,000 in 2026, and 370,000 in 2027 and 2028. This move is part of the federal government’s aim to decrease the proportion of temporary residents from about 7.5 per cent to five per cent of the overall population.

“In 2018, 3.3 per cent of Canada’s population were temporary residents. By 2024, that number had more than doubled to 7.5 per cent, an unprecedented rate of growth that put pressure on housing supply, the healthcare system and schools,”

the budget document stated. “Canada’s new government recognizes that this system is no longer sustainable.”

The new measures are being taken amidst recent controversies surrounding the use of temporary foreign workers and a rising

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unemployment rate that isn’t expected to peak anytime soon. The reduction in temporary residents could lower demand for housing and other infrastructure, CIBC’s deputy chief economist Benjamin Tal said. He also noted that the decrease will have a negative impact on employment, especially in low-wage jobs, but said that overall, the numbers were a step in the right direction.

The big question, according to Tal, is how many of the new immigrants are likely to come from within Canada. Temporary residents, like students and foreign workers, can often convert to permanent residents if they meet the requirements of Canada’s points-based immigration system.

Last year, about half of the newcomers were already in Canada, he said. Many economists expect that proportion to increase in 2026, as Canada looks to stabilize its

population growth rate . Kelly Higginson, chief executive of Restaurants Canada, which represents about 100,000 businesses, said in a statement that the organization is “incredibly concerned” with the “extreme reduction” in temporary residents, and that the budget “does not recognize the importance of the foodservice industry.”

Higginson said that while temporary residents make up a small part of the sector’s total workforce, they fill “essential positions such as chefs, cooks, hard-to-staff overnight shifts and roles in rural, remote and tourism regions where there are not enough local workers available.” Such workers allow the industry to be the fourth largest private sector employer, she said.

While the number of job vacancies in Canada is on the decline, some businesses have said that the unequal distribution of the country’s labour force means that in certain regions, especially rural areas, it is harder to fill jobs. The federal government said in its budget that it would address the “the unique needs of rural and remote communities.”

In addition, the budget said that 64 per cent of the 380,000 permanent residents expected in 2026 will be economic migrants — generally young, skilled workers — who accounted for 59 per cent of permanent residents this year. The remaining newcomers belong to categories such as family reunification, refugees and protected individuals, and those admitted for humanitarian and compassionate reasons. This is a move that businesses have been pushing for in recent years.

Parisa Mahboubi, a senior policy analyst at the C.D. Howe Institute, said that skilled workers who come in through the economic category are likely to make a stronger contribution to the country’s economy. “This can be a great news for Canada,” she said.

However, she said the federal government should ensure it is bringing in top applicants through its immigration system. In recent years, the government introduced legislation allowing exceptions for specific applicants — those who speak French, for example, or who work in the healthcare sector.

The government should move away from this practice, said Mahboubi, and just have one immigration system that treats all the prospective immigrants equally.

The government also said that in the coming months it will launch an “accelerated pathway” for H1-B visa holders — foreign workers in the United States, who were recently hit with substantially higher application fees — to “strengthen Canada’s innovation ecosystem, address labour shortages and attract top talent.”

Benjamin Bergen, president of the Canadian Council of Innovators, a group representing Canada’s tech companies, said in a statement that the “moves to secure H1-B visa holders are valuable.”

“Every successful Canadian technology company includes skilled professionals who were born elsewhere and chose to move to Canada,” he said.