Canada’s economic engine is changing—and fast. A new report by the Bank of Canada highlights a sharp transformation in the nation’s labour market, with an increasing share of jobs now being filled by low-wage migrant workers. As population growth accelerates and the native-born workforce shrinks, temporary migration has emerged as a major driver of both employment and demographic shifts.
A Surge in Temporary Workers
According to the Bank of Canada’s discussion paper titled The Shift in Canadian Immigration Composition and its Effect on Wages, there has been a noticeable shift in the origin and skill level of newcomers. Since 2022, Canada has welcomed over a million newcomers annually, many arriving through non-permanent immigration streams such as the Temporary Foreign Worker Program and the International Mobility Program.
Unlike previous decades, these migrants are younger, less skilled, and more likely to come from lower-income regions, including India, sub-Saharan Africa, and the Middle East. As of 2024, these temporary residents account for nearly two-thirds of Canada’s population growth—a stark contrast from just a decade ago, when non-permanent residents barely made a dent in population data.
Wage Gap and Labour Market Impacts
The report highlights an alarming trend: migrant workers are earning substantially less than their Canadian-born counterparts. The average wage gap has jumped to 22.6%, more than doubling since 2014. Before then, the wage difference was around 9.5%. This growing divide is especially prominent in retail, hospitality, and food services industries that have seen a steep increase in temporary foreign workers since the pandemic.
For example, between 2016 and 2023, the number of foreign workers in restaurants surged by over 634%, according to King’s Trust Canada. These jobs, once filled by local youth or part-time workers, are now being dominated by temporary visa holders.
Long-Term Economic Concerns
While temporary migration supports Canada’s short-term labour needs, experts are concerned about the long-term effects. With lower-skilled migrants earning less and contributing less to productivity, Canada’s overall economic output per worker is in decline. Former Bank of Canada governor David Dodge warned that this trend could suppress wages and hinder innovation by keeping uncompetitive businesses afloat.
Moreover, the share of Canadian-born individuals in the labour force has dropped from 77.6% in 2006 to 68.1% in 2024, showing a clear dependency shift. Combined with falling birth rates—net births are now almost negligible—Canada’s workforce is increasingly being sustained by temporary foreign labour.
The Bank of Canada report on low-wage migrant workers paints a clear picture: Canada’s labour landscape is evolving in ways we haven’t seen before. With rising immigration through temporary channels, widening wage gaps, and declining productivity, the need for thoughtful, long-term policy decisions has never been more urgent. As this transformation continues, the focus must remain on ensuring fair treatment, sustainable economic growth, and inclusive integration strategies for all workers, whether born in Canada or abroad.
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