Major Immigration Updates – Federal Government’s Immigration Levels Plan

As part of their budget, the federal government has announced the Immigration Levels Plan for 2026 to 2028. Major takeaways are that the number of temporary residents (workers and students) is to be further reduced, while the number of permanent residents is to remain at a reduced level from its height during the pandemic in 2021-2023. Since 2024, the government has reduced the numbers of temporary and permanent residents from the peak during the pandemic and this policy is to continue. It is important to note that the government has already implemented measures to greatly reduce international student numbers and also reduce the number of foreign workers in some categories, so while there will be a further reduction in numbers, this is not a marked departure from the government’s current policy. The government expects that many who came during the pandemic and no longer have valid immigration status in Canada will leave Canada voluntarily. However, it is also entirely possible that many people who no longer have immigration status will remain in Canada, possibly leading to an increase in under documented workers, which will create a host of new issues and further diminish tolerance for immigrants and Canada’s immigration programs.

The government is aiming to reduce the number of temporary residents to less than 5% of Canada’s population by the end of 2027. Immigration, Refugees and Citizenship Canada (“IRCC”) has already implemented measures to drastically reduce the number of international students such as the capping of allocations to post-secondary institutions by province and territory, the implementation of Provincial Attestation Letters, as well as proof of paying tuition and housing fees and having sufficient funds and financial support to meet the financial requirement (currently $22,895 per person). IRCC has also implemented measures to reduce the number of foreign workers particularly under the Temporary Foreign Worker Program which deals with Labour Market Impact Assessments (“LMIAs”). These measures include the refusal to process low-wage LMIA applications in areas with over 6% unemployment and, in terms of the wage threshold differentiating low-wage from high-wage LMIAs, increasing this wage threshold by adding an additional 20% to the median wage in each province or territory. New eligibility criteria for spouses of foreign students and foreign workers in high-skilled and low-skilled occupations outside of the free trade agreement categories were implemented in January 2025, which also contributed to lowering the overall number of temporary residents in Canada this past year. These policies are likely to continue in order to meet the government’s target of temporary residents making up less than 5% of Canada’s population by the end of 2027. The projections of numbers of temporary residents over the next three years are as follows: 2026 – approximately 230,000 workers and 155,000 students; 2027 – approximately 220,000 workers and 150,000 students; 2028 – approximately 220,000 workers and 150,000 students.

The overall number of new permanent residents is targeted at approximately 380,000 per year from 2026 to 2028. IRCC will place its focus on economic immigrants, with a reduction in immigration from family reunification as well as refugee and humanitarian immigration. The government will also continue it’s policy of favouring French-speaking permanent residence applicants living outside of Québec in an effort to increase the prevalence of the French language throughout Canada, with a target of 9% of PRs in 2026, 9.5% of PRs in 2027, and 10.5% of PRs in 2028. Overall, the percentage of economic immigrants is to be increased from 59% to 64% by 2028. The projections of numbers of PRs for the next three years are: 2026 – approximately 239,800 economic immigrants, 84,000 family class immigrants, and 56,200 refugee, humanitarian, and other immigrants; 2027 – approximately 244,700 economic immigrants, 81,000 family class immigrants, and 54,300 refugee, humanitarian, and other immigrants; 2028 – approximately 244,700 economic immigrants, 81,000 family class immigrants, and 54,300 refugee, humanitarian, and other immigrants.

Based on the government’s PR numbers and its focus on economic immigration, we don’t expect there to be any major initiatives regarding family reunification such as increases in parent-grandparent sponsorship or initiatives related to increased refugee intakes. The government has said that it will give priority for temporary residents already living in Canada to transition to permanent residence. Specifically, the government will accelerate the transition of up to 33,000 work permit holders to permanent residence in 2026 and 2027. Details have not been provided, other than that these individuals will have had to have paid taxes in Canada and have strong roots in their communities. It is reasonable to predict that this will have a positive impact for the balance of those persons in the express entry pool, especially for individuals that have been negatively impacted by the removal of the arranged employment factor, as the number of temporary residents is reduced, the points cut-off for Canadian Experience Class draws will likely fall too.

Further, the federal government has announced in its 2025 budget released the same day as the immigration levels plan, that the federal public service is to be reduced by 28,000 positions, through attrition and early retirement packages, from 357,965 in 2025, to approximately 330,000 employees by 2028-2029. How this will affect the operational capacity of IRCC remains to be seen, but fewer employees at IRCC would appear to be in line with reduced numbers of temporary residents and permanent residents applications. Given some immigration business lines have long processing times already, these cuts will not likely improve processing times.

In addition, the government has also proposed a number of investments and pathways to improve integration and attract international talent. These include a one-time initiative to transition eligible Protected Persons in Canada as permanent residents over the course of the next two years. Further, as part of the International Talent Action Strategy and Action Plan, the government has proposed one-time initiative and funding of up to $1.7 billion to recruit over a thousand exceptionally qualified international researchers to Canada. To address labour shortages and attract top talent in healthcare, research, advanced industries, and other key sectors, the government will also launch an accelerated pathway for H1-B visa holders.

In addition, to streamline employer compliance and to improve consistent oversight for all employer-based work permits, employer-focused compliance inspections under the International Mobility Program (IMP) will be transferred to Employment and Social Development Canada (ESDC). Currently all IMP inspections are conducted by IRCC.

As a result of the reduction in overall temporary resident numbers, securing timely work permits for foreign workers will become even more challenging for Canadian employers. This will be further compounded by the reduction in IRCC employees and existing backlogs. Employers should therefore plan ahead. Employers should also consider lending support to their existing foreign worker pool to transition them to permanent residence, especially in light of the government’s announcement to transition 33,000 work permit holders to permanent residents by 2026 and 2027. Finally, the government has also signalled that employers and foreign workers within industries and sectors impacted by tariffs and operating in rural and remote communities could see some flexibility within these level plans.

Navigating Canadian immigration processes can be confusing and there is a lot to unpack with the government’s new immigration levels plan. If you, an employee, or your employer have any questions about temporary residence or permanent residence options or need advice about some aspect of immigration, you can reach out to us for assistance. Our Canadian immigration legal professionals can be reached by phone (416-368-1111) or via email: caruso@cilf.ca; bonisteel@cilf.ca; ali@cilf.ca; mukherjee@cilf.ca; garciafialdini@cilf.ca; traister@cilf.ca.