As repeated pleas by cities and provinces to review recent immigration policy changes have gone unheeded by the federal government, Canada has recorded its steepest population decline in nearly eight decades.

Businesses in small towns and cities are increasingly facing the prospect of closure due to acute labor shortages. Canada’s public broadcaster, CBC, recently highlighted the case of a young Indian immigrant who operates a restaurant in Saskatchewan. The owner, who arrived as an international student in 2010, said that by early next year her remaining two chefs will return to India after their work permits were not renewed, putting the future of her business at risk.

Her experience reflects a broader national trend. Shortages of both skilled and unskilled workers are placing significant strain on employers across multiple sectors.

According to Statistics Canada, the country experienced an unprecedented population decline in the third quarter of this year. The national population, which crossed the 40 million mark just a few years ago, has fallen by 76,000.

When the minority Liberal government led by Prime Minister Mark Carney presented its first federal budget, it signaled a major shift in immigration priorities. The budget proposed halving the number of international student permits in the coming years, while emphasizing a focus on high-skilled talent rather than broader workforce needs. It outlined plans to recruit more than 1,000 top international researchers, supported by up to Can $17 billion (US $12 billion) in funding for a range of recruitment initiatives.

Finance Minister Francois Philippe Champagne said Canada aims to attract the “best and the brightest.”

Prime Minister Carney has also stated that his government seeks to restore immigration levels to “sustainable levels” while continuing to attract the “best talent in the world to help build our economy.”

While the full economic impact of the revised immigration framework may take time to emerge, the government has proposed keeping new permanent residents below 1 percent of the total population beyond 2027. It has also set a target to reduce the share of temporary residents to less than 5 percent by the end of 2027.

Recent data from Statistics Canada suggest that the effects of these policy changes are already becoming visible in the country’s demographic indicators.

Canada’s birth rate has been on a steady decline for more than six decades, with immigration historically playing a key role in sustaining population growth. Economists have cautioned that stagnant or negative population growth could undermine certain sectors of the economy, even if it leads to gains in per capita productivity.

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