In June 2023, Canada’s population crossed the 40 million threshold and has since grown to 41.5 million.
But just two years after crossing that 40 million threshold, Statistics Canada reported Canada’s the first major quarterly population decline in decades.
In December, Statistics Canada reported that Canada experienced a net population loss of 76,068 over the third quarter of 2025.
This sudden dip was due entirely to the throttling back on temporary foreign workers and international students.
First, the previous Trudeau government opened the floodgates, then, realizing that this actually caused some flooding, slammed them shut.
Meanwhile, Canada added 102,867 permanent residents through regular immigration in the third quarter, and 7,324 asylum seekers.
In a single year, between 2023 and 2024, Canada’s population grew by nearly 1.3 million — the highest annual growth rate since 1957. This was driven mainly by temporary foreign workers and international students.
The housing vs. labour dilemma
The most immediate impact of having too many people coming into the country in a short time period is its impact on housing availability and affordability.
But this is more of a housing problem than an immigration problem, says Kermit Dahl, mayor of Campbell River and small business owner.
Many businesses in smaller resource communities like Campbell River still struggle to fill vacancies, he said – mainly manual labour and service sector positions.
He struggles with the problem in his own auto-motive shop.
“I have a young guy that we brought here from India to work doing tires and mechanical work because we weren’t getting any applications at all,” he said. “We can take one or two people right now.
“There simply (aren’t) people applying for these jobs that are more physical, or restaurants. By curtailing immigration, all they’re doing is leaving those jobs unfilled.
“I think the real issue is building permits and development was happening so slowly that housing couldn’t be built fast enough to meet the demand,” Dahl said.
The replacement rate crisis
Cutting temporary immigration flows may have been a necessary corrective measure to address the socio-economic pressures that immigration can bring, but it targeted the very demographic that Canada needs: workers and students.
The recent sudden drop in Canada’s population has exposed something more fundamental about Canada’s demographics. Without immigration, Canada would be experiencing population decline, thanks to negative replacement fertility rates.
Like almost every other industrialized country in the world, Canada has a fertility rate that is far below replacement levels.
The replacement fertility rate is 2.1. That’s the number of births needed to offset deaths and keep a population in balance and growing slightly. Canada reached a new low last year: 1.25 children per woman.
Were it not for immigration, Canada might be in the same spot as Japan or Italy, whose economies are now being weighed down by aging and shrinking populations.
Globally, the world’s population is still growing, though it appears it could peak much sooner than the UN has predicted it would – as early as the 2050s, according to some demographers.
But when it comes to population, it’s not the gross numbers that are important, in socio-economic terms.
Visualizing the demographic cliff
What is important is the working age demographic – what demographers call the “demographic dividend.” And industrialized nations around the world are rapidly spending this dividend, as people live longer and have fewer children.
Domestically, a decline in this demographic dividend means fewer workers, fewer taxpayers, fewer investors and fewer customers.
Internationally, for exporters, it means shrinking markets, if the markets they export goods to are in demographic decline.
Here is what a population with a healthy replacement fertility rate looks like:
This was Canada in 1960. Here is Canada today:
Note the two bulges. The upper bulge is my generation: The Baby Boomers. The one below that is the Millennials. There are now actually more Millennials alive today in Canada than Baby Boomers, and this is largely thanks to immigration.
Canada’s Millennial generation gives us a bit of demographic runway that many other industrialized nations do not have: a relatively healthy “demographic dividend” of workers, consumers and taxpayers.
But if they don’t start having a whole lot of kids right away, it’s all downhill from there on.
Here is Canada in 25 years, according to UN projections:
At this point, we Baby Boomers have largely died off, and the Millennials are starting to plan their retirement. This looming inverted population pyramid is the sort of thing that should give government pension planners nightmares.
It could be worse. We could be South Korea, which has what is reported to be the lowest replacement fertility rate in the world today – just 0.75.
Here’s what that looks like:
Unless South Korea experiences a baby boom, or aggressively augments its population through immigration, it is on track to see its population halved by the end of this century.
Workforce for the future
Demographic decline is something that has profound implications for economies. One need only look to Japan to see the effects of a geriatric society with a declining population.
Canada could address its low birthrates by making it easier for young Canadians to have children – affordable child care, for example. But it also needs to ensure we have sufficient immigration to address our labour needs.
If Mark Carney can make good on his promise to make Canada an energy superpower, we are going to need workers – a lot of them.
Hopefully, we will have a sufficient workforce to get all these great nation-building projects built. We did it before. Recall that, in B.C., we had half a decade of mega-project building in B.C. that included Site C dam, the Trans Mountain pipeline expansion, LNG Canada and Coastal GasLink pipeline.
This required an army of thousands of workers, which we managed to find mostly within Canada’s own borders. But if we embark on another era of mega-project building, we may need more foreign workers.
Retooling immigration
As Jock Finlayson and Steven Globerman note in a recent brief for the Fraser Institute, the Carney government is planning to retool and right-size Canada’s immigration policies.
This includes reducing new permanent immigrants to 380,000 per year (down from 500,000 in 2024), and cutting the intake of new temporary residents from 674,000 this year to 385,000 in 2026 and 370,000 in 2027. They note that most of this decline will be in international students.
This will shrink Canada’s non-permanent residents from the current 7.5 per cent of the population to less than 5 per cent in 2027.
Finlayson and Globerman appear cautiously optimistic that the Carney government is on the right track, but caution that Canada’s immigration policies need to be tailored to attracting “high-skilled well-educated immigrants.”
“There are signs the Carney government understands the benefits of an immigration policy that’s geared to attract the ‘best and brightest,’” they write.
“Encouragingly, the new immigration plan will expand the intake of ‘economic immigrants while slightly reducing the numbers admitted under the family and refugee/asylum claimant categories.”
