In each EconMinute, Business Council of Alberta economist Alicia Planincic seeks to better understand the economic issues that matter to Canadians: from business competitiveness to housing affordability to living standards and our country’s lack of productivity growth. She strives to answer burning questions, tackle misconceptions, and uncover what’s really going on in the Canadian economy.

The federal government is under pressure to reduce the number of non-permanent residents (NPRs) in Canada. Specifically, they announced a target for NPRs—foreign workers and students as well as asylum claimants—to account for no more than 5 percent of Canada’s population by 2027.

As of the time of the announcement, NPRs were thought to account for 6.5 percent of the population. Since then, the number has risen slightly (now at 6.8 percent) and many, including the Bank of Canada, have questioned if Canada will reach its target within the given timeframe.

What will it take to reach the target? One consideration is where the imbalance lies geographically. While the target is national, data shows that the NPR population is not evenly distributed across the country, and certain provinces will likely need to see sharper cuts than others.

In particular, three provinces stand out. Though around half of Canada’s provinces exceed the 5 percent threshold, British Columbia and Ontario are both significantly above it (at 8.9 percent and 7.8 percent respectively). Likewise, Quebec comes in slightly below the national average but well above the target at 6.6 percent.

Conversely, smaller provinces tend to fall below the target. Interestingly, Alberta—despite being one of Canada’s larger provinces and experiencing a record-breaking population surge—remains below the target as well.

Of course, the three largest provinces will also weigh more heavily on the national average. To put this in perspective, bringing the NPR-to-population ratio in all other provinces down to just 2 percent (which amounts to cutting the number of NPRs in these provinces in half) would still leave it well above the announced target.

On the other hand, a 30 percent reduction in the number of NPRs in each of the three largest provinces would bring the national average close to its goal (though exact numbers will vary depending on whether NPRs become permanent residents or leave Canada entirely).

Policy changes announced thus far will disproportionately target these three provinces and could go a long way toward meeting the announced target. For instance, the cap on international student permits announced earlier this year will have the biggest impact on Ontario and B.C. Meanwhile, Quebec has made moves to reduce the number of temporary foreign workers in Montreal by placing a pause on new applications in the low-wage stream of the program.

Other policy changes (including greater restrictions on the use of the temporary foreign worker program and a new pathway to transition NPRs to permanent residency) do not have a regional focus per se but will nonetheless have a bigger impact in provinces with more NPRs. All told the current geographical imbalance is likely to level as Canada moves toward the 5 percent target.

This post was originally published by the Business Council of Alberta at businesscouncilab.com. 

The U.S. job market, though weakening, is currently far from weak. Alas, the same can’t be said for Canada’s job market, at least outside the public space. Nonfarm payrolls plunged 47,300 in June, erasing two prior monthly gains. The yearly rate of 0.6 percent (110,364) was the weakest outside the pandemic since 2015.

If not for a thriving public sector (health care, education, and public administration), which has ramped up 3.3 percent (162,718) in the past year, overall employment would have contracted by 0.4 percent (-52,354). Going back 22 years, the only time private-sector employment turned negative was during the pandemic, the Great Recession, and the tech bust.

True, the timelier household survey of employment still shows an annual net increase of 1.7 percent to July, but that’s largely due to a hiring boom (4.8 percent) in the public sector. Private-paid employment is up an unremarkable 0.6 percent, the weakest pace outside the pandemic since 2016.

And lest we forget, this is in the context of sparkling 2.7 percent growth in the labour force. In other words, it’s not a supply problem—Canada’s private sector employers are just not in a hiring mood.

Businesses are seeking to fill fewer and fewer spots. Job vacancies have fallen 191,000 in the past year to 554,000 in June. After peaking at 5.7 percent, the job vacancy rate has returned to pre-pandemic levels of 3.1 percent. The rate for retailers (2.6 percent) and hotels/restaurants (4.4 percent) is below 2019 levels, implying less need to fill positions with temporary foreign workers.

Even the construction sector has normalized, though health care remains chronically in short supply. With more than two unemployed persons available for every vacancy, the labour market is looser today than in 2019, a fact that won’t be lost on the Bank of Canada.

Which industries are pulling back? Retailers, hotels restaurants, and manufacturers have slashed staff in the past year, and even construction is starting to pull in its sails. Provincially, Newfoundland and Labrador (-1.0 percent) is struggling, with Manitoba not far behind (-0.4 percent). On the plus side, mighty P.E.I. (2.3 percent) leads the nation in job growth, while Alberta, Saskatchewan, and Nova Scotia have performed reasonably well with gains of more than 1 percent in the past year.

With Canadian businesses expected to remain cautious for a while, job seekers may need to wait until next year before prospects brighten. Make no mistake, as immigration slows, job seekers will face less competition. But what they really need are policies aimed at supporting business investment, global competitiveness, and economic growth outside the public sector.

This article was originally published at BMO.