Reduced immigration will lead to increased wages: study

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Reduced immigration will lead to increased wages: study

A recent study by the Conference Board of Canada suggests that a decline in population growth could lead to increased wages for Canadians in the near future. The think tank published a report on Monday called Canada’s Five-Year Outlook, which found that the domestic labour market has so far remai

truenorthwire.com

A recent study by the Conference Board of Canada suggests that a decline in population growth could lead to increased wages for Canadians in the near future.

The think tank published a report on Monday called Canada’s Five-Year Outlook, which found that the domestic labour market has so far remained “resilient” in 2025, despite the ongoing trade dispute with the United States.

“This shift in labour market dynamics — from excess labour supply to growing labour shortages — will put upward pressure on wages over the next few years, keeping wage growth above the inflation rate,” reads the report.

The results aren’t likely to be felt right away, however, as hiring demands are expected to remain stagnant for the rest of the year. This is largely due to how U.S. tariff uncertainty has continued to weigh heavily on economic decision-makers.

However, the study noted that while unemployment increasedto seven per cent in May, it was still 0.3 per cent lower than it was at the end of 2024.

The board predicts that a reduced population will bring the unemployment rate down over time, forecasting a reduction to 6.2 per cent next year before ultimately lowering to 5.8 per cent in 2027.

Additionally, the government’s recent cutbacks to immigration will play favorably for those still active in Canada’s labour market.

The labour force grew at a slower pace in the first quarter of this year than total employment, marking the first time that’s occurred in more than two years.

As employers become increasingly strained to acquire talent over the next several years, they will be forced to hire more from within Canada’s existing labour market.

Heightened competition during a time of scarcity in employees will result in wages being driven up, argues the board.

For example, Statistics Canada reported that the average hourly wage increased by 3.4 per cent year-over-year in May after being unchanged from the pace seen in April.

The board is also projecting a 1.5 per cent growth in Canada’s overall economy this year in response to the trade dispute’s effect on consumer choice.

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