Non-permanent residents now 7.4% of population of Canada

Canada undercounts non-permanent residents (NPRs) in its labour market data, according to a new report from the C.D. Howe Institute.

This underrepresentation in Statistics Canada’s Labour Force Survey (LFS) distorts critical economic indicators such as unemployment rates and nominal wage growth, creating challenges for policymakers and economic analysts.

In “The Growing Data Gap on Canada’s Temporary Resident Workforce,” Mikal Skuterud highlights the discrepancies caused by the LFS’s failure to adequately account for NPRs, also called temporary residents.

The report notes that NPRs comprised 7.4% of Canada’s population as of October 2024, whereas prior to 2020, they never exceeded 3%. The LFS, however, underrepresents this group, estimating 1 million fewer NPRs than official government data suggests. International students, who have grown six-fold since 2006, are particularly undercounted.

“Canada’s temporary resident population has more than doubled in recent years, yet our labour market surveys fail to reflect this shift accurately,” says Skuterud, Professor of Economics at the University of Waterloo.

“This data gap is no longer a technical issue — it has broad implications for informing the Bank of Canada’s monetary policy decisions and collective bargaining negotiations across the country.”

Skuterud recommends immediate reforms to the LFS, including revising survey questions to better identify NPRs by asking about study and work permits, conducting supplemental surveys to assess current measurement errors, and exploring the possibility of linking survey data to immigration records.

These changes would enhance the accuracy of labour market metrics, providing a clearer picture of how NPRs influence wages, employment, and economic trends.

“Canada’s labour market is evolving rapidly, and our data collection methods must evolve alongside it,” says Skuterud. “Failing to address this issue makes it harder for policymakers to create effective economic policies and understand our workforce.”

The report recommends specific changes to rectify the problem.

"Increasing the representation of the NPR population, particularly international students, in the LFS survey could significantly improve the accuracy of the LFS’s estimates of nominal wage growth and unemployment rates. It would also clarify whether NPRs are displacing existing residents and suppressing their wages," Skuterud concludes.