Canada’s August 2025: 66,000 Jobs Lost, Unemployment at 7.1%

(CANADA) Canada’s labour market took a sharp turn in August 2025, shedding an estimated 66,000 jobs and pushing Unemployment to 7.1%, the highest level since 2016 outside the pandemic years. At the same time, the government’s new controls on the Temporary Foreign Worker Program (TFWP) are curbing the supply of overseas labour just as employers report widening gaps in several key industries. The combined effect is setting up a tense season for workers, employers, and policymakers weighing how to protect Canadian jobs without stalling growth.

Who was hardest hit

Men and women in their core working years—25 to 54—were hit hard. Men lost about 58,000 jobs and women about 35,000, underlining broad weakness rather than a narrow sector slump.

Youth bore a deeper burden:

• 15–24-year-olds face 14.5% unemployment
• Returning students are near 17.9%

These youth figures recall the hardest months after the 2008 financial crisis. The overall employment rate fell to 60.5%, continuing a slide since spring. Only 15.2% of unemployed Canadians moved into a job in August—well below the pre-pandemic average of 23%—a sign it’s getting tougher to re-enter the workforce.

Sector and regional breakdown

Sector losses were widespread:

• Professional, scientific, and technical services: down 26,000
• Transportation and warehousing: down 23,000
• Manufacturing: down 19,000
• Construction: up about 17,000 (a modest offset)

Regional leaders in declines:

• Ontario: –26,000
• British Columbia: –16,000
• Alberta: –14,000

Quebec held employment levels steady, though its jobless rate climbed as more people started looking for work. Prince Edward Island stood out as a rare bright spot with gains.

Broader labour-market stress

Beyond headline Unemployment, strain is building elsewhere:

• 8.8% of workers report they want more hours
• Nearly 1 in 4 part-time workers say they’re underused
• Multiple jobholding rose to 5.4%, often linked to rising living costs
• Average hourly wages increased 3.2% year-over-year to CAD 36.31, yet many households report earnings still lagging price growth

These indicators point to underemployment, income pressure, and growing financial strain for many families.

TFWP reforms: what changed

The Carney government tightened the TFWP with the stated goal of giving Canadian workers first access to available jobs and easing pressure on housing and services. Key changes include:

• Bans on low-wage foreign worker permits in regions with higher unemployment
• Higher wage thresholds set above regional medians
• Stricter caps on how many foreign workers an employer can hire
• More rigorous Labour Market Impact Assessments (LMIAs)
• Shorter LMIA validity and narrower spousal open work permits for lower-wage roles

Early data suggest a significant effect: permits issued in the first half of 2025 were down by about 50% compared to the same period in 2024. For official program background and current policy direction, see IRCC’s overview: IRCC: Temporary Workers – Ministerial Transition Binder.

Impact on employers and sectors

Employers in the following areas warn of aggravated shortages:

• Agriculture
• Healthcare
• Hospitality
• Manufacturing
• Caregiving
• Some tech roles

Common reasons these jobs are hard to fill:

• Remote or undesirable locations
• Irregular shift patterns and seasonality
• Physical demands or specialized tasks

Potential business impacts:

• Higher labour costs and delayed projects
• Lower productivity and service disruptions
• Fewer hours for Canadian staff if roles remain unfilled

According to analysis by VisaVerge.com, employers in smaller communities and seasonal industries are most exposed because they rely on timely, short-term staffing. Industry associations stress that vacancies often persist despite long hiring drives; they argue better pay and training help but do not fully solve chronic or seasonal shortages.

Effect on TFWP workers and households

For workers already in Canada on TFWP permits, the reforms bring uncertainty:

• Permit renewals face stricter reviews
• Maximum length for low-wage jobs has been reduced
• Spousal open work permits narrowed to higher-skilled roles

Consequences for households:

• Families dependent on a temporary worker’s income may struggle if renewals are denied or hours cut
• Employers face longer hiring lead times, greater documentation demands, and higher HR/legal costs

Policy rationale and supporters’ arguments

Supporters of the reforms, including some labour groups and economists, argue:

• Years of easy access to lower-wage streams dampened wage growth and reduced incentives to train Canadians
• With rising Unemployment, priority should shift to upskilling local workers, especially youth and underemployed people
• Targeted limits can help ease pressure on housing in high-demand areas where temporary residents compete for rentals

The government frames the policy as targeted rather than blanket, saying LMIAs will weigh local labour conditions more heavily and focus approvals on areas with proven shortages. Officials emphasize enforcement to prevent misuse while supporting sectors with clear needs.

Critics’ concerns

Critics counter that the TFWP is a safety valve for critical services:

• Food supply chains (harvesting/processing)
• Care homes and healthcare staffing
• Hospitality and tourism (restaurants, hotels)

They warn that overly restrictive rules can cause:

• Crops to go unharvested
• Care shortages and longer waits for services
• Reduced hours or closures for small businesses

Both sides agree that strong oversight and enforcement matter: it’s important to block abuse while allowing targeted hiring where real shortages exist.

Short-term effects and indicators to watch

The speed and scale of the changes are striking. In January–June 2025, net new TFWP permits totaled just 33,722—about half the level from 2024. The regional impacts vary; areas with Unemployment at or above 6% face moratoriums on low-wage LMIA processing, shifting hiring toward higher-paid roles or to provinces with tighter job markets.

Policymakers are watching several indicators in the months ahead:

1. Unemployment trend
   • Whether the jobless rate keeps rising or stabilizes as hiring adjusts.
2. Sector hiring
   • If construction’s gains continue and whether healthcare, agriculture, and hospitality can maintain staffing under new limits.
3. Wage movement
   • Whether higher wage thresholds in the TFWP lead to broader pay increases without causing cutbacks.
4. Job transitions
   • If the share of unemployed people finding work recovers toward pre-pandemic norms.

Important: If businesses scale back operations because they can’t fill essential roles—even with orders to meet—the Labour Market can weaken further, dragging down hours and investment.

What’s likely next

As fall approaches, the path forward rests on data and timing:

• If the Labour Market stabilizes, the reforms may be seen as a timely nudge for employers to raise pay and train more Canadians.
• If joblessness rises and shortages deepen, pressure will mount to adjust caps, widen eligibility in select sectors, or streamline LMIA steps without weakening protections.

For now, employers are recalibrating hiring plans, workers are weighing options, and households are bracing for a slower economy as the new rules take hold.