Canada’s PGWP Decline Deepens Chronic Labour Gaps in 2025

(CANADA) Canada’s work program for recent foreign students is shrinking fast, and employers say the timing could not be worse. Approvals for the Post-Graduation Work Permit (PGWP) are projected to drop by 30% in 2025, falling from more than 205,000 approvals in 2024 to about 143,600 next year. The total could slide below 130,000 if current trends hold.

Fewer international graduates entering the job market means fewer qualified workers in fields already struggling to hire — from hospitals and clinics to fast-growing tech teams. The labour pool is tightening just as unemployment rose to 7% in May 2025, up from 5.2% in 2023, and as the economy cools. The OECD expects Canada’s growth to slow to 1.0% in 2025, adding pressure on productivity and hiring.

Policy changes behind the decline

The projected fall in PGWP approvals follows several federal policy changes enacted in late 2023 and 2024. These measures narrowed who can qualify for a PGWP and reduced the number of students who can even begin studies in Canada.

Key policy steps include:

• Higher language requirements for work permit eligibility after graduation.
• Exclusion of joint public–private college programs from PGWP access.
• Limits on certain non-degree programs that previously opened a path to work.
• A national cap on new study permits, reducing the future pool of eligible students.

These rules were presented by the government as quality control and tighter oversight. Employers and schools warn the outcome will be fewer job-ready graduates at a time when Canada needs more trained talent, not less.

For official program details, see the government’s PGWP information page. The page explains who can apply, how long a permit can last, and what types of study lead to a PGWP.

How the PGWP supported recruitment and why its loss matters

Universities and business groups say the PGWP has long been a major draw for students who want to study and then work in Canada. Without that pathway:

• Students may choose other study destinations, weakening Canadian institutions’ global competitiveness.
• Recruitment pipelines that companies rely on for early-career hires could shrink.
• Canada may lose the advantage it had against policy swings in other countries (for example, U.S. changes under President Trump once pushed students to Canada).

Employers describe a growing mismatch: jobs remain unfilled while the inflow of new graduates who could step in is shrinking. The squeeze will be sharpest in areas with long-running labour shortages and in roles requiring digital skills, clinical training, or business operations know‑how.

Sector and demographic impacts

Sectors most at risk include health, tech, and operations roles that sustain businesses. Early 2025 data show how the PGWP feeds these pipelines:

• Business and management graduates: 44% of PGWP approvals
• Computing and IT: 15%
• Health and science: 10%
• Arts and humanities: 9%
• Engineering: 6%

Additional demographic notes:

• India remains the largest source country for PGWP holders, followed by China, Nigeria, the Philippines, and Nepal.
• College students accounted for 65% of approvals in early 2025. With stricter rules cutting many college pathways, the composition of PGWP holders is likely to change.

Many college-level business programs have lost eligibility under the new rules, potentially shifting future growth toward STEM areas. That may help some tech and engineering teams but could leave gaps in operations-heavy roles.

Early responses from employers, schools, and students

Stakeholders are already adjusting:

• Employers that hire large PGWP cohorts are:
  1. Front-loading recruitment.
  2. Widening searches across provinces.
  3. Offering relocation assistance to attract scarce candidates.
• Universities are revisiting program design to preserve pathways where possible — especially in computing, engineering, and health fields that still lead to a PGWP.
• Colleges excluded from PGWP eligibility are developing alternatives like:
  • Shifting students into compliant programs.
  • Building transfer routes into degree programs.
• International students are re-evaluating the ROI of studying in Canada given the lower odds of obtaining a PGWP.

Many ask whether provinces and the federal government will pair immigration changes with stronger domestic training. Observers point to the need for:

• More upskilling programs.
• Better job access for people with disabilities and older workers.

On-the-job training can help but requires time and money, while the hiring crunch is already present.

“If the PGWP path narrows too much, Canada could lose ground in the global skills race.”
University leaders worry fewer students will choose Canada, shrinking the PGWP pool further and prompting companies to scale back projects for lack of staff.

Broader economic and campus effects

Policy watchers note the timing is difficult: economic growth is expected to slow to 1.0% in 2025. When growth is weak, productivity gains and hiring for specialized roles matter more. If those specialized hires don’t materialize, projects stall.

Other impacts include:

• Smaller cities may feel the loss most, as they already struggle to attract talent away from major hubs.
• Campus budgets tied to international enrollment could fall, reducing funding for labs, co-ops, and career services that support both domestic and international learners.
• A personal impact on students and families: higher language-score thresholds or program exclusions can close doors for graduates who counted on the PGWP for work and settlement.

What to watch and next steps

Stakeholders want clearer timelines and steady rules so students and employers can plan. Specific concerns and actions include:

• Whether approval volumes will hold near 143,600 or fall further.
• How program design and eligibility may evolve.
• The balance between smarter immigration rules targeting labour needs and stronger investment in homegrown training.

Practical steps organizations are taking:

1. Reassessing hiring forecasts and budgets.
2. Expanding candidate searches and relocation incentives.
3. Reworking academic offerings to preserve eligible pathways.
4. Increasing in-house training and shifting some recruitment priorities.

Key takeaways

• A 30% projected decline in PGWP approvals for 2025 represents thousands fewer early-career hires just as key sectors face technology shifts and rising care demands.
• The PGWP has been an important bridge from classroom to payroll; narrowing that bridge intensifies strain on hiring managers and graduates alike.
• Stakeholders urge a twin approach: targeted immigration rules that keep fair, clear paths for graduates who meet Canada’s needs, alongside stronger investment in domestic training and upskilling.

The choices made now will determine how deep the 2025 shortfall becomes and how quickly Canada can recover in the years ahead.