Immigration caps and record retirements are tightening the Canadian employment outlook
Canada's labour force is approaching a structural turning point that most business leaders are not yet fully pricing in. For mortgage brokers advising clients on housing, construction timelines, and refinancing decisions, the implications are hard to ignore.
A new analysis by Nathan Janzen and Annie Zheng of RBC Economics lays out a dual pressure building beneath the surface of Canada's labour market: a historic wave of retirements that shows no sign of cresting, and immigration caps that are depleting the pool of younger workers faster than at any point outside a pandemic.
Canada's population is on track to shrink for the first year on record in 2026, driven by caps on temporary and permanent resident arrivals. At the same time, the size of the available workforce is expected to decline even more sharply than the population — again, for the first time on record outside of the pandemic.
The result is a labour market that, on the surface, still appears slack. With unemployment elevated following the Bank of Canada's 2023–24 tightening cycle and US tariff disruptions, but is quietly tightening in ways that will matter to the construction sector, and by extension, to every broker and client depending on new supply.
Retirements at record levels and not easing soon
Canada is in the thick of a retirement wave that has been decades in the making.
According to the RBC Economics analysis, monthly retirements have climbed to approximately 25,500 workers, roughly 0.12% of the labour force, compared to approximately 14,000 per month two decades ago.
The youngest baby boomers will turn 65 in 2029, meaning the current surge has further to run well into the 2030s.
The effect on participation is already measurable.
By spring 2026, Canada's labour force participation rate had hit its lowest level since 1997, excluding the pandemic, following a record number of retirements.
RBC economists Janzen and Fan have noted that aggressive federal immigration caps and population aging have "sharply lowered the amount of employment growth needed to push the unemployment rate lower."
In other words, even modest job creation or outright losses in some sectors can still produce improving per-worker conditions as the denominator of available workers shrinks.
The pipeline of younger workers is draining
Canada's fertility rate has remained below population replacement levels for decades, meaning the domestic supply of younger workers is structurally thin and immigration has been the primary offset.
With caps now tightening that pipeline, the consequences are beginning to show in the data.
According to the RBC analysis, the population under the age of 35 declined by a record 120,500 from a year ago in April 2026, with the available workforce under that age down approximately 76,000 workers.
Without immigration, the analysts estimate the population aged 15–34 would fall by roughly 186,000 per year over the next five years, translating to a loss of around 139,000 available workers annually.
Statistics Canada's Labour Force Survey for April 2026, released Friday, showed the youth unemployment rate — covering Canadians aged 15 to 24 — climbing to 14.3%, up half a percentage point from March.https://t.co/vzhJxoABwS
— Canadian Mortgage Professional Magazine (@CMPmagazine) May 11, 2026
The federal government has set a target of reducing the temporary resident share of the population to 5%, a threshold RBC expects to be reached around mid-2027. At that point, immigration restrictions may begin to ease, but the structural deficit will not be quickly reversed.
What this means for housing and brokers
For mortgage brokers, the labour squeeze carries direct implications. Housing supply depends on construction workers.
According to BuildForce Canada, the construction industry alone will need to recruit 351,800 workers by 2033, with retirements expected to account for approximately 263,400 of those vacancies. That's roughly 21% of the 2023 construction labour force.
The Canada Mortgage and Housing Corporation's Spring 2026 Housing Supply Report confirmed that skilled labour and building capacity shortages remain significant constraints, with market intelligence pointing to project delays and postponements linked to shortages of skilled trades and competition for specialized workers.
As the unemployment rate drifts lower and the pool of available workers continues to shrink, labour shortages in sectors like construction will return — and they will return in a market that has already lost years of supply-side momentum.
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