Canada is on track to add more newcomers with construction skills than in recent years, an early sign that a targeted immigration program is working, though still not quickly enough to close a massive housing supply gap.

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Admissions of permanent residents with trade skills rose 29 per cent from January through March from the average quarterly rate in 2023, according to government data obtained by Bloomberg. If that pace is sustained, Canada will grant residency to some 17,800 skilled construction workers this year.

The increase is solely driven by recent immigration policy changes to bring in more tradespeople to ramp up homebuilding. It’s crucial to Prime Minister Justin Trudeau’s goal to more than double the pace of construction to add 3.9 million homes by 2031 as he tries to calm housing angst and reverse waning popularity.

Immigration Minister Marc Miller has said Canada needs to do a better job of matching incoming talent to construction labour needs. In August, he announced the country’s first-ever targeted selection program for newcomers with trade expertise to address shortages in the sector.

While the policy alone isn’t a panacea for Canada’s chronic underbuilding of homes, it begins to address a dilemma seen across many developed economies in recent years: A surge of newcomers exacerbates housing shortages, yet at the same time, these aging countries need more migrants to boost home construction and restore affordability.

“We’re at the point in Canada where we need to look at any contribution to accelerate the pace of housing starts,” Mathieu Laberge, senior vice-president at Canada Mortgage and Housing Corp., said. “Labour is one of many. We also need to look into how we can build differently to build faster.”

Canada could need more than 500,000 additional construction workers to build the homes needed between now and 2030, according to a report by Royal Bank of Canada. “Canada must realign its immigration system by refocusing on the mismatch of skills and long-term labour market needs,” the report said.

Last year, Canada welcomed some 470,000 new permanent residents, and 2.9 per cent had trade occupations, including carpenters, contractors, electricians, plumbers and welders, the data showed. The projected gain would push the share closer to four per cent this year, assuming the country meets its 485,000 permanent-resident target.

Still, the share is lower than the roughly eight per cent of the overall employed Canadian population working in construction, underscoring the ongoing underrepresentation of trade occupations among newcomers.

That’s because Canada’s main immigration pathway, a points-based system, tends to award more scores to university education and higher-language proficiency, which puts candidates in skilled trades at a disadvantage. The resulting labour mismatch means the supply of workers outpaces job creation in some sectors, while failing to catch up to employer demand in construction and other industries.

The most common occupations for successful permanent-resident applicants include software engineers, information systems specialists, computer programmers, food service supervisors and advertising and marketing professionals, according to the latest government report.

In the first quarter, the number of admissions in 13 of the 61 trade occupations doubled or more compared to the average quarterly pace last year. Crane operators, residential and commercial installers, heating and air conditioning mechanics and machine fitters had the largest percentage change over that period.

Despite having more immigrant skilled workers and job vacancies declining, shortages persist in the construction sector, which adds to a list of housing supply barriers including zoning restrictions, permitting processes, costs of construction and elevated interest rates.

Whether the recent increase in newcomers with trades skills can be considered a success will hinge on the construction outcomes, Bahoz Dara Aziz, Miller’s press secretary, said in an emailed statement. “We are focused on getting more homes and vital projects built in Canada.”

With assistance from Jay Zhao-Murray.

Bloomberg.com