Canada’s PGWP decline set to intensify “chronic” labour gaps

Canadian post-graduation work permit (PGWP) approvals are set to fall by at least 30% 2025, disproportionately hitting sectors with existing labour shortages, new ApplyBoard analysis of IRCC data has shown.  

“Canada remains an attractive destination… However, recent study permit and PGWP restrictions risk eroding that advantage at the very moment when the US is sending mixed signals to prospective international workers,” ApplyBoard CEO Meti Basiri told The PIE News.  

The figures have shown the steepest declines are occurring in fields that “align closely with sectors already experiencing chronic labour shortages in Canada, including healthcare, technology and advanced manufacturing,” said Basiri. 

Notably, 53% fewer work permits have been issued to engineering graduates this year, with computing and IT and health and general sciences seeing reductions of roughly a third, the data revealed.  

With fewer international graduates entering the workforce pipeline, Basiri warned of widening existing skills gaps and slowing innovation in industries that rely heavily on entry-level talent.  

Nearly a year since Canada’s overhaul of the PGWP eligibility criteria – including tighter language rules, restrictions on public-private partnerships (PPP) and new fields of study requirements – the findings will come as little surprise to many in the sector.  

But Basiri said he was surprised by how rapidly the downturn accelerated in May and June 2025, when approvals dropped by 56% compared with the previous year.  

“That acceleration suggests the impact of the new policies is being felt in real time, not just in future cohorts,” he said, warning that total PGWP issuance could fall beneath 130,000 this year if the trend continued – lower than during the pandemic.  

The news comes as Canada’s southern neighbour is experiencing policy volatility, making the promise of post-graduation work opportunities in the US increasingly fragile.  

Last month, the Trump administration shocked businesses and prospective employees by hiking the H-1B visa fee to $100,000 – over 20 times what employers previously paid. Days later, the government announced proposals to overhaul the visa system in favour of higher-paid workers.   

“The White House claims that the fee will protect American workers, but in reality this action threatens to choke off a key talent source that powers research, job creation and economic growth,” wrote Presidents’ Alliance CEO Miriam Feldblum.  

She warned the fee hike would significantly reduce US talent pipelines and that if it applied to universities – which are currently cap-exempt – they would not be able to afford hiring valuable researchers and faculty.  

Sector leaders have warned that OPT could be the administration’s next target, after a senior US senator called on the homeland security secretary Kristi Noem to stop issuing work authorisations such as OPT to international students. 

Coupled with Trump’s anti-immigration campaign, including plans to impose time limits on student visas and widespread SEVIS terminations this spring, international demand for US master’s degrees has collapsed by more than 60%.  

The opportunity is there but we’re sending mixed signals by tightening PGWP eligibility while talking up talent attraction

Valerie Walker, Business + Higher Education Roundtable

With Canada receiving 50% fewer study permit applications in the first half of 2025, stakeholders are advocating for urgent action if the country is to attract any of the talent pivoting away from the US. 

“Right now, the opportunity is there but we’re sending mixed signals by tightening PGWP eligibility while talking up talent attraction,” Business + Higher Education Roundtable CEO Valerie Walker told The PIE.  

Walker called for “durable PGWP rules aligned to genuine workforce shortages”, alongside predictable pathways to permanent residency for high demand graduates, speedy processing and better housing and settlement supports.  

“Targeted strategies for tech, health, and advanced industries help; what students, post-secondaries, and businesses value most, though, is predictability,” she added.  

Since the Canadian government’s implementation of study permit caps in January 2024, the sector has been hit with a further 16 federal policy changes.  

Basiri echoed the calls for policy stability. “While we recognise the government’s intent to manage student inflows, more clarity and balance are needed to ensure Canada doesn’t lose ground in the global competition for talent,” he warned. 

Notably, while PGWPs are set to reach pandemic lows this year, the approval rate remains high at 96%, reflecting the strength of students already in the system. 

The decline in total approvals is primarily being driven by reduced application volumes, as fewer students are even applying because of the changing policy landscape, said Basiri.  

Meanwhile the UK has seen an uptick in student interest, vowing to increase post-study work opportunities for international graduates.  

Despite visa restrictions and heightened compliance measures of its own, recent surveys have repeatedly placed the UK as the most appealing study destination among international students.  

UK chancellor Rachel Reeves was quick to respond to the US’ hiking of the H-1B visa fee, declaring: “While President Trump announced late last week that [he] will make it harder to bring talent to the US, we want to make it easier to bring talent to the UK.” 

The government announced the following week at the Labour party conference plans to double the number of high skilled foreign worker visas – which it is understood would total 18,000 – including “entrepreneurial international students and recent graduates from the top 100 global universities”.