A New Trade War, an Old Barrier: Why Canada’s Labour Mobility Bill is Long Overdue

The federal government’s new One Canadian Economy Act, which enacts the Labour Mobility in Canada Act, was prompted by recent US-Canada trade tensions, but also addresses a long-standing domestic challenge: Canada’s fragmented and restrictive occupational regulation system.

This is long overdue and offers a meaningful opportunity to dismantle internal labour mobility barriers that have quietly imposed economic and social costs for decades. While the Act marks a significant step forward, its effectiveness depends on further reforms and coordination to remove remaining barriers and ensure meaningful interprovincial mobility.

Canada currently operates a balkanized system of occupational regulation, with 160 professions licensed in at least one province and a wide variation in requirements across jurisdictions. It creates redundancies and higher compliance costs for workers relocating across provinces. US research shows that occupational licensing reduces worker mobility by 7 percent, resulting in 12 percent welfare losses of occupational surplus, shared by workers and consumers. Canadian evidence, though limited, points in the same direction: Lowering migration costs could increase interprovincial mobility and contribute to GDP growth.

Sixty-eight percent of employers surveyed this spring by Statistics Canada reported difficulty finding appropriately skilled workers within their provinces, and close to a quarter were unable to fill positions with out‑of‑province candidates due to certification or licensing challenges.

Canada’s occupational regulatory environment is notably restrictive. An OECD assessment ranked Canada among the most restrictive countries for entry into several service professions, including law, accounting, architecture, real estate, and skilled trades. Interprovincial recognition is also limited: Past data show a significant share of applicants were denied in other provinces, and recent Ontario figures suggest frictions remain: In 2022, 9.6 percent of applicants to regulated professions were trained in other provinces, but only 6.4 percent of licensed professionals reported interprovincial education – much lower than the equivalent rate for internationally trained professionals (26.1 percent and 15.8 percent, respectively) – highlighting barriers to recognition and entry across provinces.

The new One Canadian Economy Act advances labour mobility by extending mutual recognition to federally regulated occupations. It requires federal regulatory bodies to recognize provincial and territorial certifications and issue equivalent federal authorizations upon application – helping close a longstanding gap in Canada’s licensing patchwork. As of July, only 13 occupations, such as dental hygienists, paramedics, psychologists, and water well drillers, have approved exceptions to labour mobility. This represents a small fraction of regulated occupations, meaning most should, in principle, be mutually recognized across provinces. Yet in practice, both workers and employers still face avoidable barriers in accessing these professions.

Provinces have also taken steps to improve labour mobility through regional agreements: The 2010 New West Partnership Trade Agreement, which unified labour mobility and trade rules across British Columbia, Alberta, Saskatchewan, and Manitoba, the 2015 Atlantic Provinces memorandum on apprentice mobility, and a 2025 economic cooperation memorandum among Ontario, Nova Scotia, New Brunswick, and Prince Edward Island, all aimed at removing mobility barriers across their jurisdictions.

Despite these efforts, barriers persist, and systematic policy evaluation remains rare. Only Ontario publishes annual data on license recognition and mobility flows. One 2020 study found that subnational agreements have largely failed to boost interprovincial mobility.

Canada also lacks national data on licensing attainment and denial rates, forcing researchers to rely on imprecise inferences from occupational codes and statutes. Without robust data, policymakers cannot accurately assess the effectiveness of existing frameworks or target reforms where they are most needed.

With these considerations in mind, here are six recommendations:

• Strengthen federal-provincial coordination: Empower the Forum of Labour Market Ministers (FLMM) to ensure the new federal recognition system integrates seamlessly with interprovincial agreements, avoiding duplication or conflicting requirements.
• Harmonize core standards across provinces: Develop national baseline standards for high‑demand and mobile professions (e.g., nurses, engineers, skilled trades), building on frameworks like the Red Seal Program. Provinces could add supplemental requirements only justified by public safety concerns.
• Encourage regional and sectoral compacts: Provide federal funding or matching grants for provinces that join or expand regional mobility compacts, prioritizing sectors with acute labour shortages.
• Streamline and standardize application processes: Standardize forms, documentation, and fees across provinces and set maximum processing timelines to reduce friction for mobile workers.
• Create a Canadian licensing data platform: Establish a centralized platform, coordinated by the FLMM, to track interprovincial licensing applications, processing times, and outcomes. This would help identify bottlenecks and support evidence‑driven reforms.
• Improve transparency and public reporting of barriers: Mandate annual public reporting by regulatory bodies on interprovincial recognition outcomes and publish consolidated data through a single federal-provincial portal to enhance accountability.

The One Canadian Economy Act offers an opportunity to modernize Canada’s occupational regulation system: Reducing redundancy, promoting fairness, and aligning regulatory practices with contemporary labour market realities. Beyond economic efficiency, labour mobility reforms affirm the principle that workers should not be constrained by artificial provincial borders or unnecessary regulatory hurdles – a crucial step toward leveraging Canada’s skilled workforce in an increasingly competitive global economy.

Tingting Zhang is Assistant Professor at the University of Illinois Urbana-Champaign’s School of Labor and Employment Relations.

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The views expressed here are those of the author. The C.D. Howe Institute does not take corporate positions on policy matters.