Canada needs to recruit more international students in fields that are facing labor shortages and make it easier for them to become permanent residents, according to Royal Bank of Canada.

Post-secondary institutions should work with governments to prioritize students studying in scientific fields and engineering, along with health care and trades that are vital for the energy transition, the country’s largest bank said in a report published Thursday. The authors recommended the federal government create a portal that lays out pathways and requirements to study, work and stay in Canada.

Canada has been relying heavily on immigrants to grow its labor force, and Prime Minister Justin Trudeau’s government set a target to bring in a record 1.3 million permanent residents over the next three years. But business groups and the country’s largest banks have raised concerns over the efficiencies of the immigration system in addressing labor demand.

“International students’ disconnect with labor markets has emerged as a weakness in the classroom-to-permanent residency process,” according to the report, written by Ben Richardson and Yadullah Hussain. “There is some misalignment between the study programs pursued by international students and labor market needs.”

Foreign students are more likely than domestic students to study engineering, as well as math and computer science -- two top areas of projected labor shortages, the report found. But their numbers need to rise in health care, some trades and services, and education to meet Canada’s future labor market needs, it said. 

Labor market misalignments could diminish Canada’s ability to keep international talent, RBC said. Last week, the Bank of Nova Scotia made a similar call for the country to close the immigrant job-education gap, which can lead to a wage penalty of more than 40% for newcomers working in roles below their credentials. 

Immigration Minister Sean Fraser said in an interview last month that Canada’s government is planning to start targeting permanent residents in specific occupations to ensure better matching with industries suffering the most intense labor shortages. The new approach, which will work alongside the existing system, is expected to begin next year. 

Construction, engineering, food services and health care are industries have the toughest time finding workers, government data show. Labor shortages have led to revenue losses and canceled projects for Canadian businesses, and have strained the public health care system. 

“The country’s recent health care staff shortages are a wake-up call that Canada should be more strategic in leveraging and expanding its international student pool,” RBC said. “As the global war for talent escalates, Canada needs to sharpen its policies to maintain its edge.”