I strongly believe that LAWYER B is correct coz for post grad students, they don't need LMO if they are under skill O,A or B ....
Sorry, this is wrong. You can apply to extend your work permit, but you can't "renew" a PGWP - you will change to a temporary work permit, which requires an LMO. However, because you were originally hired with a PGWP, your employer does not have to demonstrate recruitment efforts - in other words, they still have to apply for the LMO, but it is easier.
Show your employer this webpage - near the bottom it says:
In cases where the employer is making a permanent job offer to employees who have completed the PGWPP for employment in a skilled occupation (within National Occupational Classification 0, A and B codes only), the employer will not be required to demonstrate recruitment efforts. It is recommended that the employer submit the application for an LMO approximately four months before the expiry of the Post-Graduation Work Permit.http://www.hrsdc.gc.ca/eng/workplaceskills/foreign_workers/intstugrad.shtml