Senior Research Associate and
Senior Network Manager, Immigration
In November 2017, the federal government tabled just the second multi-year immigration plan in Canadian history. In a forthcoming Conference Board of Canada study, we find that the 2018–2020 immigration plan puts Canada on the right track to help mitigate the negative economic and fiscal impacts of our aging population and low birth rate.
The plan will see Canada increase its intake from some 290,000 newcomers last year to 340,000 by 2020. Our new report shows that immigration will become increasingly important to Canada’s economic growth. In 2017, the economy grew by an impressive 3 per cent, largely driven by strong consumer spending, a hot housing market, and the fastest employment growth in a decade. These factors have pushed Canada’s unemployment rate to its lowest level on record— and accelerated the fundamental labour-market challenges related to retiring baby boomers.
Current demographic trends suggest that immigration will account for an estimated one-third of Canada’s real GDP growth by 2030. Without immigration, Canada’s population growth would slowly erode. Our natural increase, calculated by subtracting the number of deaths from that of births, is forecast to become negative by 2034. This situation has already materialized in Atlantic Canada, resulting in challenging economic prospects for the region.
However, population growth is not the key to supporting a flourishing economy. The focus should instead be on growing our labour force. We need enough workers to keep our economy moving and pay the taxes we rely upon to fund important social priorities, such as education and health care. Labour force and productivity growth allow Canada to increase its economic output and living standards. In recent years, immigration has accounted for 90 per cent of labour-force growth, and will soon account for all of it, as more baby boomers exit the workforce. We project that Canada will need to expand its intake to some 400,000 immigrants annually around 2034 (when natural increase turns negative) to help sustain healthy labour force and economic growth.
But the relationship between immigration and economic growth is not as simple as “more is better.” It’s important to ensure that new Canadians will succeed in the workforce. In a 2016 study, we found that immigrants lose up to $12.7 billion in wages each year due to employment barriers. We must tackle this challenge to ensure better outcomes for immigrants and our economy.
Fortunately, Canada has taken positive steps on this issue. The dynamic Express Entry application-management system allows employers to hire immigrants overseas and bring them to Canada in six months or less. Its quick processing standard encourages employers to use the immigration system and attaches immigrants to jobs in their field. The Provincial Nominee Program has grown in prominence since becoming permanent in 1998, and helps match immigrants with the employment needs of Canada’s provinces and territories.
Other promising developments include more pre-arrival information and settlement supports for newcomers, and more immigration pathways for temporary residents, such as the Quebec Experience Program. Research shows that international students and temporary foreign workers integrate very well into Canada’s economy.
Nonetheless, we have much more work to do. Employers continue to report challenges using the immigration system. We need to make it easier for them. We could, for example, introduce a trusted-employer program to expedite the selection process. Canada already does this on a smaller scale through the Atlantic Immigration Pilot and Global Talent Stream. We also need to encourage Canadian employers to give immigrants a fair shot. Some may be hesitant to hire new Canadians, but it is critical to help them appreciate that immigrants are skilled, motivated, and can provide employers with a competitive edge.
Canada’s immigrant intake has been the subject of intense scrutiny throughout our country’s history and remained a hot topic leading up to the November 2017 announcement. But the number of new Canadians that we welcome is not as important as what we do with them. We must place more focus on improving their labour-market performance, so the rising inflow produces greater economic benefits for immigrants and Canadians alike.
Join Us at the Canadian Immigration Summit 2018
Our fourth annual Canadian Immigration Summit will be our biggest one yet! Join us in Ottawa May 30–31 to explore how we can make our immigration system even stronger: conferenceboard.ca/immigration
Precarious Positions: Adapting to the Changes in Canada’s Labour Market
The Conference Board of Canada, May 8, 2018 at 02:00 PM EDT
Live Webinar by Craig Alexander