Why immigrants should be upbeat about the Canadian economy
Updated: May 24
According to the most current Immigration Levels Plan 2023–2025, a record number of immigrants will be accepted.
In order to direct its operations and establish how many immigrants Canada will accept Immigration, Refugees and Citizenship Canada (IRCC) announced their annual Immigration Levels Plan on November 1.
The 432,000 new permanent residents (PRs) that are expected this year will be a record high for Canada. The (465,000) and (485,000) statistics for 2023 and 2024 will maintain the upward trend of (500,000) in 2025.
The labor force and economy of Canada will be significantly impacted by the almost 1.5 million immigrants who will arrive there during the next three years. In this article, we provide a projection for the housing and employment markets in Canada as well as for the general economic and social health of the country.
An aging country
Over 8 million, or around 21.5% of Canada’s nearly 39 million citizens, are immigrants. The IRCC’s aims will quickly and significantly increase that number, which is a good development, according to Rebekah Young, head of inclusion and resilience economics at Scotiabank.
“We have more retired people, and fewer workers in the economy, that’s really constraining through an economic lens,” said Young.
Welcoming immigrants, who, in Young’s opinion, typically are younger and more educated, is one approach to getting the assistance we require and to changing our demography.
The good news is that Canada is one of the few industrialized nations with a rising population. Young adds, “Because we have such expansive targets for newcomers, we actually see our population growing by around 1.8% per year.”
A larger, younger, more educated, and more active population benefits businesses.
“Newcomers are also consumers. They’re buying houses or vehicles, they’re going grocery shopping or to the movies, so they’re spending in the local economy,” Young indicated.
Of course, immigrants also work and pay taxes, bringing in much-needed funds that may no longer be available due to a declining labor force.
“They’re paying into federal, provincial and municipal revenues, that are then used to provide more services to Canadians, including supporting some of the benefits that go to aging Canadians,” Young further adds.
According to Statistics Canada, the first quarter of 2022 saw the greatest quarterly number ever of 957,500 job openings in Canada.
“Labour shortages existed prior to the pandemic, but now they’re even more amplified.”
The strain on the industry is massive. “Business leaders are increasingly vocal about labor shortages. There’s an understanding that this isn’t temporary, that we are going to be facing skill shortages and skills mismatches long after the pandemic is gone,” she said.
There would still be open positions, according to Young, even with the planned immigration numbers.
And what type of personnel are they trying to bring? “There are really highly educated newcomers that will come in and fill jobs in high-tech sectors, particularly given that the U.S. immigration policies have been so closed,” Young said.
Young claims that the advantage is that we have access to a pool of personnel that wish to “make transformative change in some of these very high-end sectors that can enhance overall productivity.”
Young stated that Canada should do a better job of utilizing these capabilities to their full potential as too many newly arrived immigrants with university degrees are working in positions that aren’t a good fit for their expertise.
Newcomers who are still early in their careers are also filling critical gaps at the same time, “If you look at the health care sector, for example, or home care — that caring economy — there are major vacancies there that are having a very real impact on Canadians.”
Then there are the more elusive advantages of increasing immigration. “The entrepreneurialism and the ideas, the innovation, the different way of thinking about things,” she said. “Economics isn’t great at capturing the value of diversity but it’s clear that there are benefits there.”
“Where could the government improve is in expediency and bureaucracy,” Young stated, noting that backlogs have resulted from fast program expansion and economic adjustments, which can be problematic for both people waiting to immigrate to Canada and companies searching for talent.
A thriving housing market
In Canada, housing costs have been high since the outbreak. Even when the market reached its peak in 2022, affordability would always be a major problem. A larger population without more homes will simply make the problem worse.
“We’re not building houses at a tremendous pace and that’s certainly a challenge. These are government challenges. Clearing some of the regulatory and bureaucratic processes that impede building more supply should help. We’ve just got an expanse of land here — that really shouldn’t be the issue,” Young says.
In part because of the most recent increase in interest rates, which has an impact on mortgages, many Canadians have postponed their plans to purchase a home. The market has consequently shrunk, but the same pattern may be exerting additional pressure on the already overstretched rental market, which witnessed an increase of 11.1% annually in 2020.
Newcomers will need to think about the cost of living and wages across the nation as well as which communities need their abilities. “Toronto and Vancouver tend to be big, key centers that newcomers want to go to,” Young said, pointing out that larger cities frequently have existing communities that can give a sense of security and stability. However, the average housing price-to-income ratio in some of the country’s smaller cities is four times higher. The computation will be made by newcomers.”
The situation might be better in the long run. The Department of Finance has included a number of suggestions in the 2022 Budget to increase housing building, assist affordable housing, and safeguard buyers and renters.
Pause in Canada
Experts are predicting a worldwide recession, which raises the issue of how immigrants and Canada as a whole may suffer in this situation. Young claims that the situation may not be as bad as in other regions of the world.
“We expect Canada to lead the pack over the course of the next couple of quarters and in the next couple of years. Canada has many more positives on the economic front than we think. It’s definitely going to feel the pains of a global slowdown. But we would categorize it in our best guess more as a pause – or a short and shallow slowdown – vs. a deep and prolonged contraction of the economy,” Young says.
Young mentioned job markets as one of the reasons why the Canadian economy is resilient, saying that “there isn’t a better place to survive the crisis than in Canada.” She also emphasized the importance of stable institutions with good governance for enhancing economic resilience.
Between now and 2025, immigrants will give Canada’s struggling labor force much-needed respite, fill critical positions, and lessen some of the financial pressure on a country that must now find resources for the care of a rapidly aging population. Employers in all industries will gain from the influx of knowledge, creativity, and entrepreneurship, which also promises to improve our country’s economy on a global scale.
Furthermore, these advantages are permanent. The success of immigrants to Canada influences the success of their offspring and the nation as a whole.
“There are long-term dividends of newcomers coming, settling with family, and ensuring that the second generation thrives and continues to revitalize the outlook for Canada,” she said.