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Canada Needs More Immigration To Meet Labour Market Demand, Says Report

By cvf, 07/24/2023

A new report says Canada needs more immigration in the short term to continue to increase its working-age population.

Taking into consideration the near-term economic and labour market conditions, Desjardin’s recent Economic Viewpoint report determined that the current pace of permanent and non-permanent immigration helps address Canada’s labour market shortages.

A clear indication of this finding is the number of job vacancies in Canada, which have steadily fallen from more than one million in the first half of 2022 to 800,000 in April 2023 because of newcomers to the country.

The trend in question aligns with the stability of the seasonally-adjusted unemployment rate, which currently stands at a near-record low of 1.3 percent, compared to the pre-pandemic average of 2.2 percent.

This can be attributed to the fact that a significant proportion of newcomers are non-permanent residents who enter Canada to fulfill specific labour market demands as requested by local employers.

Despite experiencing a recent decline, however, the job vacancy rate remains at levels above the average, while unemployment remains historically low.

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According to Desjardins’ Senior Director of Canadian Economics, Randall Bartlett, the gap between the two would be even wider if it were not for the recent surge in immigrants filling job vacancies.

This warrants that Canada admits more overseas workers in the short-term.

Furthermore, when considering the long-term economic implications of immigration, the report found that Canada needs foreign workers to offset the impact of an ageing population, which burdens economic activity while simultaneously increasing healthcare costs.

In fact, according to the Parliamentary Budget Officer’s latest Fiscal Sustainability Report, provincial government healthcare spending per capita is expected to double between 2020 and 2040.


It is vital for Canada to increase revenue to match this spending, to avoid debt-financing the rising healthcare cost.

This could be done by increasing the size of the working-age population (people aged 65 and over) in relation to the elderly population (those aged 15 to 64).

As per Bartlett’s findings, the 1.6 percent increase in the working-age population in 2022 was the fastest pace of growth for this age-group since 1989, and was almost completely driven by a surge in immigration and temporary foreign workers.

To reach the desired old age dependency ratio (OADR, which is the ratio of the elderly population to the working-age population), however, the population gains need to be even higher than they currently are.

This requires an increase in the current rates of immigration (which are already above historical averages), without which the OADR would continue rising.

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In terms of economic impact, the report found that immigration is also imperative for maintaining – or increasing – long-term potential GDP growth and potential GDP per capita, while also ensuring the sustainability of government financing.

Economic immigrants – who make up the largest proportion of immigrants to Canada – also earn higher real wages compared to their Canadian counterparts. Therefore, not only are they more likely to be employed by Canadian employers, but they are also more productive as a working-age economic group.

The importance of economic immigrants is evidenced through Canada’s 2023-2025 immigration levels plan, according to which it plans to attract 266,210 economic immigrants in 2023 alone. This number is set to increase to 301,250 by 2025, showing Canada’s efforts at boosting applications from this group.

The post Canada Needs More Immigration To Meet Labour Market Demand, Says Report appeared first on Canada Immigration and Visa Information. Canadian Immigration Services and Free Online Evaluation..



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