CANADA needs to improve the job outcomes of immigrants in order to realize the value of higher immigration levels, according to a new Conference Board of Canada report.
“Immigration makes an immense contribution to Canada’s economy, but the employment barriers that newcomers experience are preventing Canada from fully reaping the economic benefits,” said Kareem El-Assal, Senior Research Associate, Immigration, The Conference Board of Canada. “Conversations on Canada’s future immigration levels should go beyond the numbers to include how Canada can better integrate immigrants into the labour market.”
- With the federal government set to announce Canada’s 2018 immigration target by November 1, the report, “450,000 Immigrants Annually? Integration Is Imperative to Growth”, examines the economic impact of immigration between 2017-2040.
- If Canada were to welcome 450,000 newcomers per year, as recommended by the federal government’s Advisory Council on Economic Growth, real GDP would grow by an average of 2.05 per cent annually, with immigration contributing nearly one-third of economic growth.
- Maintaining the status quo on immigration levels would improve real GDP per capita the most. On the other hand, maintaining the status quo would have the smallest impact on alleviating Canada’s economic and fiscal pressures.
- Addressing the long-standing labour market integration challenges that immigrants face is imperative to boosting the economic impact of immigration.
With the Government of Canada set to announce its 2018 immigration target by November 1, the report evaluates the economic impact of increasing immigration. Higher immigration levels would boost real GDP growth since a larger population would mean more people spending money and working in the economy. If Canada were to welcome 450,000 immigrants per year by 2025, real GDP would grow by an average of 2.05 per cent annually between 2017-2040. This is 0.20 percentage points higher than the estimated 1.85 per cent growth currently forecast.
In addition, aging of the population would slow, as the share of seniors would drop from over 24 per cent to 22.5 per cent in 2040. And since immigrants tend to be younger than the national average, health care costs as a share of provincial revenues would decrease by 2 percentage points to 40.5 per cent in 2040. On the other hand, real GDP per capita would be slightly lower than if we maintained the status quo on immigration, due to the influx of newcomers earning less than the national average. In the higher immigration scenario, real GDP per capita in 2040 is $61,628, down by approximately $1,270, though this would have little impact on workers already in Canada.
However, increased immigration levels could create economic and fiscal pressures if Canada does not effectively address the labour market challenges that immigrants often experience. A previous Conference Board report estimates that underemployment causes immigrants to lose out on up to $12.7 billion in wages each year. Consequently, Canada’s economic performance suffers through lost productivity, lower tax revenue, and reduced purchasing power for immigrants.
450,000 Immigrants Annually? Integration Is Imperative to Growth is published under the Conference Board’s National Immigration Centre, which examines the immigration challenges and opportunities facing Canada today.