October 02, 2017 – The Conference Board of Canada’s report, titled ‘450,000 Immigrants Annually? Integration is Imperative to Growth’ was released today, October 2, 2017. It comes with Canada’s federal government on the verge of deciding how many immigrants will be accepted over the next several years. A recent federal-provincial-territorial meeting established support for a multi-year levels plan, although it is unclear whether the government will act on this support or for how far into the future a plan will go.
Canada’s population is aging, its birth rate is falling and its labour market contracting. Increased immigration levels are an important tool to help offset this growing demographic challenge. However, to throw out a headline-grabbing figure like 450,000 new immigrants per year is irresponsible, and unhelpful to those in government who are pushing for incremental, managed increases.
Annual immigration levels announcements is politically sensitive in Canada. There is little doubt that the current federal government supports increased levels, after establishing 300,000 as the base figure since coming to power in 2015. However, policy advocates know that increases must come in measured incremental tones that are backed by empirical evidence and that Canadians can accept.
For a pro-immigration organization like the Conference Board to put out a report that essentially undermines its own reasoning in the title is unhelpful. An important concern is that Canada does yet not have the infrastructure capacity to integrate what would represent a 50 per cent increase in the number of immigrants. No-one wants to see thousands more immigrants admitted to Canada if many will draw on unemployment benefits. Perhaps 450,000 is a target that can be reached over several years, but it cannot be an accurate level anytime soon.
The Conference Board report establishes three scenarios based on three different immigration levels as a percentage of Canada’s population: 0.82 per cent (the current level), 1 per cent and 1.11 per cent. It then attempts to estimate how these levels will impact different factors between now and 2040: population, the number of elderly, the ratio of workers to retirees, plus GDP, GDP per capita and the cost of health-care.
It drew the following conclusions:
Immigration at 0.82 per cent
- Seniors to be 24 per cent of population
- Worker to retiree ratio to shrink from 3.64 to 2.37
- Health-care costs to account for 42.6 per cent of provincial revenues (currently 35 per cent)
Immigration at 1 per cent
- Seniors to be 23.2 per cent of the population
- Worker to retiree ratio to shrink from 3.64 to 2.44
- Health-care costs to account for 40.7 per cent of provincial revenues (currently 35 per cent)
Immigration at 1.11 per cent
- Seniors to be 22.5 per cent of the population
- Worker to retiree ratio to shrink from 3.64 to 2.53
- Health-care costs to account for 40.5 per cent of provincial revenues (currently 35 per cent)
The central problem with these calculations is the failure to answer the dilemma posed in the title of study, that is how Canada would go about integrating so many immigrants.
Within the report, there is an acceptance that this represents a challenge, although a failure to address how it can be overcome.
The report reads: “There could be negative economic and fiscal consequences, especially if immigration levels increase and Canada does not effectively address the labour market challenges that immigrants commonly face.
“With Canada becoming more reliant on immigrants to meet its labour market needs, the success of its immigration system will greatly depend on its ability to improve the labour market outcomes of immigrants, expand its absorptive capacity and maintain public support for immigration.”
There is significant evidence to suggest immigration is economically beneficial to the receiving country, especially in the long term. On a shorter-term basis, newcomers are an initial drain on government coffers, making the challenge of expedited integration central to a functioning immigration policy. To flood Canada with extra immigrants like the Conference Board report suggests would overwhelm the current integration effort.
An International Monetary Fund report released in November 2016, argues that immigrants have an undeniable long-term benefit for advanced economies. Both high and low-skilled immigrants make a contribution over time that results in boosting the GDP of the country they move to, the study says.
The IMF report is supported by a vast amount of collaborated evidence.
A leading study concludes that immigrants are far more likely to own businesses than their Canadian counterparts, a key growth component.
Released in March 2016 and titled Immigration, Business Ownership and Employment in Canada, the study says that ‘rates of private business ownership and unincorporated self-employment are higher among immigrants than among the Canadian-born population’.
The conclusions made were based on figures from the ‘Canadian Employer-Employee Dynamics Database’.
Statistics also show immigrant children consistently beat their peers with Canadian-born parents in terms of educational attainment.
A paper entitled ‘Educational and Labour Market Outcomes of Childhood Immigrants by Admission Class’ by Statistics Canada reveals the children of immigrants graduate high school at a rate of 91.6 per cent, against 88.8 per cent of children who are third generation or more.
When it comes to university, the gap increases, with 35.9 per cent of immigrant children graduating against 24.4 per cent from the established Canadian group.
At the same time, further figures show the percentage of immigrants in the working-age population has been steadily increasing for the last decade as the Canada-born proportion drops, illustrating the need to make up for the shortfall by bringing in foreign workers.
In 2006 less than 20 per cent of the workforce – those aged 15 and over – were from the landed immigrant population, while more than 78 per cent were born in Canada.
But fast forward 10 years and Statistics Canada data shows an immigrant percentage just less than 24, while the Canada-born proportion has dropped almost as low as 74 per cent.
If the trend continues – and there’s no indication it will not – the two percentages will converge.
Analysts assert the data shows Canada has reached the point where it cannot grow without immigrants, with Canadian-born workers exiting the labour force at such a rate.
A further study suggests the more immigrants of a given nationality or culture a country welcomes, the more likely the nation of origin is to invest further down the line.
According to the National Bureau of Economic Research, investment comes in the long term, as often the ‘push’ factors of migration mean the nation of origin is not able to invest in the short term.
A good example of this is Syria, unlikely to be a source of investment any time soon, but with refugees spreading all over the world, including more than 40,000 in Canada, investment could flow in more stable times when citizens are looking for places to put their assets.
Therefore, the evidence shows that incremental increases in immigration numbers are likely to be an economic benefit to Canada. But the increase needs to take place in a managed way that allows the capacity to integrate to grow alongside the numbers. To reference immigration levels in the 450,000-range is an unrealistic figure designed purely to garner headlines.
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