What is the ideal level of immigration for Canada?
In recent years, there has been a growing debate about whether Canada should continue to have an open-door policy towards immigration or whether they should adopt a more closed-border approach.
As the country’s immigration levels rise—an additional 1.45 million immigrants are anticipated between 2023 and 2025—this subject may become more prevalent.
This dilemma has become increasingly complex as the government of Canada tries to balance the benefits of immigration, such as economic growth and cultural diversity, with concerns over security, job competition, and social integration.
This blog will cover all sides of the argument while attempting to comprehend Canada’s opportunities and problems as we work through this immigration dilemma.
A recent Desjardins study attempts to answer this question in the context of Canada’s demographic and economic goals that the Canadian government is attempting to achieve through immigration, as well as the infrastructure of public services and federal funding in Canada.
The State Of The Economy
Alleviating the shortfalls in the employment market that Canada’s ageing population cannot support is one of the main goals of the immigration system. The number of permanent residents and temporary economic residents has traditionally correlated favourably with the country’s economic potential, as determined by the economic output gap.
According to Desjardins, this relationship has recently changed, with more immigrants arriving than the economic production shortfall would support. This combination and a low unemployment rate indicate too many newcomers to justify economic expansion.
Canada has recently stepped up its attempts to attract immigrants, but its unemployment rate has remained constant at about 5%. At the same time, job openings have continued to outpace overall unemployment. All of this shows that there are still a lot of jobs available in the economy, even though Canada is getting close to reaching its economic potential through immigration.
Understanding why this would be the case involves considering that many temporary foreign workers come to Canada to fulfill a particular labor market need, sometimes through a procedure aided by the LMIA. One might conclude that sustained immigration at the current rate is economically justified given these high unemployment rates and Canada’s inability to fill these positions with its population.
The longer-term effects that economic immigration has on the Canadian economy are related to this. The possibility of both GDP growth and GDP per capita increases in Canada due to immigration. It is because recent immigrants are more likely than native-born Canadians to be employed and because they are often younger when they immigrate, which means that they have more years and hours of prospective labor.
In particular 2022, permanent and temporary immigrants drove all growth in Canada’s working-age population from 15 to 64. It shows that, in terms of the economy, immigration can assist Canada in achieving its objectives of inviting 1.45 million immigrants by 2025.
Also Read: Immigration is “Highly and Increasingly” Supported in Canada
The State of Demography
Canada’s aging population is central to the debate over immigration’s economic benefits. Canada’s national healthcare system means that seniors over 64 can significantly strain the country’s economy. It is because medical expenditures tend to rise as people age, but Canada’s healthcare system ensures that the person does not bear most of these costs.
In provinces without significant urban centres, where the economy is smaller, the proportion of people aged 65 and older compared to those in the labor force is higher, and where there is less immigration to meet labor market demands, this effect may be even more pronounced. Provincial government healthcare spending per capita is anticipated to treble between 2020 and 2040, reaching CAD 10,000 per year, according to the Fiscal Sustainability Report written by Canada’s Parliamentary Budget Officer.
To enable a rising standard of living while maintaining the sustainability of public finances, the Desjardins research extends this topic by asking what amount of immigration would assist in balancing the costs of Canada’s ageing population with economic development.
According to recent studies, Canada would need to raise its working-age population by 2.2% annually to maintain the existing ratio of working-age individuals to older people until 2040. To put this into perspective, the working-age population of Canada increased by 256,000 new economic permanent residents and 756,000 work permit holders in 2022, corresponding to a growth rate of just 1.6%.
The Canadian government would need to boost its working-age population by 4.5% annually to achieve its 2040 goal of maintaining the historical ratio between aging and working-class populations, the national average between 1990 and 2015. Both scenarios call for Canada to substantially boost working-age immigration from that year’s levels, the highest population growth since 1989. That year, 2022, was the case.
According to these data, economic immigration also appears to be an important strategy for addressing Canada’s demographic issues and the potential economic costs that come with it. The Provincial Nominee Programme (PNP) is also included as Canada’s main route for economic immigration. PNPs can significantly lessen the strain on provincial budgets caused by the rising medical costs of their ageing populations and assist in spreading the benefits of economic immigration throughout Canada’s provinces, addressing important workforce shortages.
Wrapping Up
In conclusion, Canada’s immigration dilemma is a complicated, multilayered matter that calls for careful analysis and deliberate discussion. While some argue for open doors and a welcoming approach to immigrants, others advocate for closed borders and stricter controls on who can enter the country.
Since immigrants can help fill short-term labor market gaps and perhaps boost GDP growth over the long term, immigration is crucial for Canada’s economic success in the long run. Especially in light of its ageing population, immigration helps Canada’s demographics.
Ultimately, the best solution lies somewhere in the middle, where Canada can maintain its reputation as a welcoming and inclusive society while ensuring its borders and citizens are protected. By striking this balance, Canada can continue to thrive as a diverse and prosperous nation for generations.
Contact us today at Dynamic Group to know your eligibility for immigrating to Canada!
Contact us today: Dynamic Group.
