Immigration key to Canada’s economic growth, study says

posted on May 7, 2019

By the Star |

Even if Canada harnessed all of the new graduates and groups under-represented in the workforce such as women, the disabled and Indigenous people, the country would still need to rely on immigrants to satisfy its labour needs, a new study shows.

With one in four people anticipated to be 65 or older in 2040 and a continuing low birth rate, Canada will need to rely heavily on immigration for its labour force if the country wants to maintain its social infrastructure and healthy growth, according to the report released by the Conference Board of Canada on Friday.

Between 2018 and 2040, 11.8 million Canadians will finish school and enter the workforce, but it’s still far short of the 13.4 million workers retiring during the period.

“Canada’s retirement rate has gone up, and by 2030 all 9.2 million of Canada’s most prominent worker cohort — the baby boomers — will be of retirement age,” said the 57-page study, entitled “Can’t Go it Alone. Immigration is Key to Canada’s Growth Strategy.”

“This reality, combined with a low fertility rate, is creating economic and fiscal pressure. As such, to maintain its high living standards, Canada needs solutions to replenish those exiting the workforce.”

A sizable labour force must be maintained to stimulate economic activity, as well as bolster tax revenues to pay for vital social expenditures such as rising health-care costs, the report said.

Under the Liberal government, Canada’s annual immigrant intake is slated to rise to 350,000 by 2021, compared with some 300,000 annually today and roughly 250,000 per annum over the last decade. The increase is largely aimed at alleviating the impact of departing baby boomers.

Those aged 65 or above are expected to account for 25 per cent of the country’s population, up from 17 per cent today, as Canada’s low birth rate, at 1.5 births per woman, is not expected to go up.

While it would help ease the impact with Canada’s continuous effort to encourage more women, Indigenous people and persons with disabilities to join the workforce, workers from these under-represented groups would add only 2.2 million people to the workforce and $101 billion to the economy.

“Immigration, however, will be among the most formative policy measures to grow the Canadian labour force and economy,” said the Conference Board. “If Canada gradually raises its immigration rate to 1 per cent of its population by 2030 — up from about 0.8 per cent today — newcomers would contribute some 5.3 million workers to the labour force and one-third of the economic growth rate between 2018 and 2040.”

Increased immigration and participation of the under-represented workers can result in a labour force growth of 1.1 per cent annually between 2019 and 2040, only slightly below the 1.3 per cent yearly growth rate Canada experienced between 2000 and 2017.

While technological advancements may eliminate some jobs, said the report, they will also lead to new jobs.

Citing a study by the Brookfield Institute, the Conference Board said 42 per cent of all jobs in Canada have the potential to be automated to some degree by technologies that exist, with retail salespersons, administrative assistants, food counter attendants, kitchen helpers, cashiers and transport truck drivers at the highest risk within the next 10 to 20 years. Only 12.7 per cent of university-educated workers are significantly vulnerable to being replaced by machines.

“This bodes well for Canada’s immigration system as currently constructed and for immigrants already in the country,” said the study. “Canada’s economic class selection criteria tends to give preference to applicants with a university education, and it thus comes as no surprise that Canada’s immigrants are highly educated.”

According to Statistics Canada, 52.1 per cent of recent immigrants have at least a bachelor’s degree, compared with 24 per cent of the Canadian-born population.

Read more