Immigration won’t replace Canada’s aging workforce

posted on April 26, 2019

By Vancouver Sun |

“The question is: Why do we need immigration? Well, five million Canadians are set to retire by 2035. And we have fewer people working to support seniors and retirees,” Immigration Minister Ahmed Hussen said recently, echoing the watchwords of Prime Minister Justin Trudeau.

The Liberals repeatedly maintain higher immigration will, as Hussen says, “help us to ease the great challenges of the coming years, such as the slowing labour force growth and labour shortages linked to Canada’s aging population.”

But do the minister’s claims check out?

The short answer is: Not really. Leading Canadian economists say the Liberals’ claim that higher immigration levels will offset the aging of Canada’s workforce is, at the least, extremely exaggerated.

As one economist half-joked, the only way immigration alone could actually make up for the country’s aging workforce would be if Canada exclusively brought in only 15-year-old orphans.

There are two reasons we can’t expect immigration to come close to balancing out the retirement of workers:

1: Immigrants themselves age, and then leave the workforce.

2: Most immigrants come with dependents, including non-working children and spouses — as well as parents and grandparents.

Canada’s business-oriented C.D. Howe Institute has produced a report showing Ottawa would have to bring in 1.4 million immigrants a year for decades to counteract the country’s low birthrate and the retirement of workers.

That would be a rate four times higher than the 2018 historical record of 321,000, which polls by Ipsos and others show more than half of Canadians oppose. It adds up to a “preposterous scenario,” C.D. Howe says.

“Canadians in general, and policy-makers in particular, should not think of immigration as an antidote to demographic and fiscal pressures,” says the report, concluding immigration has only a “muted impact” on Canada’s age structure.

Immigration is a “terrible” way to respond to the demographics of aging, emphasizes UBC economist David Green.

“It’s not just that immigrants age. It’s that immigrants come with families. As soon as that’s true, you’re not going to alter the age structure dramatically through immigration,” Green told a recent Conference Board of Canada event in Vancouver.

It was Green, during a coffee break, who remarked the only conceivable way immigrants could offset Canada’s aging workforce would be if they were exclusively 15-year-old orphans. That’s because it would take 50 years for the teens to reach retirement age and, as orphans, they wouldn’t need to bring in any parents or grandparents.

Green first heard the line from McMaster University economist Byron Spencer, whom I contacted. In a peer-reviewed paper Spencer and his team warned long ago, in the 1990s, it’s virtually impossible for immigration to forestall the aging of Canada’s population. But very few listened then. Or today.

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