Canada’s Economic Growth Will Get Hit if Immigration is Stopped Completely: Report

Canada’s labor force and economic growth would decrease significantly if the country stops letting in immigrants completely, according to a report released by the Conference Board of Canada on May 15.

The report, titled Canada 2040: No Immigration Versus More Immigration, examined the contribution of Canada’s three immigration classes — economic, family and refugee — in the country’s economic growth. The focus of the report, however, was on the family class as it has a sizable presence in total immigrant admissions.

It is essential for Canada to boost the labor market impacts of family class immigrants as the country becomes more dependent on immigrants to support its economic growth, the report pointed out.

Canadian citizens and permanent residents are eligible to sponsor certain family members for immigration to the country, including spouses, partners, dependent children, parents and grandparents. Economic class immigrants are admitted based on their human capital characteristics, such as age, education, language skills, occupation, and work experience.

“Currently, immigration accounts for 71 per cent of Canada’s population growth and has accounted for as much as 90 per cent of labor force growth in recent years,” the report stated.

By 2034, the number of deaths in Canada is expected to exceed births, and immigration is projected to account for hundred per cent population growth. Boosting immigration to 1 per cent of Canada’s population — about 400,000 immigrants per year — by the early 2030s would help in keeping the country’s population, labor force and economy growing at a modest rate, the report said.

While Canada has prioritized economic class admissions since the mid-1990s to address its labor market needs, family reunification should also be viewed as part of economic development policy, it recommended, adding that immigrant families fare well in relation to Canada-born families in important economic metrics such as household income and home ownership. Family reunification also boosts immigrant retention rates. Having family to assist with child care permits immigrants to boost their household income by working for a longer duration.

“Low earnings and the prevalence of chronic low income among the family class are issues of concern that need to be addressed to help boost the living standards of immigrant families and for Canada to benefit from their human capital in the labor market as it becomes more dependent on immigrants to support its economic growth,” the report added.

Family class immigrants landing in Canada between 2017 and 2022 are estimated to have an employment rate of 59.2 per cent, which will gradually increase to 71 per cent for 2023-32, and 76.7 per cent for 2033-40. Data was drawn from Canada’s current census figures to create the projections.

The report also analyzed the future of Canada and its economic growth if the country were to shut its doors completely to immigrants, pointing out that in case there was no immigration, 26.9 per cent of its population would be aged 65 years or over by 2040. Canada’s potential economic growth would slow from 1.9 per cent to an average of 1.3 per cent annually without immigration.

“While it is unlikely that Canada would stop immigration completely, building this scenario helps us better understand the contributions of newcomers to Canada’s economy,” said Kareem El-Assal, Senior Research Associate, Immigration, The Conference Board of Canada.