Raising immigration levels would benefit Canada, study finds
Raising Canada’s current annual intake of 300,000 immigrants could greatly help Canadians overcome the mounting challenges posed by an aging population and low birth rate, the Conference Board of Canada says.
“Our forecast suggests that the status quo would be best for improving real gross domestic product per capita, but would have the smallest impact on alleviating Canada’s economic and fiscal pressures,” it says in a new report, “450,000 Immigrants Annually?” released Monday.
“Immigration has a small effect on domestic workers. As such, it does not appear likely that higher levels would have an adverse impact on wages and employment rates in Canada.”
Using the country’s current yearly immigration level of 0.82 percent of the population as the base, the study projected how higher intake percentages — 1 percent and 1.11 percent — would impact Canada’s population size, its population aged 65 and over, workers-per-retiree ratio, GDP, GDP per capita and health-care costs.
The projections were made assuming the composition of immigrants remains unchanged: 60 percent in the economic class, 28 percent in family class and 12 percent as refugees.
In the status quo scenario, the country’s GDP, or economic performance, would grow at an average annual rate of 1.85 percent between 2017 and 2040.
The GDP growth would reach 1.94 percent and 2.05 percent over the same period if the annual immigration levels were increased to 1 percent and 1.11 percent, respectively, the 44-page study by the conference board’s National Immigration Centre says.
In 2016, people age 65 and over made up 16.5 percent of Canada’s total population. The share will continue to rise in the coming years, reaching 24 percent by 2040.
The country’s current natural population increase (births minus deaths) adds roughly 114,000 people to the population, but the report said it will progressively drop to nearly zero by 2033 as the number of deaths surpasses births.
“We forecast that immigration will begin to account for all of Canada’s population growth by 2033, assuming that the annual immigration rate remains around 0.82 percent of the population,” said the report.
Under the status quo, seniors would reach 24 percent of the population by 2040, with the workers-to-retirees ratio dropping from 3.64 in 2017 to 2.37. Over the same period, aging will cause health-care costs to rise by an average of 4.66-percent annually, accounting for 42.6 percent of provincial revenues, up from 35 percent in 2017.
In the medium immigration scenario at 1 percent, seniors would make up 23.2 percent of the population; each worker would stand to support 2.44 retirees; and health-care costs would equal 40.7 percent of provincial revenues, almost two percentage points less than the status quo scenario.
Increasing the annual immigration intake to 1.11 percent of the population could further slow the aging of the population, bringing Canada’s over-65 demographic down to 22.5 percent, the workers-per-retiree ratio to 2.53 and the health-care share of the provincial revenues to 40.5 percent.
While the GDP per capita increases across all three scenarios, it is lower in the medium and high immigration scenarios compared to the status quo. The report said this does not imply the living standards of the average Canadians would be negatively affected.
“The medium and high scenarios … reduce the proportion of the population that is 65 and over, reduce health-care costs as a share of provincial revenues and slightly improve the workers-per-retirees ratio in comparison to the status quo,” the study pointed out.
The report, however, cautions Ottawa to address the long-standing challenges immigrants face in the job market in order to reap the full potential of immigration.
“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,” the study says.
“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.”