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Immigration and Economic Growth

By Kristine St-Laurent

2016’s first quarter Canadian population estimates indicate the highest first quarter gain in 27 years.  Preliminary Q1 numbers project that Canada’s population as of April 1, 2016 stood at 36,155,487, which is an increase of 0.3% (+106,966) since January 1, 2016.  The last time Canada experienced a higher first quarter gain was in 1989 (+115,420).  British Columbia mirrored the nation’s population gain, also increasing by 0.3% (+13,911).

The influx of new immigrants (+86,216) was the primary driver of population growth in the first quarter of 2016.  Syrian refugees comprised a large proportion of the incoming immigrant flow.  Notably, Canada has never before admitted as many immigrants within a single quarter.  Previously, the highest surge was recorded in Q3 of 2010 (+84,292).

The arrival of more new immigrants signals an opportunity to scale up labour force participation, even after accounting for the lag in the initial integration period—also known as “time since landing”.  Creating opportunities for workforce engagement by historically under-represented groups (immigrants, First Nations, women, individuals with disabilities, youth and older workers) is a pathway for addressing potential talent shortages within the Canadian labour market. 

Admittedly, there are challenges to incorporating immigrants into the workforce, particularly actual or perceived language and literacy skills, difficulties around the recognition of foreign credentials, and the fact that newcomers by definition lack experience of living and working in Canada.  Consequently, many seemingly qualified immigrants are either unemployed or underemployed, working well below their skillset.  Statistics Canada research suggests it can take up to ten years for the employment rate of recent immigrant cohorts to reach a level similar to that of individuals born in Canada.

Employment and Unemployment Rate Gaps
Between Immigrants and Canadian-born Aged 25-54,
2011

  Employment Rate Employment
Rate Gap
Unemployment Rate Unemployment
Rate Gap
Very recent immigrants
(0-2 years)
63.5% -19.4% 13.6% 8.1%

Recent immigrants
(3-5 years)

74.1% -8.8% 8.2% 2.7%
Established immigrants
(6-10+ years)
79.8% -3.1% 7.1% 1.6%
Born in Canada 82.9 n/a 5.5% n/a
Sources:  Statistics Canada, Labour Force Survey.

 

Rate of Employment Among Immigrants and Canadian-born Aged 25-54,
by Province/Region, 2011

Two key factors will shape long-term growth in Canada’s economy:  our productivity performance, and the extent to which the labour pool expands. While productivity is the most important determinant of overall economic prosperity, Canada will also benefit from the influx of working-age immigrants, particularly as the baby-boom generation moves into retirement in ever larger numbers.  Smaller communities can especially benefit from new immigrants.  Of interest, some economically stagnant communities in the US, such as Buffalo and St. Louis, report a spike in economic development with the entrance of new immigrants.  BC communities should take note of the economic revitalization of smaller and mid-sized US centres as a result of immigration.[1]    

Within a few decades, immigration will be the only source of population growth in Canada, and the only significant source in BC.  In the absence of a steady inflow of immigrants, Canada’s population will shrink, economic growth will lag, and the standard of living may well decline.  The social and economic integration of immigrants isn’t quick or easy.  But the addition of new people to the labour force and the broader economic stimulus provided by a population that is growing rather than declining will pay dividends for our economy over the long haul.