Within the next three years, Canada will welcome around 1.45 million immigrants, with most (60%) entering through economic class programs. According to a recent study by Desjardins on the effects of federal immigration targets, this influx of new arrivals will have several positive effects on the Canadian economy and society. Newcomers have better employment prospects than Canadian-born as one example of the positive effects of immigration. There have been two significant patterns that have coincided with this trend: the employment rate of new immigrants has increased since 2016. And the employment rate of people born in Canada has declined.
As a result of demographic differences between each group, this phenomenon can be explained. Between 25 and 54 years old make up the majority of recent immigrants. And are often chosen because of their human capital attributes that make them suitable for Canadian employment. The aging population in Canada is a primary reason for the need to encourage immigration. As many retirees leave the workforce each year. Taking immigration into account in this context also requires a consideration of its broader economic effects.
Newcomers will change Canada’s demographics
Immigrants in their core working years account for most of Canada’s population growth. Immigration is expected to increase significantly in the near future, resulting in a considerably younger population in Canada. With retirees leaving the workforce on a regular basis, the median age of Canadians is 41.
Bringing in immigrants during their core working years is expected to have both societal and economic benefits for Canada. This includes increased birth rates (i.e. two births per household) and numerous economic benefits.
The potential for GDP growth will be boosted by new immigrants
Since many immigrants already have employment opportunities before they arrive in the country. They have a stronger connection to the labor market. Human capital factors are considered when selecting them for employment. These factors ensure that they possess the necessary skills to contribute to the organization.
Immigration is expected to increase the labor force, which will enhance Canada’s GDP per capita. The quantity of products and services generated inside a nation’s borders determines its GDP. A growing GDP is often a sign of a healthy economy, which can bring about extra benefits like more jobs and greater earnings.
The influx of immigrants is expected to alleviate inflationary pressures in Canada by strengthening the supply side.
Is Canada capable of handling this surge of immigrants?
The Desjardins studies demonstrate the cyclical nature of immigrant labor market outcomes, with newcomer unemployment rates peaking roughly every ten years and then falling (although after 10 years in Canada, the unemployment rates for immigrants and Canadians were mostly similar). Also, while they adapt to their new environment, recently arriving immigrants can have more trouble getting a foothold in the Canadian labor market. These results have raised questions about Canada’s capacity to handle the significant inflow of immigrants it plans to welcome over the next three years.
Immigrants are likely to experience favorable labor outcomes despite the challenges outlined above. As a result of the current pandemic, there are twice as many job openings as there were during the pandemic. Canada’s ambitious immigration goals are driven in part by the competitive labor market. A number of newcomers with desirable human capital characteristics and skills are more likely to succeed in Canada’s job market as the aging population leaves the workforce every year.
Newcomers have better employment prospects than Canadian-born – Summary
From both a societal and economic perspective, Canada’s immigration objectives will be beneficial. Canadians and newcomers both benefit from the arrival of immigrants in the next three years. It is the first time since the COVID-19 outbreak that the country has needed immigrants as much as ever before.
