The governor of the Bank of Canada, Tiff Macklem, recently discussed immigration’s potential role in recent speeches on the 10th and 14th of November. Macklem spoke about how immigration can help stabilize the labor market in Canada and correct the course of inflation.
The focus of his remarks was “the future of labor jobs,” which included the following topics:
- What are the reasons why businesses can’t find enough workers?
- What are the chances of a recession?
- How does a recession affect unemployment?
- In order to maintain maximum sustainable employment, what role does the Bank of Canada play?
How immigration, labor, and inflation in Canada are interconnected, according to Macklem
Presented here is a compilation of Macklem’s remarks in relation to immigration’s contribution to balancing the Canadian labor market, including suggestions for employers on how to increase the available pool of employees to meet labor market challenges and inflationary concerns.
During his first remarks, Governor Macklem discussed how tight the labor market is right now in Canada.
Inflation has been raised across the country. It results in the rising wage pressure caused by a labor shortage, according to the governor of the Bank of Canada. Macklem says, Canadian firms should keep recruiting immigrants, especially recent immigrants, to meet the increasing demand for labor and control inflation.
According to Governor Macklem, increased labor supply is “one method for equalizing supply and demand,” and “the more we can do to supply, the less we will need to do to meet demand.” As per the Bank of Canada, more immigrants are needed to control high wages since “wages have to slow to control inflation.”
Canada’s immigration situation since 2020
The following study of the 2020 immigration slowdown that Canada suffered during the peak of the COVID-19 pandemic. It resulted in almost 100,000 workers missing the government’s immigration target. Macklem concluded that “immigration can help stabilize the labor market in Canada as border restrictions return to normal.”
Canadian immigration levels have returned to normal following the release of the Immigration Levels Plan for 2023–2025. Despite slow immigration during the peak of the epidemic, Canada seems to be rebounding and aiming even higher. As its immigration targets for the next three years exceed 460,000. In 2023, 465,000 permanent residents will be present, in 2024, 485,000 will be present, and in 2025, 500,000 will be present.
Next Step
Compared to other nations, Canada’s economy will benefit from immigration due to its growth, inflation stability, and economic stability. Statista Canada estimates that immigration will account for almost two-thirds of the projected expansion in Canada’s potential production due to high immigration targets.
By increasing the pool of potential workers in the Canadian workforce, immigrants contribute to counteracting the declining workforce participation rate resulting from the aging of our natural population, as well as helping to address the economic problems we currently face.
Final Note
Those interested in reading the entire transcript of Governor Tiff Macklem’s speech from Toronto Metropolitan University can do so on the Bank of Canada website. You can also view the entire video of his talk from the Diversity, Equity, and Inclusion Conference on November 14th (Part 1 and Part 2).
