Canada declared on November 1st that it plans to maintain steady immigration levels, targeting around 500,000 immigrants annually in 2025 and 2026. The RBC report recommends higher immigration for Canada ahead. The RBC report emphasizes the necessity for higher immigration to sustain population growth and meet domestic labor market demands. This recommendation comes amid concerns that current immigration levels may fall short in supporting Canada’s demographic needs and economic requirements.
Even though Canada’s immigration rates have recently reached all-time highs, a new Royal Bank of Canada (RBC) analysis suggests that further increases will probably be necessary. The paper underlines that current immigration levels might not be sufficient to support Canada’s population growth and meet the needs of the country’s labor market. As a result, the RBC proposes that in order to solve these issues in the near future, reviewing and even increasing immigration rates may become necessary.
The report recommends higher immigration for Canada ahead – The existing scenario
Immigration is necessary in Canada for a number of reasons, most notably to address issues with the labor market and demography of the nation.
Canada has one of the oldest populations in the world, and like many other Western nations, it has a low fertility rate (1.40 births per woman). Because of this combination, Canada cannot sustain its population by relying just on natural-born residents, underscoring the importance of immigration. The demands on Canada’s economy, which is the ninth largest in the world by GDP, are linked to this demographic dilemma. The labor market is affected by the same population replenishment issue that affects Canada.
These two aspects highlight how important immigration is to maintaining Canada’s national prosperity and health. These factors could be the cause of Canada’s continuous record-breaking rate of immigration. But when we look at the current stabilization of immigration targets, the whole story becomes clear.
Reasons for a potential increase in immigration
At present, immigration targets are projected to stay constant at 500,000 new arrivals annually, at least until 2026. Despite marking a record-breaking influx—approximately 1.3% of Canada’s current population—it falls short of stabilizing the nation’s population and adequately meeting future labor demands.
As per RBC’s analysis, Canada would need to admit 849,944 new permanent residents annually (as of the time of writing), equivalent to 2.1% of the country’s existing population. This underscores the necessity of increasing current immigration targets by over 300,000 annually to counteract the low birth rate and aging population in Canada.
In an early 2023 study by Desjardins on Canada’s optimal immigration levels, similar results emerged. The research underscores the need for Canada to prioritize both increasing its working-age population and intensifying immigration efforts (the 500,000 newcomer figure encompasses immigrants from diverse categories such as family sponsorships and refugees). The study suggests that to maintain current ratios of young to old working individuals, the annual growth rate of the working-age population should be 2.2% (equivalent to 721,600 immigrants). Alternatively, to sustain the historical ratio of the working-aged to retired population, a more substantial 4.5% annual growth rate (equivalent to 1,476,000 newcomers) is necessary.
These projections emphasize the critical importance of Canada significantly enhancing immigration levels, not only to address demographic challenges but also to alleviate labor shortages, stimulate economic growth, and sustain essential public institutions like healthcare and infrastructure.
The necessity for maintaining stability in immigration levels from 2024 to 2026
The RBC analysis argues that effective integration justifies maintaining present immigration levels, even though it acknowledges Canada’s long-term need for immigrants. The effectiveness of Canada’s immigration program as a whole depends on its capacity to accept and incorporate newcomers into the country’s demographic and economic fabric. The country’s ability to provide affordable housing has come under examination due to recent housing sector issues, which has heightened immigration debates. As a result, the IRCC has promised to reconsider the amount of temporary residents, especially those with work or study visas, and to alleviate labor shortages in industries such as construction by implementing a balanced immigration strategy that is in line with stable targets.
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