Economy

Canada's economy to slow with new limits on temporary migrants – BNN Bloomberg

Published

7 months ago

March 22, 2024

Canada’s planned reduction in temporary residents is set to add downward pressure to inflation and economic growth in the coming months, and the policy will likely halve its population growth rate when it takes full effect next year, economists say.

Prime Minister Justin Trudeau’s government plans to reduce the number of temporary immigrants by 20 per cent over the next three years, bringing the level down to 5 per cent of the population from 6.2 per cent currently. Starting in May, the government will make it harder for firms to rely on temporary foreign workers.

With one of the world’s fastest rates of population growth, the country has benefited from quickly expanding its labour force. But the rapid increase, driven primarily by foreign workers and students, has led to growing anxiety about housing shortages and the cost of living, prompting the Trudeau government to scale back its open immigration policies.

“This policy would have a material impact on the economy moving forward,” Royce Mendes, head of macro strategy at Desjardins, said in a report to investors. “The combination of a highly interest-rate sensitive economy and the likelihood of slower population growth are the main reasons we have been more bearish on the medium-term outlook for the Canadian economy.”

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A decrease in temporary residents might offset the short-term economic benefits of any Bank of Canada rate cuts this year, Mendes said, adding that it could have an “even more severe impact” next year and in 2026 as population growth will be cut in half.

Robert Kavcic, an economist at Bank of Montreal, expects Canadian population growth to be slashed to near 1 per cent in the coming years, in line with the pace seen in the decade before the pandemic. The population has been growing around 3 per cent recently.

“The impacts will be: Less pressure on rents and housing, less stress and inflation in services, and lower interest rates than we otherwise would see if these inflows were to continue,” Kavcic said.

Worsening housing affordability was a major impetus for the government’s cap. Rent prices have been surging across major cities and have been a key contributor to consumer price increases in Canada. In February, the overall rate of inflation eased to 2.8 per cent on an annual basis, while rents jumped 8.2 per cent.

Excluding shelter costs, the consumer price index rose 1.3 per cent, below the central bank’s 2 per cent target.

“By way of just slowing the upward momentum in shelter inflation, this reinforces our view that the central bank will cut rates more forcefully than what’s implied by market pricing,” Desjardins’ Mendes said.

Currently, markets are pricing in more than three rate cuts by the end of this year, with a high probability that the Bank of Canada will begin that process in June.

The government’s immigration change will hurt businesses that are relying on importing low-wage foreign workers to fill jobs. According to the Canadian Federation of Independent Business, 22 per cent of small businesses in February said that a lack of unskilled or semi-skilled labour was impeding their ability to maintain their current operations or grow.

“The costs of bringing in a foreign worker are much higher compared to those associated with the hiring of someone already in Canada,” Christina Santini, CFIB’s director of national affairs, said in an emailed statement. “When employers turn to temporary foreign workers, it’s because they can’t find someone already in Canada.”

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Economy

Minimum wage to hire higher-paid temporary foreign workers set to increase

Published

2 days ago

October 21, 2024

Anne Joseph

OTTAWA – The federal government is expected to boost the minimum hourly wage that must be paid to temporary foreign workers in the high-wage stream as a way to encourage employers to hire more Canadian staff.

Under the current program’s high-wage labour market impact assessment (LMIA) stream, an employer must pay at least the median income in their province to qualify for a permit. A government official, who The Canadian Press is not naming because they are not authorized to speak publicly about the change, said Employment Minister Randy Boissonnault will announce Tuesday that the threshold will increase to 20 per cent above the provincial median hourly wage.

The change is scheduled to come into force on Nov. 8.

As with previous changes to the Temporary Foreign Worker program, the government’s goal is to encourage employers to hire more Canadian workers. The Liberal government has faced criticism for increasing the number of temporary residents allowed into Canada, which many have linked to housing shortages and a higher cost of living.

The program has also come under fire for allegations of mistreatment of workers.

A LMIA is required for an employer to hire a temporary foreign worker, and is used to demonstrate there aren’t enough Canadian workers to fill the positions they are filling.

In Ontario, the median hourly wage is $28.39 for the high-wage bracket, so once the change takes effect an employer will need to pay at least $34.07 per hour.

The government official estimates this change will affect up to 34,000 workers under the LMIA high-wage stream. Existing work permits will not be affected, but the official said the planned change will affect their renewals.

According to public data from Immigration, Refugees and Citizenship Canada, 183,820 temporary foreign worker permits became effective in 2023. That was up from 98,025 in 2019 — an 88 per cent increase.

The upcoming change is the latest in a series of moves to tighten eligibility rules in order to limit temporary residents, including international students and foreign workers. Those changes include imposing caps on the percentage of low-wage foreign workers in some sectors and ending permits in metropolitan areas with high unemployment rates.

Temporary foreign workers in the agriculture sector are not affected by past rule changes.

This report by The Canadian Press was first published Oct. 21, 2024.

— With files from Nojoud Al Mallees

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Economy

PBO projects deficit exceeded Liberals’ $40B pledge, economy to rebound in 2025

Published

6 days ago

October 17, 2024

Anne Joseph

OTTAWA – The parliamentary budget officer says the federal government likely failed to keep its deficit below its promised $40 billion cap in the last fiscal year.

However the PBO also projects in its latest economic and fiscal outlook today that weak economic growth this year will begin to rebound in 2025.

The budget watchdog estimates in its report that the federal government posted a $46.8 billion deficit for the 2023-24 fiscal year.

Finance Minister Chrystia Freeland pledged a year ago to keep the deficit capped at $40 billion and in her spring budget said the deficit for 2023-24 stayed in line with that promise.

The final tally of the last year’s deficit will be confirmed when the government publishes its annual public accounts report this fall.

The PBO says economic growth will remain tepid this year but will rebound in 2025 as the Bank of Canada’s interest rate cuts stimulate spending and business investment.

This report by The Canadian Press was first published Oct. 17, 2024.

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Economy

Statistics Canada says levels of food insecurity rose in 2022

Published

7 days ago

October 16, 2024

Anne Joseph

OTTAWA – Statistics Canada says the level of food insecurity increased in 2022 as inflation hit peak levels.

In a report using data from the Canadian community health survey, the agency says 15.6 per cent of households experienced some level of food insecurity in 2022 after being relatively stable from 2017 to 2021.

The reading was up from 9.6 per cent in 2017 and 11.6 per cent in 2018.

Statistics Canada says the prevalence of household food insecurity was slightly lower and stable during the pandemic years as it fell to 8.5 per cent in the fall of 2020 and 9.1 per cent in 2021.

In addition to an increase in the prevalence of food insecurity in 2022, the agency says there was an increase in the severity as more households reported moderate or severe food insecurity.

It also noted an increase in the number of Canadians living in moderately or severely food insecure households was also seen in the Canadian income survey data collected in the first half of 2023.

This report by The Canadian Press was first published Oct 16, 2024.

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