Economy

Study: A decline in temporary migration could hurt Canada’s economy

Published

12 months ago

October 29, 2023

Although many rightfully link Canada’s economic and demographic growth to a permanent resident boom in recent years, a new Desjardins study suggests that Canada may be underestimating the effect that temporary migration has on the national economy in this country.

According to economist Marc Desormeaux, Canada’s economy could be “hit hard” if the country experiences a decline in non-permanent resident (NPR) migration in the face of a period of economic weakness.

The current state of non-permanent resident migration in Canada

Non-permanent (temporary) resident migration is at the root of Canada’s population growth in “most provinces.”

Note: Temporary residents are a category of migrants to Canada including groups such as foreign workers, international students and refugees

Specifically, foreign worker migration (those with work permits) has led the charge with respect to NPR growth in the last year, as this group has accounted for 70% of all growth in this category. This was found to be true both nationally and in Canada’s four biggest provinces (but more on that later).

Results and Impacts

In this study, predictive modelling – including an upside scenario, downside scenario and worst-case scenario – is used to project how the Gross Domestic Product (GDP) in Canada’s four largest provinces* (Ontario, British Columbia, Quebec and Alberta) would be impacted based on different levels of NPR admission across Canada in 2023 (2023-2024) and 2024 (2024-2025).

*These provinces made up almost 90% of Canada’s total GDP in 2022

Understanding that these results vary by province – between a 0.5 and nearly 2 percentage point drop in GDP in the downside and worst-case scenario projections – the overall results of this study suggest that all four assessed provinces will see a hit to their GDP if Canada sees a reduction in temporary resident migration.

What this means is that the “health” of Canada’s economy would decline as a result of a drop in temporary resident migration. This is because GDP is used to define “the monetary value of all finished goods and services made within a country during a specific period.” In other words, a declining GDP, “used to estimate the size of an economy and its growth rate”, would signal a negative short-term economic future across this country.

Some adverse impacts of a declining GDP may include:

An economic recession
A decline in “real income”
Reduced production
Increased unemployment

Conclusion: What could happen if temporary resident migration slows across Canada?

NPR admissions across Canada tend to rise and fall in concert with national economic cycles. In other words, NPR admissions across Canada’s four biggest provinces usually grow when the economy is strong and falter in times of economic struggle.

In light of these results, and expecting a possible recession in the near future, Desjardins makes it clear that Canada’s “recent population‑induced boost to economic activity and tax revenues may not last forever.” In other words, temporary migration to Canada must maintain itself through periods of economic volatility if Canada wants to try to avoid having to “grapple with the immense challenges of a rapidly aging population and a lack of affordable housing supply.”

To accomplish this, Desjardins suggests that Canada needs to produce better data on temporary migration to Canada, as this would help the country “appropriately calibrate labour and housing market policy.”

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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

1 week 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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