On November 1, Immigration, Refugees and Citizenship Canada (IRCC) released their annual Immigration Levels Plan, which is used to guide their operations and determine the number of newcomers Canada will welcome.
This year’s target of 432,000 new permanent residents (PRs) is the highest ever in Canada’s history. The numbers for 2023 (465,000) and 2024 (485,000) will continue the upward trend of (500,000) in 2025.
The arrival of nearly 1.5 million people to Canada over the next three years will have an important impact on Canada’s labour force and economy. In this article, we share the forecast for Canada’s jobs and housing markets, and for the nation’s overall economic and social well-being.
An aging nation
Of Canada’s nearly 39 million people, around 8 million, or roughly 21.5% of the population, are newcomers. The targets set out by the IRCC will raise that number swiftly and sharply — and according to Rebekah Young, Scotiabank’s head of Inclusion and Resilience Economics, this is a positive development.
“We have more retired people, and fewer workers in the economy,” said Young. “That’s really constraining through an economic lens.”
Welcoming newcomers, who, according to Young, tend to be younger and better educated, is one way to find the help we need — and to shift our demographics.
The good news is Canada is one of the few advanced economies with a growing population. “Because we have such expansive targets for newcomers, we actually see our population growing by around 1.8% per year,” she said.
A younger, working, educated and enlarged population in turn helps the commercial sector.
“Newcomers are also consumers. They’re buying houses or vehicles, they’re going grocery shopping or to the movies, so they’re spending in the local economy,” Young pointed out.
And, of course, newcomers are also working and paying taxes — much-needed money that may not be coming in due to a shrinking labour force.
“They’re paying into federal, provincial and municipal revenues, that are then used to provide more services to Canadians, including supporting some of the benefits that go to aging Canadians,” she said.
Nearly 1 million job vacancies
According to Statistics Canada, there were 957,500 job vacancies in Canada in the first quarter of 2022 — the highest quarterly number on record.
“Labour shortages existed prior to the pandemic, but now they’re even more amplified.”
The pressure on industry is enormous. “Business leaders are increasingly vocal about labor shortages,” she said. “There’s an understanding that this isn’t temporary, that we are going to be facing skill shortages and skills mismatches long after the pandemic is gone.”
Even with the proposed immigration numbers, Young said that there will still be job vacancies.
And what kind of workers are arriving? “There are really highly educated newcomers that will come in and fill jobs in high tech sectors, particularly given that the U.S. immigration policies have been so closed,” she said.
The benefit, according to Young, is that we have access to a pool of workers who want to “make transformative change in some of these very high-end sectors that can enhance overall productivity.”
Young shared that Canada could do a better job in fully leveraging these skills as too many university-educated newcomers are in positions that aren’t the right fit for their abilities.
At the same time, newcomers who are in the earlier stages of their careers are filling important gaps as well, “If you look at the health care sector, for example, or home care — that caring economy — there are major vacancies there that are having a very real impact on Canadians.”
Finally, there are the more intangible benefits to boosting immigration. “The entrepreneurialism and the ideas, the innovation, the different way of thinking about things,” Young said. “Economics isn’t great at capturing the value of diversity but it’s clear that there are benefits there.”
“Where could the government improve is in expediency and bureaucracy,” Young said, noting that rapid expansion, as well as pandemic changes, to various programs have led to backlogs that can be challenges for both those waiting to come to Canada and businesses looking for talent.
A hot housing market
Houses and rentals in Canada have been expensive since before the pandemic. Even after the market peaked in 2022, affordability remains an urgent concern. Adding people without adding housing will only intensify the issue.
“We’re not building houses at a tremendous pace and that’s certainly a challenge. These are government challenges,” Young said. “Clearing some of the regulatory and bureaucratic processes that impede building more supply should help. We’ve just got an expanse of land here — that really shouldn’t be the issue.”
Newcomers will have to consider not only which communities need their skills, but also what the cost of living and wages looks like across the country. “Toronto and Vancouver tend to be big, key centers that newcomers want to go to,” Young said, noting that there are often existing communities in larger cities which can provide a sense of stability and security. But the average home price to income ratio is fourfold what it is in some other smaller cities across the country. Newcomers will be making that calculation.”
The longer-term picture may be brighter. Included in the 2022 Budget are several proposals by the Department of Finance to increase housing construction, support affordable housing and protect buyers and renters.
Canada on pause
Experts are warning of global recession, which begs the question of how newcomers and Canada as a whole might fare. According to Young, the outcome might not be as dire as in other parts of the world.
“We expect Canada to lead the pack over the course of the next couple quarters and in the next couple of years,” she said. “Canada has many more positives on the economic front than we think. It’s definitely going to feel the pains of a global slowdown. But we would categorize it in our best guess more as a pause – or a short and shallow slowdown – vs. a deep and prolonged contraction of the economy.”
Among the factors making the Canadian economy resilient, Young cited job markets, and noted that “there isn’t a better place to weather the downturn than in Canada.” She also underscored the value of well-governed and stable institutions that contribute to the resilience in the economy.
Between now and 2025, newcomers will bring Canada some much-needed relief to the desperate labour force, filling important jobs and taking some of the fiscal pressure off a nation that must now find resources for the care of a rapidly aging population. The influx of skills, ideas and entrepreneurialism will benefit employers across sectors, and promises to boost our economy on the world stage.
And these benefits aren’t temporary. The success of newcomers to Canada leads to the success of their children and to the country.
“There are long term dividends of newcomers coming, settling with family and ensuring that the second generation thrives and continues to revitalize the outlook for Canada,” Young said.
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OTTAWA – Canada’s unemployment rate held steady at 6.5 per cent last month as hiring remained weak across the economy.
Statistics Canada’s labour force survey on Friday said employment rose by a modest 15,000 jobs in October.
Business, building and support services saw the largest gain in employment.
Meanwhile, finance, insurance, real estate, rental and leasing experienced the largest decline.
Many economists see weakness in the job market continuing in the short term, before the Bank of Canada’s interest rate cuts spark a rebound in economic growth next year.
Despite ongoing softness in the labour market, however, strong wage growth has raged on in Canada. Average hourly wages in October grew 4.9 per cent from a year ago, reaching $35.76.
Friday’s report also shed some light on the financial health of households.
According to the agency, 28.8 per cent of Canadians aged 15 or older were living in a household that had difficulty meeting financial needs – like food and housing – in the previous four weeks.
That was down from 33.1 per cent in October 2023 and 35.5 per cent in October 2022, but still above the 20.4 per cent figure recorded in October 2020.
People living in a rented home were more likely to report difficulty meeting financial needs, with nearly four in 10 reporting that was the case.
That compares with just under a quarter of those living in an owned home by a household member.
Immigrants were also more likely to report facing financial strain last month, with about four out of 10 immigrants who landed in the last year doing so.
That compares with about three in 10 more established immigrants and one in four of people born in Canada.
This report by The Canadian Press was first published Nov. 8, 2024.
The Canadian Institute for Health Information says health-care spending in Canada is projected to reach a new high in 2024.
The annual report released Thursday says total health spending is expected to hit $372 billion, or $9,054 per Canadian.
CIHI’s national analysis predicts expenditures will rise by 5.7 per cent in 2024, compared to 4.5 per cent in 2023 and 1.7 per cent in 2022.
This year’s health spending is estimated to represent 12.4 per cent of Canada’s gross domestic product. Excluding two years of the pandemic, it would be the highest ratio in the country’s history.
While it’s not unusual for health expenditures to outpace economic growth, the report says this could be the case for the next several years due to Canada’s growing population and its aging demographic.
Canada’s per capita spending on health care in 2022 was among the highest in the world, but still less than countries such as the United States and Sweden.
The report notes that the Canadian dental and pharmacare plans could push health-care spending even further as more people who previously couldn’t afford these services start using them.
This report by The Canadian Press was first published Nov. 7, 2024.
Canadian Press health coverage receives support through a partnership with the Canadian Medical Association. CP is solely responsible for this content.
As Canadians wake up to news that Donald Trump will return to the White House, the president-elect’s protectionist stance is casting a spotlight on what effect his second term will have on Canada-U.S. economic ties.
Some Canadian business leaders have expressed worry over Trump’s promise to introduce a universal 10 per cent tariff on all American imports.
A Canadian Chamber of Commerce report released last month suggested those tariffs would shrink the Canadian economy, resulting in around $30 billion per year in economic costs.
More than 77 per cent of Canadian exports go to the U.S.
Canada’s manufacturing sector faces the biggest risk should Trump push forward on imposing broad tariffs, said Canadian Manufacturers and Exporters president and CEO Dennis Darby. He said the sector is the “most trade-exposed” within Canada.
“It’s in the U.S.’s best interest, it’s in our best interest, but most importantly for consumers across North America, that we’re able to trade goods, materials, ingredients, as we have under the trade agreements,” Darby said in an interview.
“It’s a more complex or complicated outcome than it would have been with the Democrats, but we’ve had to deal with this before and we’re going to do our best to deal with it again.”
American economists have also warned Trump’s plan could cause inflation and possibly a recession, which could have ripple effects in Canada.
It’s consumers who will ultimately feel the burden of any inflationary effect caused by broad tariffs, said Darby.
“A tariff tends to raise costs, and it ultimately raises prices, so that’s something that we have to be prepared for,” he said.
“It could tilt production mandates. A tariff makes goods more expensive, but on the same token, it also will make inputs for the U.S. more expensive.”
A report last month by TD economist Marc Ercolao said research shows a full-scale implementation of Trump’s tariff plan could lead to a near-five per cent reduction in Canadian export volumes to the U.S. by early-2027, relative to current baseline forecasts.
Retaliation by Canada would also increase costs for domestic producers, and push import volumes lower in the process.
“Slowing import activity mitigates some of the negative net trade impact on total GDP enough to avoid a technical recession, but still produces a period of extended stagnation through 2025 and 2026,” Ercolao said.
Since the Canada-United States-Mexico Agreement came into effect in 2020, trade between Canada and the U.S. has surged by 46 per cent, according to the Toronto Region Board of Trade.
With that deal is up for review in 2026, Canadian Chamber of Commerce president and CEO Candace Laing said the Canadian government “must collaborate effectively with the Trump administration to preserve and strengthen our bilateral economic partnership.”
“With an impressive $3.6 billion in daily trade, Canada and the United States are each other’s closest international partners. The secure and efficient flow of goods and people across our border … remains essential for the economies of both countries,” she said in a statement.
“By resisting tariffs and trade barriers that will only raise prices and hurt consumers in both countries, Canada and the United States can strengthen resilient cross-border supply chains that enhance our shared economic security.”
This report by The Canadian Press was first published Nov. 6, 2024.
