Immigration Surges Past One Million — Canada Needs a Real Count and Real Plans

2023/04/24 Leave a comment

Annual levels plan needs to include temporary workers and international students rather than these being solely demand-driven. And better and more disaggregated data would be welcome although we have enough to understand the general trends:

Canada revved up its immigration machine last year to make up for the pandemic slowdown and recorded a new high of 437,500 new permanent resident arrivals. And the federal government plans to keep going, increasing permanent immigration targets to half a million by 2025 – 75 percent higher than the 2017 target level.

While public opinion remains broadly supportive of greater immigration, the impact on housing, health care, and broader community capacity has entered the debate. And to fully assess the effects, especially on housing, we need to look beyond headline immigration numbers. International arrivals for permanent and temporary visa holders not already in Canada need to be added to the equation. Precisely counting these groups is not an easy task due to data gaps and inconsistencies, but for 2022, we estimate the real total of arrivals last year was more than one million people.

The expansion of two-step immigration selection that prioritizes applicants with Canadian work experience and post-secondary education, allowed many applicants, such as temporary foreign workers and students, to receive approvals from within Canada. However, Immigration, Refugees and Citizenship Canada (IRCC) does not publish the data on their country of residence, making it difficult to understand the role of approvals for those already residing in Canada. According to IRCC data, this trend of applications from within Canada spiked during COVID. They made up fully 75 percent of 406,045 permanent residency approvals in 2021, but only 45 percent last year. This means the number of permanent residency approvals for people outside Canada – who create incremental housing demand – more than doubled between 2021 and 2022 to about 241,500.

Among those new arrivals are non-permanent residents. This category is growing rapidly, faster than new permanent residents, and is the most volatile element in population estimates. Non-permanent residents need to hold a valid permit to live in Canada and include temporary foreign workers, international students, refugee claimants and now a surging number of Ukrainians under a new authorization for emergency travel program.

In total, there were 1.3 million new temporary visas issued (excluding extensions and tourists) in 2022, a 45-percent increase from 2021. According to country of residence data, the number of new permit holders (e.g. temporary foreign workers and international students) whose place of residence was outside Canada grew by 83 percent from 2021 to more than 855,000 in 2022.

Combining permanent and temporary entry from outside Canada in 2022, the estimated total arrivals was more than one million (see Figure).

A new element of the temporary resident increase was the policy response to the invasion of Ukraine. Eligible Ukrainians can come to Canada for up to three years under the emergency authorization, and Ukrainians already in Canada can extend their visas. There is also a surge in Ukrainians arriving through other programs.  In 2022, only 29 percent (140,094 individuals) of the 478,357 approved applications arrived (another 66,000 have landed so far in 2023 through April 2). The continuing flow will substantially increase international arrival and non-permanent resident numbers in 2023 as Canada keeps receiving and processing applications.

Although some residents may leave Canada and some new arrivals are absorbed into existing extended family households, the available data points to an overall net increase in the number of arrivals as well as in demand for housing: the latest CMHC Rental Market Survey shows the national vacancy rate fell from 3.1 percent to 1.9 percent from October 2021 to October 2022.

Current trends indicate a larger influx of international arrivals (far outpacing temporary visa departures) in 2023 and further increases in housing demand. This would push the rental vacancy rate to near zero and worsen housing supply shortages.

Even if the Ukraine War ends swiftly and the labour market starts to cool down, requiring fewer temporary foreign workers, Canada still needs to address its housing crunch in both the short- and long-term.

In the short-term, prefabrication and modular construction, like those that non-profits have constructed for veterans may be needed.

Meanwhile, another concern is Canada’s data quality. Complex, confusing and even conflicting published data due to over- and under-estimates of temporary immigration figures hampers accurate and timely population and housing forecasts. First, one individual can have more than one visa in a calendar year, and leave prior to the visa expiry. As well, in another COVID response, the immigration department has allowed non-permanent residents with expired visas to remain in Canada while their application for visa renewal or permanent residency is under review. To obtain population estimates, however, Statistics Canada still assumes non-permanent resident visa holders left the country the month following visa expiry. Accurate data is needed for accurate analysis of resources and capacity planning to serve new arrivals. And evidence shows that there have been long term data gaps in tracking temporary residents.

COVID shutdowns and the Ukraine war illustrate how dramatic changes in the number of new arrivals can occur with lasting economic and demographic consequence. Using the correct metric in a timely manner is, therefore, critical. We need disaggregated data on permit issuances and arrivals by country of residence as well as data on the total unique count of temporary residents to make sure we know how many people are here.

Henry Lotin is an economist and principal of Integrative Trade and Economics and a retired Canadian diplomat, and Parisa Mahboubi is a Senior Policy Analyst at the C.D. Howe Institute.

Source: Immigration Surges Past One Million — Canada Needs a Real Count and Real Plans

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Immigration alone can’t keep Canada young

2018/03/21 Leave a comment

Reminder that the demographic argument for large increases in immigration to address an aging population will not by itself reverse the demographic trends:

Canada is getting older. Not just us Canadians as individuals, but our population as a whole.

Our fertility rate dropped below the replacement rate of 2.1 required for population stability way back in 1971. Life expectancy at birth has increased by more than nine years since then.

One consequence of low fertility and increased longevity is that the number of people past what we traditionally consider working age is rising relative to the people of working age. The ratio of Canadians age 65 and older to Canadians age 18-64 rose by more than 10 percentage points over the past 40 years, and will rise by more than 10 percentage points again over the next 40.

An aging population puts pressure on living standards, dampens growth of government revenue and presents fiscal challenges – notably to public pensions and health care. Since immigration has become a major contributor to population growth, and immigrants are, on average, younger than already-resident Canadians, immigration can look like an antidote to aging – a kind of national elixir of youth.

This hope does not survive an encounter with real numbers, as we show in a recent publication.

Running the federal government’s recent targets, and the recommendation for an increase to 450,000 immigrants annually from the government’s Advisory Council on Economic Growth, through a demographic model reveals that higher immigration, by itself, does little to alleviate the pressure of aging.

Raising immigration, whether to an unchanging level of 450,000 a year, or to a permanently higher rate of 1.2 per cent of the already-resident population, does not stop the ratio of retirees to workers rising further, and has negligible impacts on living standards.

An immigration policy designed to stabilize the ratio of retirees to workers would require massive inflows – 1.5 million annually over the next decade alone – that are outside the realm of economic or political reality.

By contrast, projections involving later retirement – an increase in the age at which we typically consider people too old to work – present a markedly brighter picture. A projection in which the average age of retirement rises from 65 to 70 over 20 years produces a stable ratio of retirees to workers over the next decade and a half, and a decline after that. More workers per retiree means faster growth in living standards.

Encouragingly, combining later retirement with a permanently higher rate of immigration produces a bonus.

Not only does that mix lower the ratio of retirees to workers and boost living standards throughout the projection, but it demonstrates some happy timing.

In the next decade or so, when the pressure of aging on living standards will be most intense, later retirement improves the outlook – and as that boost begins to fade, the slower-acting impact of higher immigration gives us a second wind.

The later-retirement example highlights a more general point. Canada needs policies to complement higher immigration targets.

Slower growth and higher taxes will make us less attractive to potential immigrants than faster growth and lower taxes.

If living standards are growing relatively quickly in countries that are potential sources of immigrants, and in countries that compete with us as destinations for immigrants, we will have a tougher time attracting the quantity and quality of people envisioned by advocates for higher immigration – a vicious circle.

If longer work life and other responses to aging makes us more prosperous, however, we will more easily attract immigrants and retain workers who can contribute to our prosperity – a virtuous circle.

Higher immigration may be good for many reasons, but it cannot keep Canada young. Other policies to ease the demographic transition, notably encouraging people to work longer, hold out at least as much promise for boosting living standards.

And those changes would complement higher immigration targets, by improving Canada’s attractiveness to people willing and able to contribute to the Canadian economy.

via Immigration alone can’t keep Canada young – The Globe and Mail

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