Mikal Skuterud | Multicultural Meanderings

Theo Argitis: Why economists – not politicians – are raising alarms around immigration

2023/04/20 Leave a comment

More questioning of increasing levels of immigration and their impact on housing and productivity, along with legitimate worry regarding ongoing support for high levels:

One of the most encouraging national polls in recent weeks was a survey done by Nanos Research for Bloomberg News that showed large flows of international migration into Canada continue to be widely supported by the public.

This is a relief. I’ve been worried, and not because I’m an immigrant.

Other than perhaps our endowment of natural resources, Canada probably has no competitive advantage greater than our willingness to open our doors to the world’s brightest and hardest working people. Our country is largely free of the hang-ups and complexities that hamper immigration policy in other large industrialized economies, an advantage that is doubly important today as our native-born population quickly ages.

But questions are being raised whether current migration numbers are coming in too large and too fast.Not from politicians in Ottawa. At a time when parties struggle to find anything to agree on, the broad multi-partisan parliamentary consensus around open immigration is holding.Canvass Conservative members of Parliament and you get little sign of distress over the Liberal government’s efforts to drive up immigration flows. As long as immigration remains focused on the nation’s economic needs and filling job shortages, the main opposition party appears to be supportive of Prime Minister Justin Trudeau’s plan to raise annual immigration targets to about half a million.

Economists though — a handful at least — are beginning to raise some flags as stresses grow in the housing market and data show the economic gains from accelerated population growth may be producing diminishing returns. (On my Twitter feed, the University of Waterloo’s Mikal Skuterud has been on the forefront of this issue).

The numbers are big and historic and well ahead of our peers.Canada’s population is estimated to have increased by just over one million last year — easily a record and up 2.7 per cent from 2021. (This number included a large increase in non-permanent residents such as foreign students and temporary foreign workers.)In the United States, with more than eight times the population, the increase is estimated at 1.5 million. The International Monetary Fund projects our population to grow by about nine per cent over the next six years, which is more than twice as fast as the U.S., which ranks second in the G7.

We all know this is producing strains in housing

Stéfane Marion, chief economist at National Bank of Canada, pointed out in an April 10 note that the ratio of housing starts to working-age population has fallen to the lowest on record. “Ottawa should consider revising its immigration targets to allow supply to catch up with demand,” he said.

But it’s not just housing. Economists are beginning to see warning signs in another gauge: rising population isn’t coming with a commensurate increase in economic output.According to data released by the International Monetary Fund last week, Canada’s population growth will help fuel the biggest increase in national income among G7 countries over the next six years, but our economy will also see the smallest increase in GDP per capita.

The IMF projects that our GDP per capita — income per person — will shrink over the next two years and grow by just 2.1 per cent over the next six years. That’s a third of the G7 average.

In other words, our economy will grow fast but our actual living standards will stagnate. It’s a very peculiar phenomenon and it will be hard to sustain.

This is not to suggest the growth in population is responsible for sluggish productivity numbers. Maybe it’s coincident and there’s no link whatsoever.

Weak productivity is deep rooted in Canada. Perhaps we’re paying the price for being too reliant on housing over the past decade. Or there’s something particular about the sharp increase in foreign students or temporary foreign workers that is skewing the numbers and will soon correct.

Or, maybe there is a link. The greater supply of workers — one could postulate — is making companies less willing to invest.

I don’t know. But someone should take a closer look and get a better understanding as we proceed on such a major endeavour.

An economy that produces strong gains in national income but leaves per capita incomes stagnant — it seems to me — would be a very fragile one with growing inequality. That income will accrue to someone, but it won’t be the average worker.

My worry is that these are exactly the sort of economic dynamics that could produce much worse polling results on immigration in the future.Theo Argitis is managing director at Compass Rose Group.

Source: Theo Argitis: Why economists – not politicians – are raising alarms around immigration

Filed under Immigration Tagged with ecoonomists, housing, impacts, levels, Mikal Skuterud, Theo Argitis

Skuterud: Using immigration to fill vacant, lower-skilled jobs is not sound economic policy

2023/04/12 Leave a comment

Mikal continues his crusade, rightly, against the flaws of the government’s approach in terms of productivity. Unfortunately, appears governments and business are not listening to these warnings:

Ask a Canadian why the government is increasing immigration and more often than not they will tell you: “to grow our economy.” Ask an economist and you’ll rarely get that answer.

Boosting the economic well-being of a population is indeed a worthwhile objective of immigration, but that requires more than simply making the economy bigger.

India’s economy is 60 per cent bigger than Canada’s and Switzerland’s is 60 per cent smaller. Is India’s economy what we are aiming for? Making the economic pie as big as possible is clearly not the objective. What matters is the size of the average slice when the pie is divided by the population.

The immigration policies that the current Liberal government adopted in 2015 reflected two decades of reforms focused on leveraging immigration to boost GDP per capita, the size of the average slice – a sound economic objective. But this government has shifted the objective to something new.

The government hinted at its objective in March when it rationalized Canada’s surging population – a one million increase last year – as an alleged economic necessity to fill vacant jobs, which if focused on lower skilled jobs is more likely to lower than raise GDP per capita.

Other times, however, the government has been less than transparent. The government’s opacity in what it is trying to achieve leaves us to guess.

Perhaps it is trying to maximize our population to raise our geopolitical influence on the world stage or to keep small towns in the Maritimes from disappearing.

But why then limit our annual immigration target to only 500,000? Why not announce to the world that if you get here, you will be granted permanent residency status on arrival?

That’s because economies have absorptive capacities. When our housing, social infrastructure and business-capital investments do not grow commensurately with our population, there are economic tradeoffs. Usually, the Canadians most adversely affected by these tradeoffs are existing immigrants competing for housing, jobs and social services in the same communities as the newcomers.

Perhaps the objective is humanitarian, that is it’s more about boosting the economic well-being of the newcomers themselves. If that is true, however, then we should target the world’s poorest.

The world’s 20 poorest countries accounted for 8.2 per cent of the world’s population in the 2015-21 period but only 4.8 per cent of Canada’s new immigrants. The share of immigration dedicated to humanitarian objectives in the government’s latest targets is 19.8 per cent in 2023, 18.5 per cent in 2024, and 16.2 per cent in 2025. Humanitarian ideals is clearly not what this government is focused on.

The reality is that the objective of this government’s immigration policies is not the size of the economy, population growth, humanitarianism or GDP per capita.

Leveraging immigration to boost GDP per capita requires attracting the world’s best and brightest to drive innovation, productivity growth and job creation in advanced sectors that are intensive in new technologies, research and development, and STEM skills. That does not seem to be this government’s priority.

The priority of this government appears to be filling existing job slots with workers regardless of the value added of those jobs. The goal is overwhelmingly to support businesses by alleviating the competitive labour market pressures they are facing to increase the wages and productivity of their work forces.

This is evident in the government’s recent decision to reverse regulations introduced by its predecessors in 2014 to curtail business reliance on low-skill temporary foreign workers.

It is also evident in the government’s recent decision to waive all limits on the off-campus work activity of foreign students, whose numbers are exploding and who are heavily engaged in low-wage work.

Most significant, the government is now proposing a reform of its system for selecting candidates for economic-class immigration, known as the “express entry system,” which will target immigrants to fill existing job slots rather than being focused on attracting the world’s top talent.

Debates about immigration policy are contentious precisely because people have different objectives in mind.

The Immigration Department is launching a new initiative that will solicit the views of Canadians on optimal immigration policy. It is hard to believe that this exercise will be any more productive than asking Canadians how they would change the income tax rates they pay.

If we are going to solicit the views of all Canadians, I propose a rule: In making public statements about how Canada should reform its immigration policies, we must all first declare what objective we think the government’s immigration policies should be aiming to achieve and how that objective is best measured.

Mikal Skuterud is a professor of economics at the University of Waterloo and the director of the Canadian Labour Economics Forum.

Source: Using immigration to fill vacant, lower-skilled jobs is not sound economic policy

Filed under Immigration Tagged with Mikal Skuterud, productivity

‘Too much, too quickly’: economists warn of Liberal ‘pro-business’ immigration policy

2023/03/18 Leave a comment

Great counterpoint to the simplistic and misguided arguments of the government and immigration arguments in favour of the current high levels, with Mikal Stuterud, Chris Worswick and David Green being cited extensively:

The Liberal government’s move to admit record numbers of immigrants to fill a purported “labour shortage” has prompted warnings from economists with years of experience studying immigration to Canada.

The government is selling the policy change as a way to boost economic growth and “help businesses find workers.”

But there’s no evidence, the economists said, that the plan to eventually accept a half million new residents per year will benefit the average Canadian resident—though it might help businesses looking for low-cost labour.

The higher immigration targets—along with a growth in the use of temporary foreign workers and working international students under the Liberal government—have the potential to push down wages for the lowest-paid workers in the country, many of whom are recent immigrants or refugees, they said.

“The short answer is that the evidence just does not line up with the talking points. It’s not even in the ballpark, it’s not even close,” said Mikal Skuterud, a labour economist at the University of Waterloo who serves as a director for the Canadian Labour Economics Forum.

The Hill Times spoke to three economists with decades of experience researching immigration and labour economics in Canada. All three said they did not believe that the government’s moves to raise its immigration targets and focus on filling “labour shortages” would increase GDP per capita, a proxy for average financial well-being in the population.

“I think what the government is considering is too much, too quickly,” said Christopher Worswick, a labour economist at Carleton University in Ottawa who has published extensively on immigration and immigrant earnings.

Immigration spike could increase income inequality

Canada’s economic immigration system is supposed to prioritize the most skilled applicants for entry. In theory, that should bring in immigrants with better workforce skills and earning potential than the average Canadian resident and is supposed to raise the workforce’s productivity and GDP per capita.

However, the reality is that immigrants to Canada earn less, on average, than workers born in Canada.

In 2016, immigrants who had been in Canada for a decade earned an average of $40,700, while the average for the entire population was $58,100, according to a 2022 study by Worswick, Skuterud, and University of Waterloo economist Matthew Doyle, who used data from Statistics Canada.

Economic immigrants in that sample actually earned a higher-than-average income of $62,500, but their spouses and dependents earned significantly less, pulling down the average.

Now, there are signs that the Liberal government may be compounding the problem by preparing to move away from the high-skill selection system to accommodate demands from employers for lower-skilled workers.

“I worry a lot about the language coming out of the federal government in terms of the skill level of immigrants,” said Worswick.

Those signs include the government’s upcoming changes to its Express Entry program; emphasis on resolving so-called “labour shortages;” increase to economic immigration targets; and a relaxed approach to growing numbers of temporary foreign workers and international student workers, the economists said.

Expanding the number of immigrants admitted will mean reaching deeper into the applicant pool, and picking candidates whose workforce skills are, on average, less valuable than those who would be admitted with a smaller target, said Worswick.

“You’re bringing in people who are going to contribute less in terms of GDP per capita at the margin. If they drop a long way below average, you’re probably worsening wage inequality from admitting them compared to not,” said Worswick.

David Green, a professor at the University of Vancouver’s School of Economics, is also critical of the government’s move to increase immigration. He made his case in an op-ed in The Globe and Mail in December and again in an interview with The Hill Times.

“This feels like, ‘We’re going to pump the numbers up for the sake of pumping the numbers up,’ but won’t create ways to integrate [the new arrivals],” said Green, who has researched labour economics, wage inequality, and immigration since the early 1990s.

“What tends to happen is that the people who suffer the most, in terms of the negative effects of immigration, are the previously-arrived, recently-arrived immigrants—the ones who are going to compete most directly with the new immigrants.”

A 2014 paper by Statistics Canada concluded that the wages of immigrants to Canada fell slightly when the number of immigrants admitted to the country increased.

‘Pro-business’ policy

Canada welcomed more than 400,000 immigrants last year. That was the largest number of newcomers in Canadian history. The government plans to continue increasing its target for admitting immigrants until at least 2025, when the target will be 500,000 people.

Immigration is often viewed through a humanitarian lens, but that’s not what’s driving the increases. Immigration Minister Sean Fraser (Central Nova, N.S.) has made clear that boosting Canada’s economy is the impetus for raising the immigration target.

“There were a million jobs available in the Canadian economy at a time when immigration already accounts for nearly all of our labour force growth,” Fraser told the Canadian Press back in November. “We cannot maximize our economic potential if we don’t embrace immigration.”

Fraser’s press release trumpeting the government’s latest immigration levels plan said that it “embraces immigration as a strategy to help businesses find workers and to attract the skills required in key sectors—including health care, skilled trades, manufacturing, and technology—to manage the social and economic challenges Canada will face in the decades ahead.”

It also referenced “critical labour market shortages causing uncertainty for Canadian businesses and workers” in its opening paragraph.

Prime Minister Justin Trudeau (Papineau, Que.) said in a March 14 press conference the government’s higher immigration targets and the growing population were a “huge selling point for us” for business investors looking to troubleshoot labour shortages.

The underlying premise seems to be that bringing in more workers in “key sectors,” and those with high job vacancy rates will change the economy in a way that benefits most Canadians financially.

The economists who spoke to The Hill Times poured cold water on that suggestion.

Bringing in more workers will expand the economy and population in absolute terms, but there is, according to Skuterud, “just no evidence that we could expect this to raise GDP per capita”—the measure of per-person prosperity.

Skuterud is an immigrant, having moved to Canada with his family when he was young. He said he worries that his objections to increasing Canada’s immigrant intake could be seized upon by those who oppose immigration on racial grounds.

Still, he and other economists who spoke with The Hill Times said they believed the government had shifted to pursuing economic immigration policies that won’t improve the productivity of Canada’s economy and might even do the opposite.

“The immigration policy I’m seeing is very pro-business,” said Skuterud.

Consultation underway, Express Entry changes coming

The government is now moving to rework its “Express Entry” program via legislative amendments passed in last year’s budget implementation bill.

Express Entry is supposed to be a “cream-skimming” program that invites especially skilled prospective immigrants to jump the application queue, lest other countries scoop them up. However, the government is preparing to create new, more flexible criteria for judging who gets to jump that queue. It has given the immigration minister more control over those criteria.

The new criteria will be implemented in the spring. The government says it will provide “flexibility to respond to evolving economic needs and government priorities, selecting those with the skills and talent needed to support long-term growth and prosperity.”

The criteria will change over time, partly in response to demands from provinces and territories and “stakeholders from across Canada.”

Skuterud said he is concerned these changes will mean prioritizing applicants who help employers fill job vacancies but wouldn’t necessarily have higher-than-average workforce skills.

The wage that a worker can command is one of the most useful ways of evaluating workforce skill, he said.

Skuterud also pointed out that the government has dropped work restrictions on the growing number of international students in Canada, adding competition for entry-level jobs.

Then there is the steady increase in temporary foreign workers under the Trudeau government. More than 400,000 were in the country in 2021 under two different programs: the Temporary Foreign Worker Program and the International Mobility Program, the latter of which does not require employers to complete a labour market impact assessment. There were a little under 300,000 such workers in Canada in 2014, and fewer than 200,000 in 2011, before the International Mobility Program was established.

The Liberal government moved last year to further loosen restrictions on temporary foreign workers coming into the country.

Fraser has now begun a public consultation on further changes to Canada’s immigration policy. It’s not clear exactly what the purpose is, given that he has set immigration targets for the next several years, and is working to change Express Entry. The press release announcing the consultation said Fraser wants an immigration system that is “strong, easy to navigate, and adaptive to change.”

Fraser’s office said he was not available for an interview for this story. Questions about the concerns raised by the economists who spoke to The Hill Times were forwarded to his department, Immigration, Refugees, and Citizenship Canad (IRCC).

The department responded with a list of media lines, not all of which were applicable to the questions that had been posed. The department’s response did note that the increases to the government’s annual immigration targets were meant to “address current labour shortages, and attract new skilled workers to build our economy.”

IRCC also said that increased immigration was necessary to help address Canada’s decreasing worker to retiree ratio, low fertility rate, and “labour shortages.”

“Economic immigration is a priority to help fill critical labour shortages throughout the country in key sectors and across all skill levels. It will help position Canada’s labour force for today’s challenges and those of the future,” read a portion of IRCC’s response.

Wages should trump ‘shortages’: economists

References to a “labour shortage” have been filling the inches of government press releases and media responses, as well as politicians’ speeches and newspaper pages.

The labour economists who spoke with The Hill Times, however, rejected the notion that a “labour shortage” is a problem for the average Canadian.

On the contrary, they said, a tight labour market benefits workers. It forces employers to compete for the best workers by raising wages and improving working conditions. They are also incentivized to innovate, by purchasing labour-saving technologies, reorganizing their use of labour, or training low-skilled employees to fill vacant higher-skilled jobs.

Bringing in a greater number of workers takes that pressure off, the economists said, helping businesses to maintain their bottom line without changing their production model or raising wages.

“There’s a lot of people in Canada who can do these jobs,” said Worswick. “We should just let the wages rise until either the new immigrants, or the Canadian citizens, or the longstanding permanent residents choose to do those jobs.”

“We should bring people in who are highly skilled and tend to pull up GDP per capita by their presence in the economy. And it’s not because their jobs are essential, it’s because their jobs are well remunerated, in terms of earnings,” he said.

“If we just do that, I think we would have a smaller immigration program than they’re planning to have.”

All three economists who spoke to The Hill Times said they supported immigration to Canada, but not the sharp planned increase in economic immigration, in combination with the shift in policy away from accumulating human capital and toward filling short-term labour shortages.

“I’m really not convinced that many companies will go bankrupt because of this,” said Worswick, of the notion that businesses be forced to confront job vacancies without a boost to immigration or temporary foreign workers.

“I think what’s more likely is that profit margins might shrink. You might see some restructuring, but you might also see a drop in wage inequality, because usually these are low-wage jobs that governments are being pressured to fill using temporary foreign workers or immigrants.”

Immigrants still earning less on average

But who says immigrants compete for low-paying jobs?

The answer, unfortunately, is decades of research on immigration outcomes in Canada.

“The hard reality is that Canadian immigrants, on average, experience significant shortfalls [compared to those born in Canada] in their earnings throughout their careers, and these shortfalls have tended to increase over time,” concluded Worswick, Skuterud, and Doyle in their 2022 paper.

The three authors also concluded that “Canadian evidence provides little evidence that Canada has in recent history been successful in leveraging immigration to boost GDP per capita.”

That paper also found that reforms to the government’s immigration selection process over the past two decades had shown some promise of reversing the earnings shortfall of immigrants to Canada—in particular, the introduction of the Express Entry program in 2015, and improvements to it made in the following years. Those reforms, however, could now be under threat by the upcoming changes to tailor Express Entry to short-term job vacancies.

‘We need more immigration’: McCallum

The government does have cheerleaders to its current approach, however. Those include former Liberal immigration minister John McCallum, who worked as an economist before getting into politics.

“I have always felt that we need more immigration. I’m in favour of letting more people in,” he said in an interview with The Hill Times.

McCallum argued that more immigration is needed to fill in labour shortages, and offset the aging of Canada’s population and its low birth rate. He also said that bringing in more immigrants—who will work and pay taxes—would help take the pressure off Canada’s flailing health-care systems.

McCallum also underlined the social benefit that immigration brings to Canada.

“I think we are better off, culturally, having the diverse population we have today as opposed to the all-white population we have when I was growing up,” he said.

“It enhances the feel of our country. I think, when I look around Toronto today, it’s a much more interesting and exciting place than when I was growing up and everybody was white,” he said.

Skuterud, who immigrated with his family from Norway as a boy, said he thought the benefits of multiculturalism warranted more space in the immigration debate.

That’s not how the government has been selling its shift in immigration policy to the public, however, and the government’s immigration policies are not being designed specifically to increase diversity in Canada. Rather, the government has focused on the purported economic benefits of the policy changes and higher targets.

An aging population

The government has another ally in its corner in the Century Initiative, an advocacy group backed by big business that is calling for Canada to nearly triple its population to 100 million by the year 2100.

On its website and in its reports, the Century Initiative argues that striving towards that target will “mean more skilled workers, innovation, and dynamism” in the economy.” It also argues that a ramp-up in immigration is necessary to offset the aging of Canada’s population caused by the country’s low birth rate—that it would “reduce the burden on government revenues to fund health care, Old Age Security, and other services.”

“We are becoming a nation of old people,” Century Initiative CEO Lisa Lalande said in an interview with The Hill Times.

She argued that economists who are critical of the higher immigration targets are taking a “very narrow perspective,” and should be looking at measures of economic prosperity besides per capita income.

She said that the contributions second-generation Canadians make to the economy should also be factored into analysis of boosting immigration.

She also said that Canada’s governments can boost the per capita economic contribution that immigrants themselves provide by reducing barriers to their success—for example, loosening restrictions on the recognition of professional credentials acquired abroad.

“If we address the income gap for newcomers, then that could actually boost GDP per capita” she said.

Green, however, noted that credential recognition problems are nothing new.

“We’ve been trying to figure that one out for a long time. We’ve never yet figured it out. And to just sort of open the gates by an extra hundred thousand per year, and just say, ‘These people are going to do all of these wonderful things because they’re skilled,’—Well you know that [for] a bunch of them, it’s not true, and you don’t have a plan for how to make it better. To me it’s irresponsible.”

The economists who spoke to The Hill Times also pushed back against the notion that increasing immigration was a way to prop up the health-care system or other social services as Canada’s population ages.

For one thing, working-age immigrants often bring retired parents or grandparents to Canada with them.

For another, immigrants brought in today to support social services for retirees will themselves one day retire, necessitating an even bigger cohort of working-age immigrants to be brought in to support them.

“I just don’t see how you’re going to get a lot of benefit on the demographic front,” said Worswick.

Source: ‘Too much, too quickly’: economists warn of Liberal ‘pro-business’ immigration policy

Filed under Immigration Tagged with Century Initiative, Chris Worswick, David Green, John McCullum, Mikal Skuterud

Skuterud: Canada’s worker ‘shortage’ is an illusion, and bringing in cheap labour doesn’t help

2023/02/27 Leave a comment

Needed commentary:

If your inclination in hearing about Canada’s labour shortage crisis is to ask, “Where did all the workers go?” you have the wrong economic model in mind.

Despite our aging population, the percentage of Canadian adults participating in the labour force was 65.7 per cent last month, identical to what it was in October, 2018, and July, 2016, after accounting for usual seasonal variations.

In terms of absolute numbers, Canada’s labour force now stands at 20.8 million workers, the largest it has ever been.

Rather than not enough workers, the issue is that the prices of the goods and services that workers produce have increased faster than their wages, motivating businesses to hire more workers and sell more.

Canada’s current tight labour markets overwhelmingly reflect increases in the demand for workers, not a decline in their numbers. And the solution is not to satiate that demand with cheap labour, which undermines labour productivity and average economic living standards in the population.

Why do so many people interpret current labour shortages as “not enough workers”? It is because in their minds the jobs that need to be done in our economy are fixed and the job of policy makers is to make sure there are enough workers to fill all the slots, so the economy does not fall apart.

But employers’ demands for workers are constantly fluctuating and evolving in response to factors within the economy, including relative prices, interest rates, technological advances and consumers’ preferences and incomes.

In 1921, one-third of Canada’s workers were employed in agriculture. After more than 100 years of innovation in farming equipment, less than 2 per cent are.

Very few jobs, if any, are truly essential.

Once we recognize that the jobs employers seek to fill in the economy are fluid, it all becomes clear.

Throughout this pandemic era, I have been tracking Canadian labour-market tightness, measured as the number of job vacancies per available job seeker. After hovering between 0.2 and 0.6 in the 2015-20 period, the ratio surged in January, 2021, and peaked at 1.1 job vacancies for every job seeker in June, 2022.

It is not a coincidence that this increase in labour-market tightness lines up precisely with movements in the relative prices of the goods and services that businesses sell and the wages that workers are paid.

Canada’s headline inflation rate – Statistics Canada’s measure of the annual change in consumer prices – stood at 1 per cent in January, 2021, but increased rapidly, peaking at 7.9 per cent in June, 2022.

After accounting for changes in the mix of jobs, I estimate that workers’ wages were growing at an annual rate of 1.7 per cent in January, 2021, which sluggishly increased to 3.7 per cent by June, 2022, far behind the pace of increases in consumer prices.

In other words, workers’ wages have not kept pace with the prices of the goods and services they produce and consume.

Workers aren’t disappearing; what’s happened is employers’ profit incentives to hire more workers have increased dramatically.

And as the gap between the growth in consumer prices and workers’ wages diminished after June, 2022, so did the hiring appetite of Canadian businesses. With one exception, the number of job vacancies declined in every month between May and November, 2022, resulting in a 21-per-cent reduction in total job vacancies in six months.

In November, 2022, the most recent data we have, there were 0.8 job vacancies for every job seeker, down from the June peak of 1.1.

No doubt, Canadian labour-market tightness remains elevated, making life difficult for some businesses. Competing for scarce workers with other businesses and retaining the ones you have requires improving wages and working conditions, which eats into profit margins. And where competition is especially fierce, it can pose existential risks.

But business failures are a healthy feature of a well-functioning economy. Starting a new business is necessarily risky. It ensures scarce capital is invested where its expected returns are highest and that the businesses that survive are the ones that utilize their workers most efficiently by, for example, investing in new technologies to maximize employee productivity.

These competitive pressures are not a good thing for businesses struggling to turn a profit, and those businesses will plead for government support.

But not coddling the business lobby by, for example, expanding wage-subsidy programs or easing access to low-skilled temporary foreign workers, including foreign students, is good for worker productivity, workers’ wages and average economic living standards.

Mikal Skuterud is a professor of economics at the University of Waterloo and the director of the Canadian Labour Economics Forum.

Source: Canada’s worker ‘shortage’ is an illusion, and bringing in cheap labour doesn’t help

Filed under Immigration Tagged with labour shortage, Mikal Skuterud

Mahboubi, Skuterud – The Unintended Consequences of Category-Based Immigrant Selection

2023/02/10 Leave a comment

Valid critique:

From: Parisa Mahboubi and Mikal Skuterud

To: Sean Fraser, Minister of Immigration, Refugees and Citizenship Canada

Date: February 6, 2023

Re: The Unintended Consequences of Category-Based Immigrant Selection

Immigration, Refugees, and Citizenship Canada (IRCC) recently held consultations on plans aimed at giving the department more flexibility in how it prioritizes economic-class applicants for permanent residency.

The new rules will, in effect, free the immigration minister to bypass the existing system for selecting candidates, known as the Comprehensive Ranking System (CRS), to target applicants with particular “attributes” such as work experience in a particular occupation.

This may alleviate some labour shortages, but we see significant unintended consequences.

Leveraging immigration to boost average living standards in the population requires selecting immigrants whose Canadian earnings exceed average earnings in the pre-existing population, thereby pulling up average incomes and per capita GDP.

The CRS aims to achieve this by ranking and cream-skimming economic class candidates who have the highest expected Canadian earnings. This is estimated using data on the earnings of previous cohorts of immigrants who arrived with similar human capital characteristics. Of particular importance in the CRS calculation are education, age, language abilities, and Canadian work experience.

Recent analysis using Statistics Canada survey and census data, as well as our own examination of immigrants’ income tax records (see Figure below,) provides encouraging evidence that the CRS has contributed to rising earnings for newcomers since its launch in January 2015.

By prioritizing applicants’ occupations, IRCC hopes it can be more responsive to employer needs, as well as address Canada’s chronic labour shortages.

But accurately identifying labour market requirements and being sufficiently responsive is difficult, if not impossible. Tight labour markets can quickly become slack. By the time targeted immigrants arrive, their skills may no longer align with employer needs, thereby exacerbating long-standing mismatch issues between immigrant skills and job openings. For this reason, the CRS does not use specific occupational information in its calculation.

The raison d’être of the Temporary Foreign Worker Program, which allows Canadian businesses to employ guest workers on limited-term contracts, is to meet temporary labour-market shortages. The objective of our permanent immigration system, on the other hand, should be to drive new employment growth in high-productivity sectors that are intensive in their use of skills and new technologies.

Unfortunately, we increasingly have a system where our temporary and permanent immigration systems are focused on the same objective – satisfying employers’ current labour needs. The risk is that the overall immigration system fails to do anything well.

An important advantage of the CRS is its transparency. Candidates can determine their own scores using a simple online tool and IRCC reports cutoff scores in their bi-weekly draws allowing unsuccessful candidates to identify what’s needed to be selected. The category-based selection system that IRCC is proposing compromises this transparency by leaving screening criteria to the whims of the minister of the day. This risks increasing applicant confusion and frustration and increases the need for immigration consultants and lawyers to help applicants navigate the system. At worst, it drives applicants with the best outside options to other countries.

Allowing the ministers to determine which candidate attributes are prioritized also risks politicizing the process. Research shows that while temporary worker inflows in Canada are responsive to the intensity of corporate lobbying, the same has not been true for permanent immigration. One explanation is that ‘point systems’ like the CRS remove immigrant selection decision making from the political realm in the same way that the Bank of Canada’s inflation mandate keeps its interest rate decisions from being politicized. Look for that to change.

In our view, prioritizing candidates’ occupational work experience in immigrant selection makes most sense in sectors where the competitive market mechanism to address labour shortages does not exist, such where wages are set by collective agreements or government regulation.

In these settings, labour shortages are less likely to induce the wage adjustments necessary to encourage job switching and training and education investments within the existing population. Chronic shortages of nurses and other healthcare workers are an important example.

Nonetheless, we question if it makes sense to prioritize applicants for permanent residency whose foreign work experience is in an occupation where credential recognition in Canada is problematic. It doesn’t really matter if credential recognition problems reflect genuine skill and competence issues, or the self-interested behaviour of professional associations. Either way, we are prioritizing applicants who will contribute relatively little to Canadian economic growth, thereby compromising the key objective of our economic immigration system.

In our view, IRCC’s planned reform of how it selects economic-class immigrants is just one step in a series of pandemic-era policies compromising the prioritization of skilled immigrants. The CRS has come to be seen by IRCC as a constraint rather than an effective quality-control mechanism. In prioritizing employers’ short-term labour needs, IRCC is being forced to lower the average CRS score of selected immigrants and, in turn, average expected earnings. The hard reality is that Canada’s newcomers continue to experience labour market challenges that are longstanding and exceptional. The risk is that the last decade’s significant gains will be undone.

Parisa Mahboubi is a senior policy analyst at the C.D. Howe Institute and Mikal Skuterud is professor of economics at the University of Waterloo.

Source: Mahboubi, Skuterud – The Unintended Consequences of Category-Based Immigrant Selection

Filed under Immigration Tagged with CRS, Mikal Skuterud, occupations, Parisa Mahboubi, productivity

Canada wants to welcome 500,000 more immigrants in 2025. Can our country keep up?

2022/11/28 Leave a comment

The Globe’s Matt Lundy is doing some of the best reporting and analysis of immigration these days, with this article raising one of the elephants in the room, housing availability and affordabilty, healthcare, infrastructure:

Every year, Canada adds a big city – in a sense. The mass of individuals are spread around, mostly to urban centres, but increasingly to suburbs and far-flung communities. They are here to work, to study, to build a better life.

The expansion is historic. From July to September, Canada’s population grew by around 285,000, a 0.7-per-cent gain that was the largest since Newfoundland joined Confederation in 1949. More than 700,000 people have been added over the past year, roughly the same as the population of Mississauga, the seventh-largest municipality in the country.

The trend picked up when the federal Liberal Party came to power. Since 2016, the country has grown at nearly double the rate of its Group of Seven peers. For the most part, that growth is driven by immigration.

The push is deliberate. Policy makers say higher immigration is necessary to fuel Canada’s economic growth, and in particular, to ease labour shortages that have frustrated the corporate sector.

It is, however, a population boom with its share of growing pains

Consider that over the past year, fewer than 200,000 housing units were completed. There were 3.6 new residents for every home added, the highest ratio since at least 1991. Affordability is deteriorating in most places. There is a fundamental mismatch between home supply and demand – and the population boom is contributing to the divide.

At the same time, Canadian governments are struggling to deliver basic services. Surgeries are getting cancelled in crammed hospitals. Canadians can’t find family doctors, let alone newcomers trying to navigate an ailing health care system. Cash-strapped cities can’t refurbish their infrastructure as fast as it’s falling into disrepair.

To cope with the affordability crisis, a growing number of people are fleeing our cities. They include teachers, nurses and construction workers – the very people who keep those cities running.

In this fraught environment, Ottawa has its foot on the accelerator. After admitting about 405,000 permanent residents last year, the federal government is aiming for 500,000 in 2025. And that’s just a portion of the migration wave: At last count, there were 1.4 million residents with temporary work or study permits.

Canada is facing a complicated adjustment. Notably, developers are scrapping or delaying housing projects, owing to rising interest rates and waning profitability. Just when more homes are needed, fewer are being built.

Several economists question why the federal government would create more demand for services, when so many pillars of social infrastructure are in distress. They wonder if Ottawa is singularly focused on hitting its immigration targets, with insufficient planning for how to successfully absorb those newcomers.

For its part, the federal government says the solution to so many of these problems is simple: more immigration. They’re planning to bring in more doctors and nurses from abroad, along with people to build homes.

Many recent immigrants have waited years for admission. Now they’re arriving at a time of decades-high inflation and slowing economic growth. Highly-skilled newcomers will likely manage the transition just fine. But others are discovering the Canadian dream is a pricey proposition – and perhaps not what they bargained for.

Ash Gopalani knew Toronto would be expensive. Just not this expensive.

He and his wife, Sneha, arrived in September, after a stressful three-year process to get their permanent resident cards. Finding an apartment was the next hurdle. Too often, the listings were in cramped basements, with little natural light, or far removed from the city’s core or public transit.

Mr. Gopalani eventually signed a lease for a one-bedroom unit in the city’s west end for $1,800 a month, the top end of his expected range. What he didn’t anticipate was paying six months of rent – $10,800 – up front, because the couple from Mumbai has no credit history here. Now, they have less of a financial buffer as they search for jobs.

Mr. Gopalani was hoping to follow a familiar playbook for newcomers. Establish a career. Save up money. Then buy a house – preferably big enough that their family from India could stay a while.

But the experience of moving here has been a reality check.

“We don’t know if we can afford building a life in Canada,” he said.

The rental market is ground zero for where immigrants get a taste of the cost-of-living crisis, in which fierce competition and bidding wars for relatively few units have led to jacked-up prices.

For Alexiane Sauvaire, it was a rude awakening. She thought finding an apartment in Toronto would be easier than in her native Paris. After eight frustrating days of looking, following her arrival, she moved to Montreal.

“Maybe for rich people, it’s easy. But when you’re not rich, it’s impossible to live right now in Toronto,” she said.

Increasingly, recent immigrants are bypassing the largest metro areas – Toronto, Vancouver and Montreal – to settle elsewhere, although a slim majority still favour those regions, according to the latest census results. However, costs are rising quickly in other cities, too, as they experience fervent demand from migrating people.

Over the past year, the average rent in Calgary has jumped 18 per cent to around $1,720 a month, according to data for new listings on Rentals.ca. London, Ont., is up 26 per cent. Halifax: 21 per cent.

From a labour standpoint, the affordability crisis is making it difficult to recruit – and retain – important workers.

“There are very significant economic risks to large cities if they do not get housing costs under control,” Aled ab Iorwerth, deputy chief economist at the Canada Mortgage and Housing Corp., said on a conference call this summer. “It’s getting increasingly difficult to attract skilled workers and even highly-skilled workers to these cities because they’re just becoming simply unaffordable.”

The task ahead is nothing short of gargantuan. CMHC says that, in order to restore affordability back to levels in 2003 and 2004, Canada would need to build 3.5 million morehomes than projected by 2030.

Earlier this year, the federal government unveiled billions in new spending for housing, with a goal of doubling construction over the next decade. That plan looks dead on arrival amid higher borrowing rates.

There is, of course, another problem: labour. In a recent report, CMHC said there were not enough skilled workers to build the homes so desperately needed.

“Even under more ideal conditions, I don’t think we have the capacity to build at a pace that matches the demand through population growth that we’re seeing,” said Shaun Hildebrand, president at real estate firm Urbanation.

Immigration lawyers have a blunt message: The application system is a mess.

And it’s a mess that was largely created in Ottawa.

Immigration, Refugees and Citizenship Canada (the federal immigration department) had around 2.2 million applications in its inventories as of Oct. 31. About 1.2 million of them were in backlog, meaning they’ve been in the system for longer than service standards for processing. That’s far higher than before the COVID-19 pandemic.

“The system is falling apart. I’ve never seen it like this, in the 20 years that I’ve been practising,” said Kerry Molitor, an immigration consultant in Toronto.

After failing to hit immigration targets in 2020, owing to pandemic challenges, the federal government wanted a rebound. Through various decisions, it invited thousands of people already in Canada to apply for permanent residency. The surge in applications overwhelmed a civil service that struggled to process files efficiently amid office closings and the shift to remote work.

In some cases, applicants are waiting years for a decision. Mr. Gopalani and his wife applied for permanent residency in the fall of 2019. They expected an approval within months, a typical outcome in their stream of immigration. They weren’t approved until July, 2022.

“The immigration system could have been more sensitive, empathetic, towards the kind of transition that people go through, which didn’t happen,” he said.

Because of the backlog, applicants such as Mr. Gopalani have put their lives on hold for years. Others are working in Canada, but their permits are nearing expiry, putting their future plans in doubt. These are individuals who, in Canada’s points-based system for economic immigrants, would often be shoo-ins for approval, but now are caught up in a bureaucratic nightmare.

There are “really good, quality people in the pool, and they’re not getting invitations,” said Mikal Skuterud, an economics professor at the University of Waterloo. “What happens now when these folks leave? They say, ‘The hell with this, I’m going back to my country or the U.S. or wherever.’ Now you’re losing all that talent. That’s completely not what this process is supposed to be.”

Despite the administrative headaches, Canada is on pace to welcome 431,000 permanent residents this year, right on target. The trouble is that talented people are slipping through the cracks – and the immigration system is taking a beating in public opinion.

“There’s this massive psychological toll that the backlogs, the delays and the lack of transparency have on people,” said Lev Abramovich, an immigration lawyer in Toronto. “I don’t think IRCC bureaucrats and politicians understand how much suffering this has caused.”

For all of Ottawa’s talk of targeting the best and brightest, the federal government is also allowing more cheap foreign labour into the country. Earlier this year, it overhauled the Temporary Foreign Worker (TFW) program, largely so employers could access more low-wage labour.

Colleges and universities, meanwhile, are ramping up their intake of foreign students, who mostly don’t need work permits. Increasingly, those students are taking jobs to rack up points for their permanent residency applications.

Around 1.4 million people had temporary work or study permits at the end of 2021, an increase of 85 per cent since 2015. That’s 640,000 people – about equal to the city of Vancouver – who have been added in just six years. Their ranks are set to accelerate this year, after policy changes.

While Ottawa has targets for admissions of permanent residents, there are no such guidelines for other migrants. With students, the federal government has essentially ceded that responsibility to postsecondary institutions, which are inclined to boost their revenues through higher intake of foreign students, who pay lofty tuition fees.

“The number of foreign nationals who receive study permits in any given year is based on demand, not predetermined targets,” Rémi Larivière, a spokesperson for IRCC, said in a statement.

An extreme example: Cape Breton University. Nearly 4,000 of its full-time students this fall had study visas, up a whopping 68 per cent from last year, according to preliminary survey data from the Association of Atlantic Universities. About three-quarters of CBU’s full-time students are from abroad. That’s injecting a surge of new demand for services in sleepy Sydney, N.S. (population: 31,000).

Gurmeet Singh, a second-year student, is trying to help people with their transition. He’s part of a volunteer group that verifies rental listings for incoming students. On average, the group gets three requests daily to check out potential residences. Mr. Singh visits those listings to see if they’re suitable for living – and if they exist.

Fraudulent listings are fairly common, Mr. Singh said; the group finds a scam every couple of days. “We felt it was our moral duty to help our fellow international students,” he said.

That’s not the only source of frustration. In local media this week, CBU students complained that a majority of classes in the two-year postbaccalaureate business program – a popular choice among foreign students – were being held in an unexpected venue: a Cineplex Inc. movie theatre off campus

Higher immigration is a guiding principle for this iteration of the federal Liberal Party.

Time and again, the party frames immigration as the antidote to an aging population, helping to grow the pool of labour market participants – and thus, too, the economy.

“Immigration is not just good for our economy, it’s essential. We can’t get by without it,” Immigration Minister Sean Fraser told reporters at a recent news conference.

The truth is more complicated. A vast body of economic literature shows that immigration has little effect on gross domestic product per capita, a popular measure of living standards. Furthermore, while new immigrants are younger than existing residents, the intake is too meagre to offset a demographic wave of aging citizens.

This doesn’t mean immigration is bad for the economy. But it’s not an accelerant, either.

“Often, the argument is made as if it’s obvious that immigration generates economic growth,” said David Green, an economics professor at the University of British Columbia. “Not if you look at the numbers.”

Of late, Ottawa has said various policy changes – including the expansion of the TFW program and allowing foreign postsecondary students to work longer hours – are aimed at easing labour shortages. This has led several economists to accuse the federal government of kowtowing to corporate pressure, flooding the job market with low-wage foreign labour, rather than forcing companies to hike wages or make investments.

“There’s lots of evidence that holding employers’ feet to the fire in times of tight labour markets is the best way to spur innovation, automation and productivity. Those are the things you want in an economy,” said Jim Stanford, director of the Centre for Future Work, a think tank.

“And if you say to employers, ‘Don’t worry, we’ll let you bring in some low-priced temporary migrants to solve your problem,’ you’re just dissipating the pressure that’s required to achieve a more productive economy.”

Prof. Green questioned the need to admit half a million permanent residents in 2025, given the fragile state of Canada’s social infrastructure and the questionable economic rationale for that target.

“I don’t see the planning here,” he said. “Do you really want to ramp up to 500,000 a year, at a time when we seem to be heading into recession and our housing markets and our health care system are straining at the seams? That’s a discussion that should be had.”

By and large, surveys suggest Canadians welcome immigrants. A recent poll, conducted by the Environics Institute for Survey Research, found nearly seven in 10 respondents support current levels of immigration, about double the share in late 1970s. The vast majority of respondents – 85 per cent – agreed that immigration is positive for the economy, a view that has held strong for decades.

But Prof. Green suggests we shouldn’t take that for granted. If the country struggles to integrate newcomers, then perhaps Canadians will start to eye them suspiciously. “It’s politically dangerous, to my mind,” he said.

For now, that’s a worry. But it’s not the experience of Tanushree Holker and Nishant Kalia, who moved to Toronto from New Delhi in the summer of 2019. Their expectation of Canada as a welcoming country has checked out.

“That perception about Canada being a country which accepts immigrants with open arms, it is true when you come here,” Ms. Holker said.

The couple has shared their journey in Canada on YouTube; their channel, In The North, has nearly 100,000 subscribers, to whom they dispense their acquired wisdom on everything from buying a car to navigating a complex immigration system. Mr. Kalia started the channel after getting laid off early in the pandemic. He’s since built a career in human resources, while his wife works for a Big Six bank.

In recent videos, they’ve documented a major life change: They moved to Calgary. By doing so, they’re saving $350 a month on a similar-sized rental unit, and they expect to buy a home within six to nine months. Despite any number of financial complications, their version of the Canadian dream is going to plan.

“After we made our trip to Alberta, we realized that there is actually a life in Canada beyond Toronto and Vancouver,” Mr. Kalia said in a video. “To our surprise, [Calgary] was much better than we expected.”

Source: Canada wants to welcome 500,000 more immigrants in 2025. Can our country keep up?

Filed under Immigration Tagged with CMHC, David Green, globe and mail, housing, Jim Stanford, Kerry Molitor, Lev Abramovich, levels, Matt Lundy, Mikal Skuterud

Canada’s permanent resident application backlog is forcing thousands of skilled workers to quit and return home

2022/10/13 Leave a comment

Major policy and program fail, unfortunately yet another one, as a result of the government’s fixation on artificial immigration targets and attracting applications rather than addressing the existing “inventory” of potential immigrants from the Canada Experience Class, creating backlogs and hardship:

Thousands of highly skilled immigrants who in previous years would easily have qualified for permanent residence in Canada are being forced to return to their home countries as their work permits expire – the result of a backlog created by federal policy decisions intended to boost immigration during the pandemic.

Many of them are former international students who landed jobs in Canada mid-pandemic, during a critical labour shortage. Now they find themselves in limbo, waiting for opportunities to apply for permanent resident status – opportunities that may never arrive.

“I have spent weeks trying to figure out what to do, but I don’t think there’s anything left that I can really do but leave Canada and find a job elsewhere,” said Gaurav Purohit, a Toronto-based finance professional who has worked at a prominent global financial services company for the past 15 months.

Mr. Purohit came to Canada from India in 2017 and completed a master’s program in Indigenous Studies at Trent University the following year. His work permit expires this month.

His immigration problems, and those of other people who now find themselves in similar situations, stem from the earliest days of the pandemic, when COVID-19 caused a steep drop in the number of immigrants being granted permanent residence in Canada. Sensing trouble for the country’s immigrant-dependent work force, the federal government introduced measures to reverse the trend.

Those measures succeeded in attracting a great many applications for permanent residence, but there was an undesired side effect: Canada’s immigration bureaucracy soon buckled under the pressure to process the avalanche of paperwork. Immigration, Refugees and Citizenship Canada (IRCC), the federal immigration ministry, responded to the backlog by imposing a moratorium on new applications from people who had already lived and worked in Canada. The pause lasted for almost a year.

Now, Mr. Purohit and other immigrants with Canadian work experience, many of whom would likely have sailed through the federal vetting process before the pandemic, are still waiting for the government to invite them to apply for permanent residence. If their work permits expire before that happens, many of them will be unable to remain in the country.

“Our immigration system is already a particularly complicated one, but the pandemic and the decisions made by the federal government during the pandemic created an even bigger mess,” said Meika Lalonde, a partner at McCrea Immigration Law in Vancouver. “We are now in a situation where tens of thousands of individuals who are integrated into the labour market – the perfect individuals to stay here forever – have to leave.”

Canada’s economy relies heavily on immigrants. Every year, the government sets a target for the number of them it hopes to turn into permanent residents, who can live and work in the country indefinitely and eventually apply for citizenship.

The target in 2020 was 341,000 – but, because of the pandemic, only 185,000 new permanent residence visas were granted.

This was the exact opposite of what the government was trying to achieve. In late 2020, it announced that it was increasing its targets for the next three years, in the hopes of admitting over 1.2 million new permanent residents by the end of 2023.

And so the government decided to take steps to boost the number of permanent residence applications it was receiving. One of the first things it did to accomplish this was make a dramatic adjustment to Express Entry.

Skilled immigrants who want to live permanently in Canada usually start by submitting their personal information to Express Entry, which is a federal program that puts them all in a pool of candidates who are competing against one another for permanent residence.

Each person in the Express Entry pool gets a score from the government’s Comprehensive Ranking System (CRS), which awards them points for having positive attributes like Canadian work experience, advanced academic degrees or fluency in English or French. Everyone in the pool is waiting for the government to invite them to apply for permanent residence. Normally, only those with the highest CRS scores get invites.

Immigrants like Mr. Purohit, who have already worked in Canada for at least one year, typically apply for permanent residence through the Express Entry program’s Canadian Experience Class (CEC) stream, whose candidates form a smaller pool within the Express Entry pool.

The government usually issues 3,500 to 4,000 CEC application invitations every two weeks, which gives the pool time to replenish its supply of high-scoring candidates. But in February, 2021, during the push for more applications, IRCC handed out invitations to all 27,332 people remaining in the CEC pool at the time. To send out all those invites, it lowered the minimum CRS score to 75, from its usual average of 450.

Another way the government boosted 2021 immigration levels was by creating a new program: the “temporary resident to permanent resident pathway,” or TR to PR. The special program was designed as a quick path to permanent residence for foreign nationals who were already in Canada and working in essential sectors like health care.

The resulting increase in the number of permanent residence applications created a processing backlog at IRCC.

“It’s easy to make an announcement that you’re going to boost immigration levels. But they created a massive problem for the people who worked in the department, who had to now process tens of thousands more applications,” said Mikal Skuterud, a professor of labour economics at the University of Waterloo who has spent decades researching Canada’s immigration system.

In September, 2021, to stop that backlog from growing, IRCC abruptly paused permanent residence invitations for work permit holders in the CEC pool. The invitations didn’t resume until July, 2022.

“If you happened to be in the CEC pool when the CRS score was lowered to 75, you plainly got lucky. If you were in the CEC pool during the pause and your CRS score was high, above the old average of 450, it didn’t matter. You had to sit and wait, even if your work permit was on the brink of expiring,” Ms. Lalonde explained.

IRCC acknowledged these backlogs in a March, 2022, internal memo, which said “existing federal high skilled inventory would have to be reduced by more than half” before any new invitations were sent out. Caught up in this delay were immigrants like Mr. Purohit.

Canada did succeed at hitting its immigration target for 2021. That December, the government announced it had admitted more than 401,000 new permanent residents, the highest annual number on record.

“There was a cost to reaching those 2021 immigration targets. You now have huge numbers of talented, high-skilled workers, who would have previously qualified easily, sitting in this pool, just waiting,” Prof. Skuterud said.

In a statement to The Globe, IRCC said it paused invitations to “manage growing inventories.” It added that Express Entry is an application management system, meaning reducing or pausing invitations is “precisely part of what the system was designed to do.”

IRCC also said new applications will now be processed within the usual six-month time frame.

In response to a question about why the minimum CRS score was lowered to 75, IRCC said the average score of candidates invited in that round was 415.

“All candidates in the Express Entry pool, even those with the lowest CRS scores, qualify for at least one economic immigration program and therefore have the necessary skills to succeed and contribute to the economy,” the ministry said.

The government has offered some supports to immigrants who now find themselves with expiring work permits and no way to apply for permanent residence.

In January, 2021, IRCC introduced a special temporary program that gave people with postgraduation work permits 18-month extensions on their permits’ expiry dates. The permits, which are given to people who studied in Canada, typically expire after eight months to three years.

The rationale for the extensions was pandemic-related: because much of the country was in lockdown, many former international students struggled to find work in Canada. Without Canadian work experience, it’s much harder for a person to gain permanent residence.

The government estimated that roughly 52,000 former international students would benefit from the extensions. Mr. Purohit was one of them. “I was really happy to get the 18-month extension in April, 2021,” he said.

He worked as a part-time instructor at Trent University before landing his current job in July, 2021.

By October, 2021, Mr. Purohit had worked full-time in Canada for a year, his CRS score was high, and he was confident he would get an invitation to apply for permanent residence before the extension on his work permit expired.

But by the time the government resumed draws from the CEC pool in July, 2022, there were so many applicants in the pool that the average CRS score required to receive an invite had risen above 500.

“Now I’m in a situation where I’m not going to get an invitation for PR because my score is too low,” Mr. Purohit said. “And it is ironic, because when the government granted us the 18-month extension, they said it was to ensure we would all get permanent residency.”

Ramkumar Narayanaraja, a Vancouver-based graphic designer who came to Canada from India, is in a similar situation.

His 18-month extension expired in September. He is now waiting for his employer to agree to apply for a labour market impact assessment, which would allow the company to get government approval to hire a certain number of temporary foreign workers. Meanwhile, Mr. Narayanaraja’s wife is about to give birth, and the couple has been racking up hospital bills because their immigration status prevents them from getting public health benefits.

“It just seems unfair that I paid my taxes, contributed to the system, and I’m faced with so much uncertainty,” Mr. Narayanaraja said. His CRS score is high, but not high enough to clear the new, elevated bar for a permanent residence invite.

If he’s able to remain in Canada as a temporary worker, and if the minimum CRS score eventually declines, he might one day be able to apply. But it’s more likely that he and his wife will have to leave the country.

In August, the government announced another 18-month extension for post-graduation work permit holders, but only for those whose initial permits had expiry dates between September, 2021, and December, 2022. Neither Mr. Purohit nor Mr. Narayanaraja are in that category.

In response to questions about whether they and others will be granted further extensions, IRCC said it “cannot speculate on future policy or program decisions.” But the ministry noted that in some cases people who were issued extensions under the 2021 policy will also be eligible for the extension announced this year.

It is unclear exactly how many skilled immigrants are currently living in limbo, unsure when or if they will obtain permanent residence, but Prof. Skuterud and Ms. Lalonde estimate that there are tens of thousands. The number of people in the Express Entry pool currently waiting for permanent residence invitations has ballooned to nearly 240,000 since early 2021.

Prof. Skuterud argued that the government lost sight, during the pandemic, of the real objective of economic immigration.

“Look, the Express Entry program and the CRS score was created in 2015 in order to get the best immigrants into this country,” he said. “And for years, it worked well. There’s been a clear improvement in the average earnings of new immigrants since 2015.”

“But the government got really fixated on making up for the 2020 shortfall, so they lowered the CRS score for the CEC pool, and created the TR to PR pathway. The result is we gained a lot of low-skilled immigrants, and we are currently losing high-skilled immigrants because of an avoidable backlog.”

Ms. Lalonde said the obvious solution is to hand out targeted work permit extensions to people like Mr. Purohit and Mr. Narayanaraja, who have high CRS scores and would easily have qualified for permanent residence had the pandemic not happened. And she said the government should be more transparent about how it intends to address the current backlog.

In September, the government announced steps to shorten application processing times. Those included hiring 1,250 new employees at IRCC and exempting permanent and temporary residence applicants who are already in Canada from medical exams.

But that won’t help people whose work permits are on the verge of expiring.

“There is so much uncertainty. And it’s unfortunate, because these people did so much to get to this point,” Ms. Lalonde said. “We really shouldn’t have to lose them.”

Source: Canada’s permanent resident application backlog is forcing thousands of skilled workers to quit and return home

Filed under Immigration Tagged with CEC, Express Entry, Meika Lalonde, Mikal Skuterud, temporary residents

The future for tens of thousands of international students is in jeopardy. Here’s why

2022/09/22 Leave a comment

More on international study permit delays, yet another unfortunate example of government and IRCC failure in service delivery:

Leila Ghodrat Jahromi should have been sitting in class at Simon Fraser University this week, studying for her master of education degree.

Instead, the Iranian student is sitting in her temporary home in Turkey as she waits for a Canadian study permit some 14 weeks after applying for one.

“I have gone through a difficult path in my life,” said Ghodrat Jahromi, who sold off a marriage gift of land from her parents and her car to cover her tuition in Canada. “Studying abroad is a milestone in my occupation towards prosperity. This situation is shattering all my planning for the future.”

The 30-year-old is among tens of thousands of international students whose fall semester has been put in jeopardy thanks to a processing backlog of permits at Immigration, Refugees and Citizenship Canada (IRCC). As of Sept. 1, just days before classes began, 151,000 applications were still working their way through the system, according to IRCC’s latest figures, provided to the Star on Tuesday.

Universities and colleges, which have mostly returned to in-person learning, have been scrambling to offer alternatives.

But where online options don’t exist, schools are warning international students they need to be in seats this week — or else it will be too late to catch up.

Deferrals are being recommended at this point, and in most cases, tuition and residence fees are being refunded. But such deferrals come at a huge cost for both students and institutions.

“Canada is now getting a reputation on the global stage that perhaps it’s better to go to the U.S. or it’s better to go to the U.K.,” said Deborah MacLatchy, president and vice-chancellor of Wilfrid Laurier University, where at least 71 of its approximately 1,336 international students have been impacted by delays.

Canada has become the third-largest destination for international students after the U.S. and Australia. Post-secondary institutions across Canada, including Laurier, have been actively working to attract international students, who, as of 2020, made up 18 per cent of the student body nationwide.

Last year, a record 560,000 study permit applications — which are considered a step towards permanent residency — were processed by IRCC. In the first eight months of this year, the government finalized 452,000 study permits, but has struggled to keep up with demand.

A spokesperson at the University of Toronto, which has more than 20,000 international students, said that, as of last week, more than 600 permits for U of T students were still outstanding, and that the university “sympathizes with the frustration of those experiencing long delays in processing.”

Despite IRCC’s promise to hire 1,250 new employees to tackle the problem, the current wait time for a study permit from outside Canada is 12 weeks. Industry agents and consultants say processing in Canada is taking longer than in rival destinations, although IRCC told the Star that 62 per cent of the 150,000 applications in the system are within the service standard of 60 days.

IRCC told the Star it is “moving towards a more integrated, modernized and centralized working environment in order to help speed up application processing globally,” including the hiring blitz and digitizing applications.

“Honestly, I am starting to regret not having an alternative,” said Ghodrat Jahromi, who was accepted to the B.C. university in February and applied for her study permit in early June, together with her husband, who sought an open work permit so he could accompany her. They were asked for additional documentation in early July, which they provided immediately. “With such an academic background, I could simply have been admitted to top universities around the world with much less painful processing time.”

Having co-founded an online English academy, Ghodrat Jahromi is hoping to enhance her credentials by getting a M.Ed. in teaching English as an additional language. She said Simon Fraser, which has about 6,860 international students, has been helpful, but ultimately her program had to be completed in person, and time just ran out.

She has, regretfully, decided to defer to spring 2023.

Because she had already resigned from her job and broken her lease in Antalya, Turkey — where she had moved to escape Tehran’s pollution that was exacerbating her asthma, and to better access COVID-19 vaccines — she is now faced with a huge rent increase and finding work to tide her over to the next semester, assuming her permit comes through.

“Right now, I am applying to other countries, just in case,” she said, adding that through an online forum, she has been tracking similar frustrations from many other Iranian students facing delays.

University of Waterloo economics professor Mikal Skuterud has for weeks been receiving emails from students worried about what they’re missing. Of the 600 students in his Economics 101 course, about a fifth are international students.

For those still waiting on a permit, the window is nearly closed, said Skuterud: “Once you are missing two of 12 weeks, a sixth of the course, to me that’s a problem.”

Waterloo’s faculty of arts is recommending students not in class by Sept. 20 defer admission. Laurier, meanwhile, has suggested Wednesday as the last date to start in-person classes, given group work and assessment expectations.

“This is really quite unnecessary stress that we’re putting these students under. Why? Because the IRCC is a bit of a mess right now,” said Skuterud.

“This is a big, big move for many of them,” leaving behind families and homelands. And, he added, “students are paying a lot of money.”

Tuition for international students is, on average, three times higher than for domestic students, making it a vital revenue source in schools across the country. Undergraduate tuition for engineering at Waterloo, for example, is $66,000 per year compared to $18,000 for Canadian citizens.

At Laurier, permit delays this year alone could have a financial impact of $2 million, climbing to $10 million over the course of four years if those students choose to go elsewhere, according to MacLatchy.

“My worry is that if they’re not going to be able to come this year, by next year, will they have made other decisions about other opportunities?”

Although delays are not isolated to this year, MacLatchy said they are having a cumulative effect, and Laurier and other institutions like Waterloo have been advocating for solutions.

Having university-educated international students, said MacLatchy, is one of the “smartest ways for the country to get great talent” that will bring entrepreneurship and global experience to the workforce.

“We want (international students) to think of Canada as their destination for their education and also for their future careers and lives. To have visa delays be what stops them is really unfortunate.”

Source: The future for tens of thousands of international students is in jeopardy. Here’s why

Filed under Immigration Tagged with delays, international students, Mikal Skuterud, Processing

Douglas Todd: The downside to increasing low-skill migration to Canada

2022/09/10 Leave a comment

Good overview of recent research on low-skill migration and the government’s repetition of the Harper government mistakes before correction after a few years:

Former Conservative prime minister Stephen Harper found himself in trouble in 2014 for jacking up the number of temporary foreign workers coming to Canada to work at places like McDonald’s and Tim Hortons.

Then-opposition leader Justin Trudeau, labour unions and the media went into overdrive — attacking Harper for pandering to the business lobby by inundating the market with hundreds of thousands of low-skilled temporary foreign workers, many of whom were vulnerable to exploitation.

To the surprise of many, Harper responded to the outcry. He sharply reduced the number of guest workers and brought in laws encouraging employers to improve working conditions and hire more people who were born in Canada or had become permanent residents.

But a rush of low-skilled foreign labour happening again, more than ever, in 2022.

Under a different name. And under the radar.

This time voters can thank Prime Minister Justin Trudeau for handing certain business lobbyists what they eagerly seek: A huge supply of low-skilled temporary foreign workers to fill jobs in supermarkets, coffee shops, kitchens, hotels, construction and residential care, for which some bosses don’t want to pay serious wages.

The legislation that Trudeau’s government has produced in the past few years, especially this spring, reduces pressure on employers to raise wages, improve conditions and hire people they may not always prefer, including recent immigrants, refugees and people with disabilitiesThat’s the gist of the case carefully set out by a range of Canadian economic professors who specialize in labour, including McGill University’s Fabian Lange, Waterloo’s Mikal Skuterud, Carleton’s Christopher Worsick and Western’s Ian O’Donnell.

Their arguments — which also analyze the high degree to which hundreds of thousands of foreign students contribute to Canada’s low-skilled workforce — are buttressed by researchers at Statistics Canada, including Eden Crossman, Youjin Choi, Yuquian Lu and Feng Hou.

The labour economists believe high-skilled immigrants have the potential to boost the living standards of all Canadians. But they disagree with encouraging employers to over-rely on low-skilled foreign workers, particularly through a new visa category, which is unknown to 99 per cent of Canadians.It’s called the “international mobility program.”

The ostensibly short-term foreign workers who arrive under the international mobility program now far surpass the number who come under the traditional category of temporary foreign worker, which is often nostalgically associated with farm staff and live-in nannies.

There has been a 65 per cent increase in guest workers arriving into Canada in 2019 compared to 2015, when the Liberals were elected.

And much of that expansion of mostly low-skilled workers, says a recent paper by O’Donnell and Skuterud, has come through the international mobility category. In 2019, it made possible the arrival of almost 400,000 workers, compared to 95,000 temporary foreign workers.

Employers prefer the international mobility program because it is an “open visa,” which is far less restrictive than the temporary foreign worker category. Government websites highlight how the mobility program does not require employers to do a labour-market impact study, through which a boss must show a local wasn’t available to fill the position.

The little-known international mobility program has brought in far more guest workers in recent years than the temporary foreign worker program. (Source: Prof. Mikal Skuterud)

And while Harper once restricted temporary foreign workers to 10 per cent of certain sectors, and allowed them only in regions where unemployment is under six per cent, the Liberals have done away with those limits even for temporary foreign workers, say Lange et al in a Policy Options article titled, “The economic case against low-wage temporary foreign workers.”

The resulting “unprecedented” increase in guest workers has not been transparent to the public. Nor is there decent study of it.“Whether or not the purpose is to obfuscate the data to mitigate controversy, that has been the effect,” say O’Connell and Skuterud.

There’s more. The mobility program does not include the even-larger class of foreign nationals who arrive on student visas. Six in 10 of them work while in Canada, mostly at low-skill jobs

Foreign student numbers at the end of last year stood at 621,000. That’s a five-fold increase since 2000. Most apply for three-year work permits following graduation. Their presence is felt most strongly on the job and rental markets in Canada’s big cities, where educational facilities are concentrated.

About one in six foreign students in Canada, or more than 100,000, attend schools in Metro Vancouver, where the majority also work, typically in the service and hospitality sectors. Many put up with the low wages because Ottawa portrays it as a prime route to permanent resident status.

“A cynical view of what has happened,” say O’Connell and Skuterud, is that people who used to arrive in Canada as temporary foreign workers “have been replaced by … study permit holders,” whose affect on the job market basically goes untracked.

Despite the Liberal government’s progressive rhetoric, this spring it found another way to make things even easier for bosses to hire more migrant workers at low pay.

On April 11, the government increased the cap on temporary foreign workers to 30 per cent from 10 per cent in seven sectors, including food services, hospitality, construction, health and residential care. Across the rest, the cap has been hiked to 20 per cent.

Guest permits will also go for 270 days instead of 180. And, incontradiction to what Trudeau urged in 2014, the Liberals “will end the moratorium on the hiring of temporary foreign workers in regions where the unemployment rate exceeds six per cent,” says the Policy Options essay.

The economists say all this reflects a fundamental shift in Canada’s immigration policy — to a “two-step approach” that encourages applicants to work in Canada before applying for citizenship. Almost 60 per cent of those who now go for permanent residency in Canada have already worked in the country, compared to just 12 per cent in 2000.While that can have its benefits, it can also lead to low-skilled workers (who are more likely to apply for immigration than those with high skills) being exploited while they pursue what the scholars call “the dream” of a Canadian passport.

Instead of employers relying on “a ready source of cheap labour” from outside the country to fill low-paying jobs, the economists advance the supply and demand concept that employers who have trouble finding workers should instead lure them by paying more, offering better conditions and hiking productivity through innovation.

To that end, Lange et al recommend a system to gradually lower the issuing of work visas — “thereby improving the economic efficiency of the system and the wages and working conditions of Canada’s lowest-wage workers.”

Harper did it once. It’s time now for Trudeau to reduce the damage.

Source: Douglas Todd: The downside to increasing low-skill migration to Canada

Filed under Immigration Tagged with Christopher Worswick, Douglas Todd, IMP, low-skilled, Mikal Skuterud

Koop: Foreign-worker changes could spell trouble

2022/05/20 Leave a comment

Yet another warning note and reminder of how the Conservatives had to backtrack in 2013-14 given the abuses of the program by employers preferring temporary foreign workers than Canadian residents:

CANADA has been welcoming temporary foreign workers since 1973, but the programs that facilitate this have often been criticized for abuse and mismanagement. Recent changes introduced by the federal government that will expand the number of foreign workers could lead to even more such criticism, as every indication is low-income Canadians will suffer because of the government’s reforms.
Programs that welcome low-skill foreign workers can be of great assistance to employers in very tight labour markets where employees are hard to come by. But the danger of unchecked growth is that these workers typically are willing to accept lower wages and worse working conditions than Canadian workers, which can lead to wage suppression for Canadians or even displacement.
In 2013 and 2014, as the number of foreign workers swelled, abuses of these workers were covered widely in the Canadian media. In some cases, foreign workers were underpaid, or their working conditions were odious; in others, corporations recruited them despite high local unemployment rates. The result of this media coverage was several restrictions introduced by prime minister Stephen Harper’s government designed to slow growth in the number of low-skill foreign workers.
Since then, Ottawa has been besieged by fancy corporate lobbyists intent on loosening these restrictions. In April, Prime Minister Justin Trudeau’s Liberal government finally caved, agreeing to reverse the 2014 restrictions. These changes, which have already taken effect, will likely lead to a spike in the number of low-skill foreign workers in Canada.
In particular: the cap on the total number of foreign workers in several sectors was boosted from 10 to 30 per cent. There is no limit on the number of foreign workers that can be employed in the agriculture, caregiving, and fish and seafood processing sectors. Crucially and inexplicably, employers will now be able to hire foreign workers in regions where the unemployment rate exceeds six per cent.
The problem with expanding access to low-skill foreign workers is that doing so short-circuits market forces that should benefit Canadian workers. When labour markets are tight, employers must compete for the applicants available. The result is higher wages, better benefits and more attractive working conditions.
Employers also have to expand their searches and be more open to applicants they may previously have passed over; for example, disabled Canadians, recent immigrants and refugees, apprentices and young Canadians.
Canadian workers should be benefiting from these market forces. But, to the contrary, post-pandemic wage growth is very low. Indeed, inflation has meant that real Canadian wages may in fact be declining. Low-wage workers — including working class-families, single mothers, and immigrants and refugees just starting out in Canada — are hit hardest by inflation since any marginal increase in costs is felt most acutely by these vulnerable Canadians.
Opening access to foreign workers will present an opportunity to business, but it will likely prolong the pain already faced by working-class Canadian families as wage growth continues to stagnate. Economists Fabian Lange, Mikal Skuterud and Christopher Worswick argue convincingly that the government’s recent reforms will further undermine wage growth despite the tight labour market. They ask, “Does relying on foreign guest workers to fill low-wage job vacancies make sense in this environment?”
Well, it makes perfect sense for corporations.
A few months ago, it was revealed that Tim Hortons, the ubiquitous coffee chain, was facing a staffing crisis that was directly related to low wages. Emails obtained by BNN Bloomberg show that managers at 22 high-traffic suburban chains, mostly surrounding Toronto, were panicked by a lack of workers to handle the post-pandemic return of motorists picking up coffee on the way to work.
As these franchises’ profits have increased, the solution to their staffing problem was obvious: increased wages and enhanced benefits to draw potential workers back from other sectors. But Tim Hortons was among the corporations that protested the most loudly when the government restricted the use of temporary foreign workers in 2014. Should anyone wonder how the coffee chain and other corporations will address staffing shortages now that the Harper-era reforms have been reversed?
When provided with an opportunity from the federal government to suppress labour costs, why wouldn’t employers take it? Workers hoping for relief in this sector may be out of luck.
This raises the question: who is looking out for these Canadian workers? New Democrats fancy themselves the party of workers, but Jagmeet Singh recently dragged his party into a confidence-and-supply agreement with the Liberal government that scrapped the old restrictions. Should voters hold him as well as the Liberals accountable in the next election?
Royce Koop is a professor of political studies at the University of Manitoba and academic director of the Centre for Social Science Research and Policy.

Source: Foreign-worker changes could spell trouble

Filed under Immigration Tagged with corporate lobbyists, Fabian Lange, Mikal Skuterud, Royce Koop, temporary foreign workers, wage-growth

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Douglas Todd: The downside to increasing low-skill migration to Canada

Koop: Foreign-worker changes could spell trouble

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