Canadians are turning against immigration. Labour economist Mikal Skuterud on how to reform the system and reverse this trend

2023/11/14 Leave a comment

Usual insightful comments by Skuterud:

Canada has long been an outlier in the Western world for having the rare dynamic of both high levels of immigration and high levels of public support for immigration. Paired with cross-partisan support on the topic, the issue has not been a major driving factor of the country’s politics. But that consensus may be changing. New data from the Canadian Century Initiative finds that there has been a significant increase in Canadians who believe that Canada has too much immigration.

Mikal Skuterud, a labour economist at the University of Waterloo and director of the Canadian Labour Economics Forum, offers his expertise on the topic in an exclusive exchange with The Hub’s editor-at-large, Sean Speer. He breaks down the numbers and highlights the ways Canada can reform its system to reverse these trends and better serve the country as a whole.

SEAN SPEER: As you know, the Canadian Century Initiative, a non-profit organization dedicated to the goal of raising Canada’s population to 100 million by 2100 through large-scale immigration, recently released new polling in conjunction with the Environics Institute for Survey Research. I want to start by asking for your reaction to the survey’s top-line finding. There has been a significant increase—indeed, the largest year-over-year increase since Environics started asking this question in 1977—in the percentage of respondents who believe that Canada has too much immigration. What do you think about this result? Are you surprised? And what do you think is behind it?

MIKAL SKUTERUD: While Canadians have always been, and continue to be, overwhelmingly open to immigration, opinion polls have long shown that a significant majority of Canadians believe the number of immigrants Canada accepts should be limited. I think this reflects a widespread belief that while immigration has the potential to boost average economic well-being in the population, there is a limit to that potential. The vast majority of Canadians understand that the economy has an absorptive capacity. When the population grows faster than the housing stock, public infrastructure, and business capital, there is less capital per person, and this tends to lower labour productivity and average economic living standards in the population. My best guess is that the shifting sentiments that Environics is seeing in their polling reflect concerns that the government’s ambitious immigration agenda is pushing up against the economy’s absorptive capacity. 

SEAN SPEER: The biggest explanation for the increase in the public’s misgivings about immigration is the perceived effect on housing prices. This ought to have been a predictable concern among policymakers and the Canadian Century Initiative itself. Why do you think we failed to account for housing demand and the need for greater supply in conjunction with raising immigration levels? What can be done to improve jurisdictional coordination and coherence on these issues? 

MIKAL SKUTERUD: In 2015, an economic narrative surfaced in this country that claimed heightened immigration rates, from what were already high rates when compared to other OECD countries, would be a tonic for economic growth. Canadians were told that higher population growth would not only make Canada more prosperous but that higher immigration was necessary for economic growth. For economists like me, who have been studying the economics of Canadian immigration for decades, these hyperbolic claims did not line up with the predictions of standard economic models of economic growth or with the Canadian empirical evidence. 

In March 2016, then Minister of Immigration, John McCallum, invited a group of us to share our views. In retrospect, it’s clear that our concerns fell on deaf ears. The immigration narrative was a feel-good story, and nobody likes a cold shower. The appeal of the narrative that immigration—“Canada’s secret sauce”—could be the solution to our dismal economic growth and labour productivity performance is understandable. But, of course, sometimes political narratives are so appealing that well-intentioned people get caught up in the warm feelings of what we’d like to be true and lose sight of the more important question of what is true. 

If we know nothing else about the economics of immigration, we know that immigration has distributional effects. In general, the folks who are on the opposite side of consumer and producer markets of immigrants stand to benefit, while folks on the same side are likely to experience adverse economic effects. While recent immigrants who live in the same communities as newcomers face heightened competition for housing and jobs, the competitive pressures facing sellers in mortgage markets (banks) and buyers in labour markets (employers) are alleviated. 

An interesting result from the recent Environics poll which I haven’t heard any media report on is that the biggest shift in dissatisfaction with recent immigration levels is among first-generation immigrants. This is consistent with the proposition that population growing pains are likely felt most by immigrants already here. To the extent that we care about the consequences of heightened immigration on economic inequality and social cohesion, these distributional effects should be of first-order concern to policymakers. 

SEAN SPEER: One of the issues that, according to the polling, is the subject of declining public confidence is the notion that we need or want a larger population itself. A lot of the immigration debate is implicitly motivated by the idea that we should aspire to a fast-growing and larger population. What is your view on this question? What does the scholarship tell us about the benefits of bigness? Should we have an explicit goal for Canada’s population to become larger?

MIKAL SKUTERUD: The economic case for bigness is most often made with reference to what economists call “agglomeration effects.” The general idea is that bigger cities with higher population densities are more successful in generating the flows of knowledge and ideas that result in innovation, and in turn, technological advances, and growth in total factor productivity. This mechanism could, in theory, be a source of increasing returns to scale, such that a two percent increase in the inputs that go into producing aggregate output, most importantly the labour input, result in a more than two percent increase in aggregate output. In this way, an increase in the immigration rate can produce an increase in GDP per capita. 

Unfortunately, I’m unaware of any credible evidence that this mechanism has been important in recent Canadian history. Certainly, the current push to settle more immigrants in remote communities works against this mechanism. In work with my colleague Joel Blit and recent Ph.D. student Jue Zhang, we examined the relationship between inflows of university-educated immigrants into Canadian cities to the number of new patents created in those cities and found no evidence consistent with the proposition that agglomeration effects have been quantitively important for Canada historically, in contrast to the results of a similar analysis using U.S. data. 

Perhaps a more compelling argument for why population size is, in itself, a sound economic objective is that bigger countries have more geopolitical influence on the world stage and that this advantage somehow benefits economic growth through more advantageous free trade deals, for example. However, if this mechanism was quantitatively important, we’d expect countries with larger populations to be on average richer, but the opposite is true. World Bank data from 187 countries in 2019 shows that the correlation between national population and GDP per capita is unambiguously negative. Many big countries are poor, and many small countries are rich. 

SEAN SPEER: One of the most interesting results is that 77 percent of respondents said that government policy should prioritize high-skilled immigration. Only one-third said that it should prioritize low-skilled workers and students. Yet as your work has shown, government policy has tilted away from high-skilled immigration to the latter two categories in recent years. How does one explain that dissonance and what should be done to rebalance the composition of Canada’s different immigration streams? 

MIKAL SKUTERUD: The repair to the permanent immigration system is simple: return to a single pathway for economic-class immigration with a single selection criterion. This is what we had in Canada before 2021. All economic-class immigrants (outside Quebec) received permanent residency status by entering the Express Entry pool where they were assigned a Comprehensive Ranking System (CRS) score, which is essentially a prediction of the applicants’ future earnings in Canada. Every two weeks, IRCC announced a CRS cutoff score and candidates with scores above the cutoff were invited to apply for PR status. 

However, since 2021 IRCC has introduced a series of ad-hoc TR-to-PR pathway programs intended to provide PR pathways for applicants with low CRS scores. For example, in April 2021, they announced a new PR pathway for 90,000 temporary workers employed in a list of “essential occupations” that included cashiers, cleaners, truck drivers, construction and farm labourers, and security guards. More recently, the Category-Based Selection System has been introduced allowing the minister of the day to bypass the CRS criterion to prioritize any occupation in the applicant pool. This flexibility enables the Minister to respond to business lobbying pressure for more low-skilled labour. This politicization of immigrant selection isn’t good for wage growth in Canada’s low-skilled workforce and undermines business incentives to invest in training and technologies to improve labour productivity. 

The question of whether immigration should be focused on raising the average human capital stock of the population or plugging holes in current labour markets is longstanding. Economists have overwhelmingly argued for the former approach. Their logic is simply that we don’t believe planned economies work well. There is overwhelming evidence that aggregate production in modern economies doesn’t require some fixed ratio of labour types. In 1921, one-third of Canada’s workers were employed in agriculture. After more than 100 years of innovation in farming equipment, less than two percent are. Trying to predict where job vacancies will be in five or ten years is futile because labour demand is endogenous to labour supply. Where a particular labour type is plentiful, wages will be low, incentivizing employment of those types, and where a labour type is scarce, wages will increase, incentivizing substitution to other types of labour or capital investments. If we want a low-wage low-skill economy, we should target low-skill immigrants; but if we want a high-skill high-wage economy, we should prioritize high-skill immigrants. 

SEAN SPEER: More generally, if you were advising government policymakers on their policy response to these findings, what might change? Should we lower our permanent resident target? Should we prioritize addressing the growth in non-PR streams? Should we do both? What is the Skuterud plan to restore public support for high levels of immigration?  

MIKAL SKUTERUD: A positive outcome of the growth in Canada’s foreign student and temporary foreign worker populations is it has justified a call for better data. Statistics Canada now publishes a quarterly data series on the overall size of Canada’s non-permanent (NPR) population. This population is exceptionally difficult to measure but they have taken a good shot at it. What the data show is that Canada’s NPR population increased from 1.5 million to 2.2 million—a nearly 50 percent increase—between July 2022 and July 2023. 

As the NPR population grows faster than the number of new PR entries, an increasing number of temporary residents who came to Canada with dreams of settling permanently will find their permits expiring before they’ve made the transition. This inevitably means that Canada’s undocumented population will grow. A growing undocumented population is undesirable for many reasons, so rebalancing growth in Canada’s NPR population with the growth in Canada’s PR targets should be, in my view, a first-order priority for IRCC. 

At the core of the challenge here are two realities. First, Canadian permanent residency status holds enormous economic value to huge populations of individuals around the world. Second, Canadian immigration policy has over the past decade shifted in a significant way to “two-step immigration” in which the pathway to PR status is to study or work in Canada as a temporary resident and then clear the hurdles of the PR admission system. Together these realities mean that a key factor in migrants’ private cost-benefit decisions to come to Canada is their perception of the likelihood of making a successful TR-to-PR transition while in Canada. 

While increasing TR-to-PR pathways for migrants may be well-intentioned, an unintended consequence of these programs is they increase the odds that lower-skilled migrants will get lucky and obtain PR status. In this regard, they serve to lure migrants who are willing to pay exorbitant tuition fees to postsecondary institutions that offer little educational value and or accept jobs offering substandard wages and working conditions. There’s little doubt in my mind that an important cause of the tremendous growth in the NPR population is a supply-driven response to migrants’ perceptions that their chances of winning the PR lottery have increased in recent years. Fixing this problem requires returning to a single PR pathway that is transparent and predictable and that prioritizes applicants with the highest CRS scores. 

Source: Canadians are turning against immigration. Labour economist Mikal Skuterud on how to reform the system and reverse this trend

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Clark: Time to address the immigration number that matters now

2023/11/03 Leave a comment

One of the better assessments, particularly on the lack of action on temporary residents, whose numbers have ballooned over the last 10 years:

Don’t look too closely at the immigration targets the federal government set Wednesday. They’re not the numbers that matter right now.

Immigration Minister Marc Miller kept the already-planned target of 500,000 in 2025, but said there’d be no increase in 2026. But that isn’t Canada’simmigration number.

The figure that matters more is the 2.2 million in temporary residents who are in Canada. That number has surged for reasons that have nothing to do with immigration planning. And the Liberal government should be screwing up their courage to do something about that, right away….

Source: Time to address the immigration number that matters now

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Yakabuski: The Liberals’ immigration blueprint is unsound, and will hinder the economy it seeks to help

2023/10/30 1 Comment

Good, long and informative read on the fallacies of the government’s immigration policies and programs. Good quotes by Mikal Skuterud, Pierre Fortin and yours truly:

On the afternoon of June 16, Canada’s population surpassed the 40-million mark.

In a country long lamented by some of its leading thinkers as a low-density also-ran stunted by a lack of bodies to fill its vast expanses and dynamize its sleepy cities, it was to be expected that hitting this milestone would be considered a big deal by some.

…

Source: Opinion: The Liberals’ immigration blueprint is unsound, and will … – The Globe and Mail

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Missing million temporary residents in figures casts doubt on how many have jobs: report 

2023/09/07 Leave a comment

Good analysis by Mikal Skuterud along with policy implications:

A discrepancy of around a million temporary residents between official figures from two federal bodies is leaving Canada in the dark about how many of those residents actually have jobs, an economist is warning.

Mikal Skuterud, a professor of economics at the University of Waterloo, also says Statistics Canada may be dramatically undercounting the number of temporary residents, including international students and temporary foreign workers, employed in Canada. He describes the findings in a report to be published later this week by the C.D. Howe Institute.

The report notes that Statistics Canada’s Labour Force Survey – which is used to set Canada’s unemployment rate – suggests there were 503,079 temporary residents with jobs in Canada in December last year.

But Mr. Skuterud says information from Immigration, Refugees and Citizenship Canada, the federal department that issues work permits and study visas to foreign nationals, suggests there were 1,585,664 temporary residents with jobs at that time.

“The problem is that the margin of the difference has become so large, now exceeding one million workers, that labour market analysts are increasingly in the dark,” Mr. Skuterud says in a summary of the report.

He told The Globe and Mail that he believes the true number probably falls somewhere between the survey figures and the IRCC numbers.

“I want to know the truth,” he said. “What’s the true number here? The reality is that nobody knows what the truth is – nobody. And that’s a problem.”

The report says undercounting of temporary residents in labour force figures could have a serious impact on planning to alleviate labour shortages, and could also affect wages.

Mr. Skuterud said accurately assessing the contribution of temporary residents in alleviating labour shortages is crucial for policy-makers.

“As this population continues to surge, the significance of this measurement issue is critical,” he added.

The report, Canada’s Missing Workers: Temporary Residents Working in Canada, says there has been a large increase in the number of temporary residents working in Canada since 2006. Since then, the report says, the discrepancy between the IRCC and Statistics Canada figures has widened.

Mr. Skuterud’s analysis found that Statistics Canada’s labour market survey suggests an increase of 391,600 temporary residents with jobs from 2006 to December, 2022.

But IRCC data – which include information on international students permitted to work, as well as temporary residents in the temporary foreign worker program and the international mobility program – suggest an increase of 1,330,404 over the same period, the report says.

The report does not account for undocumented people working illegally in Canada.

“Since the inflow of temporary residents shows no signs of slowing, it is imperative and urgent that Statistics Canada and IRCC revise their data collection to obtain better estimates of employment in the temporary resident population,” the report concludes.

Benjamin Tal, deputy chief economist at CIBC Capital Markets, cautioned federal ministers at their August cabinet retreat that there may be around one million more temporary residents living in Canada than government estimates suggest. He reiterated this in a report, published last week.

Melissa Gammage, a spokesperson for Statistics Canada, said in a statement last week that the agency’s statistics on non-permanent residents “are accurate, produced using robust mechanisms and in collaboration with many stakeholders.”

But she said the agency constantly reviews its methodology, and that starting on Sept. 27 it will publish new data tables on non-permanent residents “computed using a revised methodology and going back to 2021.”

The new tables will include new details on non-permanent residents, “such as their estimated numbers and permit types, as well as other methodological improvements,” Ms. Gammage said.

Mr. Skuterud said it is if unclear if this new methodology will include better estimates of employment in the temporary resident population.

The Labour Force Survey samples around 60,000 Canadian households every month and identifies the work activities of people 15 and older. It has lower response rates in certain subpopulations, which may lead to a downward bias in its estimates, Mr. Skuterud’s report says.

The report says there are also serious questions about the accuracy of the IRCC figures, which it says may have an “upward bias.” This could have partly to do with the fact that holders of valid work permits and study permits are not always employed for the entire time their papers are valid. And some temporary residents might hold both types of permits, potentially leading to double counting.

“Unfortunately, with available data sources, it is impossible to determine the magnitude of the upward bias in the estimates based on the administrative data from IRCC,” the report says.

Source: Missing million temporary residents in figures casts doubt on how many have jobs: report

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Douglas Todd: Remarkably popular book on baby boomers distorted by politicians

2023/09/02 Leave a comment

More on some of the false or at least misleading demographic arguments underlying current government immigration policies and organizations like the Century Initiative:

Daniel Stoffman was co-author of one of the most popular books written in Canada.

Boom, Bust and Echo: How to Profit from the Coming Demographic Shift sold more than 300,000 copies after it was published in 1996, with a followup in 2000. Stoffman, who died this summer in Vancouver, shared the royalties equally with University of Toronto economist David Foot.

The theme of Boom, Bust and Echo was that “demographics explains two thirds of almost everything.”

Stoffman and Foot maintained the baby-boomer bulge of Canadians, born between 1947 and 1966, would have a huge impact on trends in real estate, the stock market, eating habits, health care, and leisure activities, including, for instance, the future of birdwatching.

But an odd thing happened largely because of this best-selling book. Its spotlight on Canada’s baby-boom cohort of almost 10 million people has often been misinterpreted, if not distorted, by corporate leaders and federal politicians. That did not please Stoffman, a journalist, author and secular Jew who described himself as a “radical centrist.”

Stoffman, who once worked as a reporter at The Vancouver Sun and edited the University of B.C. student newspaper, The Ubyssey, wrote 13 books before he died in Vancouver at age 78 on July 3. They included profiles of Canadian Tire, Barrick Gold, Boston Pizza and McCain Foods, plus The Money Machine, an unusually readable look at the mutual fund industry.

But the more risky book for Stoffman, in contrast to the crowd-pleasing Boom, Bust and Echo, was the one he wrote to challenge business leaders and politicians who maintain, to this day, that aging baby boomers are the No. 1 reason Canada needs one of the highest immigration rates in the world.

Most commentators, scholars and journalists have only recently been catching up with some of Stoffman’s analysis in his book Who Gets In: What’s Wrong with Canada’s Immigration Program — and How to Fix It, which was a finalist for the Donner Prize in public policy.

Stoffman was pro-immigration. But in the early 2000s he wanted Canadians to think seriously about the complex, almost taboo subject. That’s what he did after winning an Atkinson Fellowship from his liberal newspaper, The Toronto Star, to write a groundbreaking series on it.

Today, more mainstream voices are joining Stoffman in questioning the platitudes streaming out of Ottawa, particularly from Prime Minister Justin Trudeau, who is currently justifying increasing Ottawa’s immigration target to a record 500,000 this year, double the 250,000 when the Liberals came to power.

Stoffman also anticipated the questions pundits are now raising about the federal Liberals’ related migration decisions to allow the number of foreign students and other non-permanent residents to reach almost two million, a figure CIBC’s Benjamin Tal cited this week. That compares to about half a million when Trudeau was first elected.

Former immigration minister Ahmed Hussen, echoing Trudeau’s talking points about the need to welcome immigrants, foreign students and guest workers to “grow our economy,” often justified his approach by referring to what he characterized as the baby boom problem.

“The question is: Why do we need immigration? Well, five million Canadians are set to retire by 2035. And we have fewer people working to support seniors and retirees,” he said, echoing similar remarks by other immigration ministers about the high costs of public health care for the elderly.

Stoffman’s book, Who Gets In, laid out some of the counter arguments economists are making today, which is that high in-migration can never replace an aging workforce.

The main reason is that immigrants also age. The baby boom generation is now aged 56 to 77, a cohort that includes millions of immigrants.

The second reason is many immigrants bring dependants. That is especially true under the Liberals, who quadrupled the number of parents and grandparents that could be sponsored.

The University of B.C.’s David Green and McMaster’s Byron Spencer, both economists, have their own unique way of responding to the supposed dilemma of aging baby boomers. Wryly, they say, the only conceivable way high immigration could offset Canada’s retiring workforce would be if every newcomer was a 15-year-old orphan. That’s because it would take 50 years for the teens to reach retirement age and, as orphans, they would not seek to bring in parents or grandparents.

Stoffman maintained there are two main reasons corporate leaders lobby Ottawa to keep immigration levels high, roughly triple per capita those in the U.S.

“I think the main purpose of Canada’s high immigration policy is to lower wages — and inflate real estate values,” he said in 2015.

The authors of Boom, Bust and Echo were aware, decades ago, of the two dangers. They recognized hiking immigration rates does indeed, as the politicians boast, increase the country’s overall GDP. But it also tends to lower GDP per capita, especially for low-skilled workers.

Stoffman said struggling immigrants best understood this downward pressure because they were the ones most likely to come to him after his speeches to express their worries.

In recent years, economists like Don Wright, former head of the B.C. government’s civil service, Mikal Skuterud of the University of Waterloo, and the B.C. Business Council’s David Williams have been strongly making the argument about lagging wages.

And a host of housing analysts, such as Steve Saretsky, John Pasalis and Ben Rabidoux, have also been warning about how high in-migration, including by foreign students and guest workers, puts intense pressure on rent and housing prices, which are at crisis levels in Vancouver and Toronto.

Stoffman was among the first to argue that Canada could deal with the societal costs of a large baby boom (which once made up 31 per cent of the population, but is now down to 23 per cent) by increasing productivity through innovation. Alas, in recent years productivity has fallen.

Another way is to offer incentives for Canadians to stay longer in the workforce, which the baby boom is doing. Canada could also encourage more people to have children, he said, particularly by providing better and cheaper daycare.

What would be an optimum number of permanent residents coming to Canada, leaving aside guest workers and foreign students? Eight years ago, Stoffman suggested a balanced number for Canada would be about 150,000 new immigrants annually.

Stoffman said he understood why right-wing people — “who think wage inflation is worse than income equality, and don’t want to see cab drivers and cleaning ladies earn more” — would promote “apocalyptic visions” about the need for higher in-migration targets.

“But it’s weird,” he wrote in Who Gets In, “that so many Canadians, who pride themselves on their social consciences and progressive politics, hurl nasty names at those who call for a more limited immigration program.”

Source: Douglas Todd: Remarkably popular book on baby boomers distorted by politicians

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New temporary foreign worker pilot program to speed up approvals for some employers

2023/08/10 Leave a comment

Good critical comments by Banerjee and Skuterud regarding possible abuse and the ongoing favouring of reduced labour costs to employers. That being said, for repeat users, simplification has merit but as in so many areas of immigration policy, these change fail to address the immigration-related challenges of housing, healthcare and infrastructure:

The federal government is making it easier for businesses to bring temporary foreign workers into Canada, announcing a new “recognized employer” program aimed at speeding up the approval process for companies with a track record of using foreign labour.

The three-year pilot program is designed to reduce the amount of paperwork companies need to submit to justify bringing in outside workers.

It’s the latest expansion of the temporary foreign worker (TFW) program, whose use has exploded over the past year as the federal government has eased restrictions on short-term foreign labour. And it comes alongside a record surge in immigration, which is increasing the country’s labour supply but also adding demand to Canada’s overheated housing market and public services.

Randy Boissonnault, the new Minister of Employment, Workforce Development and Official Languages, said the change to the TFW program would “cut red tape” and help companies manage widespread labour shortages.

The move was applauded by the Canadian Chamber of Commerce, which has long lobbied for a trusted employer carveout in the TFW program.

Some labour economists, however, warned that further expansion of the program could undercut wages in Canada and make it more difficult to identify companies that are exploiting vulnerable workers.

“It could be a good thing for addressing kinds of critical labour shortages,” said Rupa Banerjee, the Canada Research Chair in economic inclusion, employment and entrepreneurship of Canada’s immigrants at Toronto Metropolitan University.

“But if this kind of a system is not really closely monitored, scrutinized, audited, it’s easy for sort of mundane and everyday examples of abuse and exploitation to kind of become even more rampant in the system,” she said.

As it stands, companies need to submit a Labour Market Impact Assessment (LMIA) before applying to hire temporary foreign workers. The purpose of the LMIA is to show that there are no Canadians or permanent residents who are able to fill the job.

Under the new system, employers who can demonstrate “a history of complying with program requirements” will be given a three-year approval to bring in temporary foreign workers, and won’t have to submit an LMIA before each application. Eligible employers will need to have had three successful LMIAs in the past five years for workers who are deemed to be “in-shortage,” and will be subject to a “more rigorous upfront assessment,” the government said in a news release.

The pilot program will be open to agriculture businesses in September and employers from all other industries starting in January.

This is the second notable change to the TFW program in just over a year. Last spring, the federal government said companies could hire up to 20 per cent of their staff through the program’s low-wage stream, up from the previous 10-per-cent cap. And in seven industries with acute labour shortages – such as restaurants, construction and hospitals – the cap was moved to 30 per cent for a year, then extended to this fall.

The TFW program is largely used as a recruitment tool for farm workers. During the first quarter of this year, employers were approved to hire more than 25,000 workers through agriculture streams, according to figures published by Employment and Social Development Canada, which decides on LMIA applications. General farm workers are easily the most sought-after role in the TFW program, with more than 22,000 approved positions in the first quarter.

But as Ottawa has eased access to foreign labour, employers have ramped up their recruitment of low-wage employees from abroad. Companies were approved to fill about 22,000 roles through the program’s low-wage stream in the first quarter, an increase of about 275 per cent from four years earlier. Cooks are the No. 2 occupation of highest demand, with nearly 3,000 positions approved from January through March. Truck drivers, food counter attendants and seafood plant workers are also in high demand.

Diana Palmerin-Velasco, senior director of the future of work at the Canadian Chamber of Commerce, welcomed the announcement and said it could improve access to the TFW program for smaller employers.

“There are whole sectors of the economy that are dependent on temporary foreign workers,” Ms. Palmerin-Velasco said. “What we have heard from our members is that it’s not that easy for employers. There is a lot of administrative burden, it can be a very complex application process. And when we think about small businesses, it’s not really accessible.”

Mikal Skuterud, an economics professor at the University of Waterloo, questioned the government’s rationale for expanding the program. The Canadian labour market has been exceptionally tight over the past year-and-a-half, as demand for workers has outstripped supply. However, in recent months, job vacancies have been trending down and the unemployment rate has risen.

“We’ve had a 25-per-cent reduction in job vacancies since May, 2022, and if you measure labour market tightness, that’s also been dropping,” Prof. Skuterud said.

He added that recent research into temporary foreign workers suggests that they tend to suppress wage growth within companies that use them. “And so we’re going through a period where real wages for low skilled workers in this country are not increasing. The most recent data looks like they’re decreasing. And so it’s all about where this government’s priorities are,” he said.

Source: New temporary foreign worker pilot program to speed up approvals for some employers

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Canada’s new approach to immigrant selection aims to fix labour markets. Will it create more gaps instead? 

2023/07/22 Leave a comment

Good critiques:

The federal government has shifted its immigration policy by recruiting thousands of foreign nationals to settle permanently in Canada in hopes they will fill specific jobs, a strategy that has drawn criticism from labour experts.

Since late June, the immigration department has invited almost 9,000 people to apply for permanent residency because of their recent work experience in certain occupations or because of their French-language skills. These individuals are being selected through the Express Entry system, which accounts for a large portion of economic immigration to Canada.

Immigration, Refugees and Citizenship Canada (IRCC) said last year that it would target immigrants who could fill roles in high demand. On May 31, the department announced it would focus on French speakers and people with experience in five fields: health care, skilled trades, agriculture, transportation and STEM (science, technology, engineering and math).

Within health care, for example, the government is seeking immigrants with experience in 35 occupations, including dentists, massage therapists and registered nurses.

The government says its pivot to category-based selection of immigrants, which started on June 28, is meant to ease the hiring challenges that have frustrated many sectors of the economy over the past few years.

But this new approach has raised concerns among economists and policy experts, who warn that today’s labour needs could change quickly and leave the country with a glut of workers in some fields. Moreover, they say high-ranking candidates in Canada’s points-based immigration system could get overlooked as Ottawa prioritizes various groups.

Labour markets “are always evolving and changing,” said Robert Falconer, a doctoral fellow at the London School of Economics who studies migration policy in Canada. “We’re potentially overtargeting certain needs.”

Canada’s labour market is undergoing a transition. While employment has risen by a net 290,000 positions so far this year, job vacancies have tumbled about 20 per cent from their peak levels in 2022. The unemployment rate, now at 5.4 per cent, has risen half a percentage point from a record low set last year.

In some areas, there appears to be persistently high demand for labour. As of April, there were more than 150,000 vacant jobs in health care and social assistance, a record high – almost a fifth of all job vacancies in Canada.

These labour gaps “are just going to get worse as the population ages,” said Rupa Banerjee, a Canada Research Chair in immigration and economics at Toronto Metropolitan University. “Targeting those kinds of occupations has the potential to improve this mismatch” in labour supply and demand.

But in some white-collar industries, there has been a steep drop in vacancies. For example, job postings in software development have plummeted to below prepandemic levels on the hiring site Indeed Canada. (Software developers are among the STEM roles being targeted by the government.)

“We don’t know if the targets that are set today will really be indicative of the needs that we’ll have in five years’ time,” Dr. Banerjee said.

She noted that category-based selection echoes a situation in the late 1990s, when the government admitted thousands of technology workers during a boom period in that industry. Shortly afterward, the dot-com crash led to significant layoffs.

To date, IRCC has invited 8,600 people to apply for permanent residency over five rounds. Two of those rounds targeted French speakers, another two focused on candidates with recent work experience in health care occupations and one focused on STEM experience.

This is a departure from how Express Entry usually works.

Immigration candidates in the Express Entry pool are assigned a score through the Comprehensive Ranking System (CRS), accounting for such factors as age, education and employment history. The score corresponds to their expected Canadian earnings, based on the outcomes of previous cohorts of immigrants.

In the past, Ottawa would select a few thousand people with the highest scores every two weeks to apply for permanent residency. Policy experts likened this to a “cream-skimming” approach that would boost economic outcomes by targeting people with the highest earnings potential.

But in selecting people with certain attributes, the government is reaching deeper into the pool – and those individuals, with lower CRS scores, have lower expected earnings.

Last week, for example, IRCC invited 3,800 people in the French-language category to apply. The cut-off score for an invite was 375 – much lower than usual.

“It’s analogous to a university prioritizing other considerations, such as athletic ability or legacy status, in their student selection,” said Mikal Skuterud, an economics professor at the University of Waterloo, via e-mail. “The inevitable trade-off is lower average academic quality of new admissions.”

IRCC is still selecting people from the broad pool of Express Entry candidates, but it has largely focused on category-based selections since late June. The categories are in effect for 2023 and subject to change thereafter.

Dr. Banerjee said this adds “uncertainty” to a system that, because of the points system, was more predictable for prospective immigrants. “People who perhaps have a higher score may be overlooked, and this could lead to a lot of frustration,” she said.

Recognizing foreign credentials is another issue, Mr. Falconer said. Just because someone is selected for their health care work experience doesn’t mean they’ll easily transition into a similar role in Canada.

He said he senses “mission creep” in how IRCC is trying to fulfill multiple objectives at once, such as boosting the number of French speakers through an economic immigration program.

“If we want to accomplish goals outside of economic goals, I think that’s fine,” he said. However, with the Express Entry system, “we should really see it as the economic productivity stream, where we do aim to boost productivity across Canada.”

Source: Canada’s new approach to immigrant selection aims to fix labour markets. Will it create more gaps instead?

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Globe editorial: Justin Trudeau should listen to Justin Trudeau on temporary foreign workers

2023/07/20 Leave a comment

Of course, always easier while in opposition but 2014 should be a cautionary tale about Temporary Foreign Workers as well as an example of a government pivot when the Conservatives and Jason Kenney had to reverse course:

Justin Trudeau has some advice for Justin Trudeau.

Mr. Trudeau, in 2023, leads a federal government that has overseen a surge in the country’s reliance on low-wage temporary foreign workers. The federal Liberals stoked this increase: they loosened the rules early last year. According to the latest data, reported by The Globe last week, Ottawa has approved the hiring of almost 80,000 low-wage foreign workers in the year after the rules were eased. That’s triple the level of the 12 months before the change.

…

Source: Justin Trudeau should listen to Justin Trudeau on temporary foreign workers

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John Ivison: Ottawa’s tech-talent drive finally puts some economic elbows up

2023/06/30 Leave a comment

Positive commentary on the new streams:

It’s been said that moving to the U.S. is part of Canada’s culture.

But times change. Social media was humming this week with reaction in the U.S. to a new immigration policy launched by the Canadian government. American high-tech entrepreneur Srinivasan Balaji tweeted to his nearly one million followers that work visa holders in the U.S. who are “stuck in an endless green card line” should be aware of a new program in Canada that is attempting to lure engineers that the U.S. is “repelling.”

Another user said: “Canada is eating our lunch. This is bad news for America.” The policy in question was unveiled by Immigration Minister Sean Fraser, at the Collision tech conference in Toronto on Tuesday.

As part of a new Tech Talent Strategy, Canada will open a work permit stream for holders of the H1B visa, which allows U.S. employers to employ foreign workers in specialty occupations.

Other strands include bringing in employer-specific work permits for up to five years in companies the government deems “innovative”; a digital nomad strategy to allow people working for foreign companies to stay in Canada for six months; and the option for people waiting for permanent-resident status to apply for a work permit while their application is processed.

“There is no question that we are in a global race for the same pool of talent with competitors around the entire world,” Fraser said.

The Trudeau government has been loath to view the world in competitive terms, preferring to hand out participation medals. The consequences of de-prioritizing competitiveness and productivity are apparent in this country’s GDP-per-capita numbers, which are sliding — as is, consequently, our relative standard of living.

But Fraser was speaking in terms that will encourage those who despair about the country’s economic future. He said he is enthusiastic about the “ambitious goals” being set “because they are not just about numbers, they are strategic.”

The news was greeted with enthusiasm by Mikal Skuterud, economics professor at the University of Waterloo, who hailed the policy as one that is “at long last, aimed at leveraging immigration to boost real economic growth.”

The Liberal government has been enthusiastic about raising immigration rates for a number of reasons, ranging from the popularity of its family reunification policies in politically important seats around our big cities, to the impact on economic growth of bringing in a million people a year, as happened last year.

But while GDP rises almost in lockstep with population growth, such a dramatic influx puts strains on services like health and on the housing market. Critics of unplanned immigration, like Andrew Griffith, a former director general at Immigration, Refugee and Citizenship Canada, have long argued that the country should “bring in fewer people and treat them better.” But he said the new tech strategy is a good initiative to tap into the available talent pool and into frustration with the U.S. immigration system.

“It should bring in immigrants that boosts productivity, rather than drains it,” Griffith said. He pointed out that this is a government that has found it much easier to make announcements than manage complex systems.

Fraser talked of streamlining and fast-tracking the International Mobility Program for talented individuals, but this is still an immigration system with an 800,000-case backlog across all lines of business. Frustration with the U.S. immigration system could very quickly become exasperation with Canada.

But the intentions are good. Twenty years ago, the numbers of permanent residents coming to Canada outnumbered the temporary residents, according to numbers compiled by Griffith. Last year, the 437,000 new permanent residents were a fraction of the 1.6 million temporary residents, half of whom were covered by the International Mobility program or the Temporary Foreign Workers program; half of whom were students. It is open to debate whether it is responsible for the government to bring in so many low-skilled people when the impact on health and housing systems is so clearly deleterious.

That discussion is likely to get more pointed if, as the OECD suggested this week, unemployment starts to rise. But it is long overdue that Canada gets its elbows up in the global battle for talent.

Source: Ottawa’s tech-talent drive finally puts some economic elbows up

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Ottawa to rectify issue with massively revised temporary foreign workers data

2023/06/26 Leave a comment

Good quick response. And kudos to the Globe for uncovering the change. Hopefully the lesson learned is that any significant change must be openly and transparently communicated, preferably with advance consultations:

The federal government says it will publish a full accounting of temporary foreign work permit holders in Canada after The Globe and Mail discovered that more than two decades of data had been altered without explanation.

More than one million people held work permits through the International Mobility Program at the end of last year, according to figures that Immigration, Refugees and Citizenship Canada published in February.

However, the federal immigration department recently made significant downward revisions to those numbers, indicating there are now around 675,000 permit holders. The figures for all previous years, dating back to 2000, had also been reduced.

Several immigration researchers told The Globe that IRCC removed work permit holders whose primary reason for being in Canada may not be related to the labour market, such as students and refugee claimants.

The department said the revised numbers were not properly labelled. “When this new data set was published, the incorrect title/description was mistakenly published to accompany it,” spokesperson Matthew Krupovich said in a statement.

IRCC said it intends to publish figures on both the narrower and broader groups of work permit holders, but did not indicate when that will happen.

Some economists were frustrated with how IRCC handled the data revision and expressed concern that lowering the numbers would obscure how many temporary foreign workers are in the country.

“The data is just a mess,” said Mikal Skuterud, a professor of labour economics at the University of Waterloo.

By not counting international students with work permits, for example, “one would understate the growth of the IMP,” Feng Hou, principal researcher at Statistics Canada, said by e-mail.

The International Mobility Program accounts for a large share of temporary foreign workers in the country. Within the program are several categories of permit holders, including postgraduate workers and spouses of skilled workers.

Canada’s population is growing rapidly, in large part because of the influx of temporary residents, including workers and students. Many of those people are accruing postsecondary degrees and Canadian work experience in hopes of getting permanent residency.

The use of temporary foreign labour by Canadian employers has soared in recent years. The trend has been criticized by many economists for helping companies minimize their labour costs, among other reasons.

Source: Ottawa to rectify issue with massively revised temporary foreign workers data

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