Employers boost recruitment of temporary foreign workers, despite softer labour market

2024/04/25 Leave a comment

Of note (should decline given recent government changes):

Canadian companies ramped up their recruitment of temporary foreign workers last year, even as the labour market softened and the unemployment rate drifted higher.

During the last quarter of 2023, employers were approved to fill more than 81,000 positions through the Temporary Foreign Worker Program, according to figures shared by the federal government with The Globe and Mail. It was easily the largest quarter for approvals since Ottawa made several employer-friendly changes to the program in the spring of 2022.

For the year, employers were approved to fill roughly 240,000 job vacancies, an increase of 7.5 per cent from 2022 – and more than double what was permitted in 2018.

The federal government is now trying to clamp down on temporary migration to the country with various changes that include tighter restrictions on the TFW program. Immigration Minister Marc Miller has said that Canadian companies have become “addicted” to temporary foreign labour….

Source: Employers boost recruitment of temporary foreign workers, despite softer labour market

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Ottawa focuses on French-speaking economic immigrants – and often bypasses stronger candidates

2024/04/16 Leave a comment

The federal government is prioritizing French-speaking economic immigrants, a shift that has often seen higher-ranking applicants bypassed in the selection process, according to a Globe and Mail analysis of figures published by the Immigration Department.

Since it overhauled the Express Entry system for skilled immigration last year, Ottawa has invited 19,700 people to apply for permanent residency based on their French skills, easily more than in other new categories for selection. The government has also extended 36,150 invites to the broad pool of candidates, whose selection is based solely on points rather than specific attributes.

To pick these French speakers, the government is effectively reaching deeper into the pool of immigration candidates, which means the cutoff score for entry is frequently much lower in this category than in others. These individuals have lower expected earnings in Canada than people with higher scores.

“What’s the objective here? If it’s about economic growth, then this is not a smart policy,” said Mikal Skuterud, an economics professor at the University of Waterloo. “But clearly, that’s not what this is about. They’re using economic-class programs to achieve different objectives.”

…“It is definitely going to affect our ability to select the top talent,” said Parisa Mahboubi, a senior policy analyst at the C.D. Howe Institute….

….Anne Michèle Meggs, a former director of planning and accountability at Quebec’s Immigration Ministry, said it was unlikely Ottawa was selecting French speakers to curry favour with certain communities ahead of the next federal election. “There are not a lot of votes to find among francophones outside Quebec,” she said….

Source: Ottawa focuses on French-speaking economic immigrants – and often bypasses stronger candidates

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Mahboubi: The other immigration problem: Too much talent is leaving Canada

2024/02/16 Leave a comment

More commentary on emigration and the apparent churn we have between arrivals and departures:

The Statistics Canada paper also draws attention to the challenges immigrants encounter, extending beyond economic integration to encompass factors such as family dynamics and considerations, cultural adaptation, and the political, economic, or cultural conditions of their country of origin. Furthermore, the study highlights the phenomenon of transnationalism, where immigrants maintain ties in multiple countries. Some immigrants may plan to emigrate from Canada as part of a strategic migration approach. Not all these circumstances are easy for Canadian policy makers to address.

Other circumstances, however, are well within Canadian policy makers’ scope. Canadian living standards are stagnating. Weak capital investment is hurting productivity and incomes. Canadian businesses tend to stay small. Canadian governments rely relatively heavily on personal income taxes, with high rates that apply at relatively low income levels – not an approach that signals to talented people that Canada is the place for them. Tax reform and other changes that mitigated these problems would make Canada more attractive to everyone – immigrants and Canadian-born alike.

Paying attention to which immigrants are likeliest to leave, and why, can help Canada improve its ability to attract and retain talent. We may be able to refine our selection criteria to raise the proportion of talented, entrepreneurial immigrants who stay in Canada. We can make it easier for immigrants with specialized skills, in health care for example, to work in their professions. Moreover, addressing factors such as high taxes and regulations that stifle entrepreneurship can help Canada retain more immigrants and retain more Canadian-born talent – a win for everyone.

Parisa Mahboubi is a senior policy analyst at the C.D. Howe Institute, where William Robson serves as CEO.

Source: The other immigration problem: Too much talent is leaving Canada

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Mahboubi and Skuterud: Canada must stem the surge in temporary foreign workers and international students

2023/12/15 Leave a comment

More needed analysis and commentary:

Recent years have seen an unprecedented increase in Canada’s non-permanent resident population, far surpassing increases in annual admissions of new permanent residents. The unbalanced growth in Canada’s temporary and permanent migration inflows will inevitably result in a growing undocumented population and forced deportations. Both developments risk inflaming Canada’s immigration politics and undermining public confidence in the immigration system.

It is imperative that the government take immediate steps to stem the continuing growth in foreign student and temporary foreign worker entries.

Several factors have contributed to the non-permanent resident (NPR) population surge, including ad-hoc programs aimed at expanding eligibility for permanent resident (PR) status, increasing postsecondary reliance on international student tuition revenue and eased employer access to temporary foreign workers, most notably those in low-wage occupations.

Statistics Canada estimates that by the third quarter of 2023 Canada’s NPR population had reached 2.2 million, while entries of new permanent residents remained below 500,000 and which the government has announced will stabilize in 2025. The tightening bottleneck in temporary-to-permanent residency flows is, in fact, worse, because most PR slots continue to be filled by applicants residing abroad, not from Canada’s NPR population.

A key factor driving the growth in NPR inflows is the government’s repeated announcements of ad-hoc programs aimed at easing the pathway to PR status for lower-skilled migrants who would otherwise struggle to clear the hurdle of the Express Entry skills-based points system. Allocation of PR slots has increasingly become a lottery incentivizing large numbers of migrants to try their luck at obtaining Canadian PR status.

But given the limited number of PR admissions, large numbers of justifiably hopeful NPRs will be unable to realize their dreams. As their study and work permits expire, many will be unable or unwilling to return to their home countries. These migrants will become increasingly vulnerable to workplace exploitation, distorting wage outcomes in lower-skilled labour markets, and poverty, which government supports are unable to address because of their ineligibility.

Canada urgently requires a multipronged strategy to stem the continuing growth of the NPR population and restore the stability and integrity of the immigration system. In our view, policies should be aimed at augmenting migrants’ own incentives to seek NPR status in Canada.

On the international student front, we recommend reintroducing the cap on foreign students’ off-campus work hours at 20 a week; it was waived in October, 2022, and recently extended to April 30, 2024. The punting of this issue down the road is unhelpful in restoring predictability for prospective foreign students. Study permits have become de facto work permits incentivizing migrants whose primary objective is accessing Canadian jobs, not human capital investments.

We also recommend restricting study permits to institutions of a certain standard. Too many private colleges are essentially used as stepping stones to residency. Designated learning institutionswhose students are currently ineligible for postgraduation work permits should also be ineligible for study permits. The government should also seek to undesignate institutions based on the measured immigration and labour market outcomes of their graduates. Moreover, these metrics should be regularly published by Immigration, Refugees and Citizenship Canada (IRCC) to help prospective migrants make informed decisions and to combat false dreams pushed by education recruiters.

On the temporary foreign worker front, the government must reconsider extended measures allowing, for example, 30 per cent of the work forces of employers in specific industries to be composed of low-wage temporary foreign workers. Stemming the growth in the low-wage stream of the Temporary Foreign Worker Program and restoring the pre-2020 hiring regulations would recognize recent evidence of the adverse effects of this program on wages and local unemployment rates.

Most important, the government needs to bring back predictability in its system for allocating PR admissions in the economic-class applicant pool. Though well-intentioned, ad-hoc programs aimed at easing the pathway to PR status are contributing to growth in TR inflow. IRCC needs to return to relying on the Comprehensive Ranking System (CRS) for allocating PR admissions, as it did before 2020. Given the transparency of the CRS “points system” and a stable CRS cutoff over time, unsuccessful applicants can see what human capital investments they need to be successful, thereby advancing the objectives of our skilled immigration program.

If these policy levers are collectively applied, they can stem growth in Canada’s NPR population, restore fairness and transparency in the PR system and secure the immigration system’s integrity and sustainability. In doing so, we can ensure that Canada continues to be a welcoming and prosperous country for all.

Parisa Mahboubi is a senior policy analyst at the C.D. Howe Institute. Mikal Skuterud is a professor of economics at the University of Waterloo, director of the Canadian Labour Economics Forum and a fellow-in-residence of the C.D. Howe Institute.

Source: Canada must stem the surge in temporary foreign workers and international students

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Mahboubi: Canada’s underemployed economic immigrants: How to stop wasting talent

2023/08/29 Leave a comment

Usual list of factors and issues. Regulated profession credential recognition is under provincial jurisdiction and that is where some of the movement is. Was always amused when at IRCC foreign credential recognition that appeared to me as all process with little substance.

And if economic principal immigrants are largely not using settlement services, the government needs to understand why and make necessary program adjustments (or just accept that for most economic immigrants, these services may be less necessary).

Would be nice if IRCC would publish settlement services on open data!

Canada consistently fails to fully utilize immigrants’ skills, limiting its efforts to address labour-market needs and imposing a loss on the economy.

Economic immigration is Canada’s largest and most popular admission category. To make such immigration more responsive to labour-market needs, Canada recently launched category-based selection that prioritizes in-demand occupations facing shortages, such as those in health care and science, technology, engineering and mathematics (STEM) fields.

However, once they get to Canada, foreign-educated immigrants, particularly recent immigrants, often encounter difficulties finding employment that aligns with their qualifications, and experience persistent skills underutilization. This phenomenon exists even among immigrants in targeted occupations in category-based selection, limiting the benefit of immigrants’ influx in those occupations.

According to Statistics Canada, more than 25 per cent of all immigrants (aged 25-64) with a foreign bachelor’s degree or higher worked in occupations requiring only a high-school diploma or less in 2021.

Earlier evidence from 2016 also shows that only two in five economic immigrants with a health-related degree worked in health-related occupations. The mismatch rate is also high among immigrants with a degree in the STEMfields (more than 50 per cent).

While admitting more immigrants in targeted occupations can help combat some chronic labour shortages, addressing underutilization issues is far more critical.

Obstacles that prevent economic immigrants from fully utilizing their skills include regulatory, language and cultural barriers, nonrecognition of foreign credentials and work experience, lack of Canadian experience, and discrimination.

To better integrate economic immigrants, provincial governments need to work with regulatory bodies to streamline foreign-credential and work-experience recognition. Some provinces are already moving in the right direction. For example, eight provinces offer practice-ready assessment programs for internationally trained family physicians.

But although this program can help speed up the credential recognition process, it is not open to all physicians and the number of assessments seems to be low, failing to keep pace with demand: Only 50 applicants will be accepted this year in Ontario. Provinces should expand this program based on the outcome evaluation and consider a similar program for other regulatory professions.

Provinces can also learn best practices from abroad. For example, Australia offers four assessment pathways for international medical graduates to register to practice. It has also taken several actions to reduce red tape and to streamline and expedite the assessment and registration process. The changesinclude increasing senior staff and cutting the processing time for initial risk assessments, fast-tracking admission of practitioners from trusted countries, and reviewing standards and requirements.

Professional Engineers Ontario recently removed the requirement of Canadian work experience for qualified foreign engineers. This change is a welcome strategy for other regulatory professions and other provinces to follow.

In addition, investing more in bridging programs such as Canada Work Experience that connects immigrants with experienced professionals in their respective fields through experiential learning, internship, or unlicensed opportunities helps immigrants understand the local job market. It also allows them to learn the workplace culture and gain Canadian experiences and new skills.

Governments need to support programs focusing on employability skills and develop targeted job-matching programs to facilitate connections between employers seeking skilled workers and immigrants looking for opportunities. They also need to educate employers on the benefits of hiring immigrants and encourage employers to hire recent immigrants.

A McKinsey report found that organizations with more ethnic and cultural diversity are 36 per cent more likely to outperform their competitors in profitability. According to a Toronto Region Immigrant Employment Council’s survey, 80 per cent of GTA employers who intentionally hire immigrants noticed a positive impact on their organization.

Raising awareness of, enhancing access to, and encouraging participation in employment services, language learning resources and bridging programs helpprovide better and faster labour-market integration of newcomers. Between 2016 and 2020, only 8.5 per cent of economic principle applicants accessed federally funded employment and community connection programs, far less than other immigrant groups.

According to a survey in 2021, only 8 to 9 per cent of skilled newcomers who used employment services learned firsthand about the available services from government offices (e.g., upon arrival at the border). The federal government needs to actively reach out to newcomers, educate them about employment assistance services and improve the usage of prearrival employment services.

As Canada plans to attract more skilled immigrants to fill gaps in the labour force and support the economy, better use of their skills and integration of this talent are becoming more crucial. Their prosperity means generations of benefits to come.

Parisa Mahboubi is a senior policy analyst at the C. D. Howe Institute, where Tingting Zhang is a junior policy analyst.

Source: Canada’s underemployed economic immigrants: How to stop wasting talent

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

2023/04/24 Leave a comment

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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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

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Canada’s next wave of immigration set to add more fuel to overheated housing market

2022/01/07 Leave a comment

About time for greater focus on the links between levels and housing prices. Federal and provincial governments need to consider such externalities rather than just push for more:

After a frenetic 18 months when Canadians pushed up home prices in a quest to ride out the pandemic in comfort, another influx of buyers is set to provide more fuel to the overheated real estate market.

The federal government has increased its annual immigration targets to the highest levels on record, creating the conditions for a surge of new permanent residents, which Canada needs to fill job vacancies. These new immigrants will add to the country’s population and immediately boost the need for housing in major job centres and nearby cities.

This will ramp up competition for homes at a time when national real estate prices have jumped 40 per cent in the past two years.

“Canada’s strong population growth is a factor driving our home prices upward at a faster pace than in many other economies,” said Bank of Montreal chief economist Douglas Porter, who analyzed the relationship between population growth and home prices in 18 developed countries.

He found that countries with faster population growth have had greater home price inflation than those whose populations have remained stable, or decreased.

Between 2010 and 2020, New Zealand and Canada both saw their populations climb by an average of more than 1 per cent each year. In Canada’s case, much of that growth was attributable to immigration.

Over that same decade, home prices rose an average of 7.9 per cent each year in New Zealand and 7 per cent each year in Canada.

Meanwhile, countries with shrinking populations have experienced stagnant or falling home values. Japan’s population declined by an average of 0.2 per cent each year, and home prices there rose an average of 0.2 per cent annually.

One reason immigration may be pushing up Canadian home prices is that Canada’s policies cater to newcomers with wealth and job skills. Many new permanent residents arrive with hefty bank accounts, or with enough professional expertise to make money quickly. And, like anyone else with means, they buy real estate.

Parisa Mahboubi, a senior policy analyst with the C.D. Howe Institute and an immigration labour expert, said integration is a challenge for all newcomers. But, she said: “Economic immigrants, especially those with Canadian experience or with education, are able to integrate into the labour market quickly. This means they are able to purchase a property sooner than other immigrants.”

New research from Statistics Canada suggests that in many cases it’s pre-existing wealth, not Canadian income, that is behind pricey real estate purchases by immigrants.

For example, in Richmond, B.C., a typical immigrant buyer in the lowest wage quintile, with median annual income of just $11,100, spent a median of $763,000 on a home in 2018, according to data from Statscan’s Canadian Housing Statistics Program (CHSP).

In contrast, a typical Canadian-born buyer in British Columbia in the lowest income quintile, with median annual income of $32,300, spent a median of $396,000 on a home in 2018, according to CHSP, which analyzed land registry information, property assessments and tax filings.

The disparity in the amounts spent by low-income immigrants and Canadian-born buyers suggests that the newcomers were relying on money not earned in Canada. The actual sources of the funds are unknown. CHSP has said the immigrant wealth could have been income earned previously in Canada or abroad, or income that was earned by others or underreported.

CHSP observed that in 2018 the majority of immigrant buyers across B.C. had moved to Canada prior to 2009 and had been admitted through the country’s various economic immigrant programs, which are designed to attract skilled workers and those with wealth.

“If you are an economic immigrant and you don’t have other opportunities, real estate becomes one of the fastest wealth generators,” said Andy Yan, director of the city program at B.C.’s Simon Fraser University. “They are wealthy. But when they try finding a job, it goes south.”

Other factors that have contributed to high home prices in Canada include low mortgage rates, a flood of domestic investors looking for high investment returns, and millennials increasingly forming families and seeking properties.

In the Toronto region, the country’s largest job centre, the average price of a home is above $1-million and many of the surrounding cities are nearing or above that price.

That has pushed Canadians and newcomers out of Toronto and into smaller regions in Southern Ontario. Some have left the province altogether for more affordable areas such as Regina, Saskatoon, Winnipeg and Halifax.

Canada’s six largest metropolitan areas – Toronto, Vancouver, Montreal, Edmonton, Calgary and Ottawa – used to be the top destinations for immigrants. But that has been changing.

In 2002, Canada’s largest cities took in 88 per cent of the country’s immigrants and non-permanent residents. In 2019, the proportion was just 68 per cent, according to Canada Mortgage and Housing Corp.

Over that same period, net international migration to those cities grew by 43 per cent. But in the rest of Canada it soared by 370 per cent, with particularly strong growth in Ontario locations such as Niagara, London, Kitchener-Waterloo and Cambridge.

Today, there is an acute shortage of housing in those smaller cities.

In Kitchener-Waterloo, Cambridge, London and the Niagara-St. Catharines region, the typical price of a home is 60 per cent higher than it was two years ago, according to the Canadian Real Estate Association home price index, which adjusts for higher-priced homes.

The flow of new permanent residents will put even more pressure on those places. If prices continue to rise, the higher cost of living could discourage newcomers.

“We need the immigration for the labour market. But if we don’t get the immigration for the labour market because they can’t afford to live in the community, that’s a significant challenge,” St. Catharines Mayor Walter Sendzik said.

The federal immigration target for 2021 was 401,000 new permanent residents. The goal for 2022 is 411,000. For 2023, it’s 421,000. By comparison, the number of new permanent residents admitted to the country in 2019 was 341,180.

Anthony Passarelli, a CMHC senior analyst, said that if immigration reaches these record-high levels and Canada doesn’t respond by increasing its housing supply, the effects on the housing market could be noticeable. “We will likely go through a similar situation, where you see another price surge and the ripple effects of people getting priced out of the larger population centres and moving further out,” he added.

Asked whether Canada should slow the pace of immigration until the country has enough affordable housing, BMO’s Mr. Porter said: “I suspect policy will be little swayed by housing market concerns. Having said that, at the very least the impact on housing should be taken into consideration when determining immigration targets.”

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Mahboubi, Skuterud – An Economic Reality Check on Canadian Immigration (Part I), Part II link

2021/03/11 Leave a comment

Good and needed critical thinking regarding the limitations and weaknesses of the government’s immigration plan and approach:

COVID-19 travel restrictions hobbled Canada’s immigrant admissions in 2020. In response last fall, the federal government revised its 2021 targets upwards, saying it was necessary for our economic recovery.

Showing its commitment to the ambitious target, on February 13 the government issued invitations to a record-breaking 27,332 applicants in its Canadian Experience Class (CEC) program, which targets applicants with Canadian work experience, and are therefore more likely to be living in Canada.

But to issue so many invitations, it was forced to drop its Comprehensive Ranking System cut-off score in its Express Entry system to an all-time low of 75, far below the previous record of 413. This strategy is analogous to a university doing away with entry standards to significantly boost enrolment. If history is an indicator, there is good reason for concern.

The primary objective of Canada’s economic-class immigration programs is to leverage immigration policy to boost the economic well-being of Canadians. To do that, we need immigration inflows to raise GDP per capita, not simply increase the population.

To assess if we are achieving this objective, Canadian researchers examine earnings of new immigrants. Since workers’ earnings comprise roughly two-thirds of GDP, we need new immigrants to earn more than the national average if we are to raise GDP per capita.

Unfortunately, the evidence is that Canada has historically struggled to achieve this objective, and continues to struggle. The hard reality is that we saw a substantial deterioration in the earnings of subsequent cohorts of new immigrants and an increase in their relative poverty rates from the early 80s to the early 2000s.  

This prompted numerous reforms of skilled immigration policies since 2005, primarily directed at improving immigrant selection, including introducing pre-migration mandatory English/French language testing and education credential assessments. A key piece of the policy reform was the 2015 introduction of the Express Entry system.

Rather than admit applicants who have met the minimum requirements of one of Canada’s economic-class programs on a first-come, first-served basis, the Express Entry system skims the cream of the applicant pool on a regular basis using a tool known as the Comprehensive Ranking System (CRS). The CRS assigns each applicant a score between zero and 1,200 using a set of criteria, including age, education, and work experience. The factors and their relative weightings were determined by a statistical analysis predicting immigrants’ earnings during their first 10 years in Canada.

While there is evidence that these reforms have helped curtail the deterioration in immigrants’ earnings, they continue to experience significant economic integration challenges. For example, a recent Statistics Canada study shows that international students who graduated in 2010-2012 earned considerably less than domestic graduates in their first five years after graduation.

Shortfalls of former international students are also evident when their earnings are compared to domestic graduates with similar degrees in similar fields of study.

The economic challenges of Canadian university-educated immigrants are, in fact, exceptional. Whereas university-educated immigrants from India who settle in the United States outperform their US-born counterparts with similar education, the average earnings of Indian-born university-educated immigrants in Canada fall significantly below their Canadian-born counterparts. This reflects the continuing truth that US universities and salary premiums attract the world’s best and brightest while Canada’s relatively generous welfare state attracts migrants less sure of their talents.

Examining the 2016 earnings of recent immigrants admitted under an economic-class program, we find that CEC principal applicants had higher average earnings than the non-immigrant population. When we also include their spouses and dependants, their combined average earnings were only slightly lower than prime-age non-immigrants (Figure 1). This small difference reveals both the success of Canada’s CEC program, but also the risk of forgoing CRS standards to reach immigration targets.

Immigration, Refugees and Citizenship Canada (IRCC) has held 170 Express Entry draws since January 2015. The median CRS cut-off score in past draws was 461 and has never dropped below 413. Lowering the standard to 75 means admitting immigrants who will experience more significant economic-integration challenges. Doing so during an economic crisis with high levels of joblessness seems ill advised.

In the government’s defence, all 27,332 CEC applicants who received invitations in February’s draw have at least one year of Canadian experience, and it is likely that a high percentage are currently employed, and in all likelihood many close to the front line during the pandemic. There are unquestionably compelling ethical reasons for providing these workers and their families with pathways to permanent residency.

But there is a risk in using economic-class programs to achieve humanitarian objectives; it compromises the ability of the Express Entry system to achieve its economic objectives.

The Tinbergen Rule says that for every policy target there should be at least one policy instrument. When there are fewer instruments than targets, the ability of policy to achieve its targets is compromised. Let us make sure that all our immigration programs do at least one thing well, instead of everything badly.

Tomorrow, we examine the potential consequences of increasing immigration during the crisis.

Source: https://www.cdhowe.org/intelligence-memos/mahboubi-skuterud-–-economic-reality-check-canadian-immigration-part-i

Part II: https://www.cdhowe.org/intelligence-memos/mahboubi-skuterud-–-economic-reality-check-canadian-immigration-part-ii

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