Better integrate and increase Canada immigration rate are a must
Canada’s government is re-evaluating now how many immigrants it should welcome in the next years. As we know, Canada counts on immigrants to fill it labors needs. And to enhance its workforce, Canada immigration rate must rise widely. That is what it shows a new report released yesterday by Conference Board of Canada. The report brings a study comparing three hypothetical scenarios for immigration in Canada between the years of 2017 and 2040 to prove its point.
Also, researchers claim on the report that is vital to better integrate current immigrants in Canada, giving them better job positions in other to really boost the economy and have better fiscal impacts of Canada immigration policy. Finally, the report affirms that if those challenges weren’t effectively accomplished, there might have some serious negative impacts on Canada’s economy and fiscal revenue. Especially if the immigration levels kept growing without a good planning.
Many stakeholders gave some insights in this study about the number of immigrants that the Canadian government should accept in the country. In their opinion, Canada must increase the number of immigrants to prevent a fiscal and economic collapse posed by the Canada’s aging population and low birth rate.
Canada’s government current target is 300,000 immigrants per year. But the specialists say it should aim higher: 450,000 immigrants per year. That would be an increase of 50 percent in the original target. Therefore, to show how this would have a positive impact, the report presented three different hypothetical scenarios for Canada between 2017 and 2040. The scenarios would be: “Status Quo Scenario”, “Medium Immigration Scenario”, and “High Immigration Scenario”.
The three scenarios
In the “Status Quo Scenario”, researchers believed that Canada would continue to welcome 0.82 percent of its population in newcomers each year. That scenario was based on Canada’s recent immigration rates and used as a reference to the other two.
According to the researchers, under the “Medium Immigration Scenario”, Canada would gradually increase its newcomers. The intake would go to nearly 1 percent of its population by 2040. And that would be necessary to replace job positions for the baby boomers’ generation, that will be retiring in this period.
Finally, in the “High Immigration Scenario,” Canada would boost to at least 450,000 newcomers per year by 2025. After that, according to the researchers, the country would maintain an immigration rate of 1.11 percent of its population over the subsequent 15 years.
In all scenarios, the researchers considered the impacts of the immigration rates on Canada’s population size, population aged 65 and over, workers-per-retiree ratio, GDP, GDP per capita, and health care costs as a share of provincial revenues.
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Comparing the Three Scenarios
Gross domestic product (GDP) and GDP per capita
Status Quo: real GDP grows by an average annual rate of 1.85 percent between 2017 and 2040. And real GDP per capita improves from $50,087 in 2017 to $62,901 in 2040.
Medium Immigration: the 450,000 immigrants arriving in Canada in 2040 contribute 0.45 percentage points to average annual real GDP growth of 1.94 percent over the forecast period (about one-quarter of growth).
High Immigration: 528,000 immigrants arriving in Canada in 2040 contribute 0.66 percentage points to average annual real GDP growth of 2.05 percent over the forecast (nearly one-third of growth).
So, in all three scenarios, real GDP per capita rises. It is highest in the Status Quo Scenario, increasing from $50,087 in 2017 to $62,901 in 2040, compared to the medium ($62,348) and high ($61,628) scenarios for 2040. In addition, in all scenarios, the real GDP per capita increases too. But, it is highest in the Status Quo Scenario, increasing from $50,087 in 2017 to $62,901 in 2040.
Population and revenues
From a certain point of view, the medium and high scenarios would have a better impact on the economy and fiscal revenues, considering Canada’s aging population and low birth rate. In comparison to the Status Quo, the medium and high scenarios would improve a bit the workers-per-retiree rate. As it would bring more young workers to the country’s labor force, increasing provinces revenues.
Also, those immigrants would probably not burden the health care costs since they about 12 years younger than the national average age. It would mean less pressure on the health care system on the medium and high scenarios than the Status Quo scenario.
However, medium and high scenarios would create other economic and fiscal pressures of their own since the social expenditures would rise with more immigrants arriving in Canada and a larger population overall.
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Conclusion: how to have a successful immigration plan
It is not only a matter of increasing numbers. If the Canadian government doesn’t accomplish the challenge of better integrate newcomers in Canada’s labor force and make them have good economic outcomes, it might be worthless.
Because simply upping the number of immigrants, without a good plan can even make more pressure on the health care and other welfare programs. Also, it may, in fact, lead to economic costs and risk decreasing public support for immigration. Hence, to maintain a successful immigration plan, Canada must consider three major factors:
First, to grow and have a good economic performance, Canada needs to improve the labor market outcomes of immigrants.
Second, Canada needs to better integrate economically and socially it’s immigrants, making them access better job opportunities. That will show a higher social absorptive capacity and generate more economic activity, increasing government revenues. Therefore, the government will be able to invest even more in social welfare programs.
And last but not least, Canada has to maintain a solid immigration policy. That is practically the only way to keep the economy growing and keep the social welfare programs. And is, for sure, one of the key factors that support Canada’s high living standards.
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