Early in 2023, Statistics Canada’s new population statistic made a splash. Canada’s population was estimated at 39,566,248 on January 1 – for the first time in Canada’s history, an increase of more than a million over the year before.
By far the dominant factor in this increase was international migration, also over a million and accounting for 96 per cent of the year’s population growth. What was new was the increase in non–permanent residents: 607,782, or 58 per cent of the total international in-migration of 1,044,962, while new permanent residents, at 437,180, represented 42 per cent.
Looming behind these statistics is the Century Initiative, an influential lobby advocating a Canadian population of 100 million by the end of the century. Anne Michèle Meggs, a retired senior official in the Quebec immigration ministry and a member of the Inroads editorial board, and Pierre Fortin, Professor Emeritus of Economics at the Université du Québec à Montréal and a Fellow of the Royal Society of Canada, exchanged views on recent developments in immigration and their possible implications.
Anne Michèle Meggs
It is interesting that this is the first time non–permanent residents outnumber permanent residents in the population data. Anyone following administrative immigration figures knows that, for several years now, there have been two or three times more people in Canada or Quebec with temporary status than new permanent residents.
Where Statistics Canada leads us astray is in its affirmation that “both of these numbers (permanent residents and non–permanent residents) represent the highest levels on record, reflecting higher immigration targets and a record-breaking year for the processing of immigration applications at Immigration, Refugees and Citizenship Canada” (my emphasis).¹
Non–permanent residents do not figure in any official immigration targets, and nowhere is their connection with permanent residence made explicit. Canada’s immigration system is less and less planned. Immigration is rising, but at rates much higher than the federal government announces and with much less predictability as to when and where these people will be arriving, what skills they have and how best to help them integrate. The director of the Canadian Labour Economics Forum, Professor Mikal Skuterud of the University of Waterloo, shares my concern: “The temporary immigrant stream doesn’t have a target; it has no cap or limit.”²
In 2022, 437,180 people were accorded permanent resident status (number of landings or admissions). A large percentage of these new permanent residents had been in Canada for several years with temporary status. Only some are new arrivals.
On December 31, 2022, there were 1.6 million temporary permit holders residing in Canada. In addition, there were more than 70,000 asylum requests pending, many of them with work permits, many others waiting long months to obtain one.
This unplanned massive temporary immigration is consistent with the goal of the Century Initiative. The home page of the Century Initiative website has several dramatic affirmations. I’m very interested in your reaction to these statements as an economist.
On its home page, you can read the rationale: “We are shrinking in the world – by population and by economic power.”
The patriotic intent of the Century Initiative statements is admirable. Unfortunately, they are a confusing hodgepodge of true, misleading and outright false assertions.
Canada’s population is not shrinking among peers. From 1989 to 2019 according to United Nations data, our share of the G7 population increased from 4.2 to 4.9 per cent, and our population share of the 25 larger advanced OECD countries – call them the OECD25 group³ – also increased, from 3.2 to 3.7 per cent. Admittedly, from 1989 to 2019, our share of world population has declined slightly, from 0.52 to 0.48 per cent. This is mostly due to the fast-growing populations of Africa and South Asia. Do we want to emulate these developing countries demographically? High population growth in these regions is projected to push the world’s stable population to three to four billion more than the present eight billion.
The other assertion is that “we are shrinking in the world by economic power.” Is this true? If you measure global economic power by total GDP, as most people do, the answer is no. From 1989 to 2019, according to International Monetary Fund data, our total GDP increased slightly, from 4.1 to 4.5 per cent of total G7 GDP, and from 3.4 to 3.5 per cent of total OECD25 GDP. Admittedly, our total GDP went down from 2.1 to 1.4 per cent of world GDP. But then, who could match the stratospheric catchup growth rates of Asian economies such as China’s? And why should becoming more economically powerful in international elite circles be a national goal, as opposed to enhancing the material and spiritual well-being of the average Canadian?
Anne Michèle Meggs
How about “Our population is aging; our workforce is shrinking”?
Our population is aging. The large baby-boom generation is currently about 60 to 75 years old, and is retiring after having fewer children than previous generations. But economic research has consistently shown that faster population growth through immigration would not make a dent in the aging of the population resulting from the passing of the boomer wave through the “golden years” over the next couple of decades. One clear and definitive demonstration was presented recently by William Robson and Parisa Mahboubi of the C.D. Howe Institute.⁴
Anne Michèle Meggs
It’s also true that well over 75 per cent of immigrants are adults, and they often bring their parents to Canada through family reunification. Also, they make up a relatively small proportion of the general population, I recall the demographer Marc Termote pointing out that the mean age of labour force participants is higher for immigrants than for natives because they arrive in Canada and enter the workforce at a later age. Don Wright reminds us that immigrants age too, which has led at least one analyst to joke that the only way immigration could be a solution to the population pyramid problem is if Canada only accepted 15-year-old orphans as immigrants.⁵
All true. It’s a mirage to see faster population growth as helpful in preventing population aging. Furthermore, the Century Initiative statement that “our workforce is shrinking” is false. In the 12-year period 2007–19 (from before the 2008 recession to before the 2020 pandemic), Canada’s labour force increased by 13.5 per cent. That was twice the increase in the United States (6.8 per cent). Do we want to accelerate population growth to prevent a shrinking of the labour force that is just not occurring?
Anne Michèle Meggs
The Century Initiative website also claims that “economic growth is tied to population growth.”
This statement is either a tautology or a falsehood. By making more muscles and brains available, a growing population obviously allows a country to produce more goods and services. Total GDP increases. But this is an insipid tautology. If, instead, the statement means that a larger population is necessary and/or sufficient for GDP per capita to be large, then it is outright false. In fact, in 2019 the cross-country correlation between GDP per capita and population size in the OECD25 group was exactly zero. There were several smaller countries whose average standard of living was among the highest (e.g., Switzerland, Denmark, Austria and Sweden), and larger countries where per capita GDP was among the lowest (e.g., Italy and Spain). Furthermore, if we shift from a narrow GDP per capita to a measure of overall “happiness” as in the United Nations World Happiness Report, among the G7 and the OECD25 groups, in 2017–19, overall satisfaction with life was uncorrelated with national population.
The observation that immigration and GDP per capita are uncorrelated across nations was solidly backed up a few years ago by two in-depth reviews, one by Brahim Boudarbat of the Université de Montréal and Gilles Grenier of the University of Ottawa, and the other by Craig Riddell of the University of British Columbia, Christopher Worswick of Carleton University and David Green of UBC. Both research teams highlighted that increased immigration has little or no effect on GDP per capita.⁶
Anne Michèle Meggs
And here’s a lengthy Century Initiative affirmation that almost sounds progressive and adds a dire warning!: “Our population growth is tied to our quality of life. If we have more people, we have a larger workforce and we create more economic activity. This means more potential tax dollars we could use to maintain and improve social services, including healthcare and income security programs; and needed infrastructure. We can manage our growth or accept our decline.” The final assertion on the home page is “We need a bigger, stronger Canada.”
The statement that more people in the workforce will generate more economic activity and tax revenues is correct – more people in the labour force means larger GDP and more tax revenue. But the assertion that this will allow social services and infrastructure to be improved is a non sequitur. It implies that the larger GDP and tax dollars will not only cover the larger population but also increase social services and infrastructure per capita. This is just a restatement of the false assertion that a larger total GDP will increase GDP per capita (whether in the form of more private or public goods and services) and overall satisfaction with life on average. There is no basis whatsoever for arguing that growing “a bigger Canada” is a requirement for growing a better Canada.
Would faster population growth solve the problem of labour shortages? No. Labour shortages arise when the economy runs full speed at or above potential, so that labour demand comes to exceed labour supply. The unemployment rate goes down to the floor and the job vacancy rate rises to the ceiling. However, contrary to popular opinion, it is not a sure thing that population growth, whatever its origin, can alleviate labour shortages.
True, a larger working-age population allows labour supply and economic activity to increase. But what is often forgotten is that the new workers and their employers will then spend the additional income to buy more food, housing, clothes, transportation, investment goods, etc. The greater demand for labour that this new spending generates can in fact be as large as, or even larger than, the initial increase in labour supply. If so, the shortage of labour – the gap between labour demand and supply – will not be reduced. The gap will be unchanged or even worse. More immigrants in the workforce may be needed (and useful) to attenuate labour scarcity in specific sectors or regions, but they are unlikely to solve the gap at the level of the whole economy. The popular belief that population growth will solve the problem of labour shortages macroeconomically is a fallacy of composition.
What is the evidence for the absence of a negative connection between labour shortages and population growth? Well, an immediate piece can be extracted from Canada’s recent experience with job vacancies and total net migration. In 2021–22, just before the economic slowdown began and asylum claims expanded, the total net migration of people aged 18–64 to Canada had accelerated to 499,000, up 150 per cent from 199,000 in 2015–16. But the lift this gave to the workforce was not followed by a decline in the job vacancy rate. Instead, the job vacancy rate more than doubled, rising to 5.5 per cent of total available jobs in 2021–22 from 2.4 per cent in 2015–16. Extending the evidence to the OECD25 group of countries, it is readily found that, between 2016 and the spring of 2022, there was no systematic tendency for the job vacancy rate to fall more in countries where the workforce increased more rapidly. Quite the opposite. As in Canada, countries that experienced faster increases in their workforce saw their job vacancy rate increase on average.
Anne Michèle Meggs
I suggest that the large number of temporary immigrants is poor policy. The vast majority of temporary immigrants are not directly linked to labour-market needs.
It’s ironic that, in 2018, Canada signed the United Nations Global Compact for Safe, Orderly and Regular Migration, when our system is less and less “orderly and regular,” and an argument could be made that it’s becoming less safe.
In 2021 I described in Inroads how the Canadian immigration system has changed. For decades, we selected economically skilled workers from overseas based on a point system referring to characteristics known to facilitate socioeconomic integration – training in fields that are in demand, previous work experience, postsecondary education, knowledge of English or French, age under 44, preferably with families so they would be more likely to settle permanently in Canada. These people arrive as permanent residents, with a secure status that allows their planning for the future, taking out mortgages, getting car loans.
Among the 1.6 million temporary permit holders on December 31, 2022, 50.5 per cent (807,750) held study permits; 42 per cent (678,105) held open work permits accorded under the International Mobility Program (IMP) (e.g., Ukrainians arrive with a special permit issued under this program), and 7.5 per cent (119,995) held closed work permits issued through the Temporary Foreign Worker Program (TFWP).
The only program linked directly to labour demand is the TFWP, the smallest of these. The permit issued under this program ties the new arrival to a specific job and employer (who has been given authorization to hire foreign workers). These workers are generally less educated and work in low-paid positions in the agricultural and manufacturing sectors. The permits can be renewed, but the employee is dependent on the employer to renew the authorization. TFWP employment is precarious because the employer can pull the permit at any time. Almost all news reports about exploitation of temporary foreign workers relate to this program.
The other 1.5 million temporary permit holders are not selected by their profile, nor do they have a job on arrival. It is difficult, if not impossible, to obtain the data required to determine their specific needs on arrival, such as language training or skills, or educational upgrading.
Foreign students are a source of low-wage labour during their studies; Ottawa lifted all restrictions on off-campus work in November 2022. Previously, study permits allowed students to work only 20 hours a week during semesters and full-time during breaks. The International Mobility Program allows them access to an open work permit after graduation. Open work permits are also available for their spouses before and after graduation through the same program.
When it comes to the labour market and economic integration, there is little or no information available on their field of study, their Canadian work experience, or the educational levels, field of expertise or work experience of their spouses. Unlike rules for permanent residence, there are no specific language requirements for temporary immigration. It’s whatever the study program or the employer requires.
Are huge increases in this type of temporary immigration really the right way to go in the long run?
This requires a nuanced answer. Immigration has always been a big plus for the Canadian economy. I firmly side with those who believe it is helpful in relieving specific labour shortages in particular markets, even if the skills requirements are modest. Immigration should increase over time. But doing it too fast and with ever lighter skills requirements is not beneficial for our economy.
There is a well-known connection between economic benefits and the overall rate of immigration. The more permanent immigrants you admit and the more temporary immigrants you allow to enter, the more likely the last candidates down the two lists will have weak schooling and training credentials and get low earnings. This applies with particular force to temporary workers and students, because they are subject to much less scrutiny than candidates for permanent residence. (Actually, some temporary immigrants will never be able to meet the minimum number of points required for permanent residence.) If immigration to Canada is tilted toward low-wage labour, average GDP per capita will decline. Canadian economic research has provided evidence that increasing the total inflow of immigration, whether permanent or temporary, generally lowers the average skills level and annual earnings of arriving immigrants.⁷
The trend is particularly worrisome at present, because the conditions on temporary workers are very light and often determined by the prospective employers (who prefer paying low wages, of course). The educational establishments have their eyes on the subsidies they can get from departments of education. The consequence is that, with no cap for temporary immigration, Ottawa issues as many study and work permits as the market can bear, with little consideration given to specific labour characteristics.
Professor David Green of UBC has reminded us of an additional pitfall, widely discussed in the research literature:
Immigration … keeps wages down in occupations in high demand, and that reduces incentives for firms and workers already here to invest in the skills needed to fill those positions, reducing opportunities, missing an opportunity to increase the skill level of the work force and getting in the way of training and education policies intended to help workers with those opportunities.⁸
In other words, using too much immigration to solve labour shortages has the potential to increase wage inequality among workers and weaken incentives for firms to increase productivity.
Anne, assuming that immigration to Canada should be a balanced inflow of high- and low-skill immigrants, what targets would you set for permanent admissions and temporary permit holders? What changes would you suggest the current system needs?
Anne Michèle Meggs
Whether it is for Quebec or Canada, I would gradually bring the system back to a primarily one-step process. People arriving in Canada or Quebec would be selected from overseas so that they arrive in the country with permanent resident status.
In parallel, it is essential to plan temporary immigration levels, to determine in advance under what conditions and at what pace temporary work and study visas will be issued. This planning must be done in collaboration with the provinces in line with the availability of public services. And the provinces must include the municipalities. It is absurd to see municipalities currently developing their long-term growth plans for infrastructure, density and mobility with no clear idea of population growth. As we indicated at the outset, the only source of population growth in Canada now is international migration. Immigration planning or population growth must be part of every other government plan.
In the present system, the federal government is obliged to consult the provinces on its plans for the permanent immigration level, but not for temporary immigration. How could this be amended for the better?
Anne Michèle Meggs
Well, consider first the case of Quebec. Its specific concerns, when it comes to immigration, are recognized in the Canada–Quebec Accord Relating to Immigration and Temporary Admission of Aliens signed in 1991 after the failure of the Meech Lake Accord.⁹ Not only does this agreement allow Quebec to set its own levels and establish its own criteria for permanent immigration programs, but it also ensures that Quebec will give its consent for international students and temporary immigrant workers. Quebec therefore has broad powers to regulate and control its international intake. However, Quebec has not yet shown signs of wanting to plan or reduce temporary immigration, which is at odds with the CAQ government’s claim to want to keep immigration levels down.
As for the other provinces, their agreements with the federal government do not allow them to limit temporary immigrant workers. All provinces, however, have power over the number of international students they want to allow, since education is a provincial jurisdiction. Clearly, none of them is yet willing to start limiting the number. Do the provincial governments understand the actual number of new arrivals these international students represent, given that the federal government offers work permits to their spouses? It is doubtful that the provinces assess student requirements for housing – and public transit. Furthermore, they and their spouses often need language training and other services.
Ottawa ultimately has control over admissions whether they be permanent or temporary. The provinces have no control over the number of ad hoc visa programs put in place through ministerial decree within the framework of the International Mobility Program. One of the biggest of these is the program to take in Ukrainians. So far, close to 500,000 applications have been approved. Fewer than a third have actually arrived, and the processing of applications continues. Clearly, Canada has a moral obligation to open its doors to these people or others fleeing conflict, but greater consultation and collaboration with the provinces is essential to prepare the way for their arrival.
In fact, Ottawa needs to base targets on the total number of arrivals, whatever the immigration status, to be able to welcome newcomers properly. The increased arrival numbers should not be so large that the host communities feel overburdened by inclusion and integration. Accommodation of the newcomers means ensuring that they have a roof over their heads, that they can integrate rapidly into the labour force, that they have access to language training, that they can obtain financial services, and that government services such as public transit, child care, education and health care are available and affordable for them. Canada’s recent immigration policy proposes huge increases in permanent immigration targets while refusing to set targets for the even higher levels of temporary immigrants.
This cavalier policy is in great danger of transforming immigration to Canada from a successful operation to a painful breakdown. To answer your question, nobody really knows the right target because planning in line with welcoming and settlement capacity has never been properly undertaken. Canada needs to set guidelines and targets for both permanent and temporary immigration, looking at the number and pace of arrivals rather than the type of permit. Otherwise, the newcomers will not be able to participate adequately in their new communities, and Canadians will lose confidence in immigration policy.
I agree that optimal immigration is not maximal immigration. First, the expansive immigration policy inspired by the Century Initiative is generating chaos at Immigration, Refugees and Citizenship Canada. More than 1.7 million temporary and permanent applications are waiting in the pipeline, which doesn’t include asylum seekers and their applications for a work permit.
Second, as I said above, the increased inflow of immigrants is likely to have a zero or negative impact on the average living standard of Canadians; it will not attenuate the pace of population aging, and it will not reduce global labour shortages. It may make them worse.
Third, I add to your last observation, Anne, that overly expansive immigration targets risk not only producing some “loss of confidence” in immigration but fuelling an anti-immigration movement as has exploded in the United States and Europe. Canadians in general like to vaunt the good performance of their immigration system and their generosity toward immigrants. Unfortunately, this is a vision of the past. A recent online Environics survey (in which respondents are more likely to express their true feelings than in an interactive telephone survey) found that about half of Canadians think that there is too much immigration to Canada.¹⁰ It would not take much to metamorphose Canada’s proverbial generosity into generalized xenophobia. This has recently occurred in one of the world’s most progressive societies, Sweden. In the 2022 election, the Social Democrats there were defeated and the anti-immigration vote exploded. We must avoid slipping into this kind of political quagmire.
My bottom line is that immigration is an imperative work of civilization. It must increase over time, but going too fast is a dangerous course to follow. We should do it “allegro ma non troppo,” as in Italian classical music.
Anne Michèle Meggs
Your concern is certainly relevant, Pierre. I’ve recently been reading about immigration policy in Spain. Spaniards have had quite open attitudes toward immigration over the last 50 years.
However, in 2018 the emergence of the right-wing VOX party with anti-immigration positions coincided with a slight increase in negative immigration attitudes in the Spanish population. A recent study addressed the “chicken or egg” question: is VOX’s political platform playing on anti-immigration sentiment in Spain or the source of it?¹¹
The study concluded that “the strong showing of VOX in 2018 and 2019 cannot be attributed to a generalized increase in anti-immigration sentiment among the Spanish population as a whole, since public opinion towards immigration was evolving favourably during those years.” The authors could not determine whether recent hardening of attitudes toward immigration was due to VOX or contextual factors such as the economic situation, the pandemic and the Canary Island irregular arrivals. Nevertheless, Canada, another country with relatively high tolerance levels for immigration, should heed the warning at the end of the report:
What is clear, however, is the effect VOX is having on polarisation, causing a growing divergence of attitudes towards immigration based on ideological positions. This polarisation is “freezing” opinions by ascribing them to ideologies and tainting arguments with labels related to partisan sympathies. This polarisation is concerning because it becomes an obstacle to calm and rational debate on immigration and public policies devoted to manage it.
The present absence of a “calm and rational debate” on immigration is what worries me the most.
¹ Statistics Canada, Canada’s Population Estimates: Record-High Population Growth in 2022, The Daily, March 22, 2023.
³ The 25 are Australia, Austria, Belgium, Canada, Czechia, Denmark, Finland, France, Germany, Greece, Ireland, Israel, Italy, Japan, South Korea, the Netherlands, New Zealand, Norway, Portugal, Slovakia, Spain, Sweden, Switzerland, the United Kingdom, and the United States. The economies of these OECD countries are deemed “advanced” by the IMF, and each has more than three million people.
⁴ William B.P. Robson and Parisa Mahboubi, Inflated Expectations: More Immigrants Can’t Solve Canada’s Aging Problem on Their Own (Toronto: C.D. Howe Institute, March 13, 2018).
⁵ Don Wright, Rhetoric vs. Results: Shaping Policy to Benefit Canada’s Middle Class (Ottawa: Public Policy Forum, June 28, 2021).
⁶ Brahim Boudarbat and Gilles Grenier, L’impact de l’immigration sur la dynamique économique du Quebec, Report to the Quebec Ministry of Immigration (Quebec City, 2014); W. Craig Riddell, Christopher Worswick and David Green, How Does Increasing Immigration Affect the Economy? Policy Options, November 2, 2016.
⁷ Charles Beach, Alan Green and Christopher Worswick, Toward Improving Canada’s Skilled Immigration Policy: An Evaluation Approach (Toronto: C.D. Howe Institute, 2011).
⁸ David Green, No, Immigration is Not Some Magic Pill for Saving the Economy, Globe and Mail, December 25, 2022.
⁹ Aliens: people born outside the country, not extraterrestrials!
¹⁰ Environics, Confederation of Tomorrow 2022 Survey, Detailed Data Tables (Toronto, 2022). Question 5A: Agree or disagree that “overall, there is too much immigration to Canada.” Strongly agree or somewhat agree = 48 per cent for all provinces/territories.
¹¹ Carmen González Enríquez and Sebastian Rinken, Spanish Public Opinion on Immigration and the Effect of VOX (Elcano Royal Institute, April 15, 2021).