Canada has its lowest unemployment rate ever. However, there was little doubt the labour market would recover given the significant demographic shifts transforming Canada’s workforce before the pandemic, which will continue to convert over the next decade.
From an immigration policy perspective, one of the biggest concerns is how a recession will impact Canada’s labour market performance of immigrants who obtain permanent residence during periods of economic downturn. Research shows that such immigrants may see their labour market outcomes negatively impacted for the rest of their careers in Canada.
This is alarming in light of the significant shock to the Canadian economy at the start of the pandemic and Canada seeking to welcome the highest levels of immigration in its history. But a closer look suggests that the COVID recession is different, and immigrants who have recently landed or will be landing soon are still poised for a bright future in the Canadian labour market.
Advantages of Canada’s Labor Market
1. Canadian government investment to help newcomers:
A third primary consideration is IRCC’s increased investment in immigrant settlement services such as workforce and language training. IRCC now spends some $2 billion per year on such services compared to about $350 million per year twenty years ago.
These services are also delivered pre-arrival to give immigrants helpful information and support to help expedite the settlement process once they arrive in Canada.
2. More Canadian workers retiring:
The first reason is the exodus of baby boomers from Canada’s workforce. This exodus helps explain why Canada enjoyed its lowest unemployment rate ever before the COVID recession and has achieved another historic low in the unemployment rate despite the pandemic continuing to impact the Canadian and global economy.
Canada has about 20 million workers, of whom about 9 million are baby boomers. All 9 million of these baby boomers will reach Canada’s retirement age of 65 within the next decade. More of them are retiring, leaving a more significant gap in the labour market.
Historically, Canada has been able to fully replace retirees with young Canadian graduates completing their education and entering the workforce, but this is no longer the case. Canada’s low birth rate means it must rely on other sources of talent to replace its retiring workers.
Replacing retiring workers is essential to keep the economy going and ensure the tax base is large enough to support the services that residents of Canada can benefit from, such as education and health care. This is even more important as the ageing of the population will see Canada’s health care spending rise.
3. Competitive selection process:
One is the shift to a more competitive selection process for skilled immigrants. The federal government, provinces, and territories have transformed their selection criteria in recent years to account for human capital factors demonstrated by research to result in more substantial economic outcomes for immigrants.
Under the Express Entry Comprehensive Ranking System (CRS), for example, candidates who are young, well-educated, fluent in English or French, with professional work experience, and other bonuses such as having Canadian education and work experience, are awarded a higher CRS score which increases their chances of obtaining permanent residence and ultimately succeeding in the Canadian labour market.
More Immigrants Selected from Within Canada
Another major shift has been the increasing number of permanent residents selected from Canada. Before the pandemic, immigrants overseas comprised some 70% of those who landed under Express Entry, but last year, this figure fell to 30%, with Immigration, Refugees and Citizenship Canada (IRCC) relying more on in-Canada candidates to achieve its immigration levels targets amid pandemic-related disruptions such as travel restrictions.
It remains to be seen whether IRCC will rely more on selecting immigrants overseas or in Canada after the pandemic. We know Immigration Minister Sean Fraser’s mandate letter asks him to identify more immigration pathways for in-Canada candidates.
In addition, provinces and territories are increasingly selecting more in-Canada candidates via the Provincial Nominee Program (PNP) and other streams.
Main Reason Why Immigrants Have a Bright Future in Canada's Labor Market
Other talent sources include under-utilized groups such as women, persons with disabilities, older workers, Indigenous peoples, and disengaged youth, among other groups. But adding more of them to the labour market would not fully compensate for all the retirees even if we lifted their employment participation rates to the national average.
This explains why immigration is so crucial to Canada’s economic success. Before the pandemic, they comprised up to 100% of Canada’s annual labour force growth on a few occasions, which will become the norm over the next decade.
An experienced Canada Immigration Consultant can help guide applicants interested in going to Canada. The visa process and application will more likely be fast-tracked. Their goal is to approve successful applicants within weeks.
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