The economic situation is only going to get more demanding for Canadian employers. We expect that over the next three years the national unemployment rate will decline back toward 6 per cent, which is effectively full employment. Finding workers and containing wage pressures are already resurfacing as key issues for Canadian employers in some regions and sectors.
The role of immigration in Canada’s economic development over many centuries is generally appreciated by most other Canadians. Less well understood is the role that immigration will have to play in the coming years if Canada’s economic development and growth are to be sustained.
Around the world, there are significant differences in attitudes and policies toward immigration, with clear economic consequences. At one end of the spectrum is Japan, whose total population is already in decline. The share of its population over the age of 65 is expected to increase from 22 per cent in 2010 to more than 30 per cent by 2030. However, Japan has yet to introduce broad policies that actively encourage immigration. Although some controls on foreign workers have been relaxed, its underlying economic growth potential is being steadily eroded by this aging phenomenon and by a shrinking workforce.
Similarly, there are numerous countries in Europe that are now suffering the negative effect of an aging workforce and weak labour force dynamics. Much of Europe is struggling to find the right balance between economic and social objectives in its approach to immigration.
At the other end of the spectrum are Canada, Australia and the U.S. All three countries are actively encouraging immigration as one means of building their labour forces and economies over time.
The born-in-Canada population will continue to grow. Although the fertility rate rose slightly during the 2000s, to 1.66 in 2007, it is still well below what is needed to maintain the population through natural increase, which is 2.1 children per woman. Canada will need more immigrants if the labour force is to grow and remain vibrant. Other demographic groups that will be called on to contribute to Canada’s labour force stability are mature workers, aboriginal people, women, people with disabilities and youth.
If Canada is to increasingly rely on immigrants, obviously it needs a modernized, integrated and well-managed immigration policy.
What, then, should be the key attributes of that policy?
• Increase the weight given to economic factors. A reinvigorated immigration policy will need to recognize the importance of skills-based immigration to address Canada’s labour market needs and to unlock immigrants’ potential for making a long-term economic contribution.
• Ensure that we have an immigration system that is streamlined, coordinated and well-managed. Canada cannot afford to have an immigration system, or any national policy for that matter, where there is misalignment between the federal and provincial levels.
• Be prepared to expand the use of temporary foreign worker (TFW) programs to fill short-term gaps in labour markets. As a matter of public policy, Canada should develop an array of tools to balance short-term labour market needs with the longer-term objectives of a growing and skilled labour force. TFW programs, delivered by provincial governments through their close contact with local business, are one such policy tool.
• Increase employers’ upfront involvement. If a renewed immigration policy is to address Canada’s labour market needs appropriately, it stands to reason that employers need to be included in the decision-making and delivery process.
• Create new and improved pathways to permanent residency for TFWs and foreign students.
• Improve foreign credential recognition, access to language training, settlement services and opportunities to gain meaningful work experience. To be fully effective in the labour force, immigrants will need the same hard and soft skills and demonstrated competencies that other participants in the Canadian labour market have.
Labour supply is more plentiful now in many industries than it was two years ago, but the recession has provided only temporary reprieve from the tight labour market conditions faced during 2007 and much of 2008.
Failure to adequately plan for the coming deceleration in labour supply growth will likely leave organizations short of skilled employees and could dampen growth prospects for the entire Canadian economy.
Immigrants can come to the rescue, but only if the policy framework and the supporting infrastructure create the right conditions for success.
Glen Hodgson is the author of “Canada’s Future Labour Market: Immigrants to the Rescue?” published in the July-August issue of Policy Options ( www.irpp.org). He is senior vice-president and chief economist at the Conference Board of Canada.