Canada is facing significant economic headwinds because of its demographics. This may not seem too alarming, but it is. Baby boomers are retiring, the population is aging, and the fertility rate, at 1.6, according to Statistics Canada, is well below the 2.1 babies per adult couple required to replace the population. Because of these shifts, Canada faces a declining labour force, a large population of non-working dependants, and a weak demand for consumer goods and investment vehicles.
Why does this matter? Because if we do not act, our children will inherit a country that is financially worse off in a world where Canada is no longer a leading economy. If unchecked, Canada’s economy will languish, provinces will spend more than one-third of their budget on health care for an elderly population, and there will be a small — and shrinking — domestic market for food, furniture, housing, cars, cellphones and banking services.
Growing Canada’s population to 100 million by 2100 will reverse these trends. 100 million sounds big — after all, it is a tripling of Canada’s current population. However, we have 84 years to reach this number, and immigration levels would only need to increase three to five per cent per year, rising slowly from 0.85 per cent to 1.3 per cent of the population, according to the 2016 report from the Conference Board of Canada: A Long-Term View of Canada’s Changing Demographics: Are Higher Immigration Levels an Appropriate Response to Canada’s Aging Population? This translates to about 450,000 new permanent residents per year over the next 10 years, enabling the population to grow responsibly and incrementally.
One-hundred million is not opening the floodgates, nor is it swamping our thoughtful systems and processes for evaluating applications and integrating new arrivals. We believe “human infrastructure” is as necessary as physical infrastructure.
We can and should invest in Canada’s talent base by supporting the selection and integration programs necessary to realize the potential of people we are able to attract.
The Conference Board report highlights how increasing the number of newcomers to Canada is necessary for healthy economic growth and to offset some of the negative economic implications of the aging baby boom.
If Canada was to grow to 100 million, the Conference Board forecasts annual economic growth of 2.6 per cent per year, compared to current projections of a long-term, low-growth scenario of 1.6 per cent. At current rates, Canada’s population will start to shrink in 20 years.
If immigration levels were to fall to zero, by the end of the century, Canada would be roughly half its current size and the economy would stagnate. In numerical terms, the differences are stark. Without immigration, the Conference Board forecasts a Canada of 19.5 million people and a long-term growth rate of 0.2 per cent per year.
One might argue size doesn’t matter and Canada can have a small population and maintain its GDP per capita. After all, Canada has done pretty well so far. Long-term GDP per capita growth comes from gains in productivity, capital and the size of the labour force. What are our prospects? Well, current GDP per capita is growing at less than one per cent per year. In fact, in the past 10 years, Canada’s total factor productivity growth has been zero, according to the Conference Board.
Labour force growth drives Canada’s economy. The increase in available hours per week creates growth. Fewer available workers result in growth industries starved for increasingly hard-to-find and expensive talent. Ask the technology sector — Canada needs people to grow its labour force, and Canada needs new arrivals to do that.
The alternative to labour force growth is fewer houses sold, fewer cellphones bought, fewer teachers needed, fewer airplane tickets bought, and fewer airplanes built. Canada will have health care it can’t afford, specialists we can’t access, and wait times we don’t even want to think about. Companies will have a sales operation with little research taking place and little investment made in institutions such as the University of Waterloo and the Princess Margaret Cancer Centre in Toronto.
Historically, Canada’s economy and society thrive with higher immigration. In 1913, 400,000 immigrants came to Canada, representing 5.5 per cent of the population at the time, and the impact was strong economic growth, according to the 2016 Statistics Canada report 150 Years of Immigration in Canada. To put this in context, 1913 immigration levels would be the equivalent of over 2,005,000 immigrants in 2017.
In the late 1800s and early 1990s, the immigration policy under former Minister of the Interior Clifford Sifton was an integrated effort to populate the prairies. It included land grants, investment in infrastructure (the transcontinental rail line), research into crops like winter wheat, and a marketing program abroad to convince people to come to Canada.
More recent examples of the positive impact of immigration also exist. In a landmark study, labour economist David Card found the Miami economy was able to absorb a large one-time influx of Cubans, increasing the Miami labour force by seven per cent, without having a negative impact on wages or unemployment at all levels of the local economy, according to his 1990 paper The Impact of the Mariel Boatlift on the Miami Labor Market.
Immigrants create jobs, jobs create opportunities
New arrivals bring different skills, provide diverse perspectives, and increase the resilience of the economic base. Immigrants also help cities grow, encouraging them to scale up in areas such as transit, communications technology, primary education, water and sewage, and airports. Immigrants are overrepresented in STEM (scienc, technology, engineering and mathematics) fields and growth industries, where the need is greatest.
Upon arrival and for the first 10 years living here, new arrivals to Canada are healthier than people born in Canada, according to the Institute for Clinical Evaluative Sciences. New arrivals to Canada start more companies than people born in Canada do.
When immigrants are welcomed and included in society and the economy, we succeed and our economy grows. A long-term commitment to immigration is a long-term commitment to economic growth. Thoughtful, gradual and responsible measures will get us to 100 million people. In the process, a more interesting Canada develops.
Diversity helps businesses — and culture, and the vital character of a country. Canada is an open society with a genius for getting along. Our welcoming nature is our competitive advantage.
Kate Subak is executive director of Century Initiative in Toronto. For more information, visit www.centuryinitiative.ca.
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