A new report suggests that if Canada were to shut its doors to immigrants completely, its labour force and economic growth would shrink significantly.
The report, carried out by the Conference Board of Canada, estimates that without immigration economic growth would slow from a trend rate of 1.9 per cent to an average of 1.3 per cent annually.
“While it is unlikely that Canada would stop immigration completely, building this scenario helps us better understand the contributions of newcomers to Canada’s economy,” said Kareem El-Assal, the Senior Research Associate for Immigration at the Conference Board of Canada. “If it stopped immigration, Canada would experience a shrinking labour force, weak economic growth, and greater challenges funding social services such as health care.”
In a no-immigration world, 26.9 per cent of the country’s population would be aged 65 and over by 2040. Meanwhile the ratio of workers to retirees would drop from 3.6 to 2.0.
Under this scenario, paying for social services such as health care, which becomes more expensive as the population ages, would be even more difficult for the country. Provincial governments across the country would likely need to increase taxes to compensate for the declining number of workers. Additionally, with a shrinking labour force, modest domestic demand, and the prospects of fiscal pressures and tax hikes, firms would likely forego operations in Canada, resulting in lower levels of business investment.
Currently, immigration accounts for 71 per cent of Canada’s population growth and has accounted for as much as 90 per cent of labour force growth in recent years. By 2034, the number of deaths in Canada is anticipated to exceed births and immigration is expected to account for 100 per cent of population growth.
The Conference Board of Canada found that boosting immigration to 1 per cent of Canada’s population (about 400,000 immigrants per year) by the early 2030s—up from 290,000 in 2017—would help to keep Canada’s population, labour force, and economy growing at a modest rate.
Article published 18th May 2018