Economic impact of immigration to Canada

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The economic impact of immigration is an important topic in Canada. Two conflicting narratives exist: 1) higher immigration levels help to increase GDP^[1][2] and 2) higher immigration levels decrease GDP per capita or living standards for the resident population^[3][4][5] and lead to diseconomies of scale in terms of overcrowding of hospitals, schools and recreational facilities, deteriorating environment, increase in cost of services, increase in cost of housing, etc.^[6] A commonly supported argument is that impact of immigration on GDP is not an effective metric for immigration.^[7][8] Another narrative regarding immigration is the replacement of the aging workforce.^[9] However, economists note that increasing immigration rates is not an entirely effective strategy to counter it.^[10][11] Policy Options found that mass immigration has a null effect on GDP.^[12] Increased immigration numbers and the associated soaring housing prices have significantly contributed to the rise of inflation in 2021 to the highest in 18 years.^[13][14][15]

Canada is one of the top Western countries in terms of per capita immigrant acceptance.^[16] The per capita immigration rate to Canada has been relatively constant since the 1950s. However, in the first and second decades of the 21st century, there was a steady increase in the education and skill level of immigrants to Canada. This was due to the focus on higher average productivity-based applicants, resulting in immigrants to Canada being, on average, better educated than Canadians.^[17][18] This trend was enhanced for income redistribution in the third decade of the 21st century by opening low-skilled immigrant pathways with minimal immigration score requirements to reach a target of 400,000 immigrants annually. This has cemented a new narrative on immigration: immigration is to fill low-skilled jobs and alleviate competitive labor market pressures faced by businesses that use cheap labor.^[19][20][21] Starting in 2022, the Trudeau government has set immigration targets influenced by the Century Initiative's lobbying. Over a million immigrants were targeted in 2022, followed by 465,000 immigrants in 2023, 485,000 immigrants in 2024, and a projection of 500,000 immigrants in 2025.^[22][23][24] Across Canada, people have been asking the government to match affordable housing to the set immigration levels, while the government annually welcomes 500,000 new permanent residents, and more than 800,000 foreign nationals into the country on study visas, as asylum seekers, and on temporary work visas.^[25] A Canadian journalist highlighted the poor preparedness for receiving immigrants in swathes, pointing to Canada's historic need for a "servant class" and "cheap labor" for bourgeoisie and the owning class. Furthermore, the journalist observed that Canada's failure to address or neutralize the social and professional barriers for immigrants suggests it is not as welcoming as it purports to be. This policy of inaction silently perpetuates the creation of a servant class within the country's diverse mosaic. As a part of the process, by default, the government systematically forces a majority of immigrants into vulnerable positions and economic disenfranchisement.^[26][27]

An article by an ex-policy maker states that Canada is rooting for the low-wage-low-productivity model of competitiveness that it has been locked in since the mid-1980s with the immigration targets, a problematic approach according to Paul Krugman in the long term, and which the ex-policy maker also endorses by stating that throwing more cheap labor at problems without a significant increase in productivity will affect a country's ability to improve its standard of living over time.^[28] Experts also warn that sustaining low productivity and the permanent integration of low-skilled temporary residents or foreign workers would lead to forced tax increases to manage associated government costs.^[29] The article further observes that it is imperative that Canada and the "government for the people" require a fundamental re-commitment to pre-1970s dominating national objective and efforts for a steady improvement in raising the living standard of Canadians by embracing the supply and demand concept of labor economics, and improving the economic efficiency of the system.^[30] A former director from Quebec's Ministry of Immigration observed that the government needs to treat people better, as their lives and families' futures are at stake.^[31]