Newcomers to Canada Not Driving Employment Gains – Scotiabank

Canada’s expansive immigration policy – which has seen an influx of 1.5 Million newcomers to the country in the last twelve months alone – has been predicated on the assumption that a large volume of newcomers is necessary to support an aging demographic and address labour shortages.

However, recent research from banks including BMO (TSX:BMO) and TD (TSX:TD) has increasingly indicated that the influx of new Canadian residents has had more negative than positive consequences – including the exacerbation of a housing shortage, and worsening weaknesses in Canada’s already strained infrastructure, such as healthcare.

A new report from Scotiabank (TSX:BNS)’s Derek Holt now posits that “the narrative that immigration is driving jobs and GDP is more hype based upon spurious correlations than substance”, implying that the ” Canadian immigration experiment” is not just worsening the housing crisis, and straining Canadian infrastructure. It is also failing to deliver the benefits of the premise this policy has been primarily predicated on.

In the report, Holt notes “The popular theory is that Canada’s jobs juggernaut has been driven by a surge of immigration over 2022–23.”

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84% of all employment gains in Canada have gone either to those born in Canada or to permanent residents who have been here for 10 or more years. About 14% of total employment growth over this period went to temporary residents.

Of the remaining 2% of employment gains, only 10% were due to landed immigrants who have been in Canada for under 5 years.

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Holt adds several implications that this data forces one to consider. First of these is that “If employment growth is not being driven by fresh arrivals and their conversion to landed immigrant status, then by extension the diversified drivers of overall economic growth are probably not being driven by fresh arrivals.”

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Another key implication Holt notes is that “If immigration is not driving the employment gains, then perhaps we shouldn’t count upon it to keep employment growth going for as long as high immigration targets are maintained.”

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