Statistics Canada’s new study, Immigration as a Source of Labour Supply, shows Canada’s labour market is dependent on high levels of immigration. Further, it suggests modest, sustained levels of immigration will not be enough to offset the labour impacts of Canada’s ageing population. Below are reasons why immigration will remain crucial for the Canadian labour market:

Recovery from the Covid-19 pandemic

Pressure on the labour supply is temporarily high as businesses emerge from the covid-19 pandemic. The latest Job Vacancy report by Statistics Canada shows job vacancies climbed to 957,500 in the first quarter of 2022. So far, it is the highest quarterly number on record.

The Job Vacancy report shows that the health care and social assistance sectors record a significant shortage due to the growing ageing population. Moreover, the covid-19 pandemic has further impacted the shortage.

Another is the construction industry, which records numerous open positions, and the manufacturing and retail sector, which continues to record high vacancies.

Growing Ageing Population

The study suggests persistent labour supply challenges over the long term due to the growing aging population. Nearly one in five working Canadians are approaching retirement age.

As a result, modest, sustained increases in immigration levels will not be sufficient to offset the longer-term impacts. However, ongoing immigration is still essential to help alleviate the effects of ageing population on the labour market over time.

Immigration to help manage the labour shortage

Many businesses struggle to fill vacancies because of Canada’s severe shortage of skilled workers. As a result, Canada has turned to immigration to help solve this issue by providing numerous opportunities to temporary residents.

For example, extending PGWPs, conducting targeted draws and resuming all program draws. In addition, the Canadian government continues to increase immigration targets to meet the economic demand.

Even before the pandemic in 2010, the employment rate for economic immigrants rose by 8 percent. Additionally, their salaries increased by 39%. In comparison, employment rates for Canada-borns increased by 2%.

This percentage difference is because there are not enough Canadians to fill open positions in the country’s growing economy. Therefore, to fill the gap in labour shortages and maintain economic growth, immigration would remain essential.