Quantifying the importance of immigration to the job market
Updated: May 10, 2022
When I worked at OECD and ESDC on population ageing, we looked at a number of different scenarios on how to grow a country's labour force. Common scenarios estimated the impact of retaining workers approaching retirement and improving employment outcomes of landed immigrants (both issues explored in earlier posts). Another scenario looked at levels of immigration.
In this latter context, one of the more innovative scenarios I have come across recently raised the spectrum of a future without immigration (thanks to a Conference Board of Canada study). Taking the medium growth population scenario from Statistics Canada, I generate two scenarios for Canada:
Labour force growth would slow to a halt without immigration
The first assumes that participation rates by broad age group remain constant at their current levels — yielding an estimated labour force growth of 28 percent over the next 30 years (slower than the previous 30 years but still rather robust).
These scenarios highlight that the real question is (and has always been) not whether immigration but how much? Additionally, looking through the lens of the job market, what skills (not just education) are needed?
The issue will be challenging across the country, but particularly so in those provinces that are already facing acute population ageing. Take for instance Atlantic Canada where the natural population growth (births less deaths) is already or very close to negative in every province. Quebec gets there in less than 10 years.
Each province is counting on, to varying degrees, immigration to offset population declines and boost labour force growth. Immigration must therefore be an essential component of a comprehensive labour market strategy to address current and future labour market needs.
Policy and research considerations
Of the many things we can do, here are 3 suggestions:
1. Recognize the importance of immigration. Immigration is already built into population forecasts. Let’s not take that for granted. Sometimes when something is missing (the illustrative scenario above) we realize how important it is (good lesson for life and research).
2. Skill, skills and skills. In the context of growing and persistent skill shortages and mismatches, the Federal Skilled Work program needs to be an actual skill program (not just an education and essential skills program).
3. Focus on job quality. Recognition of prior skills attained and increased efforts to better match immigrants upon arrival will go a long way to making the most of their potential and Canada’s.
Note: A more refined scenario depiction would take into consideration more detailed age categories and gender. However, doing so would not alter much the orders of magnitude.