Canada Needs Immigration to Balance Aging Population

A new report from the Conference Board of Canada has found that immigration levels should increase to 413,000 per year by 2030 to strengthen Canada’s economic growth. The report highlights the need for increased immigration in order to respond to challenges posed by Canada’s aging population. It is projected that without significant policy changes, including a substantial increase in immigration, the costs required to support retirees could undermine the strength of Canada’s economy in the coming decades.

Proposed Scenarios

The report proposed four scenarios for the future of Canada’s population growth. Across all scenarios, it is clear that immigration is an essential component, and that improving the fertility rate — 1.6 births per woman in 2015 — is not enough to maintain the economy.

In the report’s most optimistic scenario, it is projected that Canada inviting up to 413,000 immigrants per year by 2030 will result in the strongest economic growth. This scenario — in which Canada’s population increases to 100 million by the year 2100 — ‘results in a sharp increase in Canada’s potential output over the long term,’ states the report. Under this scenario, the increase in economic growth results in greater revenue for the provincial and federal governments. The number of homeowners also increases, leading to greater spending on durable goods.

Another scenario posed by the report projects that if immigration grows moderately, but shifts to a younger demographic of new arrivals, the impact on Canada’s economy and fertility rates could be significant. For example, if more men and women come to start careers and families in Canada, the country may benefit from their economic input and the input of their children for future generations.

More Working-Age Immigrants Needed

The report declares that although immigration may not entirely solve the challenges posed by Canada’s aging population, nevertheless new immigrants are essential in order to reduce the side effects. As Canada’s population ages, more pressure is put on social welfare systems to support the elderly. In the meantime, more jobs may become available as workers retire, and an influx of young families and workers is needed to fill these positions.

Increasing the Canadian population will ‘cushion the impact’ of economic consequences of overall population aging, the report states, adding that inviting more immigrants to enter the workforce will ‘boost Canada’s labour force and generate stronger long-term economic growth’. Economic growth may be strengthened in the long term because inviting qualified, working-age individuals — rather than focusing on increasing the fertility rate — provides a faster and effective solution to a shrinking pool of workers. It also increases the ratio of workers to retirees, which eases pressure on social services.

If population growth continues as established without a significant effort to grow the population, it is projected that Canada will be home to 54 million people by 2100. That number, argues the report, is not sufficient to sustain a strong economy and support an aging population. The subsequent slowing in economic growth will impact revenue for governments, and consequently job creation and social services.

Looking Forward

‘Growing Canada’s population through immigration boosts economic growth and softens the economic burden of a rapidly aging population and low birth rates in Canada,’ concludes the report.

The figure of 413,000 new immigrants per year by 2030 proposed in the report’s most optimistic scenario is well within the realm of possibility for Canada. As previously reported, in the period of July 2015 to July 2016, immigration levels to Canada reached their highest point since at least 1971, when records began. A total of 320,932 new immigrants arrived in Canada during that time, representing an increase of one-third over the same period in 2014—2015.

“If the growth in immigration levels that we saw from 2015 to 2016 repeats itself in the coming year, it could surpass that most optimistic figure by 2017,” says Attorney David Cohen.

“Prospective immigrants to Canada may be encouraged that statistics and research support the Goverment's agenda to increase immigration. Inviting more immigrants and helping them to establish careers and families in Canada not only enriches our current society, it ensures the future strength of our economy.”