Canada immigration is improving from pandemic lows, but it’s still weak. A BMO economics analysis shows the net flow of non-permanent residents was minimal in Q2 2021. It’s better than the beginning of the pandemic when the flows were negative, but not by much. The bank sees this as a big contributor to the rising job vacancies, and will potentially force wages to rise to attract domestic labor.
Canada Is Seeing A Lot Fewer Non-Permanent Residents
Canada’s inflow of non-permanent residents is still much lower than normal. During the beginning of the pandemic, there were net outflows, but those have since reversed. Positive flows are better than contractions, but they’re still fairly close to nil, especially in contrast to pre-2020 numbers.
The lack of non-permanent residents has put a major drag on the labor supply. “This is likely adding to the labor shortage situation in Canada, as it appears difficult to pull domestic labor into jobs normally filled by foreign workers. Or it might take more significant wage increases to do so,” said BMO.
A Lack of Non-Permanent Residents Is Making The Labor Shortage Worse
Over the past three quarters, the inflow of non-percent residents has been around 70,000/people per year. BMO says this is about 30% lower than the 100,000/people per year that was the norm before the pandemic began.
During this drought of non-permanent residents, the labor shortages have continued to pile up. “Surely enough, Canadian job vacancies are now running roughly 100k above pre-pandemic levels (although rising quickly),” said the bank.
“Easing of labor shortages might be predicated on these population flows returning (which might be a while), unless policymakers can spur participation domestically.”
Basically, either find immigrants or raise wages to attract domestic labor. The immigration brochure must be missing the part where they pitch you providing cheap labor, so domestic companies can avoid wage increases.
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