COVID-19 restrictions could derail immigration strategy
Economic growth plan may be hobbled
OT TAWA • The travel and border restrictions currently in place due to COVID-19 risk derailing Canada’s strategy of growing the economy through high levels of immigration, says a new report from RBC Economics.
The effect on Canada’s economy will depend on how long the restrictions stay in place and how quickly economic activity recovers from the downturn. But the report also warns of a longterm danger if global immigration is scaled back for years as a result of the pandemic.
“Canada has been one of the world’s top destinations for immigrants, and this year was supposed to be no exception,” the report says, noting that Canada saw a record-setting 341,000 newcomers in 2019 and was planning for 370,000 new permanent residents in 2020.
“Amid ongoing border restrictions, travel- related health fears, and the global economic downturn, we expect immigration levels to be down sharply in 2020,” it says.
“The disruption will reverberate across the economy, given our reliance on immigration for labour-force growth and to offset Canada’s aging demographic. Among the potential casualties: industries with labour shortages, urban rental and housing markets, and university budgets.”
The report says permanent resident additions were down 30 per cent in March 2020 versus a year earlier, temporary foreign worker entries in the agricultural sector fell 45 per cent in the same period and the number of students entering on study visas fell 45 per cent.
It says the net loss of new permanent residents this year could total up to 170,000 if the restrictions last through the summer.
Andrew Agopsowicz, RBC senior economist and the report’s author, said we’re going to see a “short shock” from the restrictions currently in place, but it’s important to keep a longterm focus on adapting our immigration system to the COVID-19 world, as new immigrants are crucial for Canada’s fiscal stability.
“While the restrictions are necessary and will eventually be temporary, we shouldn’t fall back into a world in which we don’t encourage immigration like we have in the last few years,” Agopsowicz said in an interview. “Falling off that track is really dangerous for our long-term prospects.”
On top of immigration, the report notes that “refugee resettlement — which delivered around 150,000 newcomers to Canada in the last five years and has been a key source of pride for the federal Liberals — has stopped entirely.”
Canada’s largest cities and its universities and colleges are among the places that will feel the biggest effect of reduced immigration, the report says.
“In fact, with closed borders, Toronto, Vancouver and Montreal would all have seen declines in population in 2019, as Canadian- born millennials fled for more affordable outlying areas,” it says. “A slowdown in immigrant- related demand for homes could squeeze the rental and housing markets.”
The exact i mpact on housing markets from the COVID-19 immigration drop is difficult to analyze, Agopsowicz said.
“It’s unclear because the housing market’s been affected by a wide range of COVID- related things,” he said. “People are just not leaving their houses and all this other stuff that’s not related to immigration. But I think the biggest thing we tried to first point out is that cities rely so heavily on immigration to fuel growth.”
The report warns that with schools moving to online classes this fall, there may be a pronounced drop in enrolment from international students — who are an increasingly important source of tuition revenue for universities and colleges, as well as a significant source of new permanent residents for Canada.
“We’ve been looking into this for the last six months, just more detailed thinking about the future of education,” Agopsowicz said. “The importance of international students to a lot of universities’ budgets has grown immensely over the last 10 years.”
The report says the University of Toronto has seen international enrolments double since 2010 to 25 per cent of the student body. “If just one- fifth of its foreign students decide not to study in Canada this year, it could see a shortfall of around $200 million on a $3-billion budget,” it says.
Regardless of the measures governments take to encourage international students to come, Agopsowicz said students may simply decide to put travel off for a year, given the pandemic.
Overall, the report says, Canada must focus on ensuring immigrants continue to come, given that more than 30 per cent of Canada’s overall population is at least 55 years old but just eight per cent of immigrants are.
“In 2019, Canada’s population grew by about 580,000 people (or 1.6 per cent), with immigrants accounting for more than 80 per cent of the increase,” it says. “Without immigration over the past 15 years, Canada would have aged on a similar trajectory as 1990s Japan. Instead, Canada is one of the younger countries in the G7.”