Arabnews24.ca:Thursday 20 July 2023 11:15 AM: The unemployment rate rose in June, wage growth slowed, and job gains continued as record numbers of newcomers and international students continue to arrive in Canada. And a new report from Desjardins points out that Canada will need to settle many more newcomers if it hopes to counter-balance its aging (and retiring) workforce demographic.
That’s the current labour market reality for immigrants arriving in Canada.
60,000 full-time jobs added in June
Statistics Canada data for June showed that the economy created 60,000 new jobs, while the unemployment rate rose 0.2 percentage points.
The economy, propelled by gains in full-time work, added 60,000 jobs in June, according to the latest data from Statistics Canada.
The job gain is far more than was predicted by economists, reports Canadian Press.
Meanwhile, the unemployment rate increased to 5.4 percent up from 5.2 percent in May. That’s the highest it’s been in more than a year.
Job report shows severe labour shortages continue
The June increase in unemployment represents the second month in a row the unemployment rate has risen.
Canada, which continues to experience severe labour shortages in many sectors of the economy, is welcoming a record number of immigrants, including international students who increasingly comprise the temporary workforce.
Canada set a record for population growth in 2022, growing by more than one million people. The total population grew by 2.7 percent. That’s the fastest rate since 1957.
Job report reveals strong labour market
The current Liberal federal government has set ambitious annual immigration targets and plans to welcome 500,000 immigrants per year by 2025.
“The rapidly growing labour force, which was also helped along by a rise in participation, will further ease some of the labour shortages reported by employers,” said Desjardins economist Royce Mendes.
“On the whole,” said Mendes, “this was a very strong labour market update.”
Many sectors saw job gains
Mendes also pointed out that population growth creates additional demand for goods and services “in an economy that’s already running too hot.”
Here are the sectors that saw the most job gains in June:wholesale and retail trade manufacturing health care and social assistance, and transportation and warehousing.
According to Pedro Antunes, chief economist at the Conference Board of Canada, the supply of workers has outpaced job growth, which is why the unemployment rate has risen.
Working in Canada | A 5-Step Approach
Interest rates also rose again
“I see a beneficial situation in the sense of, we are addressing … the excess demand issue by adding to supply with more workers,” said Antunes, “and we’re taking some pressure off of the labour market with the unemployment rate coming up a little bit.”
However, the softening of the labour market in the June report was not enough to deter the Bank of Canada from raising interest rates again.
The central bank, in its fight to get inflation down to 2 percent, has been looking for signs in the labour market that its continued rate hikes are working to cool the economy.
The bank chose to end its rate hike pause in June following economic data that indicated interest rates were not high enough.
Owning a home became more expensive
The July quarter percentage point rate hike brought the Bank of Canada’s key interest rate to 5 percent. That is the highest it has been since April 2001.
The July hike again increases the cost of borrowing and raises debt-servicing charges for Canadian mortgage holders.
Canada’s continuing hot labour market is a cause of high inflation, the bank argues. It also has concerns about the economy’s resilience to higher borrowing costs and continuing wage growth.
However, according to Statistics Canada, year-over-year wage growth slowed significantly in June, increasing just 4.2 percent from a year ago (the year-over-year gain was 5.1 percent in May).
Population growth is key to economy
The new Desjardins report, as reported by Nojoud Al Mallees of The Canadian Press, examines exactly how much population growth among working-age Canadians is necessary to maintain the old-age dependency ratio (meaning the ratio between 15 to 64-year-olds and those aged 65 and older).
The report discovered that the working-age population would have to grow by 2.2 percent per year through 2040 to maintain the same ratio that existed in 2022.
If Canada chose to return to the average old-age dependency ratio it had between 1990 and 2015, reported Al Mallees, that group of Canadians would have to grow by 4.5 percent annually.
“I feel like the discussion around immigration levels in Canada, by and large, focuses on the immediate impact on the Canadian housing market,” said Randall Bartlett, Desjardins’ senior director of Canadian economics.
“And so, what I wanted to do was sort of zoom out and provide some broader economic context around immigration and why immigration to Canada is important.”
Immigration fills the labour market need
And while Canada is experiencing (and working to solve) a housing crisis, particularly in the rental market, many economic experts argue that the labour market can absorb more workers via higher immigration and that Canada needs more working-age inhabitants to support the tax base as more people retire.
Desjardins estimates the country would need to build 100,000 more units every year to offset upward price pressures caused by having a higher number of permanent residents in the country.
“We need immigration at a relatively high rate, actually, in order to offset the economic impacts of aging — to be able to pay for the health care that Canadian seniors are going to need,” Bartlett said.
Newcomers achieving better outcomes
A recent Desjardins analysis, reports Al Malless, finds Canada’s plan to increase immigration could boost gross domestic product per capita if newcomers continue to have the same success getting work that they’ve enjoyed recently.
The jobless numbers from the June jobs report certainly support that.
The employment outcomes of recent newcomers, in particular those who come through the economic stream, have improved compared to those of previous arrivals. That’s in part because of changes to federal immigration policy.
In 2018, the median wage of economic immigrant principal applicants surpassed that of the Canadian population by the time they had been in the country for one year, according to Statistics Canada.
Solving the housing crisis is critical
“We’re bringing in very, very talented people,” Bartlett said. They can find jobs and “generate earnings very quickly that are outpacing the Canadian average,” he added.
But solving the housing challenge remains critical, said Bartlett, particularly when it comes to continued public support for higher immigration.
“If that leads to scaling back immigration in a meaningful way, then that means Canadians are going to be facing a significant bill going forward to meet the aging costs of older Canadians.”
Immigration is the solution
Writing in The Globe and Mail, Irfhan Rawji and Daniel Bernhard argue convincingly that the solution to the housing crisis IS to bring in more immigrants, and that immigrants are not the cause of our housing current housing shortage.
“Immigrants don’t simply occupy existing housing,” they argue. “Fact is, they built most of our current housing stock and could build even more. Each worker occupies one home (less, if they share) and builds dozens more for everyone else – an irrefutable net gain.”
The authors argue that government inaction and the lack of an overall “can do” attitude is the problem.
“Housing and health care failings pose existential threats to Canada,” they said. “The only shortage more acute than that of skilled people to provide these vital services is the shortage of audacity to believe that we are capable of solving these problems: the confident ambition to make big dreams come true.”
*No AI-Generated content was used in the writing of this story, and all sources are cited and credited where possible.
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