So what is the role and what should be the role of Canada’s Immigration Program in the labour market? Information presented in this paper indicates that immigration alone (at current levels) cannot fix the major challenges faced by the Canadian labour market in the years to come. However, that being said, immigration can prove to be an invaluable tool for dealing with shortages in specific occupations and regions which would improve the performance of the labour market.
Canada will have challenges to overcome in the future as it has had in the past. Many of these challenges will arise from factors that have been discussed in the risks section above (e.g. economic cycles, changes to technology and regulatory factors, etc.). The problem with these types of risks is that they cause upswings and downturns in the demand for workers. Slow or declining economic growth usually results in employment declines and research has shown that recent immigrants can be particularly vulnerable during economic downturns. Further, overrepresentations in certain industrial sectors and occupations (such as those related to information technology) have resulted in weaker economic performance for the immigrant population in the recent past.
Demographic influences are somewhat easier to predict and also weigh heavily on the future labour market. In fact, probably the most important factor to consider during the next couple of decades is the large number of retirements expected by workers from the “baby boom” generation. This will have a significant impact, not only on labour supply, but also on labour demand. While many workers are expected to retire, Canada is not expected to experience sustained generalized shortages of workers in the future. However, labour market pressures and imperfections are expected to materialize for a number of occupations.
Do we need high human capital selection criteria to ease these pressures and achieve a better labour market performance? This is unclear and largely depends on the evaluation criteria used to measure labour market needs. With the implementation of IRPA, human capital characteristics became the main screening criteria for selection decisions within the Federal Skilled Worker class. Early indications with respect to the economic performance of these immigrants suggest superior economic results as compared to immigrants chosen under pre-IRPA legislation.Footnote 31 However, other programs (such as the Provincial Nominee Program) which are based to a greater extent on regional occupational needs are also showing signs of positive economic outcomes. The important point to take away from this is that Canada’s Immigration Program can help to reduce labour market pressures and imperfections through the admission of permanent residents from different classes and also temporary foreign workers.
The inclusion of immigrants in the labour force and improving employment outcomes of immigrants is an essential condition for integrating immigrants into Canadian society and improving the overall performance of the Canadian labour market. However, it is not just an exercise in levels management. Adding permanent and temporary residents to the labour force does not necessarily satisfy all labour-market needs and, in fact, may lead to bigger problems. Attention must also be exercised in the determination of the “right” mix of immigrants. The “right” mix of immigrants may have many dimensions including:
- How many high-skilled workers versus mid-skilled and low-skilled are required?
- What region of the country requires these workers?
- Are labour imbalances of a temporary nature and can these pressures be eased by temporary workers or are permanent residents required?
Given the dynamic and ever changing situation in the Canadian labour market, it is essential that the Canadian Immigration Program provides sufficient flexibility to respond to the complexities of Canada’s labour market today and in the future. This is not only essential for the integration of new immigrants coming to Canada but also to maximize the benefits to the Canadian economy.
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