Migrant tsunami stifles Canadian wage growth

In late 2017, the Canadian Government launched a massive increase in the country’s immigration program, announcing that one million migrants would be let in over the following three years, with an annual migrant intake of 340,000 considered the “new normal”.

Canada’s immigration minister, Ahmed Hussen, claimed the new targets would lift immigration to nearly 1% of the population by 2020, which would help offset an aging demographic.

After Canada’s immigration intake fell to only 184,000 new permanent residents in 2020, the lowest since 1998, the government announced a plan to import 1.2 million migrants in just three years, with Canada aiming to bring 401,000 new permanent residents in 2021, 411,000 in 2022 and 421,000 in 2023. Further, this monster immigration intake will be achieved by lowering visa entry requirements:

The Immigration, Refugees and Citizenship Canada (IRCC) invited the highest ever number of express entry candidates in a single draw…

[It has] invited candidates with a Comprehensive Ranking System (CRS) score as low as 75. The lowest ever CRS score for Express Entry draws since it launched in 2015.

The Canadian Government also made it far easier for international students to qualify for permanent residency:

International students will now be eligible to immigrate to Canada if they have completed at least 50% of their studies in person at a university in British Columbia…

You can use documents such as bank statements, utility bills and tenancy agreements to show that you were physically in Canada.

Hilariously, Canadian Imperial Bank of Commerce (CIBC) claims the influx of migrant workers is suppressing Canadian wage growth:

The increased flow of newcomers and their suitability for the needs of the job market “will work to provide the Bank of Canada with some flexibility in the pace of monetary tightening due to the taming impact of new immigrants on wage inflation,” Benjamin Tal, deputy chief economist at CIBC, said Thursday in a report to investors.

Wage growth in Canada has lagged behind the U.S as their economies have recovered from the Covid-19 crisis, a factor some attribute to the stark differences in immigration policies between the two countries.

After a pandemic lull, Canada welcomed more than 400,000 immigrants in 2021. Prime Minister Justin Trudeau’s government is weighing an increase to its target of 411,000 this year, and has fast tracked permanent residents for citizenship.

As the labor market nears full employment, the additional pool of new workers is helping fill record job vacancies and possibly mute wage inflation, even with consumer price gains at the highest in three decades.

Immigration and its impact on wages give the Bank of Canada “enough justification to hike more slowly than what’s priced in by the market,” Tal said.

Anyone still claiming that mass immigration has no impact on wages is either a paid industry shill or stupid. Canada is engaging in basic supply-side economics here: flooding the market with people to keep wage pressures from building. What’s hard to understand?

Canada’s biggest housing markets are also already among the most expensive in the world, which will be made worse by its mass immigration program.

Funneling hundreds of thousands of migrants into these cities will obviously drive up demand for housing, exacerbating Canada’s housing affordability problem to the detriment of young Canadians. It will similarly crush-load infrastructure and worsen congestion, reducing livability and placing more strain on Canada’s natural environment.

The Nordic countries of Denmark, Sweden, Finland and Norway provide a sensible model of growth. These nation’s are considered by many to be among the best run and happiest nations of the world that enjoy high productivity and high living standards. Moreover, they achieved this status without resorting to high immigration-fueled population growth:

Canada (and Australia) should emulate these nations instead of resorting to unsustainable ponzi-led growth.

Unconventional Economist

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