Predictive But Unheeded Canadian Labour Woes

"Not only has Canada experienced an unprecedented surge in immigration, but the composition of recent newcomers has been markedly different than in the past."

"[Since 2015 -- when the Liberal government of Justin Trudeau took office], the average nominal wage gap between temporary and Canadian-born workers has more than doubled."

"[By mid-2024, non-permanent residents were representing] almost two-thirds of population growth [in a] sharp divergence [from the norm]."

"[Dropping wages among] non-permanent workers [could be a sign that] the productive capacity of the Canadian economy grew less than it would have if recent newcomers had the same socioeconomic characteristics as in the past."

The Shift in Canadian Immigration Composition and its Effect on Wages .. Bank of Canada report

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As younger, lower-skilled immigrants enter Canada to shore up its lagging workforce, the share in the labour force of native-born Canadian workers has dropped almost by ten percent since 2006, according to a report issued by the Bank of Canada documenting the country's economy becoming increasingly reliant on migrant workers on low-wages. The bank's Economic Analysis Department published a discussion paper on May 9.

 

The analysis discovered that the average Canadian immigrant has become younger, lower-skilled and likelier to emanate from poor regions of the world: India, sub-Saharan Africa or the Middle East, comprising a situation driven largely by a temporary migration surge. Among Canada's surging ranks of temporary migrant workers wages have been "reduced significantly relative to Canadian-born workers" the paper states. 

 

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According to the authors' calculations, the average migrant worker in Canada is paid over one-fifth less than a Canadian-born worker in comparable working positions. Prior to 2014, the wage gap was 9.5 percent, rising to 22.6 percent by 2023. The paper, titled The Shift in Canadian Immigration Composition and its Effect on Wages, is regarded as one of the most definitive official documents yet produced with respect to the massive surge of migrant workers brought to Canada immediately following the COVID-19 pandemic.

Canada began to accept over a million newcomers annually, beginning in 2022, for the most part in "non-permanent" categories of immigrants in a spectrum from international students, among those admitted under the international mobility program, to temporary foreign workers. This massive intake of workers was not matched anywhere else in the world of advanced economies.

 

Population growth in Canada between 2019 and 2023 amounted to over six percent, triple the rate in the United States, and double that in Switzerland, the two developed economy countries analyzed for the paper with a demographic shift coming a distant close to Canada's. The situation is hardly reflective of the norm for Canada traditionally where immigration flows are "generally stable and predictable over history."

 

Canadian population growth until 2015 was almost entirely unaffected by "non-permanent residents". Immigration came through permanent channels; the "NPR" cohort vanishingly small to the extent that new temporary immigrants entering the country were generally negated by those leaving.  As well, temporary migrants were sourced from different regions. The region between 2006 and 2014 where the highest level of non-permanent immigration to Canada arrived from was Northern and Western Europe. Now, since 2024 India has replaced that traditional source.

 

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"An increasing number of NPRs have been migrating from lower-income regions" the report states. Canadian "net births" have been sharply reduced, even while an massive influx of migrant workers increased. Until the early 1990s, net births remained the primary driver of population growth. They became "negligible" by 2024, the paper notes. Canadian babies born in 2024 were equivalent to the number of Canadians who died. As well, the paper documents a marked decrease in the labour force of Canadian-born workers.

 

Alarmingly the post-pandemic surge in migrant workers matched a massive increase in youth unemployment, particularly among retail and food services -- sectors that relied traditionally on part-time entry-level workers, now relying on temporary work visas. Service jobs of a temporary nature were, in the past, employment opportunities for high-school and university students as a means to pay their tuition fees. Less attractive to Canadian-born students looking for summer employment was agricultural work, where migrant workers took up the slack.

 

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King's Trust Canada found in a November report that between 2015 and 2023 the rate of temporary foreign workers in Canadian restaurants had increased by a whopping 634 percent. The Bank of Canada report authors surmise that the  trend they analyzed could have an effect on the country's overall productivity -- how much the average Canadian worker is capable of producing. 

In recent years they note, Canadian productivity has gone into sharp decline with each passing year yielding a progressively lower rate of per-capita GDP than the year before. This trend is likely exacerbated, according to analysts, by Canada's surge in cheap, low-skilled temporary labour. Former Bank of Canada governor David Dodge in 2023 warned that a "large and rising inflow of workers with lower skills" was impacting in depressing wages and propping up "uncompetitive" businesses.

 

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