Canada has changed its approach to immigration after years of welcoming them in order to boost the economy and reduce labour shortages.
The Trudeau government made an announcement on October 24 to reduce immigration. They cited the pressures placed upon housing, employment, and services.
It is a major policy shift for a nation that has been known to embrace newcomers and see them as vital contributors to the economy.
Why has Canada changed its immigration policy?
Canada’s population has grown rapidly, thanks to record levels of immigration. This influx of immigrants is equivalent to the addition to Canada each year of a city with a population equal to San Diego.
This surge in population has put pressure on infrastructure and housing costs, as well as putting the country’s unemployment rate up.
Public opinion has shifted due to the strain on resources.
According to a recent Environics Institute survey, nearly 60% of Canadians believe that immigration levels in Canada are now too high – up from 27% just ten years ago.
The shift in public opinion has increased pressure on Trudeau to take action, particularly as the Conservative Party is gaining ground before the elections of 2025.
Immigration policy has changed since the past
Canada has a long history of regulating its immigration policy and gaining positive public opinion.
Canada has only one border between it and the US. The government sets annual immigration targets in order to maintain a steady population increase.
The post-pandemic surge, driven by lax travel restrictions and labor shortages, exceeded expectations. It revealed cracks in our system.
The surge in population helped many sectors, including housing, retail and telecommunications. However, it was too rapid for the country to accommodate newcomers.
The GDP per capita, an important indicator of the standard of living, has been declining for successive quarters. The most affected are young adults and immigrants who have recently arrived, both of whom are vital to the labour market.
Immigration system: How to break it down
Canada’s Immigration System is divided in two main pools.
- Permanent Residents: The immigrants in this category are chosen based on a point-based selection system, which takes into account factors like education, work experience, and language proficiency. This pool is the primary source for new citizens, economic migrants and other immigrants.
- Temporary Residents: Includes international students, foreigners workers and asylum seekers. These groups contributed to the population growth in a minimal way, but recent policy changes that made it easier to obtain work visas has led to an increase.
Temporary Residents often want to become permanent residents, and use their experience working or studying in Canada as an advantage during the application process.
The sudden increase in this group’s size has put pressure on housing and the public sector.
Trudeau’s immigration plan
In order to address challenges caused by the high level of immigration, the Government has tightened restrictions for both temporary and permanent residents.
- Canada is expected to reduce its number of permanent residents from 485,000 people in 2023 to 395,000 by 2025.
- A first-ever limit on the number of temporary residents will be introduced by the government, with a goal to reduce their numbers in three years’ time by 20 percent.
- This cap also includes restrictions on the foreign workforce and limits on visas for students. It is a measure to reduce pressure on public housing services and on government-funded services.
Canada is expecting a modest 0.8% population increase by 2027. This contrasts sharply with the recent 3% growth.
The economic implications of reducing immigration
The new immigration policy aims to stabilize the housing and job markets but it also comes with some economic risks.
The majority of the growth in Canada’s labour force is due to immigration, so a decline in new arrivals would be detrimental for long-term performance.
Canada relies on immigration as a source of consumer spending. This helped to avoid recession when the Bank of Canada increased interest rates aggressively.
Reduced immigration can reduce labour availability, which could hamper economic growth or even cause inflation as businesses struggle to fill vacant positions.
Balance public opinion and economic needs
The decision by the government to lower immigration targets was partly motivated by public unrest, but this could complicate future economic stability.
Any significant decrease in immigration could have a negative impact on productivity and growth.
Marc Miller, the Immigration Minister, acknowledged that a balance approach was needed.
Immigration is a key part of the long-term strategy of our economy, even though we must manage newcomers.
What is the future of Canada’s Immigration Policy?
New immigration policies reflect a careful approach in managing population growth and balancing the public’s sentiments with economic requirements. Analysts warn, however, that these changes may have unintended effects.
Slowing growth in the labour force could harm sectors like healthcare, technology, construction and other industries that rely on highly skilled immigrants.
Also, lower rates of immigration may result in reduced spending by consumers, which could slow down the economic recovery.
The long-term effects on Canada’s economic future are uncertain, even though Trudeau’s government is aiming to tackle immediate problems.
Success of the new policies will depend on whether the country is able to strike the perfect balance between population growth and control.
What does this post Canada’s immigration cut by 20 percent mean for the economy of Canada? This post may change as new information becomes available
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