Posthaste: More immigration? Bring it on, say RBC economists
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Record numbers of immigrants are on their way and they can’t get here soon enough, according to a new report by Royal Bank of Canada’s economics department.
“As our population gets older and birth rates decline we’ll face a range of challenges in supporting aging cohorts and sustaining growth,” a team of Royal Bank analysts wrote in a research note called “Immigration Nation: New Canadians are vital to an aging society.” “Increased immigration and better utilization of existing pools of talent can power the transition.”
New immigration goals established by Ottawa call for 1.3 million immigrants to arrive in the country between 2022 and 2024. That will significantly reverse the trend during COVID-19 when immigration to Canada fell off a cliff, slowing population growth from mid-2000 to mid-2021 to 0.5 per cent, the slowest on record going back half a century, the Royal team said.
Since then, international travel restrictions have eased, allowing immigration to rebound by 400,000 at the end of 2021. The numbers continue climb in 2022.
The research note highlights several demographic potholes that could damage Canada’s economy unless the country attracts more people from abroad. Canada’s natural population growth is on track to drop to zero by 2030, the Royal Bank analysts estimated. So, “an even greater infusion of newcomers will be needed to grow the workforce,” the researchers said.
In 1970, eight per cent of the Canadian population was aged 65 or older. In 2022, that number was 19 per cent, and if current trends continue, some 25 per cent of the population will be 65 or older in 2050. That puts Canada in the middle of the pack among its peers; the United States is projected to be at 22.4 per cent, the U.K. at 25.3 per cent, and Japan at 37.7 per cent by 2050.
Regardless of Canada’s position in relation to other nations, the Royal Bank researchers argue that an ageing population means there will be fewer people of working age to support the economy. In 1990, there were six people aged 15-64 for every one person over the age of 65; today, there are 3.5 people of working age for every one person over 65. “The tighter this ratio gets, the more acute economic and fiscal strains will become,” the report said.
Immigrants could help widen the ratio because they tend to be younger and would have a longer runway of working life ahead of them to help fund social programs and fuel growth.
Speaking of strains, signs of an acute labour shortage are everywhere. Just walk on any neighourhood street and there are any number of signs in local business windows looking for workers. The depth of that shortage was brought home last week when Statistics Canada reported that more than a million positions were vacant in April, a 45-per-cent increase from a year ago.
The Royal Bank authors say the labour problem is “not going anywhere” and suggest that immigration is the obvious answer to this ballooning crisis. “To counter this, we’ll need to convince older people to work longer, maintain or boost the flow of immigrants, and find ways to make our existing workforce more productive,” the note said.
Of the three, immigration might be the most effective in the short-term. “As the post-pandemic labour squeeze tightens its grip on Canadian business, these newcomers are already among the few sources of relief,” the report said.
Posthaste will return on July 4 following the Canada Day weekend
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OPEC+ meeting
Health Minister Jean-Yves Duclos and government officials will provide an update on COVID-19
Deputy Prime Minister Chrystia Freeland will visit Canadian automotive parts manufacturer Exco Engineering in Newmarket, Ontario
Karina Gould, minister of families, children and social development, on behalf of Jonathan Wilkinson, minister of natural resources, will make an announcement to support electric vehicle charging infrastructure in Ontario
Shaun Chen, MP for Scarborough North, on behalf of Helena Jaczek, minister responsible for FedDev Ontario, will make an announcement in support of a Scarborough-based aerospace supplier
Daniel Vandal, minister responsible for PrairiesCan, will announce federal support for a range of initiatives that will stimulate the local economy in Calgary and position the Alberta tourism economy for long-term growth
Today’s Data: Canadian GDP (April); U.S. initial jobless claims, personal spending and income
Earnings: Walgreens Boots Alliance, Constellation Brands
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As gas prices continue to climb, hitting a record average of $2.09 per litre in mid-June, many drivers may feel like they’re passengers, buckled in against their will for a bumpy ride.
But while the cost of fuel isn’t likely to decelerate for a while, there are tangible things drivers can do to wrestle back a little control over what they pay at the pump.
Our content partner MoneyWise fills you in on what to expect when filling up for the rest of the year, and how you can lessen its impact on your wallet.
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Today’s Posthaste was written by Gigi Suhanic (@GSuhanic), with additional reporting from The Canadian Press, Thomson Reuters and Bloomberg.
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