Construction workers watch Prime Minister Justin Trudeau speak at the construction site of an affordable housing project in London, Ont., on Sept. 13.Nicole Osborne/The Canadian Press
Kevin Yin is a doctoral student at the University of California, Berkeley, and holds a master’s degree in economics from Yale University.
Support for immigration in Canada is eroding in the wake of an unprecedented lack of affordable housing. Calls to cut immigration are growing and the concerns are not entirely without merit. But there is a more elegant solution than restricting immigration across the board. We should let in a much greater portion of immigrants who can build houses.
Canada simply doesn’t have enough workers to construct homes, and this has produced a critical bottleneck in developing housing supply. The Canadian Chamber of Commerce said that nearly half of manufacturing and construction companies suffer from labour shortages. Benjamin Tal, the deputy chief economist of CIBC, estimates there are 80,000 vacancies in the industry, a number which is expected to reach nearly 300,000 by 2032 because of a rapidly aging labour force. This has contributed to soaring construction costs, limited supply, and thus an affordability crisis.
On the other hand, collective anxiety about immigration exacerbating the housing situation is disproportionate, but it is also understandable. Welcoming foreigners en masse certainly can’t help, especially if they have neither the background nor the desire to work in construction. Furthermore, the optics of doing so while existing Canadians are being priced out is damaging for the long-run sustainability of immigration. If the leadership cannot persuasively argue immigrants are helping rather than hurting on this front, the country’s flagship love for immigration is under threat.
While the government is aware of these challenges, it is far too optimistic that its current immigration plan will address them.
The Express Entry (EE) Program is the primary avenue for economic immigrants and it is divided into three programs: the Federal Skilled Workers Program (FSWP), the Canadian Experience Class (CEC) and the Federal Skilled Trades Program (FSTP). While the FSWP and CEC both demand work experience that requires college diplomas or two-year apprenticeships, FSTP, like much construction work, does not.
Yet out of over 100,000 people let in annually under the EE program for the past few years, Canada has never taken in more than 565 permanent residents under the FSTP. Additionally, while construction drillers, mechanics and supervisors can qualify for FSTP, general-purpose labourers notably do not.
When we consider all paths to permanent residency, the picture remains bleak. CIBC estimates that only 2 per cent of all immigrants go into the construction sector and that this number is falling. Even among temporary foreign workers only 11 per cent do so.
Canada does not need fewer immigrants; it needs the right ones. There is a “third way” for those of us who still believe in the talent and diversity that immigrants bring to Canada, while also acknowledging the additional demand stresses that come with new people if they are not simultaneously contributing to housing supply. In principle, immigration ought to follow a “multiplier” rule until the crisis abates; more than one living unit built per new immigrant.
It would take roughly 30 times the existing number of immigrants in construction over a decade to fill the labour gap in the sector. The scale of this challenge implies the need for a drastic reform. Canada must raise the blue-collar proportion of incoming cohorts without significantly increasing the rate of immigration overall. Giving much greater weight to skilled-trade work experience under Express Entry, shifting quotas away from the FSWP and CEC to the FSTP, and making labourers without specific qualifications eligible for FSTP would be a start. While offering stronger domestic incentives to work in construction could also help, it is easier to change immigration policy than to change peoples’ tastes in employment.
The fact is our immigration strategy currently does not value construction and trade work nearly enough. It is no coincidence that construction labourers make more than many entry-level bachelor degree holders. There is an air of condescension in the immigration point system, which equates the education level of would-be immigrants with their economic value. But it is not a person’s education but rather the matching of their skills to domestic economic needs that determines how much a new person can contribute. Nowhere is this clearer than the construction labour market.
Our existing policy is well-intentioned but heavily distorts the labour supply away from who companies want to hire and what Canadians desperately need. We don’t need to curb immigration; we just need to open the door further to those who can actually help.