Mikal Skuterud is a professor of economics at the University of Waterloo and the director of the Canadian Labour Economics Forum.
Ask a Canadian why the government is increasing immigration and more often than not they will tell you: “to grow our economy.” Ask an economist and you’ll rarely get that answer.
Boosting the economic well-being of a population is indeed a worthwhile objective of immigration, but that requires more than simply making the economy bigger.
India’s economy is 60 per cent bigger than Canada’s and Switzerland’s is 60 per cent smaller. Is India’s economy what we are aiming for? Making the economic pie as big as possible is clearly not the objective. What matters is the size of the average slice when the pie is divided by the population.
The immigration policies that the current Liberal government adopted in 2015 reflected two decades of reforms focused on leveraging immigration to boost GDP per capita, the size of the average slice – a sound economic objective. But this government has shifted the objective to something new.
The government hinted at its objective in March when it rationalized Canada’s surging population – a one million increase last year – as an alleged economic necessity to fill vacant jobs, which if focused on lower skilled jobs is more likely to lower than raise GDP per capita.
Other times, however, the government has been less than transparent. The government’s opacity in what it is trying to achieve leaves us to guess.
Perhaps it is trying to maximize our population to raise our geopolitical influence on the world stage or to keep small towns in the Maritimes from disappearing.
But why then limit our annual immigration target to only 500,000? Why not announce to the world that if you get here, you will be granted permanent residency status on arrival?
That’s because economies have absorptive capacities. When our housing, social infrastructure and business-capital investments do not grow commensurately with our population, there are economic tradeoffs. Usually, the Canadians most adversely affected by these tradeoffs are existing immigrants competing for housing, jobs and social services in the same communities as the newcomers.
Perhaps the objective is humanitarian, that is it’s more about boosting the economic well-being of the newcomers themselves. If that is true, however, then we should target the world’s poorest.
The world’s 20 poorest countries accounted for 8.2 per cent of the world’s population in the 2015-21 period but only 4.8 per cent of Canada’s new immigrants. The share of immigration dedicated to humanitarian objectives in the government’s latest targets is 19.8 per cent in 2023, 18.5 per cent in 2024, and 16.2 per cent in 2025. Humanitarian ideals is clearly not what this government is focused on.
The reality is that the objective of this government’s immigration policies is not the size of the economy, population growth, humanitarianism or GDP per capita.
Leveraging immigration to boost GDP per capita requires attracting the world’s best and brightest to drive innovation, productivity growth and job creation in advanced sectors that are intensive in new technologies, research and development, and STEM skills. That does not seem to be this government’s priority.
The priority of this government appears to be filling existing job slots with workers regardless of the value added of those jobs. The goal is overwhelmingly to support businesses by alleviating the competitive labour market pressures they are facing to increase the wages and productivity of their work forces.
This is evident in the government’s recent decision to reverse regulations introduced by its predecessors in 2014 to curtail business reliance on low-skill temporary foreign workers.
It is also evident in the government’s recent decision to waive all limits on the off-campus work activity of foreign students, whose numbers are exploding and who are heavily engaged in low-wage work.
Most significant, the government is now proposing a reform of its system for selecting candidates for economic-class immigration, known as the “express entry system,” which will target immigrants to fill existing job slots rather than being focused on attracting the world’s top talent.
Debates about immigration policy are contentious precisely because people have different objectives in mind.
The Immigration Department is launching a new initiative that will solicit the views of Canadians on optimal immigration policy. It is hard to believe that this exercise will be any more productive than asking Canadians how they would change the income tax rates they pay.
If we are going to solicit the views of all Canadians, I propose a rule: In making public statements about how Canada should reform its immigration policies, we must all first declare what objective we think the government’s immigration policies should be aiming to achieve and how that objective is best measured.