Canada’s economy is fighting the challenges of an aging population as well as a low birth rate. In a situation like this, the Advisory Council of Economic Growth has opined to raise the target of immigration levels in Canada from 300,000 to 450,000 per year. An increase in the annual target of immigration levels seems to be the only solution to aid Canada’s economic growth.
The final annual immigration target will be formally announced by November 1 this year. Till then the Canadian government has put up a report highlighting the influence of increased immigration levels on Canada’s economic scene. First and foremost an increased immigration level will have a direct impact on the real GDP growth. This will be a natural outcome of an increased population that will contribute to Canada’s economy. It is estimated that if the annual target of 450,000 immigrants is maintained till the year 2025, Canada’s real GDP would witness a rise by an average of 2.05% per year till 2040 from now.
Another significant change that is anticipated out of an increased annual immigration target is a fall in the role of seniors in the economy, as immigrants largely fall into a younger category. This will consequently result in a decrease in health care costs and contribute for the better of the economy.
In order to yield optimum benefits from an increased immigration level, the Canadian government also needs to pay attention to a number of labor market challenges like underemployment that often come in the way of immigrants and cause them to lose out on their wages. This often leads to lost productivity on the part of the immigrants that consequently affects Canada’s economy in the form of reduced tax revenue and low purchasing capacity. Hence, the Canadian government needs to pay attention to these challenges too along with increasing its immigration levels.
