Did you know that although it seems strange on the surface, partly due to the Coronavirus pandemic, Canada is today enjoying its lowest unemployment rate? But if you consider the significant demographic shifts that transformed Canada’s workers before the pandemic, you will realize that the country had little doubt that its labor market would recover.
Looking at it from an immigration policy standpoint brings up the biggest concerns of how a recession will influence the labor market performance of newcomers who acquire permanent residence during times of economic downturn. Recent research indicates that such newcomers may view their labor market results as negatively affected for the rest of their careers in Canada.
Such research findings are alarming, especially considering the major shock that impacted the Canadian economy during the pandemic’s initial stages. Also, remember that Canada is currently seeking to welcome its highest immigration levels.
But taking a closer look helped us realize that the COVID recession is different. After all, immigrants who have recently crossed into Canada or those who will be earning admission into the country are still self-assured of light at the end of the Canadian labor market’s tunnel.
More Canadian Workforce Retiring
If you wonder why more Canadian employees are retiring, the baby boomers’ exodus from Canada’s workforce should be the first thing to note. With this departure, you will better understand why Canada benefited from the country’s lowest unemployment rate ever before the COVID recession. Additionally, despite the ongoing pandemic’s impact, Canada has also attained another historic low in its unemployment rate.
Of Canada’s 20 million employees, 9 million are baby boomers who will attain Canada’s 65 years retirement age within the coming ten years, thus leaving a gap in the county’s labor market. We all know that Canada’s low birth rate has challenged the process of entirely replacing retirees with young Canadian graduates. So, the nation must now depend on external talent sources to replace its retiring employees.
Replacing a retiring workforce is inevitable for maintaining any country’s economy. So, Canada does this to ensure the sustainability of its tax base to support healthcare and education. Under-utilized groups like disengaged youth, older workers, persons with disabilities, Indigenous people, and women are other talent sources that we can see Canada targeting. However, adding more of these groups would still not fully compensate for all retirees.
Now you understand why immigration is crucial to Canada’s economic progress. In the pre-pandemic period, immigrants comprised up to one hundred percent of the country’s yearly labor force growth on several occasions. And we expect this to continue over the next decade. The Canadian labor force’s aging is seeing wages rise and the unemployment rate fall and immigrant and Canadian workers are enjoying this phenomenon. So, what you are witnessing in Canada’s labor market experiences will likely continue with more baby boomers retiring.
We have also noted the chief immigration policy shifts in Canada over the past ten years and highlighted how they impact newcomers’ labor market results below.