Immigration increase alone won’t fix the labour market, experts say
By Rosa Saba
Experts say Canada’s plan to increase immigration may ease some pressures in the labour market, but bigger changes are needed to ensure new permanent residents are matched with the jobs that most need filling.
With the unemployment rate at historic lows, many companies are “starved” for workers, and new immigrants will help fill some of the need, said Ravi Jain, principal at Jain Immigration Law and co-founder of the Canadian Immigration Lawyers Association.
The federal government’s new immigration plan calls for the admission of 1.45 million more new permanent residents over the next three years, beginning with 465,000 in 2023 and reaching 500,000 in 2025. That’s compared with 341,000 in 2019.
According to Immigration, Refugees and Citizenship Canada, the plan is intended to help attract labour in key sectors, including healthcare, skilled trades, manufacturing and technology.
“It’s clear that there are real gaps, real demands, and real needs,” said Naomi Alboim, a senior policy fellow at Toronto Metropolitan University and a former Ontario Deputy Minister of Immigration.
But upping immigration levels is just one way to begin addressing those needs, she said — the government’s plan should be part of a wider initiative to address temporary workers, international students and a larger range of jobs.
Change is needed to ensure new Canadians are well-matched to jobs that maximize their skills, qualifications and experience, said Alboim.
Recent immigrants are less likely to see their skills and education utilized than Canadian-born workers, Statistics Canada said, and new and recent immigrants are overrepresented in certain industries, including transportation and warehousing, and accommodation and food services.
Government policies have created a mismatch between the specific skills employers are looking for and the skills of immigrants being approved, Toronto immigration lawyer Sergio Karas said.
Some of this mismatch begins with international students, said Karas. Though many international students plan to become permanent residents after they graduate, many of them aren’t in programs for jobs that are in demand by immigration policies, like healthcare or trades, he said.
International students and temporary foreign workers (TFWs) have made up an increasingly large portion of Canada’s economic immigrants, or those selected for their contribution to the economy, who made up more than half of recent immigrants in 2021, Statistics Canada said.
In 2020, 67 per cent of the country’s principal applicants in the economic class were previously temporary foreign workers or international students, the agency said.
But that 67 per cent is a relatively small portion of all the temporary workers and international students in Canada, said Alboim. Canada had 777,000 TFW work permit holders in 2021, and almost 622,000 international students that year, Statistics Canada said.
Canada’s dependence on temporary workers to fill long-term gaps is a huge problem, said Alboim. It creates little incentive to improve wages, conditions or supports for temporary workers, she said.
Federal immigration policy seems laser-focused on jobs requiring higher levels of training and education, said Alboim, a barrier to permanent residency for many TFWs and international students.
That’s despite the fact that much of Canada’s labour shortage is in jobs that require lower levels of education or experience, jobs that many temporary workers and students take on, said Alboim.
The federal government should expand its scope to prioritize more of these kinds of jobs, she said.
“There are way, way, way more people here now with temporary status that will never be able to transition to permanent residency, assuming they want to, unless the rules for permanent residency are changed to recognize that we actually need them too,” she said.
However, not all the onus lies on the federal government, Jain said. One ongoing problem has been immigrants’ credentials not being recognized in Canada, and while there have been some recent changes aimed at improving that, more needs to be done, he said. These credentials are the jurisdiction of provinces and territories, not Ottawa.
Provincial and regional immigration programs often do a better job of bringing in workers who can meet a wide range of labour needs including in lower-skill jobs, Alboim said, noting those programs are set to increase under the federal government’s plan.
A legislative amendment recently gave the minister of immigration the power to select immigrants for Express Entry programs based on specific qualities like occupation, but currently Alboim anticipates that use of that power will be focused on higher-level jobs.
“(There are) real needs at the high end, which immigration should certainly be focused on, but not exclusively,” she said.
“My worry is that if the targeted draws get too heavy, like if it’s weighted too much in terms of the proportion of people coming in, then I worry that some of these other folks will get marginalized,” he said.
“There needs to be some kind of a balance.”
— With files from Lee Berthiaume
This report by The Canadian Press was first published Jan. 19, 2023.
Alberta moves to force oilpatch to pay owed taxes above ‘threshold’ amount
The Alberta government says it’s moving to force oilpatch companies to make good on their unpaid municipal taxes.
Energy Minister Peter Guthrie says he’s issued an order that blocks companies from acquiring or transferring licences on wells or other assets if their unpaid taxes exceed a threshold amount.
That threshold is yet to be determined and will be set by the Alberta Energy Regulator and Alberta Municipal Affairs.
Alberta Energy says in a release that once the threshold has been established, companies that don’t meet it will be targeted for collection.
Rural Municipalities Alberta has said energy companies owe the municipal districts in which they operate a total of $268 million.
Paul McLauchlin of the group says the order will help reduce the unpaid tax burden on its members.
This report by The Canadian Press was first published March 20, 2023.
The Canadian Press
Fed’s tough challenge: Confront inflation and bank jitters
Federal Reserve chair Jerome Powell speaks during a news conference, Wednesday, Feb. 1, 2023, at the Federal Reserve Board in Washington. With inflation still high and anxieties gripping the banking industry, the Federal Reserve and its chair, Jerome Powell, will face a complicated task at their latest policy meeting Wednesday and in the months to follow: How to tame inflation by continuing to raise interest rates while also helping to restore faith in the financial system – all without triggering a severe recession. (AP Photo/Jacquelyn Martin, File)
By Christopher Rugaber in Washington
WASHINGTON (AP) — Still grappling with persistently high inflation, the Federal Reserve faces an entirely new — and in some ways conflicting — challenge as it meets to consider interest rates this week: How to restore calm to a nervous banking system.
The two simultaneous problems would normally push the Fed in different directions: To fight elevated inflation, it would raise its benchmark rate, perhaps substantially, for the ninth time in the past year. But at the same time, to soothe financial markets, the Fed might prefer to leave rates unchanged, at least for now.
Most economists think the Fed will navigate the conundrum by raising rates by just a quarter-point when its latest policy meeting ends Wednesday. That would be less than the half-point hike that many economists had expected before the recent collapse of two large banks. But it would still mark another step by the Fed in its continuing drive to tame inflation.
If the Fed were instead to leave rates alone, which some analysts last week had suggested it might do given the banking turmoil, it could alarm Wall Street traders by suggesting that significant problems remain in the banking system.
Vincent Reinhart, a former top Fed economist now at the investment bank Dreyfus-Mellon, noted that the central bank prefers to manage financial stability issues separately from its rate decisions. One goal of a series of emergency steps the Fed announced Sunday to bolster the banking system is to allow it to separately address inflation through its rate policies.
“If you are obviously seen as adjusting your monetary policy because of concerns about financial strain, then you’re admitting you’re not (successfully) doing … crisis management,” Reinhart said.
Last week, the European Central Bank imposed a half-point rate hike to try to reduce an 8.5% inflation rate despite jitters caused by the struggles of Switzerland’s second-largest lender, Credit Suisse. ECB President Christine Lagarde said she saw “no tradeoff” between fighting inflation and preserving financial stability.
On Sunday, the Swiss banking giant UBS bought troubled Credit Suisse for $3.25 billion in a deal orchestrated by banking regulators to try to prevent potentially calamitous turmoil in global markets.
The Fed intervened in the banking emergency a little over a week ago by joining with the Treasury Department and the Federal Deposit Insurance Corporation to announce that the government would protect all of the banks’ deposits. It also unveiled an expansive emergency lending program to provide ready cash for banks and other financial institutions. And it sweetened the terms for the banks to borrow from a long-standing Fed facility known as the “discount window.”
On Thursday, the Fed said it had lent nearly $300 billion in emergency funding to banks, including a record amount from the discount window.
Assuming that those programs work as intended, the Fed can focus on its ongoing campaign to cool inflation. Most recent economic reports point to a still-hot economy with strong hiring, steady consumer spending and persistent inflation.
Consumer prices rose 6% in February from a year earlier, down from a peak of 9.1% last June. Most of that decline reflected a shift in consumer spending away from goods — such as used cars, furniture and appliances, which have been falling in price — and toward services, including traveling, dining out and entertainment events.
That spending surge has kept inflation high in services categories, which Fed Chair Jerome Powell has singled out as a major concern because inflation tends to be particularly persistent in services.
“Inflation — it’s still got some legs, unfortunately,” said Nathan Sheets, a former Treasury official and Fed economist, now chief global economist at Citi. “The labor market is still booming.”
Hiring and inflation figures accelerated earlier this year after having shown signs of cooling in late 2022. In response, Powell and other Fed officials suggested that the central bank would likely raise rates higher than they had forecast in December and probably keep them at a peak for longer.
When the Fed raises its key rate, it typically leads to higher rates on mortgages, auto loans, credit cards and many business loans. Typically, consumer and business spending slow in response.
“The recent data indicate that we haven’t made as much progress as we thought,” Christopher Waller, a member of the Fed’s Board of Governors, said this month. The Fed’s efforts to reduce inflation to its 2% target, Waller said, “will be slower and longer than many had expected just a month or two ago.”
The banking troubles have also intensified fears among many economists that the economy could soon tumble into recession.
One reason for the pessimism is that some banks will likely curtail lending to help shore up their finances and avoid running the risk of a collapse. Economists at Goldman Sachs estimate that credit tightening by the banking sector could reduce economic growth this year by as much as a half-percentage point.
Ironically, though, that slowdown in growth could help the Fed, which has had only limited success in trying to cool the economy through its rate hikes.
The potential slowdown in lending “is going to do some of the Fed’s work for it,” said John Roberts, a former Federal Reserve economist said. “So the Fed won’t have to raise rates as high as otherwise.”
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