Why Immigration Isn’t The Best Way To Solve A Labour Shortage

September 6, 2004: Why Immigration Isn't The Best Way To Solve A Labour Shortage

September 6, 2004: Why Immigration Isn't The Best Way To Solve A Labour Shortage

Martin Collacott
Special to the Sun

Monday, September 06, 2004

Tom Kent, a former senior policy adviser on immigration to Prime Minister Lester Pearson has proposed that we concentrate on bringing in younger immigrants in order to avoid future labour shortages. In a recent article in Policy Options magazine he also suggested that this could help to offset the aging of the Canadian population and the increasing proportion of older people to those of working age.
Questions remain, however, as to whether such efforts are either practical or even necessary.

For a start, it is far from clear that we are facing a looming labour shortage — at least not in the immediate future. While there are shortages in some specific fields that almost certainly need some immigration to tide them over in the short to medium term — such as the medical profession — there is no likelihood of a general shortage at least until the end of the present decade.

Some researchers, indeed, have concluded that at present we probably have a surplus of educated workers, which would help to explain why many skilled newcomers have trouble finding suitable employment.
After 2010 the situation is less clear since baby boomers will start to retire in large numbers and the gaps they leave will have to be filled by drawing more Canadians into the labour force, through immigration or by a combination of both. When this happens, our first priority must be to maximize the potential labour force participation of people already in the country and resort to bringing in people from outside only if domestic resources aren't sufficient.

The fact that countries such as Sweden, with a population already as old as ours, have been able to cope with their demographic changes and keep their economy growing without depending on immigration, makes it clear that large scale immigration in such circumstances is not essential.

One of the assumptions underlying the proposal to bring in younger immigrants to offset the aging population is the conviction that the latter brings with it more problems than benefits. Writing two years ago in the same policy journal in which Tom Kent's essay appears, Prof. Marcel Merette of the University of Ottawa made the case that analysis of the impact of population aging in Canada typically emphasize the costs of aging while neglecting important benefits — and that the latter are considerable.

As examples, he notes that the use of savings among the elderly decline with reduced needs to finance physical capital, more educated cohorts remain in the workforce longer, workers will tend to retire at an older age than they do now, and also government revenues will be bolstered by taxable withdrawals from Registered Retirement Plans and other tax-deferred private pension plans. So as public expenditures related to old age — particularly on health care and pensions — rise, there may be enough revenues to sustain the demands of an aging population.

With respect to the question of whether the economy will decline as the population ages, Prof. Merette points out that new investment in human capital that accompanies population aging has actually increased economic growth in seven Organization for Economic Cooperation and Development countries studied. While this is not to suggest that the aging of the population will be without challenges, there are also good reasons to welcome it rather than fear it.

As to the recommendation in a recent Vancouver Sun editorial that we encourage foreign undergraduates and graduates to settle in Canada after they complete their studies, there is little doubt that such individuals stand a much better chance of success in the Canadian job market than most new arrivals. Considering that most new arrivals received their education and training abroad and may not only have difficulty in getting their foreign credentials accepted here but are often disadvantaged by a limited working knowledge of English or French, this isn't surprising.

Questions must, nevertheless, be asked about the wisdom of such a proposal. While the prospects of success in Canada for foreign students who obtained their degrees here may be better than for many immigrants educated overseas, there remains the question raised above of whether we really need and can absorb large numbers of skilled newcomers at this juncture. A quite separate issue is whether allowing so many foreign students to pursue their studies here displaces promising Canadian youngsters.

Virtually all Canadians would agree that having a significant number of foreign students enrolled in our institutions of higher learning makes them more interesting places and enriches the university experience for all those involved. By the same token, we need to look at whether the numbers are so great that they block out places for promising students already in the country, whether Canadian-born or landed immigrants.

There are currently about 80,000 foreign undergraduates and 50,000 graduate students studying in Canada, and universities would like to attract even more since they pay substantially higher tuition fees than local students. This may be all very well for university budgets, but not necessarily for Canadian students. It was estimated that last fall, for example, 5,000 to 6,000 qualified British Columbia high school students were denied admission to a B.C. university.

If, therefore, we do need to increase the number of educated youngsters to meet our labour needs (and such a need seems unlikely until at least the end of the decade) drawing on foreign talent should only be used when we are reasonably certain that we have made the best use of the young people already here.

There is no doubt that Canada will face labour force challenges as our population ages and particularly after baby boomers begin to retire in large numbers. In determining how we should best respond to this situation, however, it is important that we take into account the potential resources we already possess — rather than looking first to an immigration “fix.”

While immigration has served Canada well in the past and will probably do so in the future, it should not be regarded as an end in itself.

Martin Collacott is a resident of Vancouver and a former Canadian ambassador in Asia and the Middle East.
The Vancouver Sun 2004