A recent C.D. Howe report states that immigration cannot keep Canada young. Its findings repeat what a number of other demographic reports have said: attempts to use immigration to stop problems caused by an aging population do not work and are unwise. It is best to use other methods and to make use of Canada's existing population in dealing with aging-related problems.
In the words of the researchers, “…we should not overstate the contribution immigration can make to keeping Canada young—and, by extension, to alleviating the economic and fiscal consequences of demographic change. ' (P.9)
The report is significant because its careful research once again contradicts immigration industry statements that Canada needs high immigration in order to avoid a high percentage of old-age-dependent citizens.
The C.D. Howe study looked at three different strategies to deal with the aging-dependency issue.
One strategy was aimed at reducing the projected high percentage of people who would be potentially dependent by 2050 on government services (pensions and health care). This strategy would use immigration to achieve the reduction. By 2050, it is projected that 46% of Canadians would be 65+ and age-dependent. This strategy used four possible scenarios. Three of the four scenarios reduced the percentage by about 5 to 6%. The fourth scenario, which involved increasing Canada's intake to 1% of Canada's population and recruiting mostly younger immigrants, reduced the percentage by 13%. However, the practical difficulty it presents is that, as in Scenario #3, many of the immigrants brought here would have to be below 18 years old.
A second strategy was aimed at stabilizing the current percentage of old-age dependent people until the year 2050. This strategy would also use immigration to achieve stabilization. At present, about 20% of Canada's population is 65+, so the purpose was to keep the percentage of old-age dependent citizens at 20%. All three scenarios would require Canada to bring in very large numbers of immigrants every year. In one scenario, immigration intake would be up to 7 million per year by 2050—– at which time Canada's population would be a staggering 165.4 million. (The report did not mention the environmental or cultural consequences of such a massive increase in Canada's population.)
A third strategy looked at slowly increasing Canada's retirement age to 70. This technique did not use immigration to achieve its end, but would be superior to the other two strategies. By 2050, the maximum percentage of aged Canadians potentially dependent on government programmes would be about 33%. Researchers pointed out that simultaneous policies aimed at encouraging work and saving were also important. Saving, in particular, would decrease reliance on public coffers.
The full report is available at http://www.cdhowe.org/pdf/backgrounder_96.pdf
Immigration Watch Canada provides the following details of the C.D. Howe Report entitled “No Elixir of Youth: Immigration Cannot Keep Canada Young”.
(1) “Projections based on current fertility rates, current immigration levels and moderately rising life expectancy show the ratio of the population age 65 and over to the population of traditional working age (18-64) rising from 20 percent in 2006 to 46 percent in 2050.” (P.1)
(2) “… the increase in age-related expenditures will put significant pressures on public finances.” (P.1)
(3) Even a large increase in immigration from an average of 220,000 a year between 1994 to 2004 to 320,000 per year (the level proposed by the last government) would not appreciably affect the future age structure of Canada's population. (P.1)
(4) “…no conceivable amount of immigration, with an age profile such as Canada currently experiences, can significantly affect the coming shift in the ratio of older to working age Canadians.” (P.1)
(5) “…immigration cannot relieve Canada of the challenges of an aging population. The need to encourage work and saving by an older population and to deliver pensions and health-care efficiently and sustainably will be as pressing in a future of high immigration as without it.” (P.2)
(6) “Immigration can influence the age structure of Canada's population” through two main channels: the numbers of immigrants and the age of the immigrants. (P.2) (The study does not point out that the numbers in several possible scenarios could be environmentally and culturally overwhelming.)
Strategy #1: What would be the effect of using 4 different immigration scenarios on Canada's old-age dependency by 2050?
(7) Scenario #1: This is the path Canada is now walking. If immigration continues at around 230,000 per year. “…old age dependency rises rapidly until about 2030. The rate of increase then slows down, but the ratio (of age 65+ to age 18-64) keeps rising, reaching 46% in 2050. Total population rises from 32.2 million today to 39.2 million in 2050.” (P.4) (In other words, the path Canada has chosen is not very effective in reducing age-dependency.)
(8) Scenario #2: If immigration is raised to 1% of the population, “This scenario slows the rate of population aging slightly, bringing the old-age dependency ratio to about 40% in 2050.” Total population, however, would be 48.9 million in 2050. (P.4) (In other words, this path reduces the age-dependency slightly, but it increases the total population by 50%.)
(9) Scenario #3: If immigration continues at around 230,000 per year, but immigrants below 18 are targetted. “…in about 2030, the old-age dependency ratio would stop rising within a few years and stabilize around 41% until 2050.” (P.5) Total population would be similar to Scenario #1–39.2 million. (In other words, this path also reduces the age-dependency percentage, but only slightly. It also involves a very young immigrant age group which may be difficult to secure.)
(10) Scenario #4: If immigration numbers are raised to 1% of the population and younger immigrants are targetted, the old age dependency ratio would go “from 20% today to 36% in 2035. At that point, it would begin falling again, reaching 33% in 2050.” (P.6) Total population would be similar to Scenario #2—48.9 million. (In other words, this path reduces age-dependency significantly, but increases Canada's total population by 50% and involves securing very young immigrants.)
Strategy #2: What would stop the old-age dependency ratio from rising above the current figure of 20%?
(11) Scenario #5: Suppose the current age structure of immigrants does not change. “The required (immigration) increase is immediate and colossal: immigration would rise to 2.5% of the population by 2010, 4% of the population by 2012 and 4.7% by 2020 (at which point Canada's population would be 56.6 million and immigration 2.6 million–per year).” “In this scenario, Canada's population in 2050 would stand at 165.4 million and immigration would be above 7 million a year.” (P.6) (In other words, the sheer numbers of immigrants and the total population increases would be unacceptable.)
(12) Scenario #6: Suppose younger immigrants are targetted. Yearly immigration numbers and total population figures by 2050 are similar to those in Scenario #5 and “are just as unrealistic in this case as in the previous scenario”. (P.7)
(13) Scenario #7: Suppose all new immigrants are between 20 and 24, for an average age of 22. Yearly immigration numbers would have to be very high and total Canadian population would be similar to Scenarios #5 and 6. (Pp.6-7)
Conclusion about Scenarios 5 to 7: Extremely high immigration levels would increase competition for jobs and probably decrease wages. Canada would have to dissuade younger immigrants from going to other countries, would still have to look for more, and would have to be much less selective about the people it took. The report concludes: “…trying to boost Canada's labour supply through vastly increased immigration of young people would, at least initially, be to fight a strong headwind”. (P.8)
(14) Instead of using Strategy 1 or 2, what would happen to the age-dependency ratio if the working/retirement age were extended to 70?
The researchers proposed raising the retirement age by one year every four years starting in 2008. By 2024, the retirement age would be 70. By 2050, about 33% of Canada's population would be in the old-age dependency category—without the drama and cultural upheaval of very high immigration levels and very high population levels. (P.9)”The results illustrate how even a modest and gradual change in the normal work and retirement pattern would do more over the next four decades to reduce the old-age dependency ratio than even quite extreme changes to immigration policy.” (P.9)
Another fortunate effect would be that “…a declining supply of labour should lead to upward pressure on wages, encouraging greater labour market participation, higher incomes and higher tax payments” (and more government ability to care for an older population). “No less important are policies to encourage work and saving…” (P.10)
END OF PRESS RELEASE