Emmanuel OchayiA new report from the Royal Bank of Canada (RBC) has revealed that reducing immigration targets could cost Canada’s economy around $50 billion.
The report emphasizes the link between immigration and economic growth, warning that fewer newcomers could worsen labour shortages and slow economic recovery.
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The report highlights how labour shortages are already impacting Canada’s key sectors. Reduced immigration could leave crucial industries struggling to find workers, particularly in healthcare, construction, and technology. Experts say this could raise operational costs for businesses, delay project timelines, and reduce productivity.
“Canada’s economy is at a crossroads,” said Ruairi Spillane, founder of Outpost Recruitment and Moving2Canada. “Limiting immigration now will have long-term effects on job creation and business growth.”
The job market is already showing signs of stress. Statistics Canada data from November 2024 revealed that the unemployment rate rose to 6.8%, up from 6.5% in October 2024. Despite the addition of 51,000 new full-time jobs in November, the higher unemployment rate signals a shift in the market’s stability.
Cities Feeling the Impact
Major Canadian cities like Toronto, Calgary, Edmonton, and Windsor are experiencing higher unemployment rates. While employment figures improved slightly, experts believe the uptick in unemployment is a warning sign.
Persistent job vacancies in healthcare, construction, and information technology have led to calls for increased immigration. Without sufficient new arrivals to fill these roles, employers may face delays, higher costs, and potential revenue loss.
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Bank of Canada’s Approach to Growth
The Bank of Canada’s recent decision to lower interest rates by 50 basis points aims to stimulate economic activity. This move is intended to encourage Canadians to borrow and spend more, potentially boosting demand for goods and services.
“The Canadian economy appears set for a squeeze after a period of aggressive interest rate hikes required to combat runaway inflation,” said Spillane. He added that the timing of policy adjustments is crucial to avoid a “hard landing” for the economy.
The Bank of Canada’s strategy could lead to better job prospects and improve working conditions. By encouraging spending, businesses may have more incentive to hire, thereby reducing the unemployment rate. However, experts caution that this approach alone may not address the labour shortage crisis without sufficient immigration support.
Why Immigration Matters for Economic Growth
Immigration plays a key role in sustaining economic growth in Canada. Newcomers contribute to the labour force, fill essential roles, and support the economy through consumer spending. RBC’s report emphasizes that without a steady influx of immigrants, Canada risks facing slower growth and reduced competitiveness on the global stage.
Experts point out that immigration fuels population growth, which in turn drives demand for housing, transportation, and services. This increased demand generates new jobs and business opportunities. By cutting immigration targets, Canada risks a domino effect of reduced demand, lower revenue, and fewer jobs.
Looking Ahead
The federal government’s immigration policy has a significant influence on Canada’s future economic trajectory. While there are calls for more careful management of immigration targets, RBC’s report warns that cuts could have long-term consequences.
“Limiting immigration will not only affect the economy but also reduce Canada’s ability to compete globally for skilled talent,” said Spillane.
With businesses and policymakers closely monitoring the labour market, the future of Canada’s economy depends on finding a balance between immigration policy and economic needs. Without the right approach, the $50 billion cost to the economy could become a reality.
Emmanuel Ochayi is a journalist. He is a graduate of the University of Lagos, School of first choice and the nations pride. Emmanuel is keen on exploring writing angles in different areas, including Business, climate change, politics, Education, and others.
