Canada Looks to Immigration to Boost Economic Recovery

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Canada Looks to Immigration to Boost Economic Recovery

Canada is betting on a sharp increase in immigration beginning this year as a way to boost the country’s economic recovery from the Covid-19 pandemic.

Prime Minister Justin Trudeau’s Liberal government plans to significantly increase the number of new permanent residents it accepts over the next three years, and officials have taken steps in recent months to increase the pace of permanent resident approvals, largely by drawing on residents already in Canada on a temporary basis.

“History teaches us that when we grow our immigration levels, we grow our economy,” Canadian immigration minister Marco Mendicino said earlier this year.

Yet immigration experts say people who arrive in a country during an economic downturn typically face more barriers to finding a job and getting settled, and some have raised concerns that workers who are already in Canada could be displaced. Meanwhile, analysts point out that ongoing border restrictions and current processing backlogs could make it difficult for Canada to increase the numbers quickly.

The country’s current strategy to boost immigration for economic gain is the most aggressive among its peers.

In the U.S., the Trump administration suspended most visas for people not already in the country last spring, citing risks to the domestic job market during the economic recovery. The U.K. government, which transitioned to a more restrictive system after Brexit, has said the new rules would likely curb the overall flow of migrants to the country. In Australia, a strict pandemic border policy has contributed to a sharp drop in immigration that is expected to continue over the next two years.

President Biden has proposed a comprehensive immigration-reform plan. But as WSJ’s Gerald F. Seib explains, he faces an uphill climb that could be even tougher than what previous administrations faced. Photo illustration: Laura Kammermann

Canada is among the most immigrant-reliant advanced economies in the world. Before the pandemic, net migration accounted for more than 80% of Canada’s population growth, compared with about 40% in the U.S.

Canada’s intake of permanent residents dropped by nearly half in 2020, government data show, amid border restrictions and processing delays. Temporary workers and international students were also affected.

The government hopes to make up for that shortfall by increasing the number of permanent residents it admits to 401,000 this year, about 60,000 more than its pre-pandemic intake and the equivalent of a little over 1% of the country’s current population. The target level will rise by 10,000 during each of the subsequent two years, the government says.

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To meet those goals while border restrictions remain in place, Canada is turning to people who are already in the country on a temporary basis. During the first three months of this year, it invited nearly 44,000 people to apply for permanent residence through the country’s points-based system for evaluating prospective economic immigrants, roughly double the number of invitations issued during the same period last year.

Economists say a steady growth in population is generally good for a country’s long-term economic growth. A larger workforce also contributes to a broader tax base and helps pay for government services, which is particularly important in countries like Canada that have low birthrates and an aging population.

But increasing immigration during the pandemic could prove difficult. An analysis by Royal Bank of Canada economist Andrew Agopsowicz suggests border restrictions, processing delays and a decline in application volumes will limit this year’s intake to about two-thirds of the government’s goal.

In addition, migrants who arrive during the pandemic or while the economy is still weak could face extra hurdles.

Nikhil David, 32 years old, said he struggled to find a job in his field when he arrived in Canada from India in July. Mr. David was exempted from Canada’s border restrictions because he had been approved as a permanent resident before the pandemic shutdowns began. After working for several months at a grocery store, he landed a part-time job doing wellness checks and food deliveries for elderly people.

“It’s definitely a kind of risk coming here and starting from scratch,” said Mr. David, who holds a graduate degree in social work from a university in India.

Nikhil David, from India, was exempted from Canada’s border restrictions because he was approved as a permanent resident before the shutdowns.

Photo: Darrell Jenya

Canada is already trying to find ways to meet its 2021 target. The government issued its largest-ever round of invitations for people with work experience in Canada to apply for permanent residency last month. Immigration lawyers said the invitations included people who wouldn’t normally have been considered based on their score in the country’s points-based system—which ranks prospective migrants on their age, education and other factors that could contribute to their economic success in Canada.

Immigration lawyer Chantal Desloges was critical of the unexpected decision to include lower-scoring applicants, but says the overall goal of keeping immigration pipelines flowing makes sense.

“We know that long term, demographically, we need those people,” she said.

Australia, another country that has been highly reliant on immigration for growth, has taken a different approach. Before the pandemic began, the government lowered its ceiling for the number of newcomers it planned to accept to 160,000 to relieve pressure on services and infrastructure in cities, and encourage growth in regional communities.

Amid the pandemic, the government said Australia could see around 72,000 more people leave the country than arrive during the fiscal year ending in June 2021. That is a reversal from the previous year’s estimate of 154,000 net migrants. Australia’s migration program is currently undergoing an annual review. Both the overall ceiling on the number of immigrants and the mix of visas granted are being looked at, with settings to attract more skilled and business migration being considered.

Yet an Australian government forecast, issued last year, anticipates net migration will remain well below pre-pandemic levels for at least two more years.

In the U.S., the intake of legal permanent residents slowed to about 1 million in the fiscal year ending in September 2019, down from nearly 1.2 million three years earlier. A surge in illegal immigration across the southern U.S. border in recent months, including a large number of Mexican adults in search of work, is putting pressure on the Biden administration to define his administration’s policy.

Some business leaders said Canadian immigration policies make it easier to hire the people they need. Immad Akhund runs San Francisco-based online business banking firm Mercury, and over the last year he hired 17 Canadians and two people from outside the country to work out of a new office in Toronto, including a Brazilian engineer who had previously worked in Germany and another person who was already authorized to work in Canada.

Immad Akhund, who runs a U.S.-based online banking firm, opened a new office in Toronto last summer.

Photo: Carmen Holt

He said the U.S. ban on most visas last year was a factor in opening the Toronto office, and even in normal times the process in the U.S. takes too long for a startup that needs to hire quickly, and there is no guarantee a person will be approved.

“We were considering a lot of the U.S. cities that you might consider,” such as Atlanta, Miami and New York, Mr. Akhund said. “But immigration is a really important issue.”

Write to Kim Mackrael at kim.mackrael@wsj.com and Alice Uribe at alice.uribe@wsj.com

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