the rennie brief: higher immigration targets - Nov. 2020



• Canada is expected to welcome between 190,000 and 200,000 migrants in 2020, which is upwards of 150,000 fewer than targeted due to covid-19. • In response to the impact that the pandemic has had on immigration, the federal government is raising immigration targets to 401,000 in 2021, 411,000 in 2022, and 421,000 in 2023. • If achieved, this would add 160,000 more immigrants over these three years to make up for 2020’s deficit, which in turn will have implications for Canada’s labour and housing markets.


Canada has set ambitious new targets for immigration over the next three years. The implications will be varied for labour and housing markets across the country.

On October 30, the federal government increased Canada’s immigration targets in response to the reduced inflow of immigrants in 2020 due to covid-19. Despite our expectation that immigration levels would remain below previous targets as our economy recovers over the coming three years, the new targets that have been set are 401,000 immigrants for 2021 (up from 341,000), 411,000 for 2022 (up from 351,000), and 421,000 for 2023 (up from 361,000). As such (and if achieved), the new targets mean Canada would welcome 160,000 more immigrants between 2021- 2023 than under the pre-pandemic targets. MAKING UP FOR LOST IMMIGRATION While these changes seem dramatic, it is important to acknowledge that Canada will fall well short of the 341,000-immigrant target that had been set for 2020. In fact, rennie intelligence estimates that by the end of 2020 Canada will have welcomed between 190,000 and 200,000 immigrants during the year—150,000 short of the pre-pandemic target. Viewed in this light, the new targets are just making up for 2020’s immigration deficit. As it relates to both covid -19 and recent immigration policy adjustments, our long-term outlook for Canada’s demography remains unchanged as most of the 37.6 million of us already here will continue to have birthdays and age over the coming years. That being said, there are

13.0% in May, before slipping back to 9.0% in September as 1.8 million Canadians remained out of work. To the extent that a short-term increase in immigration adds to the size of the Canadian labour force, the national unemployment rate could rise above where it would have been in the absence of the increased immigration targets (or, the unemployment rate will fall more slowly). Put slightly differently, the country’s return to full employment—that is, our pre-pandemic unemployment rate near 5%—could be delayed. That being said, some of those who will seek permanent residency in Canada are already here on work and student visas. To the degree that these individuals are already employed, or remain as students, they will not add to the labour force in the short-term as a result of becoming permanent residents, thereby mitigating upward pressure With approximately 75% of immigrants to Canada renting their home during their first five years in the country, short-term increases in immigration targets could increase the demand for rental housing. With already-tight rental markets across the country (despite some loosening due to the pandemic), this could create tailwinds for rents. It could also create additional demand for multi-family homes from investors, thereby putting upward pressure on home values. FINAL THOUGHTS Whether or not Canada can achieve these new targets largely depends on the path of the pandemic in the coming months and the efficient distribution of an effective vaccine. That said, with the Canadian government signaling its intention to bolster our labour force, it is ushering in a re-think of the trajectory of labour and housing markets in the next few years. on the unemployment rate. GROWING HOUSING DEMAND

two shorter-term consequences worth noting. AN OPENING OF OUR LABOUR MARKET GAP

Around the world, the abrupt suppression of economic activity that began in March as a means to ward off the worst of the pandemic resulted in growing labour market gaps as unemployment rose. Here in Canada our national unemployment rate jumped from 5.5% in early 2020 to

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