2024-01-12 09:00:00
Chief economists of major Canadian banks warn the federal government: economically, record population growth through immigration is unsustainable, even unjustifiable, and cannot continue at this pace in 2024 .
The chief economist of the National Bank of Canada, Stéfane Marion, is categorical.
The Canadian economy has the capacity to accommodate 300,000 to 500,000 individuals per year, he says. Beyond this level, it creates all kinds of pressures: problems with infrastructure, places in daycare, in schools, in real estate development.
A point of view shared by Scotiabank’s chief economist, Jean-François Perrault. We have not made the necessary investments, he believes, to be able to accommodate all these people without creating a loss of affordability.
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Graph comparing the growth of the working-age population with the progression of housing starts.
Photo: Radio-Canada / National Bank
The two chief economists, gathered for the annual luncheon of the Economic Club of Canada with their counterparts from other major Canadian banks Thursday morning, underline the pressure that population growth puts on the real estate market, while supply is already largely insufficient to meet needs.
It’s not that immigration is bad for Canada, explains Stéfane Marion. On the contrary, it is very good, but there are levels that have been surpassed that we had never known before. So, yes, there is a problem of loss of control in terms of immigration policy that we must correct.
Impact on unemployment
Part of the increase in the unemployment rate, adds Stéfane Marion, is exacerbated by the rapid growth of the population in Canada. This means that people enter the job market but will have more difficulty finding a job.
Despite the creation of almost 500,000 jobs last year, according to Statistics Canada data, the unemployment rate rose from 5% in January to 5.8% in December.
This is an unusual situation in the eyes of Jean-François Perrault. This happened because there are many more workers in Canada now than there were a year ago and these people have not all found jobs yet, he explains.
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Jean-François Perrault, senior vice-president and chief economist at Scotiabank.
Photo : Radio-Canada
The National Bank predicts that the unemployment rate might rise to 7% in 2024. The forecasts of Jean-François Perrault of Scotiabank are a little more optimistic with an expected unemployment rate of 6.7% this year.
Obviously, the economy is slowing down: we expect employers to throw people out a bit, that’s typical, but it’s more influenced by the fact that the active population is increasing.
Aging of the population
Desjardins recently highlighted in an analysis (New window) that the repercussions of strong population growth are shared. Senior economist Marc Desormeaux wrote that this population growth risked boosting consumption and potentially reigniting inflation.
On the other hand, by partly filling the labor shortage caused by the aging of the population, a population explosion can also help increase the supply of available workers and reduce possible inflation through wage increases, he added. in his analysis.
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Stéfane Marion, economist and chief strategist at the National Bank
Photo: National Bank
Stéfane Marion, of the National Bank of Canada, argues that replacing retiring workers cannot justify the immigration levels observed in 2023.
There are 200,000 workers who retire every year in Canada, and we are talking regarding a population growth policy currently of 1.2 million. So, clearly, we are well beyond the population aging figures.
In the third quarter, population growth in Canada once once more shattered a record. With the addition of 430,635 people, 96% of which are attributable to immigration, the Canadian population is now estimated at 40,528,396 inhabitants.
The rate of growth of the Canadian population is more than five times higher than the average rate of population growth in OECD countries.
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