Migration prospects for Canada’s small to mid-sized cities during and after the pandemic
September 14, 2020
By David Campbell
In recent years, Canada’s small to mid-sized urban centres[i] have started to attract more international migrants. Using Statistics Canada’s annual estimates of the components of population growth[ii], between 2013 and 2019, the number of immigrants settling in Canada’s four largest urban centres combined (Toronto, Montréal, Vancouver and Calgary) increased by nine percent. In the rest of Canada’s Census Metropolitan Areas (CMAs), the number of immigrants added to the population increased by 40% over the same timeframe. The number of immigrants settling in the smaller urban centres, Census Agglomerations, rose by 45%.
Of course, most of the smaller to mid-sized urban centres started from a much lower base and as a result, the immigration rate (the number per 10,000 population) is still much lower in most cases than the largest urban centres. Toronto still has one of the highest immigration rates among urban centres at 163 per 10,000 population in 2019 and Vancouver is still well above average at 128 per 10,000. However, 14 small and mid-sized urban centres had an immigration rate of greater than 100 per 10,000 (or 1% of the population) in 2019. These included: Halifax, Charlottetown, Fredericton and Moncton in Atlantic Canada; Regina, Saskatoon and Swift Current in Saskatchewan; Winkler, Steinbach, Brandon and Thompson in Manitoba and Brooks, High River and Wood Buffalo in Alberta.
Among the 40 mid-sized urban centres across Canada with a population of at least 100,000, excluding Toronto/Montreal/Vancouver, 18 have seen immigration rates rise by 50% or more over the past five years.
The significant increase in international migration to Canada’s mid-sized urban centres has been a direct response to the demographic and workforce challenges associated with an aging population.
Historically most of the population growth in these cities came from natural population change (births less deaths) and from intraprovincial or interprovincial migration. As shown in Figure 2, as recently as the 2016 Census, immigrants accounted for less than 10% of the workforce in some of Canada’s most important mid-sized urban centres in eastern Canada while accounting for 50% of all workers in Toronto and 43% in Vancouver.
Now many cities face a negative natural population growth rate and there are fewer people in small communities and rural areas to migrate into the urban centres. If these urban centres want to continue growing, they will need to attract more international migrants.
The federal government has listened to provincial and local government and changed the rules to help facilitate more immigration into mid-sized and smaller urban centres[iii]. Instead of a strict points-based approach to immigration that gives preference to highly skilled migrants, provinces are now able to tailor the attraction of migrants based on local workforce needs.
The Covid-19 pandemic dramatically curtailed the growth in international migration to Canada’s mid-sized urban centres. The number admitted by Immigration, Refugees and Citizenship Canada (IRCC) has dropped by 70% in the first six months of 2020 compared to the previous year[iv]. Figure 3 shows the toll on selected mid-sized urban centres across the country. RBC Economics estimates that over the course of 2020, there will be 170,00 fewer permanent residents than planned[v].
The role and strategic importance of temporary foreign workers (TFWs) came into sharp relief as a result of the pandemic[vi]. Many of the country’s top export industries including agriculture and fish processing are increasingly reliant on short term international migrants. After an attempt to attract Canadians into these jobs in the spring fell flat, government opened up the doors again to TFWs in response to concerns these key industries would not be able to function.
What are the prospects for migration into Canada’s mid-sized urban centres moving forward? The underlying demographic trends have not changed. The share of the workforce retiring every year is accelerating and post-pandemic it is likely the overall workforce in Canada will need to expand to foster economic growth. After the 2008 recession, between 2009 and 2019 the workforce across the country expanded by 1.95 million. Further, almost all of this growth came from landed immigrants. Nearly 1.5 million immigrants joined the Canadian workforce over the decade (this doesn’t include the increase in non-permanent residents participating in the workforce)[vii].
Table 1 shows the growth rate of the immigrant workforce in Canada by province compared to the growth among those born in Canada. This chart shows net growth in the size of the workforce by source. Over the decade the provinces with the largest increases in the landed immigrant workforce also had the fastest growing gross domestic product (GDP).
The reality is that Canada needs to continue to foster at least a moderate annual economic growth rate (real GDP) in the coming years. The country faces increased demand for health care and related services to support the aging population. Income support programs are increasing. There are considerable infrastructure demands from coast-to-coast. The ability of governments to sustainably fund public services and infrastructure has been predicated on a solid rate of economic growth. The tax to GDP ratio in Canada has risen to 33% in 2018 – mostly on an upward trajectory since 2011[viii]. The choices are a) squeeze more tax revenue out of a stagnant economy or b) foster a growing economy that is driving new organic tax revenue growth.
It seems virtually impossible to imagine the country sustaining a 1.5%-2.5% real GDP growth rate without a substantial increase in the size of the workforce and, therefore, immigration. There are some who believe technological change and innovation will reduce the need for workers in many sectors of the economy and therefore lessen the need to grow the workforce in the coming years.
The Canadian Occupational Projection System (COPS) published by Employment and Social Development Canada (ESDC) is projecting the number of new workers needed each year (to meet replacement and growth labour demand) will rise from 587,700 in 2020 to 667,900 by 2025[ix]. Further, many of the jobs coming available over the next decade will not be in high skilled occupations. The number of jobs requiring only high school or occupation-specific training are expected to increase by 20% between 2020 and 2025 while the number of available jobs usually requiring a university education are only projected to rise by 11%.
It is possible that technological change and innovation will lead to structural changes in the workforce, but the lesson of other countries is clear that a constricted talent pipeline will restrain economic growth.
One of the potential trends emerging from Covid-19 is the rise of working-from-home. A number of multinational firms have announced they are allowing workers to work remotely. Even after the pandemic subsides, the expectation is that more people than ever will do their job from their home. Overall, this should be perceived as an opportunity. Canada’s smaller and mid-sized urban centres are well positioned to attract remote workers. They offer less congestion, lower housing costs and in many cases low crime rates. Attracting international migrants and their jobs is a win-win.
In the short term, Canadians’ support for attracting immigrants could wane as unemployment rates are above average and other factors such as the high number of positive Covid-19 cases associated with international travel. However, Canadians need to understand that in the medium and longer term, immigration will play a vital role in the economic development and prosperity of mid-sized urban centres across the country.
There are a number of important trends that are poised to shape the country’s destiny over the next 20-30 years. One of the most important will be the country’s ability to sustain the talent pipeline (i.e. the talent needed to meet workforce replacement and growth demand across all occupations). If Canada can continue to attract young ambitious migrants from around the world this will help ensure we have a sustainable tax base to continue providing high quality public services and infrastructure.
Despite the pandemic, the outlook for immigration into Canada’s mid-sized urban centres beyond 2020 is good. Underlying demographic trends here and around the world will necessitate migration into developed countries that want to sustain moderate levels of economic growth. Canada’s mid-sized cities are ideally positioned to attract increasing numbers of migrants in the coming years.
David Campbell is the President of Moncton, New Brunswick-based Jupia Consultants, an economic development consulting firm. He was previously Chief Economist with the Government of New Brunswick.
[i] Herein the term ‘urban centre’ refers to Canada’s Census Metropolitan (CMA) and Census Agglomeration (CA) areas. Mid-sized urban centre refers to those with at least 100,000 population and small-sized have populations of less than 100,000.
[ii] Statistics Canada Table: 17-10-0136-01.
[iii] For a review of the Atlantic Immigration Pilot and the Rural and Northern Immigration Pilot, visit https://www.canada.ca/en/immigration-refugees-citizenship/services/immigrate-canada.html.
[iv] Immigration, Refugees and Citizenship Canada data through the end of June 2020.
[v] Canada needs to get its stalled immigration system back on track. Globe and Mail, September 7, 2020.
[vi] For a good summary of the impact on agriculture and the government’s quick response, visit https://www.thepacker.com/article/feeling-brunt-covid-19-canada
[vii] Statistics Canada Table: 14-10-0083-01
[viii] https://www.oecd.org/tax/revenue-statistics-canada.pdf
[ix] https://open.canada.ca/data/en/dataset/e80851b8-de68-43bd-a85c-c72e1b3a3890