Bank of Canada says mass immigration is driving up rents, hurting immigrants' job prospects

Roberto Wakerell-Cruz
  |   July 26, 2024   |   Be the first to comment

The Bank of Canada yesterday disputed claims by cabinet that immigration is an immediate net benefit to the country.

The Bank said that immigrants drive up rents, are slow to gain employment, and contribute to “inflationary pressures in some sectors.”

“Strong population growth in recent years has boosted demand for housing,” said the Monetary Policy Report, according to Blacklock’s. “This is adding to existing pressures on house prices and rents. The increase in housing demand from newcomers is being felt across all types of housing but the largest initial impact tends to be in rental markets.”

“This is because most newcomers start out as renters,” said the report. “Survey results indicate immigrants are less likely to report owning a home until about 10 years after arriving in Canada. Growth in housing supply has not kept up.”

Immigrants “face significant challenges integrating into the Canadian labour market,” they wrote. “Softening of the labour market has made it even harder for newcomers to find a job and be attached to the labour force. Difficulty getting foreign credentials and experience recognized in Canada also often results in newcomers taking jobs where skills do not match those required for the position.”

“This potential mismatch also weighs on productivity,” the Bank said. “As a result the boost to labour supply due to the arrival of newcomers could be initially somewhat lower than what would be expected given the increase in the working age population.”

The Bank stated it expected the cabinet to reduce the rate of immigration. Last year, Canada admitted a total of 2.3 million foreigners, including 1,040,985 foreign students, 766,250 migrant workers, and 471,550 landed immigrants.

“Overall the consumption and employment profiles of newcomers suggest they contribute slightly more to demand than to supply in the first few years after they arrive in Canada,” said Monetary Policy. “This unevenness contributes to inflationary pressures in some sectors,” it added.

The Bank’s report defies claims by the Justin Trudeau Liberals that immigrants are an immediate benefit to Canada.

Former Immigration Minister Sean Fraser told the commons that bringing in immigrants would “maximize our economic potential as a country to pay for all things we enjoy.” Fraser argued that more people needed to be brought into the workforce.

“Go down any main street, talk to a restaurant or go to a machine shop and see if they get talent on the shop floor to fill the orders that they otherwise could fill,” said Fraser. “Immigration is going to play a major role.”

Canadians expressed doubt about the claim, as noted in the Department of Immigration's internal 2022 focus group research. According to the Qualitative Research, “There was a view among some participants that the proposed levels are too high due to the current economic climate.” This led to suggestions from some to “take a pause on immigration and focus on Canadian workers until the economy recovers from the pandemic.”

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