In the latest Investment Migration Council story, economists have outlined a surge in migration to high-income countries (HICs) in the recent past, with the foreign-born population in Global North countries such as Canada rising faster than ever before.
Britain witnessed an influx of 1.2 million people just last year, and net migration (the number of immigrants minus the number of emigrants) to Australia has doubled the rate prior to COVID-19.
Canada’s own net migration in 2022 was more than twice the previous record, and it leads the G7 countries for population growth in 2022.
In fact, according to the latest figures (as of 2021), Canada’s population growth rate of 2.7% in 2022 puts it among the top 20 worldwide; most countries with a higher population growth rate were in Africa.
This global trend of migration towards the high-income world is, however, relatively new; just recently, many wealthy countries had turned their backs on mass migration, with the 2016 BREXIT vote and Donald Trump’s election solidifying anti-immigration rhetoric.
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The populist wave following that caused politicians across the Global North to shun migrants, and then COVID-19 caused international borders to shut down.
This was a huge blow to migration numbers in wealthier countries; while Singapore’s population fell by 4% (an unprecedented pattern for a country known for receiving many immigrants), Australia’s emigrant numbers exceeded its immigrant numbers in 2021 – for the first time since the 1940s.
However, the higher immigration in recent years has been a return to normalcy for some places and a huge change for others.
Newfoundland and Labrador exemplify this; Canada’s second-smallest province, it has long been home to a predominantly Irish-Catholic population. With net migration numbers exceeding 20 times the pre-pandemic numbers, however, St. John’s – the capital of the province – has become more heterogeneous than ever before.
Canada in general has been one of the most immigrant-friendly countries in the Western world. It witnessed a record-high population growth of 1,050,110 from January 1, 2022 to January 1, 2023, to result in a population of roughly 39,566,248 individuals at the start of this year.
This was the first 12-month period in Canada’s history when the population grew by over 1 million individuals, and the highest annual population growth rate (of +2.7%) recorded since 1957 (+3.3%).
The previous record – that created in 1957 – was resultant of the high number of births during the post-war baby boom and the high rate of refugee immigration to Canada proceeding the Hungarian Revolution of 1956.
However, the reason for the record-high population growth in 2022 was different, as 95.9% of it was accounted for by the international movement of workers to Canada; if the current rate persists, the Canadian population could double in 26 years.
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What is the reason for the immigration boom to the wealthy world?
The explanation for the post-pandemic immigration boom could be found in the nature of the post-pandemic economy, with unemployment in the rich world being the lowest it has been in decades at 4.8%.
This has created labour shortages and job availabilities across the Global North. Canada is a prime example of this assertion, and the international migration promoted by the Government of Canada is heavily focused on easing labour needs of employers in the country – especially with an ageing population putting an additional burden on the economy.
Another possible explanation for the same could be currency movements, with low-income country (LIC) currency having depreciated at an average of 4% to the dollar. This allows immigrants to send more money back home in the form of remittances, adding an additional incentive to move to wealthier nations.
Governments have also amped up efforts to attract more people. Canada holds an immigration target of 1.5 million new residents between 2023 and 2025, while Germany and India recently signed an agreement for more students from the latter to study and work in the former.
What is the impact of this immigration boom on the wealthy world?
Overall, economies that are open to immigration witness large benefits in the long run, such as trading and investment links between immigrants’ home countries and destinations.
According to Statistics Canada, immigrants have made huge contributions to every sector across the economy.
As of May 2021, immigrants aged 25 to 54 represented:
- over 36% of people working in accommodation and food services
- nearly 38% of those working in the transportation and warehousing sector
- over 34% of those working in professional, scientific and technical services
- over 20% of those working in construction
The healthcare industry has also particularly benefited by immigration, with 23% registered nurses, 39% dentists, and 36% physicians being skilled foreign workers who are working in Canada.
In fact, more than 40% of newcomers to Canada between 2011 and 2016 who were working in healthcare were part of important areas of nursing and residential care facilities, as well as home healthcare services.
Short-term impacts of immigration
Immigrants – as proposed by certain economists – could possibly help “cool down the labour market and slow down inflation,” according to Torsten Slok from Apollo Global Management.
However, the Investment Migration Council assessment posits that such claims may be too optimistic. While more people equal increased labour supply, they also lead to reduced wage growth. This effect is small, nevertheless; in Canada, pay is still rising by 5% per year.
Migration could also increase goods and services demand, causing increased inflation. Newcomers in Britain are pushing up housing prices, and a similar story is replicated in Canada.
According to a Desjardins report, housing affordability would be lowered unless there is quick action to build much-needed accommodation for the 1.5 million immigrants; in specific, Randall Bartlett and Marc Desormeaux predicted a need for housing boost by 50% to keep demand for housing from racing ahead of supply.
