Bank of Canada governor Tiff Macklem wants the country to bring in even more immigrants to fill the jobs going begging for a lack of workers \u2013 and has warned even more interest rate increases could be in store without those extra workers.<\/p>\n
In a speech at the Conference on Diversity, Equity and Inclusion in Economics, Finance and Central Banking in Ottawa, Macklem described a labour market that is out of sync.\u00a0<\/span><\/p>\n Read more:<\/b><\/p>\n \u201cBusinesses have had a hard time hiring enough workers to produce all the goods and services Canadians want to buy. Job vacancies are elevated, and firms report widespread labour shortages,\u201d he said.<\/p>\n \u201cThis is symptomatic of an economy that is overheated. Businesses can\u2019t keep up with demand, and this is driving prices higher.\u201d<\/p>\n That inflation can be curbed by raising interest rates.<\/p>\n \u201cMonetary policy affects demand. By raising interest rates, we are moderating spending, and that will reduce the demand for workers. Invariably, this has unequal consequences across sectors and across workers,\u201d said Macklem.<\/p>\n But the governor of the country\u2019s central bank explained immigration can also help mitigate the need for the Bank of Canada to raise interest rates.<\/p>\n \u201cThe other way to rebalance supply and demand is to increase the supply of workers,\u201d he said. \u201cThat takes time and with inflation already far too high and with elevated risks that high inflation becomes entrenched increasing labour supply is not an alternative to slowing demand.\u00a0<\/span><\/p>\n \u201cBut it is a compliment. And the more we can do on supply, the less we will need to do on demand.\u201d<\/p>\n Macklem\u2019s message is clear: boost immigration or face even higher interest rate hikes.<\/p>\n In 2022, the Bank of Canada raised its target overnight rate seven times, pushing it up to 4.25 per cent, the highest that rate has gone since 2008, in its bid to curb inflation which hit 6.9 per cent in October.\u00a0<\/span><\/p>\n As the Bank of Canada raised its policy rate from 0.25 per cent in March in that series of rate hikes, it drove up prime rates and mortgage rates, making it all that much harder for Canadians to buy homes.\u00a0<\/span><\/p>\n Canada, like many other countries, was hard hit by the COVID-19 pandemic and locked down for a while and imposed many public health restrictions, all of which had a massive impact on the country\u2019s economy.<\/p>\n \u201cNever before has so much of the economy been shut down, so suddenly and for so long,\u201d said Macklem.\u00a0<\/span><\/p>\n \u00ab\u00a0But thanks to new vaccines and exceptional fiscal and monetary policies, the recovery was the fastest ever. By August, four months after the employment lows of April (in 2020), nearly two-thirds of Canadian job losses were recouped.\u201d<\/p>\n That fast recovery led to massive labour shortages as employers in several sectors of the economy struggled to find workers who had been laid off and moved on to other jobs.<\/p>\n In its third quarter, 2022 report, Statistics Canada noted there were still 959,600 job vacancies across the country, down 3.3 per cent from the record high of 992,200 vacant positions in the second quarter of the year but still much higher than for the same quarter in 2021.<\/p>\n \u201cIt was 8.3 per cent higher than in the third quarter of 2021 and 72.7 per cent higher than in the first quarter of 2020,\u201d reported Statistics Canada.<\/p>\n The job vacancy rate, which is calculated by dividing the number of vacant positions in Canada by the total number of jobs, both filled and unfilled, was 5.4 per cent in the third quarter of 2022.<\/p>\n Immigration Minister Sean Fraser has responded to Canada\u2019s labour shortages by raising immigration targets for each of the next three years to record levels.<\/p>\n In its\u00a02023-2025\u00a0Immigration\u00a0Levels\u00a0Plan<\/i>, Ottawa has set the target for 2023 at 465,000 new permanent residents. The country is to welcome 485,000 new permanent residents in 2024 and another 500,000 in 2025.<\/p>\n That\u2019s a total of 1.45 million immigrants to Canada over the coming three years.<\/p>\n Canadian employers trying to survive during this acute\u00a0labour\u00a0shortage can recruit and hire foreign nationals through the\u00a0Temporary Foreign Worker\u00a0Program\u00a0<\/a>(TFWP) and the\u00a0International\u00a0Mobility Program\u00a0<\/a>(IMP).<\/p>\n The\u00a0Global\u00a0Talent\u00a0Stream\u00a0<\/a>(GTS), a part of the TFWP, can under normal processing situations lead\u00a0to\u00a0the granting of Canadian work permits and processing of visa applications within two weeks.<\/p>\n Under the\u00a0Express Entry system<\/a>,\u00a0immigrants can also apply for\u00a0permanent residency<\/a>\u00a0online if they meet the eligibility criteria for one of three federal immigration programs,\u00a0the\u00a0Federal Skilled Worker Program<\/a>\u00a0(FSW),\u00a0Federal Skilled Trades Program<\/a>\u00a0(FST), and\u00a0Canada Experience Class Program<\/a>\u00a0(CEC),\u00a0\u00a0or a\u00a0participating provincial immigration program.<\/p>\n Candidates\u2019 profiles are then ranked against each other according to a points-based system called the\u00a0Comprehensive Ranking System<\/a>\u00a0(CRS). The highest-ranked candidates are considered for an\u00a0Invitation to Apply<\/a>\u00a0(ITA) for permanent residence. Those receiving an ITA must quickly submit a full application and pay processing fees, within a delay of 90 days.<\/p>\n
\n\n
\nMore economic immigration can help Canada balance its labour supply, says Macklem<\/h3>\n
Fast recovery post-COVID led to massive labour shortages<\/h3>\n
Express Entry system lets skilled workers apply for immigration online<\/h3>\n