The Initial Advantage

Canada’s significant increase of population growth has been driven by an influx of non-permanent residents. It initially proved advantageous in the aftermath of the COVID-19 pandemic. As the country struggled with advanced job vacancies, this population growth helped fill these gaps, giving the workforce a much-needed boost.

The Spiral Out of Control

But according to Andrew Grantham, managing director of CIBC Economics, this population growth “couldn’t be contained” fast enough by 2023. A report released Wednesday highlighted the unintended consequences of this rapid population growth the fruit is emphasized.

The Housing Crisis Exacerbated

While the initial influx of temporary residents helped fill the vacancies, the growth from mid-2022 has led to a severe housing shortage. Grantham estimates a sharp rise in rental rates that Canada’s population grew by about 1.1 million or 35 percent from 2019.  

Exceeding Labor Force Needs

The report also shows that population growth has “overtaken labor needs” by a staggering 200,000 to 700,000 individuals. It represents a surplus of five to 20 percent. This imbalance has created a it easily comes, where rising housing prices should slow population growth. But it increased existing labor shortages. It can also drive-up prices in other sectors.

The Positive Impact of Newcomers

Despite the challenges, Grantham highlighted the positive impact of newcomers on the labor market. While the domestic workforce has aged, the Canadian-born population has understandably fallen by about three percent since 2015.

Filling Vacant Jobs

Temporary residents and new immigrants played a key role in filling vacant jobs after the COVID-19 pandemic. Coming out of the pandemic, new absorption, unemployment, and underemployment were all better than before the pandemic.

The Downside of Economic Slowdown

However, according to the report, this group has been most negatively affected by the economic downturn and decline in labor demand.

Targets for Non-Permanent Residents

To address the imbalance, the report argues that a new target for temporary residents would reduce Canada’s population, from about three per cent now, to a low than one percent in 2025-26. While this alone does not meet the housing shortage relative to population growth, rental housing prices in the Canadian CPI (Consumer Price Index) are expected to provide price movements the surface has been reduced.

The Need for a Balance

The Grantham report highlights the need for a careful balance between population growth, housing availability and labor needs. While another plays an important role in supporting the Canadian economy, population movement the top has exacerbated the already scarce housing stock and rising rents. It has created a multifaceted challenge for policymakers.