Canada is struggling with a “demographic trap.” The economy would be unable to manage current levels of immigration, which makes it impossible to improve the standard of living of Canadians, according to a National Bank study released last Monday. To escape the trap, the authors estimate that annual population growth should not exceed 300,000 to 500,000 people.
Current population growth in Canada “appears extreme relative to the absorptive capacity of the economy,” according to the study’s authors. They highlight a record deficit in the housing supply and estimate that to remedy it, “Canada would have to double its construction capacity to approximately 700,000 housing starts per year, an unattainable objective.”
However, we have to look further than housing, explains to Duty the co-author of the study, Stéfane Marion, economist and chief strategist at the National Bank. “I need 700,000 homes next year. It won’t happen, but even if I did, would I have the capacity to increase the number of schools, daycares, infrastructure, hospitals? Would cities even have the capacity to dig up streets and create sewers? »
A chest that lacks tools
Hence the importance of looking at the “stock of capital”, according to the economist. He compares this concept to a toolbox, which would be made up of factories, offices, equipment, software… In short, everything that allows workers to accomplish their work.
“If I have an extremely aggressive immigration policy — this is the case in Canada currently — I want to bring in lots of people,” explains Mr. Marion. But if my toolbox doesn’t grow at least as fast as the number of workers, I end up with people who lack tools. »
Poorly equipped, workers are therefore less productive, which leads to a drop in GDP per capita, that is to say collective impoverishment. This is what the study reports, which reports a “standard of living at a standstill” for 6 years.
In other words, Canada does not have the capital stock necessary to absorb population growth and improve citizens’ standards of living. This is the demographic trap.
According to calculations by the National Bank, the capital stock per capita in the country decreased by nearly 1.5% in 2023. If we exclude housing, it has decreased every year for seven years, while it continues to increase. increase in the United States.
A reputation at risk
If the government wants population growth like that of last year — estimated at more than 1.2 million people — to become the norm, it must “promote policies that encourage businesses, municipalities and other stakeholders economics to substantially increase investment,” estimates Stéfane Marion.
According to him, attracting foreign workers to the country without being able to offer them housing, services and career opportunities that match their skills could encourage them to leave. “This could tarnish Canada’s reputation as a welcoming land worthy of the name,” says Mr. Marion, who “advocates the formation of a council of non-partisan experts who give immigration figures to politicians” in order to depoliticize the issue.
The question of immigration thresholds has also caused the political class to react in recent days. The leader of the Parti Québécois, Paul St-Pierre Plamondon, cited the conclusions of the National Bank study during a press briefing in Alma on Wednesday to highlight the issues of immigration and access to the property. He also criticized Ottawa’s population growth objectives.
In Quebec, the Minister of Immigration, Christine Fréchette, expressed concern about the number of asylum seekers arriving in the province, arguing that it had reached its maximum reception capacity.
Justin Trudeau reiterated this week that he wants to welcome 500,000 immigrants, while affirming that he wants to “put temporary immigration back under control”. The leader of the Conservative Party of Canada, Pierre Poilievre, said last Friday that Canada should link its immigration policy to the construction of housing.