Good afternoon, and thanks.
Thankfully, Mr. Noorani and I share a lot of opinions.
On a per capita basis, Canada runs one of the largest immigration systems among the world's advanced economies. The annual inflow of immigrants to Canada, which is about 260,000, is roughly equivalent to 0.8% of the total population. This compares to the annual immigrant inflow of roughly 0.9% of Australia's population, 0.6% of the population of the U.K., and 0.4% of the population of the U.S., for their immigration programs.
Because Canada's immigration system is so large relative to others, it's also more complex to manage. The recent global recession, coupled with Canada's relatively strong labour market performance relative to other advanced nations, is an opportunity for Canada to attract some of the world's best and brightest talent.
Canada looks relatively good on the world stage. While the backlog of applications is surely dampening the attractiveness of Canada as a potential location, our relatively strong labour market is currently helping to offset some of the negative effects of the backlog and likely increasing the average skill sets of new applicants. Should the labour markets in other countries improve, the negative aspects of the backlog on the quality of potential applicants is sure to become more acute.
Quite simply, one could characterize two major problems facing Canada's immigration system, one of which is the backlog of applications. The average processing time for applications in Canada is still higher than the average six-month processing time in Australia. Many applicants are likely to give up on the likelihood of getting into Canada and are looking elsewhere.
Another major problem is that recently landed immigrants have not fared as well as their Canadian-born counterparts in the job market. They are not closing the gap over time as quickly as they were historically. This is manifested in part by the worsening earnings gap between immigrants and the Canadian-born population. Many new arrivals are underemployed and they are moving back home or to another country.
To reduce the backlog, policy-makers have three main options: one, increase admissions; two, limit applications; and three, limit the number of successful applications. One popular solution to the backlog, which is to increase overall immigration levels, risks exacerbating the labour market gaps between newly arrived immigrants and the Canadian-born population.
New academic work by the C.D. Howe Institute that evaluates the labour market outcomes of newly arrived immigrants according to historical data that tracks all immigrants who arrive in Canada bears out this point. For instance, increasing the annual immigration rate to 1% of the population, so that's expanding the number of immigrants by roughly 85,000 people per year, would reduce the average entry earnings of all applicants by about 3%. That amounts to roughly $1,300 per year for males and $900 for females. This happens because marginal applicants with lower education and language skills are more likely to enter as total immigration numbers increase.
Another solution for reducing the backlog of family class applicants would be to decrease the economic class share of immigrants under the capped level of total migrants. This could mean, for instance, reducing the economic class share from roughly 60% of total immigrants to roughly 50%. However, this would imply a reduction in average entry level earnings of approximately 7.5% for males and females, roughly $3,400 per year.
Australia currently allocates about 70% of all immigrants to the economic class whereas Canada's share is much lower, somewhere between 55% to 60% on average over the last five or six years.
Now, immigration policy decisions should not be based totally on economic criteria such as high entry-level earnings. Family reunification, for example, has intrinsic value to many recently landed and potential immigrants. That said, economic consequences matter, especially to the extent that they contribute to beneficial consequences of immigration from the perspective of immigrants themselves and society at large.
Based on these findings, I'm not convinced that increasing the total level of immigrants or changing the share of immigrants coming through certain classes offer any easy solutions to the backlog program. Doing so while helping to reduce the number of people in the backlog would come at the cost of exacerbating the already problematic gaps in labour market outcomes of newly arrived immigrants vis-a-vis the Canadian born.
Better solutions to the problem, which may also have some benefits with respect to greater earnings potential, are likely in the way applicants are screened prior to landing. Take language assessment, for example. Recent reforms and announcements to move to third-party language testing should be applauded as a measure to better screen potential applicants. That should result in a lower success rate for potential applicants. Greater weight in the point system could be taken away from work experience, for example, and put toward younger applicants. This would imply adopting a point structure that places a greater emphasis on younger immigrants, giving greater weight to those in younger age categories, like in Quebec and Australia.
While none of these suggested changes to the federal screening for skilled immigrants will necessarily help the backlog of immigrants from prior to 2008, as the backlog keeps coming down we can loosen the existing filter--sort of pre-filter--on applications according to occupational need, and instead have a bolstered point system do the heavy work.
Taking a wider view of immigration policy reforms in recent years, it's fair to say that reforms have been made in response to the extended waiting period for potential applications; labour-market shortages in specific regions; earning differentials between immigrants and the Canadian-born; and the inability of the federal skilled worker program to take into account blue-collar trade skills, as opposed to general white-collar attributes and skills.