A newly published Desjardins Economic Studies report underscores the advantages of embracing skilled immigrants in Canada. The report suggests that while addressing labor shortages in the construction industry through immigration is crucial, there is also a need to address obstacles hindering these workers from making their maximum contributions. Specifically, the report emphasizes the importance of mitigating discrimination and harassment in the construction sector. This advice is especially relevant given Canada’s current housing affordability crisis, which is primarily fueled by an insufficient supply to accommodate the needs of a swiftly expanding population.
During the third quarter of 2023, Statistics Canada unveiled data indicating that Canada’s population had surged to 40,528,396 individuals, marking a notable increase of 430,635 compared to the preceding quarter and surpassing 500,000 since reaching the milestone of 40,000,000 in June 2023.
This demographic upswing has profound implications for housing affordability in Canada, a well-documented concern. The Canada Mortgage and Housing Corporation (CMHC) estimates a pressing need for an additional 3.5 million housing units, above the current construction efforts, to adequately accommodate the existing and expanding population.
As of December 2023, the most recent figures from the Canadian Real Estate Association reveal that the average home price in Canada stands at $657,145. However, in densely populated cities like Toronto or Vancouver, home prices often soar above the one-million-dollar mark, exacerbating the challenges of housing affordability.
Individuals with temporary residency status are not engaged in construction work.
According to the Desjardins report, the construction sector ranks fifteenth among the top 20 employment industries in Canada, based on workforce size. Analysis of Census 2021 data reveals that non-permanent residents (NPRs) and immigrants constitute less than 22% of Canada’s construction workforce.
This data indicates minimal growth since 2019 when a similar study found that 21% of newcomers were employed in construction occupations. Additionally, a recent report from the Bank of Canada highlights that only “5% of employed NPRs (or 3% of total NPRs) pursue construction as their primary job.” Despite NPRs being the fastest-growing segment of the population, their involvement in construction jobs remains limited.
Costs and productivity are additional considerations influencing the situation.
The report emphasizes that the housing shortage is influenced by factors beyond increased immigration. For instance, it highlights that building material costs have reached a 10-year high, exacerbated by disruptions in the supply chain during the COVID-19 pandemic and current elevated interest rates.
According to the Canada Mortgage and Housing Corporation (CMHC), approximately 40% of residential developers are expected to decrease the number of upcoming projects due to high costs, while over 30% will delay or postpone new projects.
Low productivity in the housing sector is another contributing factor. Desjardins notes that productivity has either remained stagnant or declined, proposing solutions to boost production and meet demand. One such suggestion involves creating a catalog of pre-approved building plans, a strategy endorsed by Canada’s Minister of Housing, Sean Fraser. The implementation of preapproved plans aims to streamline municipal approval processes and facilitate faster financing for housing projects in Canada.
Enhanced and targeted immigration strategies
Ultimately, the Desjardins report recommends a more effective approach to welcoming newcomers, particularly in the construction sector. Notably, the report highlights that in 2022, only 455 new permanent residents were admitted through the Federal Skilled Trades Program (FSTP), and no Express Entry draws for FSTP candidates occurred in 2023.
Echoing this sentiment, a report from the Royal Bank of Canada (RBC) emphasizes the need for Canada to adopt a more strategic approach in selecting immigrants and temporary residents, focusing on those with robust long-term economic prospects, including individuals outside highly-educated fields.
In response to these recommendations, Immigration, Refugees and Citizenship Canada (IRCC) states its commitment to inviting skilled newcomers to address labor shortages in various sectors. In May 2023, IRCC introduced category-based selection draws for Express Entry candidates, specifically targeting those with human capital attributes or occupations in demand in Canada. Among these categories is one for candidates in trades occupations. However, IRCC conducted only two draws for these candidates, issuing a total of 2,500 Invitations to Apply (ITAs) for Express Entry candidates with experience in trades occupations.
