Saturday, 12 Oct, 2024
By: Niyati Sareen
Image Source: Pexels
Once perceived to be the land of endless opportunities, Canada is currently facing its worst decline in over four decades. About one in four Canadians are immigrants, with the highest influx from India. However, in recent years, rising inflation, skyrocketing housing costs and a tightening job market have caused a significant stagnation in Canada’s once-thriving economy.
The past few years have seen a sharp surge in the cost of living across Canada, and citizens along with immigrants are feeling the pinch. In 2023, Canada's GDP growth stood at 1.1% and was unable to keep pace with the massive spike in population which was growing at the rate of 3.2%. With the population growth rate outstripping GDP growth, the per capita growth has been falling, reflecting a decline in living standards. Necessities such as food, housing, and transportation have all seen significant price hikes, pushing families closer to the poverty line and successively causing a fall in domestic demand. According to Statistics Canada, nearly 45% of Canadians reported that rising prices were greatly affecting their ability to meet day-to-day expenses. The Consumer Price Index reached a 40-year high in 2022, climbing to 6.8%, and the annual average in 2023 was recorded to be 3.9% — the largest since 1991 besides 2022. The housing crisis has aggravated the situation, with real estate prices skyrocketing to unprecedented levels and a 21% hike in rent over the past two years.
Canada’s aging population, with the fertility rate reaching a record low of 1.33 children per woman in 2022, is inverting its demographic pyramid. Despite an outstanding drop in fertility rate since 1971, Canada experienced its highest population growth in 66 years in 2023, surging to a record high of 40.77 million. Immigration was the primary source of this growth, accounting for 97.6% while the remaining 2.4% came from natural increase. However, this unusual increase in immigration has put additional pressure on the limited resources along with exacerbating the existing problem of housing affordability and availability, amongst other things.
The widening wealth gap is another noticeable trend to worry about, with the wealthy 20% accounting for more than 67% of Canada’s total net worth, while the bottom 40% accounting for only around 2.4%. These income inequalities are hindering economic growth of the country. Additionally, there is a considerable strain on the job market, with July 2024 seeing an unchanged unemployment rate of 6.4%. The economic downturn in the country has led to layoffs and hiring freezes considerably tightening the job market and underemployment continues to be a problem, making it increasingly difficult in securing jobs that match one’s skill level.
Various policy changes undertaken since 2006 are also triggering stress in the economy. Prime focus on consumption and social spending, coupled with reduced firm entry rates, has caused a major dip in critical investment, which in turn is decreasing productivity. The lagging healthcare system with rapidly declining access to primary care, is further downgrading the country, and ranking it lowest out of the 38 OECD (Organisation for Economic Co-operation and Development) nations.
Earlier this year, the Canadian federal government announced that it will lower the number of permanent residents Canada accepts along with setting a two-year cap on the intake of international students. This was done with the aim to curb the surge in temporary immigration following the pandemic and the ongoing housing shortage. approximately 360,000 new study visas were approved in 2024, a 35% reduction in approval rates since 2023.
On 26th August 2024, Justin Trudeau also announced new restrictions on the Temporary Foreign Worker (TFW) program. Employers will no longer be allowed to hire more than 10% of their workforce through the low-wage stream, down from 20%. Applications from employers in regions with an unemployment rate of 6% or higher will also face greater scrutiny, and the maximum duration of employment under the low-wage stream has been cut from two years to one.
Changes to the Post Graduation Work Permit (PGWP) program, with stricter eligibility requirements and limited durations, are also expected to impact the future immigration patterns. Qualifying for a work permit after studies is getting harder especially for those students who are not in the high-demand fields like IT, healthcare and construction. While a job offer in a graduate’s field of study is not required to qualify for a PGWP, the tightening job market makes securing relevant employment critical for transitioning to permanent residency. Additionally, restrictions on the entry of temporary workers by closing the Spousal Open Work Permits (SOWP) in most undergraduate courses is adversely affecting Canada as a migration destination. International students are also now required to demonstrate higher proof of funds, with the amount necessary to cover living expenses rising from $10,000 to over $20,000, depending on the province.
Impact on Indians
Drawn by the promise of high-quality education and work opportunities, Canada had become one of the most popular destinations for Indians over the past years and approximately 2.8 million Indians, currently reside in Canada. Indian enrolment at Canadian universities rose more than 9063% in the last two decades, from 2,181 in 2000 to 199,861 in 2022. Comprising of 41% of Canada’s total international student population, Indian’s accounted for the largest international student body in 2022.
However, Canada’s economic downturn is challenging its lure as an immigrant haven. As their starry-eyed dreams turn into a disillusionment, fewer immigrants are pursuing Canadian citizenship, with a 30% decline since 1996 till 2021. The country’s high cost of living and weak labour market has particularly impacted Indian immigrants, who form one of the largest immigrant groups in Canada and has in part resulted in a 41% drop in the number of Indian applications for post-secondary education, as reported by Better Dwelling. From 146,000 new study permit applications in 2022, to 87,000 in 2023, there were 60,000 fewer student visas processed for Indian students in the span of a year.
A report by Indian Express estimates that India contributed 26,495 temporary foreign workers to Canada in 2023 under the Temporary Foreign Worker Program (TFWP), making it one of the top ten countries of origin for these workers. The state of Punjab, which makes up more than 50% of Indian arrivals in Canada not only includes students, but also spouses and low wage workers. The restrictions on the TFW and SOWP program will especially impact these immigrants, affecting their income and future prospects.
As Canada’s economic situation continues to deteriorate, the once steady stream of Indian students and immigrants is beginning to slow. The economic mediocrity is reshaping the world narrative of the country and pushing potential immigrants to consider alternative options.
