Immigration will support Ontario and Quebec economies during the pandemic and beyond

A new study highlights the importance of immigration in helping the Ontario and Quebec economies recover from COVID-19.

Immigration will drive long-term economic prosperity in Ontario and Quebec despite the downturn caused by the pandemic, according to a recent report.

Even though job market conditions have not fully recovered, a Scotiabank report suggests that billions could be added to the two provinces’ economies if Canada meets its new immigration targets. The increase in newcomers could add up to $2.9 billion to Ontario’s economy, and just under $1 billion to Quebec’s.

“Immigration is not a panacea, but we find clear and significant economic benefit to greater newcomer admissions in Canada’s two largest provinces— even after accounting for historical labour market gaps,” writes economist Marc Desormeaux, author of the report. “Closing those gaps offers scope for even more growth.”

If the labour force disparity between immigrants and Canadian-born workers were equalized, it would add between $12 and $20 billion to Ontario’s economy.

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Addressing the doubts on increasing immigration levels

Skeptics may question the decision to increase immigration during a period of economic contraction, given that newcomers have historically underperformed Canadian-born workers in the labour market.

However, the report says immigrants offer a “hefty” economic contribution, and their performance was improving in Quebec and Ontario before the pandemic.

The study’s model indicates that immigrants will contribute to “a significant and rising share” of economic output in the two provinces over the next five years. Beyond 2022, immigrants are expected to make up half of the economic growth generated in both provinces. Without newcomers, Ontario’s GDP would be 20 per cent lower this year, about $157 billion.

Any effort to increase newcomer labour market integration will offer further economic growth. Immigrants have consistently seen higher unemployment rates than Canadian-born workers. This is especially true in Quebec, although the province’s immigrants tend to see higher job market participation. These gaps between immigrant and Canadian performance narrows with time in the labour force, and they have reduced over the past few years even with higher levels of immigrants.

Closing these gaps will be a collaborative effort on the part of the business community as well as policymakers, the report says. While it suggests the business community can support newcomers through workforce diversification initiatives, for example, it is up to policymakers to foster an environment where businesses thrive. New immigration policy should take into account the pandemic’s uneven impact on different sectors. Retail, for example, which has been highly affected by the pandemic may see a burst of activity in the short term due to pent-up demand, while the health sector may continue to see labour shortages.

“Canada’s immigration success story is by now well-documented; we contend that just as it supported the country’s pre-pandemic expansion, under the right conditions, it can help chart a course to recovery from COVID-19,” Desormeaux wrote.