Posted on Mar. 22nd 2009 at 02:46 pm EDT (860 views, 2 comments)
Though some struggle, newcomers bring benefits in tough economic times
March 22, 2009
Nicholas Keung, Toronto Star
In the early 1990s, with signs of a recession looming, Cynthia Lai rushed to sell her downtown condominiums, anticipating a real estate market crash similar to those of previous economic downturns. She miscalculated.
"I dumped all my condos because I didn't know the market would have been sustained by immigration, which, I think, saved our economy in the 1990s," said Lai, a realtor in Toronto since 1983.
The '90s recession was the only time in Canada's history that Ottawa didn't reduce immigration during a downturn.. The current recession has led to debate about whether Canada should follow the recent actions of countries like the U.K. and Australia in tightening the immigration tap.
At issue is whether immigrants drive up unemployment and welfare caseloads or help stimulate a troubled economy. It is hard to say whether the Mulroney government's decision in the early 1990s to keep immigration levels at the 230,000 mark was a mistake or a blessing. Data do suggest that many who came to Canada during that period never recovered from chronic unemployment and underemployment – what scholars call "the scarring effect."
"These people came here and had a tough time getting any decent job," said University of Toronto sociologist Jeffrey Reitz. "Their professional careers got derailed. Their skills became stale. They were stuck even when the economy bounced back.
"These people are worse off for their entire life."
Canada's unemployment rate rose to 11.4 per cent in 1993, the same year 256,703 people arrived, the highest level in decades.
Results of Canadian research on immigration's economic impact have been mixed, but the prevalent belief is immigration has a benefit, in good times or bad, by virtue of population growth.
That seems to be the case for Markham, where the population grew 80 per cent, from 145,500 in 1991 to 261,600 in 2006, mainly due to an influx of immigrants. The population boom has led to rapid residential and commercial development, making the town Greater Toronto's fourth-most populous municipality and attracting big corporations such as IBM and soon-to-come Honda Canada.
"We are blessed with the diversity of the community and the highly skilled immigrants who came with worldwide experience and strong entrepreneurial spirit," said Markham Mayor Frank Scarpitti after a recent meeting with developers of a proposed, $130-million shopping mall near Kennedy Rd. and Hwy. 7.
"We have new neighbourhoods, retail and commercial spaces, all because of our new immigrants," he added. "It wasn't easy. Everything didn't happen overnight. But immigration is really the future of our economic prosperity in the long run."
Lai, who came here from Hong Kong in 1972, pointed out that newcomers generally are more inclined to own homes. "People from Hong Kong, China and India all believe in home ownership," she said. "The first thing they do when they come here is buy a house. Had we not had immigrants sustaining the (real estate) market, the bubble would have burst a long time ago."
However, economist Arthur Sweetman said the impact of the current recession is more complicated than the 1990s downturn, as the "triple threat" goes beyond traditional manufacturing to the commodity and financial sectors.
The demographics of Canada's newcomers have also evolved. The inflow of wealthy Hong Kong tycoons, a staple in the early 1990s, came to a halt after the island's return to China in 1997. The majority of skilled immigrants arriving now may be financially established but they aren't necessarily as wealthy.
"Newcomers could contribute to and stimulate the housing market," said Sweetman, director of the Queen's University School of Policy Studies. But how it is going to play out, he cautioned, is hard to say.
There is a perception among some that too many immigrants arriving in tough times will only strain Canada's resources, and swell welfare rolls and unemployment lines.
But Ryerson University professor John Shields, a director of the Joint Centre of Excellence for Research on Immigration and Settlement in Toronto, said most skilled immigrants with professional designations – who make up 55 per cent of all 250,000 newcomers to Canada each year – are unlikely to go on social assistance. "We have to remember, immigrants are risk-takers who have ambitions and skills. They would rather exist on the margins than being on welfare."
His concern is more for the thousands of temporary foreign workers brought here on two- and three-year visas to fill labour shortages, only to be out of work in the midst of a recession. These workers can legally stay in Canada until their visas expire but are not entitled to employment insurance or social assistance, so are likely to take jobs that pay less and ultimately drive down wages. Last year, Canada admitted 193,000 such workers.
So, do immigrants, here permanently or not, steal jobs from Canadians in a recession? Yes and no, experts say. There is always a chronic shortage of medical practitioners, for example, and the hiring of immigrants would not have an impact on Canadians seeking these jobs.
Yo'av Kaplun, a University Health Network human resources adviser, noted that there is a time lag between training a person and filling a job, and hospitals can't compromise patients' health. "It would take someone five years to be certified (as an MRI operator). Sometimes, the numbers just aren't there," said Kaplun, whose hospital recruited nine skilled immigrants to Toronto through Opportunities Ontario, a two-year-old provincial program that fast-tracks foreign workers to come as permanent residents. Despite the economic slowdown, the program last month doubled its target to 1,000 workers a year, from doctors and accountants to entrepreneurs and engineers.
In one case a few years ago, the UHN went overseas to find a nuclear pharmacist – a specialist on radioactive drugs for diagnosis and therapy – as there were only 14 of them in Canada.
Anne Golden, president and CEO of the Conference Board of Canada, said last year's changes to the immigration system have provided the country with the flexibility to weather the storm. The new "just-in-time" rules that bring in immigrants whose skills we need immediately can more quickly respond to the economic changes, she said.
The conference board, an independent research body, believes Canada's economy will bounce back in 2010. A knee-jerk reduction of immigration now wouldn't make sense, said Golden.
A bigger concern, perhaps, is how to keep a disillusioned pool of skilled talent arriving in economic tough times from leaving.
A 2006 Statistics Canada report on brain drain between 1981 and 1996 found that skilled immigrants who came to Canada during a recession were 50-per-cent more likely to leave the country for better opportunities elsewhere.
Sweetman of Queen's University suggests Canada reduce the numbers of skilled immigrants in the short term, provided overall immigration levels remain intact over the next decade.
Since a recession tends to have a lingering negative impact on entrepreneurs and skilled immigrants, Sweetman said Ottawa should bring in more in the family reunification class and shift the focus back to educated and skilled newcomers when the economy recovers.
"But it all depends if we are going to have a U-shape (longer) or V-shape (shorter) recession," he explained. "If it's going to be V-shape, we shouldn't do anything about our immigration, because there is always the six-month time lag." The recession, he said, could be over before any changes are felt.