Introduction: A recent report from Desjardins Economic Studies underscores the importance of welcoming skilled newcomers to Canada to address labor shortages, particularly in the construction sector. This recommendation is essential amidst Canada's housing affordability crisis and the need for increased productivity in the housing industry.
Challenges in Housing Affordability: Canada's population has been rapidly growing, reaching 40,528,396 people by the third quarter of 2023. This population surge has intensified the demand for housing, with the Canada Mortgage and Housing Corporation (CMHC) estimating a need for an additional 3.5 million housing units to support the population.
The average home price in Canada stands at $657,145 as of December 2023, with significantly higher prices in cities like Toronto and Vancouver. These challenges highlight the urgent need for strategies to boost housing supply and address affordability issues.
Low Representation of Newcomers in Construction: Despite the construction sector's importance, the Desjardins report reveals that non-permanent residents (NPRs) and immigrants constitute less than 22% of Canada's construction workforce. This percentage has seen minimal growth since 2019, signaling a need to increase newcomer participation in construction occupations.
A Bank of Canada report indicates that only a small percentage of employed NPRs are engaged in construction as their primary occupation, despite being the fastest-growing segment of the population.
Factors Impacting Construction Sector: The housing shortage is not solely attributed to immigration but also influenced by factors like soaring building material costs, supply chain disruptions due to the pandemic, and high-interest rates. CMHC predicts that these challenges will prompt a reduction in future residential projects by 40% and delay new projects by over 30%.
Strategies to Address Housing Shortage: Desjardins suggests boosting productivity in the construction sector by introducing pre-approved building plans to streamline municipal approval processes and financing.
Canada's Minister of Housing, Sean Fraser, endorses this strategy to expedite housing production and meet growing demand effectively.
Enhanced Immigration Strategies: The report emphasizes the need for more strategic immigration policies, particularly in the construction sector. In 2022, only 455 new permanent residents entered through the Federal Skilled Trades Program (FSTP), with no Express Entry draws for FSTP candidates in 2023.
Echoing this sentiment, the Royal Bank of Canada (RBC) advocates for a more strategic selection of immigrants with strong long-term economic prospects, including those in trades occupations.
IRCC's Response: Immigration, Refugees and Citizenship Canada (IRCC) acknowledges the importance of addressing labor shortages by inviting skilled newcomers. In May 2023, IRCC introduced category-based selection draws for Express Entry candidates, including those in trades occupations. However, only two draws were conducted in 2023, inviting a total of 2,500 candidates with trades experience.
Conclusion: Welcoming skilled newcomers to Canada, particularly in the construction sector, is crucial for addressing labor shortages and boosting productivity in the housing industry. Strategic immigration policies and enhanced support for newcomers entering trades occupations are vital steps toward ensuring Canada's long-term economic growth and housing sustainability.