A recent Desjardins Economic Studies report underscores the advantages of welcoming skilled immigrants to Canada.

The report advocates for Canada to continue embracing newcomers who can address labor shortages in the construction sector. However, it emphasizes the importance of addressing obstacles that hinder workers from realizing their full potential, particularly focusing on reducing discrimination and harassment within the construction industry.

This recommendation comes amid Canada grappling with an unprecedented housing affordability crisis, primarily driven by an inadequate supply to meet the surging demands of the population.

In the third quarter of 2023, Statistics Canada reported that Canada’s population had surpassed 40 million, reaching 40,528,396. This marked an increase of 430,635 from the previous quarter and over 500,000 since hitting the milestone of 40 million in June 2023.

The housing affordability challenges in Canada are substantiated by estimates from the Canada Mortgage and Housing Corporation (CMHC), indicating a need for an additional 3.5 million housing units to accommodate the current and growing population.

Meanwhile, the latest data from the Canadian Real Estate Association reveals that the average home price in Canada as of December 2023 is $657,145. However, in densely populated cities like Toronto or Vancouver, home prices often exceed one million.

Nonetheless, permanent residents not engaging in construction work

The Desjardins report highlights that construction ranks fifteenth among the top 20 employment industries in Canada in terms of workforce size within the sector.

Using Census 2021 data, the report indicates that non-permanent residents (NPRs) and immigrants constitute less than 22% of Canada’s construction workforce. This suggests minimal growth since similar data was collected in 2019, indicating that 21% of newcomers were employed in construction occupations.

Additionally, a recent Bank of Canada report notes that only “5% of employed NPRs (or 3% of total NPRs) choose construction as their primary job,” despite NPRs being the fastest-growing segment of the population.

Costs and productivity as contributing factors

The report underscores that increased immigration is not the sole factor contributing to the housing shortage. Escalating building material costs, reaching a ten-year high, and disruptions in the supply chain during the COVID-19 pandemic, coupled with high interest rates, have exacerbated the issue.

CMHC estimates that elevated costs will prompt approximately 40% of residential developers to scale back future projects, with over 30% delaying or shelving new projects.

The housing sector is also grappling with low productivity, with Desjardins suggesting measures to enhance production and meet demand. One proposed solution is the establishment of a pre-approved catalog of building plans, a strategy endorsed by Canada’s Minister of Housing, Sean Fraser.

A more strategic approach to immigration

The Desjardins report advocates for Canada to strategically welcome newcomers in the construction sector more effectively. It notes 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 Royal Bank of Canada (RBC) report suggests that Canada should adopt a more strategic approach in selecting immigrants and temporary residents, emphasizing those with the strongest long-term economic prospects, including those outside highly-educated fields.

Immigration, Refugees, and Citizenship Canada (IRCC) affirm their efforts to invite skilled newcomers to alleviate labor shortages in specific sectors. In May 2023, IRCC introduced category-based selection draws for Express Entry candidates with human capital attributes or occupations in high demand in Canada. One category targets 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 trades occupation experience.