Bank of Canada Governor Speaks Out on Using Immigration to Balance the National Job Market

Posted on Nov 23, 2022 at 08:00 am EST

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In two recent speeches on November 10 and 14, bank of canada (BoC) Governor Tiff Macklem spoke to attendees and the media about how immigration can be the key to achieving job market stability and turning the tide of inflation.

His speeches addressed “the future Workers and Jobs” by addressing questions including:

  • Why can’t companies find enough workers?
  • Will we enter a recession?
  • it does [a recession] does it mean a large increase in the unemployment rate?
  • What is the role of the Bank of Canada in supporting maximum sustainable employment?

What Tiff Macklem said about the connection between immigration, jobs and inflation in Canada

The following is a summary of Macklem’s speeches regarding the role of immigration in helping to balance the Canadian job market.

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Governor Macklem’s initial mention of immigration came when he emphasized that Canada’s current job market has more demand than supply of labor.

According to the BoC governor, the labor shortage has put upward pressure on wages across the country and subsequently pushed up inflation. Therefore, Macklem urges Canadian employers to continue hiring immigrants, and particularly recent immigrants, to meet the growing demand for labor and combat inflation accordingly.

“[One] A way of rebalance supply and demand is to increase the supply of workers,” Governor Macklem said, adding that “the more we can do with supply, the less we have to do with demand.” Hiring more immigrants is expected to help better regulate high wages, which, according to the BoC, is essential because “wages will have to slow to control inflation.

The state of immigration in Canada as of 2020

After reviewing the 2020 immigration recession that Canada experienced during the peak of the COVID-19 pandemic, where the country missed its immigration target by around 100,000 workers, Macklem also noted that “immigration is [now] bouncing as border restrictions return to normal.”

The evidence of the return of Canadian immigration to normality is clear in the latest report from the country. Immigration levels plan for 2023-2025Posted on November 1. With unprecedented immigration targets exceeding 460,000 total permanent residents each of the next three years (465,000 in 2023, 485,000 in 2024 and 500,000 in 2025), Canada is clearly on the mend and is aiming even higher, after from slow immigration through the height of the pandemic.

Whats Next

Consequently, immigration will help Canada’s labor market balance, growth and inflation stability, especially when compared to other countries in the world. This is because Canada’s “strong immigration targets suggest that…immigration will account for more than two-thirds of the expected growth in the potential production of Canada”.

In other words, immigrants add potential workers to the Canadian workforce, combating the decline in the labor participation rate in this country due to the aging of our natural population, and thereby helping to begin to remedy the economic problems that we currently face.

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note the full transcript Governor Tiff Macklem’s November 10 speech at Toronto Metropolitan University is available on the Bank of Canada website, as is the full video of her November 14 speech at the Conference on Diversity, Equity and Inclusion at Economy, Finance and Central Banking (Part 1 Y Part 2).

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