Canada will need to see a significant and sustained level of immigration into its mid-sized urban centres over the next 15-20 years in order for the country to continue to offer high quality public services and public infrastructure. For these services to continue, there are two choices, either to squeeze more tax revenue out of a stagnant economy or foster a growing economy that is driving new organic tax revenue growth.
The solid rate of economic growth needed for the state is virtually impossible without a substantial increase in the size of the workforce – therefore immigration.
The country faces increased demand for health care and related services to support the aging population, income support programs, and infrastructure. The tax to GDP ratio in Canada has risen to 33% in 2018 – mostly on an upward trajectory since 2011.
There are some who believe technological change and innovation will reduce the need for workers in many sectors of the economy and therefore lessen the need to grow the workforce in the coming years. This is a gamble Canada should not make.
The good news is that in recent years, Canada’s mid-sized urban centres  have started to attract more international migrants even if rates are much lower in most cases than in the largest urban centres such as Toronto or Vancouver (see Figure 1). In 2019, 14 small and mid-sized urban centres had an immigration rate of greater than 100 per 10,000 (or 1% of the population). These included: Halifax, Charlottetown, Fredericton and Moncton in Atlantic Canada; Regina, Saskatoon and Swift Current in Saskatchewan; Winkler, Steinbach, Brandon and Thompson in Manitoba and Brooks, High River and Wood Buffalo in Alberta.
Among the 40 mid-sized urban centres across Canada with a population of at least 100,000, excluding Toronto/Montreal/Vancouver, 18 have seen immigration rates rise by 50% or more over the past five years.
The significant increase in international migration to Canada’s mid-sized urban centres has been a direct response to the demographic and workforce challenges associated with an aging population.
Historically, most of the population growth in these cities came from natural population change (births, less deaths, etc.) and from intra-provincial or inter-provincial migration. As shown in Figure 2, as recently as the 2016 Census, immigrants accounted for less than 10% of the workforce in some of Canada’s most important mid-sized urban centres in eastern Canada while accounting for 50% of all workers in Toronto and 43% in Vancouver.
Now many face a negative natural population growth rate and there are fewer people in small communities and rural areas to migrate into the urban centres.
The federal government has listened to provincial and local government and changed the rules to help facilitate more immigration into mid-sized and smaller urban centres. Instead of a strict points-based approach to immigration that gives preference to highly skilled migrants, provinces are now able to tailor the attraction of migrants based on local workforce needs.
The COVID-19 pandemic dramatically curtailed the growth in international migration to Canada’s mid-sized urban centres which dropped by 42% in the first seven months of 2020 compared to the previous year.
The share of the workforce retiring every year is accelerating, and it is likely the overall workforce in Canada will need to expand to foster economic growth after the pandemic. After the 2008 recession, the workforce across the country expanded by 1.95 million, almost all of it came from landed immigrants. Nearly 1.5 million immigrants joined the Canadian workforce over the decade (this does not include the increase in non-permanent residents participating in the workforce).
Provinces with the largest increases in the landed immigrant workforce also had the fastest growing gross domestic product (GDP).
The Canadian Occupational Projection System (COPS) published by Employment and Social Development Canada (ESDC) is projecting the number of new workers needed each year (to meet replacement and growth labour demand) will rise from 587,700 in 2020 to 667,900 by 2025. Further, many of the jobs becoming available over the next decade will not be in high skilled occupations. The number of jobs requiring only high school or occupation-specific training are expected to increase by 20% between 2020 and 2025 while the number of available jobs usually requiring a university education are only projected to rise by 11%.
It is possible that technological change and innovation will lead to structural changes in the workforce, but the lesson of other countries shows that a constricted talent pipeline will restrain economic growth.
One of the potential trends emerging from COVID-19 is the rise of working-from-home. A number of multinational firms have announced they are allowing workers to work remotely. Even after the pandemic subsides, the expectation is that more people than ever will do their job from their home. Overall, this should be perceived as an opportunity. Canada’s smaller and mid-sized urban centres are well positioned to attract remote workers. They offer less congestion, lower housing costs and in many cases low crime rates. Attracting international migrants and their jobs is a win-win.
The lesson of other countries shows that a constricted talent pipeline will restrain economic growth
In the short term, Canadians’ support for attracting immigrants could wane as unemployment rates are above average and COVID-19 numbers are increasing. However, Canadians need to understand that in the medium and longer term, immigration will play a vital role in the economic development and prosperity of mid-sized urban centres across the country.
There are a number of important trends that are poised to shape the country’s destiny over the next 20-30 years. One of them will be the country’s ability to sustain the talent pipeline. If Canada can continue to attract young ambitious migrants from around the world this will help ensure we have a sustainable tax base to continue providing high quality public services and infrastructure.
Despite the pandemic, the outlook for immigration into Canada’s mid-sized urban centres beyond 2020 is good. Underlying demographic trends here and around the world will necessitate migration into developed countries that want to sustain moderate levels of economic growth. Canada’s mid-sized cities are ideally positioned to attract increasing numbers of migrants in the coming years.
 The term ‘urban centre’ refers to Canada’s Census Metropolitan (CMA) and Census Agglomeration (CA) areas. Mid-sized urban centre refers to those with at least 100,000 population excluding the Toronto/Montreal/Vancouver CMAs.