In recent times, Canada has witnessed fluctuations in its economy, posing significant implications for immigrants navigating their lives in the country. The evolving economic landscape presents both challenges and opportunities for newcomers seeking stability and prosperity.
Here we’ll discuss how Canada’s declining economy affects immigrants in several ways particularly within the job market.
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How Canada’s Declining Economy Affects Immigrants
One of the major cause of economy decline in Canada is inflation, and using the Bank of Canada inflation calculator you’ll realize that there’s a general increase in prices of goods and services. This can over time significantly impact immigrants in various ways such as:
1. Cost of Living
Inflation leads to higher costs of living, this in turn affects immigrants’ purchasing power for everyday goods and services. As prices rise, immigrants may find it more challenging to afford basic necessities such as food, housing, transportation, and healthcare.
2. Savings and Investments
Immigrants who save or invest their earnings may see the value of their savings erode due to inflation. If the rate of inflation outpaces the return on their investments or savings accounts, immigrants may experience a decrease in the real value of their money over time.
3. High Unemployment Rates
A feature of a declining economy is high unemployment rate, and this tends to hinder economic recovery. As of October 2023, Canada’s unemployment rate stood at 5.7%, while youth unemployment remained above 10%.
Some employers may adjust wages to keep up with rising living costs, others may not, leading to stagnant wages in real terms. Immigrants, particularly those in lower-wage jobs or industries, may be disproportionately affected by stagnant wages relative to inflation.
With limited job opportunities and stagnant wages, individuals and families struggle to save for down payments and meet mortgage requirements, making homeownership increasingly unattainable. This, in turn, fuels demand for rental housing, further driving up rental prices and intensifying the affordability crisis.
The lack of stable employment can lead to financial strain, increased reliance on social assistance, and difficulties in meeting basic needs such as food and shelter. This can contribute to mental health issues, social isolation, and a decreased sense of well-being.
Some strategies that can help to promote employment growth include:
- Investing in Skills Development: Providing training and education programs to equip individuals with the skills required for in-demand jobs in the evolving economy.
- Supporting Business Growth: Fostering a business-friendly environment that encourages investment, innovation, and job creation.
- Expanding Employment Opportunities: Promoting employment through government programs, targeted subsidies, and initiatives to connect job seekers with employers.
- Addressing Labor Market Mismatches: Identifying and addressing gaps between the skills of available workers and the demands of the labor market to ensure a better fit.
3. Shortage of Affordable Housing
Inflation can contribute to rising housing costs, making it more difficult for immigrants to afford homeownership or rental properties. In high-inflation environments, housing affordability challenges may exacerbate existing barriers to stable and affordable housing for immigrants.
As of November 2023, the average price of a home in Canada stands at $668,754, up 6.3% from July 2022. This rapid price growth has made it increasingly difficult for many Canadians, particularly first-time homebuyers, to afford to purchase a home.
The shortage of affordable housing is most alarming in major cities like Toronto, Vancouver, and Montreal, where the vacancy rate for rental units has hovered around 1% or lower for several years. This tight vacancy rate has driven up rental prices, forcing many renters to spend a significant portion of their income on housing. Some as much as 60% of their family’s income.
The soaring prices of houses in Canada has been so preposterous that citizens have had to endure as much as a 150% price increase in houses.
4. Limited Access to Credit
Inflation can impact interest rates and credit availability. Immigrants seeking credit for education, housing, or entrepreneurial endeavors may face higher borrowing costs or stricter lending criteria during periods of high inflation, limiting their access to financial resources.
Despite recent economic challenges, Canada continues to be a preferred destination for immigrants worldwide.
With strategic policy adjustments and time, Canada is poised to restore its economic equilibrium, reaffirming its status as a leading destination for immigrants seeking opportunities and a better quality of life.
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