Federal immigration policy needs to revive the return of foreign students, but with a focus on higher-skill talent that will pay off for the economy, CIBC World Markets Inc. suggests in a new report.
While there’s a good argument for sharply curbing immigration due to the strains on infrastructure and the housing market that arose in the absence of adequate investment to support a fast-growing population, the bank’s economists stress that immigration done right also represents a potential advantage.
Immigration can help combat the aging population, build the labour market of the future, and provide a key source of future innovation and productivity growth, the report said. In the U.S., it notes, immigrants account for almost 33% of innovation, and almost 20% of inventors.
“While a more supportive business environment has helped them a lot, it all starts with getting, and then integrating talent,” it noted.
Against that backdrop, the paper advocates for a more balanced approach to immigration policy.
“Canada needs a moderate, steady and predictable pace of immigration that prioritizes high-skilled workers, including attracting the best students from across the globe,” it said — particularly at a time when the U.S. has become increasingly hostile to foreign students.
“Global talent is being shunned south of the border, Canada is looking to diversify international partnerships, and there is a renewed imperative to strengthen our domestic economy. After the near-term squeeze has adjusted the population level back to its prior path, the medium-term plan should prioritize attracting and retaining as many of the best quality students that we can house on a sustainable basis,” it said.
In particular, the report said that foreign students “are essential to … support the job market of the future, especially in health, technology, and engineering, where demand has grown significantly.”
Yet, recently a growing proportion of foreign students have enrolled in business-related programs, it noted.
“That trend has increased the mismatch between student fields of study and labour market needs,” it said. “Had many of this past wave of students gone into health-related fields, the conversation about student immigration may very different.”
Even so, the report stressed that while there were undeniably negative consequences to an unchecked influx of workers and students, “immigration did not crash our economy, with challenges to growth and investment spending more tied to a post-pandemic hangover, monetary policy tightening and low commodity prices.”
In fact, the combination of a cheap supply of workers, and the extra spending from foreign workers and students “added about 1% to the level of GDP by the end of 2024,” it said, “a welcome buffer during what was a challenging period.”
And, looking ahead, Canada needs to target students with the right kind of skills, the report argued.
“We need to go back to thinking of student immigration as a stable source of high-skilled talent, not a short-term economic tool to fix pockets of immediate labour market stress,” it said.
Specifically, it recommended that the government develop a foreign student strategy, “that considers where and what they study, within a framework of population growth around 1%. That was the rate of population growth we had over the 2000 to 2015 period when per capita GDP growth was strong, a good starting point for the next levels plan.”
“… we need to turn back to a focus on the quality over quantity of students,” the report added. “The hard part will be the transition from where we are now, to a supportive immigration system. As we prepare for that, let’s not let past missteps blind us from the benefits students have offered our economy, and prioritize bringing in as many the best students we can on a sustainable basis.”