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A slowdown of immigration to Canada due to the Covid-19 pandemic threatens to derail a major source of economic and labour force growth, according to a report from the Royal Bank of Canada.

The shortfall jeopardizes the ability of the country to find employees needed in sectors such as health and elder care as the baby boom generation moves into retirement over the next few years, the report says.

It calls on the federal government to find new ways to encourage more immigrants to move to Canada.

“Canada does rely on having large numbers of people coming to the country to fuel growth and, if we see these large declines, one concern could be that people may decide maybe they don’t want to come to Canada anymore,” said report author Andrew Agopsowicz, a senior economist for RBC who studies labour trends.

“I think it’s really important for Canada to ensure the process is clear and that we still put out this attitude that we are open and we want people from the rest of the world to come to our country.”

Canada added 34,000 permanent residents in the second quarter, down 67% from the same period last year, the RBC study said.

Meanwhile, new permanent residency applications to Canada were down 80% and just over 10,000 new study permits were processed, down from 107,000 a year earlier.

Despite a recent recovery in the pace of immigration, the bank expects to see only 70% of the originally targeted 341,000 new permanent residents at the end of the year, a decline of about 100,000 people.

The shortfall is particularly bad news for elder care as labour shortages have gotten worse in the wake of the pandemic’s deadly sweep through the country’s nursing homes, said Dr. Samir Sinha, director of health policy research at the National Institute on Ageing at Ryerson University and director of geriatrics at Mount Sinai Hospital.

“We’ve been having a huge struggle finding workers and retaining workers in this sector for years … and we were only keeping it afloat by often recruiting immigrants who are willing to take on these jobs that we as Canadians didn’t want to do,” he said.

“The fact it’s low paid and not valued also speaks to one of the reasons it’s been incredibly hard retaining (staff).”

Sinha said higher wages are needed not only to recruit Canadian-born workers but also to keep ambitious immigrants on the job longer.

Canada’s ability to attract immigrants with meaningful work as the economy struggles to rebound from the pandemic may be difficult.

A Statistics Canada report published Thursday finds that recent immigrants were harder hit by pandemic-related job losses, with 17% becoming unemployed from March to April compared with 13.5% of workers who are Canadian-born or immigrants who have been in Canada more than 10 years.

The percentage was higher, almost 20%, for recent female immigrants.

The difference is significant, said Statistics Canada analyst Feng Hou, adding it is attributed mostly to recent immigrants having less work experience and earning lower wages.

“From past experience, when immigrants come during hard times, they tend to have a hard time finding jobs,” he said, adding there’s no data as yet to tell if that will happen in the current environment.

Travel restrictions that began in March and continue today make it difficult for people to physically come to Canada, Agopsowicz said.

At the same time, the lockdowns in the early days of the pandemic slowed processing of applications in Canada and prevented potential immigrants from accessing programs to ease application in their home countries.

An unknown is whether the Covid-19 virus, which hits senior citizens hardest, will have a dampening affect on the desire of foreigners to come to Canada and leave behind their vulnerable elderly relatives, Agopsowicz said.

“There’s a lot of uncertainty, I think, when people arrive already during normal times, so I think people are starting to work through what that means,” he said.

“This may be somewhat of a lost year (but) is this going to be easy to recover from next year in terms of bringing increased numbers back?”

Only about 20% of new permanent residents are former students or temporary workers, he pointed out, suggesting Ottawa could do more to try to convince those people to permanently reside in Canada to bolster numbers.