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Canada’s recent population boom seems like it’ll last forever, but reality may arrive soon. Government of Canada (GoC) data reveals a sharp drop in permanent resident applications in July. The direct impact on population growth is minor, since temporary residents drive growth. However, continuing to attract temporary residents will be difficult once they encounter the conditions turning people away.
Canadian Permanent Resident Applications Are Dropping
Canada recently experienced a sharp and sudden drop in permanent resident applications. The monthly volume of applications fell 15% to 17.8k in July, representing a 28% decline from last year. Monthly data is only readily available going back to 2020, but it was the worst July over that period. It was also the second month to show annual growth contract, and less than half the size of the May 2023’s peak. Not enough to be a trend, but there’s enough data to prevent dismissing it as an isolated issue.
Permanent Resident Application Growth Has Been Decelerating
The sudden shift is unexpected, especially on the heels of what was on track to be record growth. There were 181.3k applications processed year-to-date as of July, about 15% more than last year. Prior to the past two monthly declines, year to date applications were growing at more than double the rate (31%). By itself, 15% annual growth is more than enough to dismiss concerns. However, the past two months of data shows just how quickly things can change.
Applications To Canada’s Program To Help Skilled Labor Slows
Canada has been trying to promote its Express Entry program to attract skilled labor. Usually skilled labor arrives on a temporary visa, before earning a permanent visa. This program allows a certain group of in-demand labor to go right to permanent residency. If you know anyone that’s had to navigate the previous system, they’ll tell you how much better this new program is.
The program is largely a success, but recent data shows a hiccup. July saw just 10.2k Express Entry applications, a drop of 17.5% from last year. One month isn’t a trend, but annual growth in Q2 (+8.3%) was nearly half the rate of Q1 (+16.2%). Growth deceleration is materializing, making negative growth a realistic threat in the event of a downturn.
Population Growth Remains High, But Is Anyone Staying?
Canada’s population isn’t contracting, but people may be getting skeptical of its offerings. A large number of temporary residents are arriving though visas like study permits. In fact, study permits have been so popular that nearly 1 in 48 people in the country are currently on one of these visas. However, data reveals students aren’t too keen on staying.
Despite study permit issuance rising 35% in the second quarter, the share of those on study permits turning to permanent residency is relatively low. Canada minted 19.7k permanent residents that previously had a study permit in 2022. In contrast to the number of individuals with a study permit, the ratio is about 1 in 34. Those are worse odds than meeting someone with a net worth of at least a million dollars in the US.
A lot of this likely has to do with Canada’s approach to population growth. Most places with high population growth need the growth to cope with a booming economy. People are attracted because they want to be part of that growth and opportunity.
That isn’t Canada. Despite a population boom, per capita GDP is contracting. That shouldn’t surprise, since the OECD forecasts Canada dead last in this area. Instead of overflowing opportunities, immigrants are encountering an economy where the younger generation is doing worse than the previous generation. Have you ever heard an immigrant say, “we moved here so our kids couldn’t have what we did?” Probably not.
Canada essentially just adopted the model of a dodgy credit card company—churn, baby, churn. Issue as many visas as possible to hit the targeted quarterly growth, and collect the bonus. Little focus on retention, a lot of focus on squeezing new arrivals for as much as they can provide. Not a compelling sales pitch, but the glossy brochure abroad probably has more compelling copy.
It’s easy to promise opportunity, but eventually people want to see it delivered.
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