The Governments of the United States of America, Belgium, Denmark, France, Germany, the Netherlands, Sweden, Switzerland, the United Kingdom, and the European Union, chaired by Sweden, issue the following statement on situation in the eastern DRC:
The ICG expresses its profound concern regarding the continued and recent violations in eastern DRC of the ceasefires upheld by the signing of the Washington Accords on 4 December 2025 and the commitment in Doha on 19 July 2025 to a permanent ceasefire and a permanent cessation of hostilities. Such violations include the use of drones in military attacks which also pose an acute risk to civilian populations. All parties involved should urgently and unequivocally recommit to ceasing the hostilities and return to negotiations.
There can be no military solution to the conflict.
We urge all parties to fully implement their obligations and commitments made under the Washington Accords and the Doha process and to comply with the relevant UN Security Council resolutions, including resolutions 2773 and 2808, and the full respect of territorial integrity. The ICG commends the ongoing mediation by the AU-appointed mediator, Faure Gnassingbé, President of the Council of the Republic of Togo, and the Panel of Facilitators, as well as the crucial mediation conducted by the US and Qatar. We welcome the efforts by Qatar, the ICGLR and MONUSCO to establish a ceasefire monitoring and verification mechanism. We recall the importance of creating conditions for an inclusive inter-Congolese dialogue with all key Congolese stakeholders – a necessary element for durable peace in the DRC – and welcome the consultations undertaken by the Republic of Angola.
We stand ready to support these efforts.
The ICG calls on all parties to honor their obligations to respect international humanitarian law and to ensure full, safe and unimpeded humanitarian access to enable critical assistance to those in need. We welcome positive steps forward such as the commitments by governments and actors in the region to improve and facilitate humanitarian access, including following the visit of EU Commissioner Lahbib; the reopening of the border between the DRC and Burundi; and the use of the Goma airport during the recent visit to Goma by MONUSCO Interim Head and Special Representative of the Secretary-General van de Perre, which should lead to the sustained reopening of the Goma airport for humanitarian flights.
The ICG further calls on parties to stop incitement to hatred, discrimination or violence, including against Rwandophone minorities, and other actions that gravely endanger civilian populations and social cohesion.
Chief Economists Perceive Relative Resilience but Remain Concerned about Asset Prices, Debt and Geoeconomic Tensions
Acknowledging the relative resilience of the global economy amid turbulence, 53% of chief economists surveyed expect global economic conditions to weaken in the year ahead, down from 72% in September 2025.Uncertainty around technology remains high, with 52% expecting AI-related stocks to decline and 40% expecting gains. On growth, expectations diverge by region, with economists expecting strong momentum in South Asia and East Asia and weak to moderate growth in Europe.
On macroeconomics, nearly a third of respondents are concerned about sovereign debt crises in advanced economies and nearly half in emerging economies; over 60% expect governments to rely on higher inflation and tax revenues to manage elevated debt.Learn more about the Chief Economists’ Outlook here.
Follow the Annual Meeting 2026 here and on social media using #WEF26.
Geneva, Switzerland, January 2026 – The global economic outlook has improved modestly but remains uncertain, with asset valuations, mounting debt, geoeconomic realignment and rapid artificial intelligence deployment creating both opportunities and risks, according to the World Economic Forum’s latest Chief Economists’ Outlook, published today. Although 53% of chief economists expect global economic conditions to weaken in the year ahead, this marks a significant improvement from the 72% who held this view in September 2025.
“The Chief Economists survey reveals three defining trends for 2026: surging AI investment and its implications for the global economy; debt approaching critical thresholds with unprecedented shifts in fiscal and monetary policies; and trade realignments,” said Saadia Zahidi, Managing Director, World Economic Forum. “Governments and companies will have to navigate an uncertain near-term environment with agility while continuing to build resilience and invest in the long-term fundamentals of growth.”
AI and other asset valuations are under scrutiny Concentrated AI stock gains are splitting the views of the chief economists. A narrow majority (52%) are expecting AI-related US stocks to decline over the next year, but 40% foresee further increases. Should values fall sharply, 74% believe impacts would spread across the global economy. Cryptocurrencies face bleaker prospects, with 62% anticipating further declines following market turbulence, while 54% believe gold has peaked after recent rallies.
When it comes to the potential expected returns from AI, there is wide variation across regions and sectors. Roughly four in five chief economists expect productivity gains within two years in the US and China. Chief economists expect the information technology sector to adopt AI fastest, with nearly three-quarters anticipating imminent productivity gains. Financial services, supply chain, healthcare, engineering and retail follow as “fast-movers”, with one to two-year timelines. By firm size, the chief economists expect companies with 1,000+ employees to see gains earlier than others: 77% of chief economists expect meaningful productivity gains within two years.
The employment picture in relation to AI is expected to evolve over time: two thirds expect modest job losses over the next two years, but views diverge sharply over the longer term: 57% anticipate net losses over 10 years, while 32% foresee gains as new occupations emerge.
Debt may drive difficult trade-offs Managing elevated debt levels has become a central challenge for policy-makers, particularly as spending pressures rise. Defence spending is almost unanimously expected to increase, with 97% of chief economists anticipating rises in advanced economies and 74% in emerging markets. Digital infrastructure and energy spending are also expected to rise. Most other sectors are expected to see stable levels of spending, while a majority of surveyed economists anticipate spending on environmental protection to decline in both advanced (59%) and emerging economies (61%).
Views are split equally on the likelihood of sovereign debt crises in advanced economies, while nearly half (47%) see them as likely in the year ahead in emerging economies. A large majority of chief economists expect governments to rely on higher inflation to reduce burdens (67% in advanced economies, 61% in emerging markets). Tax increases are also viewed as likely by 62% for advanced economies and 53% for emerging markets. Some 53% of chief economists anticipate seeing debt restructuring or default as a debt management strategy in emerging markets over five years, compared to just 6% for advanced economies.
Trade flows and regional growth outlooks are realigning Global trade and investment are adjusting to a new, competitive reality. Chief economists expect import tariffs between the US and China to remain mostly stable, though competition could intensify in other domains. Some 91% expect US tech export restrictions to China to remain or increase; 84% anticipate the same for Chinese critical mineral restrictions.
In this new context, 94% of chief economists expect more bilateral trade deals and 69% anticipate growth in regional trade agreements. Some 89% expect Chinese exports into non-US markets to further increase, while surveyed economists are split on the future of global trade volumes. Meanwhile, almost half of them foresee the continued rise of international investment flows, and 57% expect FDI into the US to increase compared to 9% who expect increased inflows to China.
When it comes to growth expectation among the chief economists surveyed, South Asia leads with 66% anticipating strong or very strong performance, driven by robust growth in India. Some 45% expect strong growth and 55% moderate growth in East Asia and the Pacific. Some 36% expect strong growth and 64% moderate growth in the MENA region. The US outlook improved notably, with 69% expecting moderate growth versus 49% in September 2025, but only 11% expecting strong growth. China faces mixed prospects, with 47% expecting moderate growth and 24% strong growth and nearly an equal number – 29% – expecting weak growth. Europe confronts the weakest outlook, with 53% expecting weak growth, 44% moderate growth, and only 3% anticipating strong growth.
About the Chief Economists’ Outlook The report builds on extensive consultations and surveys with chief economists from the public and private sectors, organized by the World Economic Forum’s Centre for the New Economy and Society. The report supports the Forum’s Future of Growth Initiative, aiming to foster dialogue and actionable pathways to sustainable and inclusive economic growth. The Chief Economists’ Outlook is complemented by other recent publications with economic foresight. Four Futures for the New Economy and Four Futures for Jobs in the New Economy explore strategic implications for businesses navigating geopolitical shifts, technology disruption and workforce transformation through 2030, offering indicators to track and strategies to prepare for multiple scenarios.
About the Annual Meeting 2026 The World Economic Forum’s 56th Annual Meeting, taking place today the 19th and running until 23 January 2026 in Davos-Klosters, Switzerland, will convene leaders from business, government, international organizations, civil society and academia under the theme, A Spirit of Dialogue. Click here to learn more.
A Spirit of Dialogue Brings Record Numbers of World Leaders to Davos for World Economic Forum Annual Meeting 2026
A record 400 top political leaders, including close to 65 heads of state and government – with six G7 leaders expected – nearly 850 of the world’s top CEOs and chairs, and almost 100 leading unicorns and technology pioneers will convene in Davos-Klosters for one of the highest-level gatherings in the Annual Meeting’s history. Held under the theme of A Spirit of Dialogue, the 56th Annual Meeting will provide an impartial platform for close to 3,000 participants from over 130 countries to navigate the major economic, geopolitical and technological forces reshaping the global landscape.
A major focus will be on the unprecedented speed of innovation and technological advancement with key voices from industry and academia present.– At a pivotal moment for global cooperation, the World Economic Forum will convene its 56th Annual Meeting today in Davos-Klosters, Switzerland, bringing together close to 3,000 cross-sector leaders from over 130 countries under the theme A Spirit of Dialogue. Marking record levels of governmental participation, 400 top political leaders – including close to 65 heads of state and government and six of the G7’s leaders – are expected to take part, alongside nearly 850 of the world’s top CEOs and chairpersons, and almost 100 leading unicorns and technology pioneers.
Amid the most complex geopolitical backdrop in decades – marked by rising fragmentation and rapid technological change – the need for an impartial platform that brings together diverse and sometimes diverging voices across industries, regions, and generations is urgent. Building on the Forum’s long-standing tradition of providing a trusted space for dialogue and public-private collaboration, the Annual Meeting 2026 will enable an open exchange of ideas and perspectives on the issues that matter most to people, economies and the planet, turning shared understanding into action.
“Dialogue is not a luxury in times of uncertainty; it is an urgent necessity,” said Børge Brende, President and CEO, World Economic Forum. “At a critical juncture for international cooperation – marked by profound geoeconomic and technological transformation – this year’s Annual Meeting will be one of our most consequential. With historic levels of participation, it will provide a space for an unparalleled mix of global leaders and innovators to work through and look beyond divisions, gain insight into a fast-shifting global landscape, and advance solutions to today’s and tomorrow’s biggest and most pressing challenges.”
“As the World Economic Forum enters its next chapter, this year’s Annual Meeting is bringing together a record number of global leaders from government, business, and non-governmental organizations at a moment when dialogue matters more than ever,” said Larry Fink, Interim Co-Chair, World Economic Forum. “Understanding different perspectives is essential to driving economic progress and ensuring prosperity is more broadly shared.”
“At a moment when cooperation matters more than ever, the Annual Meeting provides a unique space to turn dialogue into meaningful progress,” said André Hoffmann, Interim Co-Chair, World Economic Forum. “By bringing together leaders across regions and sectors, it creates the conditions to rebuild trust, align priorities and advance solutions that support long-term, sustainable growth for all, within planetary boundaries.”
Switzerland is the host country for the meeting. 400 government leaders are expected to attend this year, representing the highest level of government participation in the Annual Meeting’s history, including close to 65 heads of state and government, 55 ministers for economy and finance, 33 ministers for foreign affairs, 34 ministers for trade, commerce and industry, and 11 Governors of Central Banks. High-level government representation is expected from all key regions, including six G7 leaders and heads of state from countries central to dialogue on critical global situations – from Ukraine to Gaza and the broader Middle East, and beyond.
Top political leaders taking part include:
Top political leaders taking part include: Donald Trump, President of the United States of America; Mark Carney, Prime Minister of Canada; Friedrich Merz, Federal Chancellor of Germany; Ursula von der Leyen, President of the European Commission; He Lifeng, Vice-Premier of the People’s Republic of China; Javier Milei, President of Argentina; Prabowo Subianto, President of Indonesia; Pedro Sánchez, Prime Minister of Spain; Guy Parmelin, President of the Swiss Confederation 2026; Vahagn Khachaturyan, President of the Republic of Armenia; Ilham Aliyev, President of the Republic of Azerbaijan; Bart De Wever, Prime Minister of Belgium; Gustavo Petro, President of Colombia; Félix-Antoine Tshisekedi Tshilombo, President of the Democratic Republic of the Congo; Daniel Noboa Azín, President of Ecuador; Alexander Stubb, President of Finland; Kyriakos Mitsotakis, Prime Minister of Greece; Micheál Martin, Taoiseach, Ireland; Aziz Akhannouch, Head of Government, Kingdom of Morocco; Daniel Francisco Chapo, President of Mozambique; Dick Schoof, Prime Minister of the Netherlands; Mian Muhammad Shehbaz Sharif, Prime Minister of Pakistan; Mohammed Mustafa, Prime Minister of the Palestinian National Authority; Karol Nawrocki, President of Poland; Mohammed Bin Abdulrahman Al Thani, Prime Minister and Minister of Foreign Affairs of the State of Qatar; Aleksandar Vučić, President of Serbia; Tharman Shanmugaratnam, President of Singapore; Isaac Herzog, President of the State of Israel; Ahmad Al Sharaa, President of Syria; Volodymyr Zelenskyy, President of Ukraine.
Heads of international organizations taking part include:
António Guterres, Secretary-General of the United Nations; Ngozi Okonjo-Iweala, Director-General of the World Trade Organization; Ajay S. Banga, President of the World Bank Group; Kristalina Georgieva, Managing Director of the International Monetary Fund; Mark Rutte, Secretary-General of the North Atlantic Treaty Organization; Tedros Adhanom Ghebreyesus, Director-General of the World Health Organization; Alexander De Croo, Administrator of the United Nations Development Programme; Mathias Cormann, Secretary-General of the Organisation for Economic Co-operation and Development; Doreen Bogdan-Martin, Secretary-General of the International Telecommunication Union; Barham Salih, UN High Commissioner for Refugees; Jasem Al Budaiwi, Secretary-General of the Gulf Cooperation Council.
Around 1,700 business leaders, including close 850 of the world’s top CEOs and chairpersons from the World Economic Forum’s Members and Partners, will also participate, alongside almost 100 CEOs and chairpersons of Unicorn companies and Tech Pioneers who are transforming industries and shaping the future or technology worldwide.
Some of the top voices in technology and innovation taking part include:
JensenHuang, NVIDIA; Satya Nadella, Microsoft; Dario Amodei, Anthropic; Dina Powell McCormick, Meta; Demis Hassabis, Google DeepMind; YoshuaBengio, Université de Montréal; Alex Karp, Palantir Technologies; SarahFriar, OpenAI; YuvalHarari, Centre for the Study of Existential Risk; Khaldoon Khalifa Al Mubarak, Mubadala; PeggyJohnson, Agility Robotics; Arthur Mensch, Mistral AI; BretTaylor, Sierra; PengXiao, G42; EricXing, Mohamed bin Zayed University of Artificial Intelligence.
“In an era where exponential technological innovation and geopolitical disruption are deeply intertwined, the need for constructive dialogue between policy-makers and industry is clear,” said Mirek Dušek, Managing Director, World Economic Forum. “Leaders will share views from across sectors to help build the understanding needed to balance short-term priorities and immediate challenges with long-term value creation.”
Close to 200 leaders from civil society and the social sector – including labour unions, non-governmental and faith-based organizations, as well as experts and heads of the world’s leading universities, research institutions and think tanks – will also participate in the meeting. Heads of civil society organizations participating include:
David Miliband, President and CEO, International Rescue Committee; Sania Nishtar, CEO, Gavi, The Vaccine Alliance; Luc Triangle, General Secretary, International Trade Union Confederation; Kirsten Schuijt, Secretary General, WWF International; Mohammad Al-Issa, Secretary General, Muslim World League; Comfort Ero, President and CEO, International Crisis Group; Pinchas Goldschmidt, Chief Rabbi and President, Conference of European Rabbis; Oleksandra Matviichuk, Nobel Peace Laureate and Chair, Ukraine Center for Civil Liberties; Peter Sands, Executive Director, The Global Fund; Amitabh Behar, Executive Director, Oxfam International; Aulani Wilhelm, President and Executive Director, Nia Tero.
The 2026 programme is centred around five pressing global challenges where public-private dialogue and cooperation, involving all stakeholders, are critical for collective progress:How can we cooperate in a more contested world?How can we unlock new sources of growth?How can we better invest in people?How can we deploy innovation at scale and responsibly?How can we build prosperity within planetary boundaries? “In a global economy shaped by technology, geoeconomics, and demographics, the defining challenge will be whether opportunity is broadly shared or if growth remains sluggish and uneven,” said Saadia Zahidi, Managing Director, World Economic Forum. “The meeting will connect leaders to discuss how to unlock growth, jobs and economic transformation that translate into progress for communities everywhere. “The meeting’s Arts and Culture Programme will further amplify the diversity of voices and perspectives needed to advance impact, while showcasing the power of art, influence, and culture to drive change and create unique space for dialogue. Renowned artistic and cultural leaders in attendance include:
Marina Abramović, Jon Batiste, Thijs Biersteker, Sabrina Elba, Renaud Capuçon, Hiro Iwamoto, Suleika Jaouad, Sir David Beckham, Ahmad Joudeh, Yo-Yo Ma, Emi Kusano, Harvey Mason Jr, Hans Ulrich Obrist, Katie Piper, Ronen Tanchum, JR and will.i.am.
The Open Forum, now in its 23rd year, will host public panel discussions for the local community and participants from around the world, encouraging wider participation and open dialogue on key global issues.
The Global Cooperation Barometer 2026 reveals strong pressures on multilateral institutions are causing global cooperation to evolve rather than retreat.
While multilateral forms of cooperation declined, smaller and more agile coalitions of countries –and, at times, companies – were instrumental in maintaining overall cooperation levels.
Climate and technology saw strong increases in cooperation even in the face of headwinds, health and trade stayed broadly flat and there was a sharp drop of cooperation in peace and security.
Learn more about the Barometer and read the accompanying report here. Follow the Annual Meeting 2026 here and on social media using #WEF26.
Geneva, Switzerland, January 2026 – Global cooperation is proving resilient even as multilateralism continues to face strong headwinds, according to the World Economic Forum’s Global Cooperation Barometer 2026. However, cooperation is below where it needs to be to address critical economic, security and environmental challenges. Within a more complex and uncertain geopolitical context, open and constructive dialogue is a critical factor in identifying potential collaborative pathways that advance shared interests.
In its third year, the Global Cooperation Barometer 2026, developed in collaboration with McKinsey & Company, uses 41 metrics to assess the level of cooperation worldwide across five pillars: trade and capital; innovation and technology; climate and natural capital; health and wellness; and peace and security.
The 2026 Barometer indicates that the overall level of cooperation has largely been unchanged in recent years but the composition of cooperation appears to be evolving. Innovative, smaller collaborative arrangements are emerging, often within and between regions, as cooperation through multilateral avenues has weakened. Progress on global priorities has shown the greatest momentum when it aligns with national interests – with climate and nature and innovation and technology seeing relatively strong increases in cooperation. Other pillars, including health and wellness and trade and capital, have stayed flat. The peace and security pillar experienced the largest drop.
“Amid one of the most volatile and uncertain periods in decades, cooperation has shown resilience,” said Børge Brende, President and CEO, World Economic Forum. “While cooperation today may look different than it did yesterday, collaborative approaches are essential to grow economies wisely, accelerate innovation responsibly and prepare for the challenges of a more uncertain era. Flexible, nimble and purpose-driven approaches are most likely to withstand the current turbulence and deliver results.”
“Leaders are reimagining collaboration across borders,” said Bob Sternfels, Global Managing Partner, McKinsey & Company. “Cooperation may look different today, and involve different partners, but importantly, it continues to deliver on some critical shared priorities. Collaborative progress can, and does, continue to happen even amid global divisions.”
Global cooperation is reinventing itself
The changing dynamics of cooperation are visible in each of the five pillars of the Barometer.
Trade and capital cooperation flattened. Cooperation remained above 2019 values, but its makeup is shifting. Goods volumes grew, albeit slower than the global economy, and flows are shifting to more aligned partners. Services and select capital flows show momentum, particularly among aligned economies, especially where they can contribute to bolstering domestic capabilities. While the global multilateral trade system faces rising barriers, smaller coalitions of countries are cooperating through initiatives such as the Future of Investment and Trade (FIT) Partnership.
Innovation and technology cooperation rose to unlock new capabilities even amid tighter controls. IT services and talent flows are up, and international bandwidth is now four times larger than before the COVID-19 pandemic. Restrictions on flows of critical resources, technologies and knowledge expanded – especially, but not only, between the United States and China. However, new cooperation formats are rising, with instances of cooperation on AI, 5G infrastructure and other cutting-edge technologies among aligned countries.
Climate and natural capital cooperation grew, but is still short of global goals. Increased financing and global supply chains stimulated deployment of clean technologies, which reached record levels in mid-2025. While China accounted for two-thirds of additions of solar, wind and electric vehicles, other developing economies stepped up. As multilateral negotiations become more challenging, groups of nations – for example, the European Union and ASEAN (Association of South-East Asian Nations) – are combining decarbonization with energy security goals.
Health and wellness cooperation held steady, with outcomes resilient for now, but aid is under severe pressure. Topline cooperation in this pillar did not fall, in part because health outcomes continued to improve after the end of the COVID-19 pandemic. Although health outcomes have stayed resilient, the stability masks growing fragility. Pressures on multilateral organizations have eroded support flows and development assistance for health contracted sharply – with further tightening in 2025 – affecting low- and middle-income countries most acutely.
Peace and security cooperation continued to decrease, as every tracked metric fell below pre-COVID-19 pandemic levels. Conflicts escalated, military spending rose and global multilateral resolution mechanisms struggled to de-escalate crises. By the end of 2024, the number of forcibly displaced people reached a record 123 million globally. However, growing pressures are creating an impetus for increased cooperation, including through regional peacekeeping mechanisms.
The Global Cooperation Barometer shows countries are rewriting the way they engage in cooperation. Creating new cooperative formats will require new structures, from trade agreements to standards alliances, and new types of partnerships, including public-private and private-private, to manage them effectively. The report concludes by highlighting the need for leaders to focus on rebuilding an effective dialogue with partners as the foundation for identifying and advancing shared interests.
About the Global Cooperation Barometer The Global Cooperation Barometer – first launched in 2024 – evaluates global collaboration across five interconnected dimensions: trade and capital; innovation and technology; climate and natural capital; health and wellness; and peace and security. The Barometer is built on 41 indicators, categorized as cooperative action metrics (evidence of tangible cooperation, such as trade volumes, capital flows, or intellectual property exchanges) and outcome metrics (broader measures of progress such as reductions in greenhouse gas emissions or improvements in life expectancy). Spanning 2012-2025 and indexed to 2020 to reflect pandemic-era shifts, the Barometer normalizes data for comparability (e.g., financial metrics relative to global GDP and migration metrics to population levels). Given rapid developments across all the areas the barometer covers, this year’s report complements the 2024 findings with more recent 2025 data where available, through partial-year data or projections. In addition, two surveys were conducted: one with around 800 executives and another with about 170 experts who are current or former members of the World Economic Forum’s Network of Global Future Councils.
About the Annual Meeting 2026 The World Economic Forum’s 56th Annual Meeting, taking place on 19-23 January 2026 in Davos-Klosters, Switzerland, will convene leaders from business, government, international organizations, civil society and academia under the theme A Spirit of Dialogue. Click here to learn more.
Forum Économique Mondial, [email protected] La coopération mondiale fait preuve de résilience face aux vents contraires géopolitiques
Le Baromètre de la coopération mondiale 2026 indique qu’en dépit de fortes pressions sur les institutions multilatérales, la coopération mondiale ne recule pas, mais progresse.
Alors que les formes multilatérales de coopération ont reculé, des coalitions plus petites et plus agiles de pays, et même parfois d’entreprises, ont contribué à maintenir les niveaux de coopération globaux.
On a pu observer une forte augmentation de la coopération en matière de climat et de technologie, malgré les vents contraires, une relative stabilité en matière de santé et du commerce, et une forte baisse en matière de paix et de sécurité.
Pour en savoir plus sur le Baromètre et consulter le rapport associé, cliquez ici. Suivez l’Assemblée annuelle 2026 ici et sur les réseaux sociaux grâce au hashtag #WEF26.
Genève, Suisse, janvier 2026 – Selon le Baromètre de la coopération mondiale 2026 du Forum Économique Mondial, la coopération mondiale fait preuve de résistance alors même que le multilatéralisme continue d’être confronté à de forts vents contraires. Toutefois, la coopération n’est pas à la hauteur de ce qu’elle devrait être pour relever les défis économiques, sécuritaires et environnementaux décisifs. Dans un contexte géopolitique plus complexe et incertain, un dialogue ouvert et constructif est essentiel pour identifier les voies de collaboration potentielles faisant progresser les intérêts communs. Pour la troisième année, le Baromètre de la coopération mondiale 2026, élaboré en collaboration avec McKinsey & Company, se base sur 41 paramètres pour évaluer le niveau de coopération à l’échelle mondiale, selon cinq dimensions : le commerce et les capitaux, l’innovation et la technologie, le climat et le capital naturel, la santé et le bien-être, ainsi que la paix et la sécurité. Le Baromètre 2026 indique un niveau global de coopération globalement inchangé sur les dernières années, avec toutefois une évolution dans la composition de cette coopération. Des accords de collaboration innovants, souvent de moindre ampleur, émergent au sein d’une même région ou entre régions, dans un contexte de recul de la coopération multilatérale. Les avancées concernant les priorités mondiales ont été les plus marquées lorsqu’elles s’alignaient sur les intérêts nationaux, avec notamment une progression notable de la coopération dans les domaines du climat et de la nature, ainsi que de l’innovation et de la technologie. Les autres dimensions, y compris la santé et le bien être ainsi que le commerce et les capitaux, sont restées stables. La dimension paix et sécurité a connu la plus forte baisse. « Au sein de l’une des périodes les plus instables et incertaines de ces dernières décennies, la coopération a fait preuve de résilience, » déclare Børge Brende, Président-Directeur général du Forum Économique Mondial. « Bien que la coopération actuelle soit différente de ce qu’elle était hier, les approches collaboratives sont essentielles pour faire croître les économies à bon escient, accélérer l’innovation de manière responsable et se préparer aux défis d’une ère plus incertaine. Les approches flexibles, souples et axées sur les objectifs sont les plus susceptibles de résister aux turbulences actuelles et de produire des résultats. » « Les dirigeants redéfinissent la collaboration transfrontalière », déclare Bob Sternfels, Global Managing Partner chez McKinsey & Company. « Si la coopération se présente aujourd’hui sous un nouveau jour, impliquant des partenaires différents, il est important de noter qu’elle continue de 1 répondre à certaines priorités communes essentielles. Le progrès collaboratif peut se poursuivre, et se poursuit, même au milieu des divisions mondiales. » La coopération mondiale se réinvente La dynamique changeante de la coopération est visible dans chacune des cinq dimensions du Baromètre.
La coopération en matière de commerce et de capitaux s’est stabilisée. La coopération est restée supérieure aux valeurs de 2019, mais on observe une évolution de sa composition. Les volumes de marchandises ont augmenté, quoique plus lentement que l’économie mondiale, et les flux commerciaux se redéploient vers des partenaires plus étroitement alignés. On observe un dynamisme des services et de certains flux de capitaux, en particulier au sein des économies alignées, surtout lorsqu’ils peuvent contribuer à renforcer les capacités nationales. Alors que le système de commerce multilatéral mondial est confronté à des obstacles croissants, des coalitions de pays à moindre échelle coopèrent dans le cadre d’initiatives telles que le Partenariat pour l’avenir de l’investissement et du commerce (Future of Investment and Trade – FIT).
La coopération en matière d’innovation et de technologie a augmenté, libérant de nouvelles capacités malgré des contrôles plus stricts. Les services informatiques et les flux de talents sont en hausse, et la bande passante internationale est aujourd’hui quatre fois plus importante qu’avant la pandémie de COVID 19. Les restrictions pesant sur les flux de ressources, de technologies et de connaissances essentielles se sont multipliées, notamment entre les États Unis et la Chine. Toutefois, de nouveaux formats de coopération voient le jour, avec des exemples de coopération en matière d’IA, d’infrastructure 5G et d’autres technologies de pointe entre les pays alignés.
La coopération en matière de climat et de capital naturel s’est développée, mais reste en deçà des objectifs mondiaux. L’augmentation des financements et des chaînes d’approvisionnement mondiales a stimulé le déploiement des technologies propres, avec des niveaux record mi-2025. Si la Chine a été à l’origine de deux tiers des nouveaux véhicules 2 solaires, éoliens et électriques, d’autres économies en développement ont accéléré leurs efforts. Les négociations multilatérales devenant plus difficiles, des groupes de nations, dont, par exemple, l’Union européenne et l’ANASE (Association des nations de l’Asie du Sud-Est), combinent la décarbonisation avec des objectifs de sécurité énergétique.
La coopération en matière de santé et de bien-être est restée stable, avec des résultats qui demeurent pour l’instant résilients, mais l’aide est soumise à de fortes pressions. La coopération en première ligne au sein de cette dimension n’a pas diminué, en partie grâce à l’amélioration des résultats en matière de santé après la fin de la pandémie de COVID 19. La stabilité des résultats en matière de santé masque une fragilité croissante. Les pressions exercées sur les organisations multilatérales ont érodé les flux de soutien, et l’aide au développement de la santé s’est fortement contractée, avec un nouveau resserrement en 2025, affectant plus particulièrement les pays à faible revenu et à revenu intermédiaire.
La coopération en matière de paix et de sécurité a continué à diminuer, tous les indicateurs suivis étant en-deçà des niveaux atteints avant la pandémie de COVID 19. Les conflits se sont intensifiés, les dépenses militaires ont augmenté et les mécanismes multilatéraux de résolution des conflits ont eu du mal à désamorcer les crises. Fin 2024, le nombre de personnes déplacées de force a atteint le chiffre record de 123 millions. Toutefois, des pressions croissantes incitent à une coopération accrue, y compris par le biais de mécanismes régionaux de maintien de la paix. Le Baromètre de la coopération mondiale montre une nouvelle manière pour les pays de s’engager dans la coopération. De nouveaux formats de coopération appelleront des structures renouvelées, des accords commerciaux aux alliances de normalisation, et des partenariats innovants (notamment public-privé et privé-privé) pour en assurer une gestion efficace. Le rapport conclut en soulignant la nécessité pour les dirigeants de se concentrer sur le rétablissement d’un dialogue efficace avec les partenaires, fondement de l’identification et de la promotion d’intérêts communs. À propos du Baromètre de la coopération mondiale Lancé pour la première fois en 2024, le Baromètre de la coopération mondiale évalue la collaboration mondiale à travers cinq dimensions interconnectées : le commerce et les capitaux, l’innovation et la technologie, le climat et le capital naturel, la santé et le bien-être, ainsi que la paix et la sécurité. Le Baromètre s’appuie sur 41 indicateurs, classés en mesures d’action coopérative (preuves d’une coopération tangible, telles que les volumes d’échanges commerciaux, les flux de capitaux ou les échanges de propriété intellectuelle) et en mesures de résultats (mesures plus larges des progrès réalisés, telles que la réduction des émissions de gaz à effet de serre ou l’amélioration de l’espérance de vie). Couvrant la période 2012-2024 et indexé à 2020 pour refléter les changements de l’ère pandémique, le Baromètre normalise les données pour les rendre comparables (par exemple, les mesures financières par rapport au PIB mondial et les mesures migratoires par rapport aux niveaux de population). En outre, deux enquêtes ont été menées : l’une auprès d’environ 800 cadres et l’autre auprès d’environ 170 experts, membres actuels ou passés du réseau des conseils pour l’avenir du monde du Forum Économique Mondial. À propos de la réunion annuelle 2026 La 56e réunion annuelle du Forum Économique Mondial, qui se tiendra du 19 au 23 janvier 2026 à Davos-Klosters, en Suisse, réunira des dirigeants d’entreprises, de gouvernements, d’organisations internationales, de la société civile et du monde universitaire autour du thème Un esprit de dialogue. Cliquez ici pour en savoir plus.
The Russia Propaganda Alert is a media analysis initiative of the Digital News Association (DNA) that serves as a resource to detect Russian narratives targeting Spanish-language news outlets in Latin America and the Western Hemisphere. DNA analysts and journalists review the daily dissemination of Russian foreign content on news sites, social media platforms, state-owned media, and the personal pages of Russian foreign officials as part of its Latin America Disinformation Tracking Initiative.
Russia’s Patterns and Propaganda Techniques
A few days ago on Dec. 29-30, 2025 The Washington Times Commentary section published an analysis by DNA Analyst Jeffrey Scott Shapiro, who revealed how Russian state sponsored media organizations were targeting Mexico as part of a deliberate effort to stoke anti-U.S. sentiment and turn America’s southern neighbor against it.
The Washington Times column referenced some of the most common narratives identified by the Digital News Association’s Latin America Disinformation Tracking Initiative and focused on how Moscow is turning its attention to Mexico. According to the column, RT en Español’s cable service is now broadcasting in nearly all Latin American nations, boasting a following of more than 500 million with nearly 10 percent—40 million—in Mexico alone.
In his analysis, “Russia is targeting Mexico with anti-U.S. propaganda,” Shapiro reported that, “The Kremlin’s interest in sewing discord in Mexico was reaffirmed in an April 2024 U.S. diplomatic cable titled, ‘Mexico: RT’s invasion.’ The cable’s findings, according to a recent New York Times report, were supported by a 2024 Justice Department investigation that uncovered a Kremlin sponsored influence campaign called Doppelgänger, which aimed to turn America’s allies and citizens against her. According to the cable, American diplomats were alarmed by the “sudden and dramatic expansion” of Kremlin sponsored news in the North American nation, and troubled by the fact that RT Español’s audience skyrocketed from 191,000 views on X in 2022 to 715 million in 2023.”
Several Common Themes
The Washington Times identified several common themes, asserting that today’s Kremlin propaganda is focused on igniting resentment among Mexicans and other citizens of neighboring Central American nations against the United States, raising war support for the Kremlin’s illegal invasion of Ukraine by falsely aligning Kyiv with “terrorism,” and targeting other U.S. allies such as Israel.
The column revealed that while Russia has had extraordinary success in expanding its audiences throughout Latin America by using conventional methods, it has engaged in covert techniques to ensure that citizens of Central and South American nations are unaware that the information and ‘news’ they are receiving is originating from Kremlin sponsored sources: “These tactics, [the German Marshall Fund] says, include ‘information laundering,’ a process of republishing content from Russian sources on less suspicious third-party websites to damper people’s awareness that they are reading Kremlin propaganda.”
The U.S. cable also discussed that American diplomats were alarmed by the “sudden and dramatic expansion” of Kremlin sponsored news in Mexico and concerned that RT Español’s audience increased from 191,000 views on X in 2022 to 715 million in 2023.
Latin American Country Discussed as Russian Propaganda Target in The Washington Times:
Mexico 🇲🇽
Topics and Issues Covered by Russia
U.S. diplomatic cable titled, “Mexico: RT’s invasion”
U.S. Justice Department uncovering a Kremlin influence campaign called Doppelgänger
RT’s aggressive investment in Mexico and its strategy to undermine the United States
RT Español’s audience increasing from 191,000 views on X to 715 million
British and French officials addressing Mexican officials about Russia’s regional activities
Club de Periodistas de México collaborating with Russian state sponsored media
Russian state media engaging in ‘information laundering,’ to republish content on third-party websites as a covert tactic to infiltrate the information marketplace
Washington Times Column: December 29-30, 2025
Russia is targeting Mexico with anti-U.S. propaganda
A U.S. diplomatic cable says Moscow is exploiting anti-American sentiment in Mexico
A specter is haunting Mexico — the specter of Russian propaganda. And it is part of a Kremlin disinformation campaign designed to turn America’s southern neighbor against it.
Earlier this year, I penned a Washington Times column titled “Russia is turning Latin America against the U.S. with veiled propaganda,” detailing how Kremlin sponsored media outlets such as Russia Today (RT), Sputnik, TASS and RIA Novosti are targeting Central and South America in Spanish with the aim of igniting anti-U.S. sentiment. I wrote that RT Español has a staff of more than 200 Spanish speaking employees in Moscow dedicated to disseminating the Kremlin’s anti-Western viewpoint throughout the region.
The column also revealed that Kremlin-sponsored outlets falsely accused then President-elect Trump of planning to use tariffs to “intensify … covert operations,” in the region and reported that the U.S. Agency for International Development was igniting a civil war in Spain while mischaracterizing Republican support for anti-Maduro sanctions as a political tool to appease Florida’s Latino voters. These outlets also depicted the Putin regime as a defender of Christian values despite the ongoing genocide in Ukraine and Moscow’s mass kidnapping of Ukrainian children — an act Rep. Mike McCaul recently called, “evil in its pure form.”
As Moscow continues to contaminate Latin American with anti-American sentiment, it is taking aim at our southern neighbor. Shortly after the 2024 U.S. elections, the Digital News Association’s Latin America Disinformation Tracking Initiative revealed that Russian media was falsely reporting that Mr. Trump was seeking to ignite a trade war with Mexico to “break the value chains between the Mexican and American economies,” and “end free trade,” while weakening regional currencies.
The Kremlin’s interest in sewing discord in Mexico was reaffirmed in an April 2024 U.S. diplomatic cable titled, “Mexico: RT’s invasion.” The cable’s findings, according to a recent New York Times report, were supported by a 2024 Justice Department investigation that uncovered a Kremlin sponsored influence campaign called Doppelgänger, which aimed to turn America’s allies and citizens against her.
According to the cable, American diplomats were alarmed by the “sudden and dramatic expansion” of Kremlin sponsored news in the North American nation, and troubled by the fact that RT Español’s audience skyrocketed from 191,000 views on X in 2022 to 715 million in 2023. For the Silo, Jeffrey Scott Shapiro.
December, 2025 – Trade tensions, regulation and growth-stifling taxes are depressing business investment in Canada, undercutting productivity growth and workers’ incomes, according to a new C.D. Howe Institute report. The report notes that the US is far more robust, hurting Canadian competitiveness and threatening to widen the gap between US and Canadian living standards.
.William B.P. Robson and Mawakina Bafale warn that (read below) a decade-long decline in capital per member of Canada’s labour force is putting Canada on a path toward a more labour-intensive, lower-wage economy. The authors urge policymakers to equip Canadian workers with the tools they need to compete and thrive.
Canada stuck in a vicious cycle
“Canada is stuck in a vicious cycle. We need higher productivity to spur capital investment – but we need higher capital investment to spur productivity,” says Robson, President and CEO of the C.D. Howe Institute. “Canadian workers today effectively have less and older capital to work with than they did a decade ago. We need to address this crisis by fixing growth-stifling regulations and taxes.”
Looking globally, the picture is even more concerning. Many OECD peers, and most notably the United States, have increased their investment levels more strongly than Canada, widening longstanding gaps. For example, in 2024, Canadian workers received 41 cents of machinery and equipment investment for every dollar received by US workers. The pattern is similar in intellectual property, where Canadian workers received just 32 cents for every US dollar of investment. These gaps translate directly into differences in productivity and wages, and they affect Canada’s ability to attract and retain talent.
Robson and Bafale identify several factors behind Canada’s weak investment performance: a long-standing tilt toward residential construction; regulatory delays for major projects; tax structures that discourage scaling up; elevated government consumption crowding out private investment; and growing policy and trade uncertainty. Rising US protectionism and the upcoming 2026 CUSMA review add an additional layer of risk for Canadian businesses assessing long-term investments.
To reverse the decline, the authors call for streamlined regulations, more competitive tax policies, stronger innovation support, a clearer path for energy investment, and a more assertive trade strategy.
“We need a renewed focus on growth and investment,” says Bafale, Research Officer for the C.D. Howe Institute. “Without faster, clearer rules and stronger incentives for businesses and workers, Canada will continue to fall behind its international peers.”
Business investment in Canada has been so weak since 2015 that capital per member of the workforce is falling, undermining growth in labour productivity and compensation.
The longstanding gap between investment per available worker in Canada and other OECD countries narrowed from the late 1990s through the early 2010s, but has since widened, especially relative to the United States. In 2025, Canadian workers will likely receive only 70 cents of new capital for every dollar received by their counterparts in the OECD as a whole and 55 cents for every dollar received by US workers.
Labour productivity and business investment go together. Rising productivity creates opportunities and competitive pressures that spur businesses to invest. Investment increases productivity by equipping workers with better tools. Low investment per worker signals that businesses see fewer opportunities in Canada and prefigures lagging growth in earnings and living standards.
Regulatory and fiscal policy changes, particularly those affecting natural resources and investment-related taxes, can prevent Canadian workers from being relegated to lower value-added activities compared to their counterparts in the United States and other advanced economies.
Introduction and Overview
Slow growth in Canadian productivity and living standards has become a top-of-mind concern for Canadian economy watchers and, increasingly, for Canadians themselves. Recent publications highlight Canada’s declining real gross domestic product (GDP) per person and its ominous implications for future living standards (Porter 2024, Marion and Ducharme 2024, McCormack and Wang 2024). Escalating trade tensions between the United States and Canada have led many firms to delay investment decisions (Bank of Canada 2025). Sluggish productivity growth has been a key factor behind Canada’s stagnant living standards, as the Organisation for Economic Co-operation and Development (OECD) recently highlighted in its Economic Survey of Canada (OECD 2025a).
The OECD predicts that the real GDP per capita in Canada will fall for the third consecutive year in 2025. This slide is a troubling break from Canada’s historical pattern of rising living standards. It contrasts with what is happening in other OECD countries, which have overtaken Canada, and contrasts especially strongly with the United States (Figure 1). Declining output per person implies that Canada is becoming a less attractive place for talented people to live and work.
Many influences on GDP per person may not be easily or desirably influenced by policy.
More people participating in the workforce and/or working longer hours will raise output per person, but more work per person has obvious costs. Higher human capital – enhanced skills and more education – and improved technology can raise output per person, but building human capital takes time, and improved technology is not, on its own, something policymakers can directly engineer. Increasing the amount of capital per worker, by contrast, is relatively straightforward to achieve and has positive results that are relatively likely to occur.
High or low levels of business capital, such as non-residential structures, machinery and equipment, and intellectual property products, are strongly associated with higher or lower output per worker. Productivity gains spur investment, and investment in turn boosts productivity. Higher productivity creates opportunities and competitive threats that promote business investment. In turn, higher business investment gives workers newer and better tools, embodies new technologies and gives managers and workers new opportunities to “learn by doing” – all of which raise each worker’s productivity.1
These links between investment and labour productivity make recent figures on Canada’s capital stock and new investment worrying. Canada’s capital stock in the business sector has grown so little since 2015 that capital per member of Canada’s labour force has been falling. Clearly, the recent extraordinary growth in Canada’s labour force, driven by permanent and temporary immigration, has not prompted businesses to provide tools to augment the productivity of the newly available brains and hands.
The spectacle of falling capital per worker forces attention to the fact that capital and labour are not only complementary factors of production – they are also substitutes. Industries and production methods vary in how intensively they use capital relative to labour. In international trade, countries with higher capital per worker tend to specialize in capital-intensive goods and services, while countries with lower capital per worker gravitate toward labour-intensive ones. Since living standards are higher in capital-intensive countries, Canada must confront the risk that low business investment and fast workforce growth are leading Canada down a labour-intensive path.
The United States and other OECD countries are investing at higher rates. Business investment per available Canadian worker was closing in on US and OECD levels from the early 2000s to the middle of the last decade, but the convergence stopped around 2015. Canada’s relative performance then plummeted during the COVID pandemic and has lagged badly since.
Canada’s workers need better tools to thrive and compete. Governments must change policies that are taking Canada’s economy down a more labour intensive, lower-wage path.
The Numbers
Many types of capital enhance productivity and living standards. Our focus in this report is on “reproducible” or “built” capital in the business sector. Human capital and natural capital, such as skills, land and water matter, but they cannot be reliably measured or compared internationally. Capital created and owned by governments also matters, but the services it yields are harder to relate to production and income.
Measures of built capital are relatively robust and easier to compare internationally. Non-residential buildings include offices, warehouses and industrial facilities, as well as engineering structures such as transportation infrastructure. Machinery and equipment (M&E) includes motor vehicles, tools and electronic equipment. Intellectual property (IP) products have three major sub-components (see Box 1). These types of built capital complement other types of capital – human, natural and government – in producing goods and services, generating incomes and helping workers compete internationally.
Labour force measures are also relatively robust and normally easy to compare internationally.2 However, the surge in temporary residents in Canada in recent years has coincided with a growing discrepancy between the number of temporary foreign workers reported by Immigration, Refugees and Citizenship Canada (IRCC) and the number of temporary residents reported in Statistics Canada’s Labour Force Survey (LFS), the most widely used source of data on the workforce and the one relied on by the OECD. Skuterud (2025) shows that IRCC’s count exceeded the LFS figure by 1.3 million in 2024. In translating Statistics Canada’s labour-force count to our measure of available workers, we multiply the labour-force figures since the first quarter of 2022 by the ratio of the populations in Statistics Canada tables 17-10-0009-01 and 14-10-0287-01. This adjustment adds 272,000 more available workers on average to the LFS numbers since the first quarter of 2022.
Notwithstanding variations in the efficiency with which various countries combine labour and business capital to produce output – variations arising from other inputs and influences such as organization of firms, often grouped under the term “multifactor productivity” – countries with high capital stocks tend to enjoy high output. Labour productivity growth and investment interact. Anticipated higher productivity creates opportunities for growth and profit for businesses, as well as threats from innovative competitors and losses. Those opportunities and threats incent investment, which increases the quantity and quality of the capital stock. A larger, newer capital stock raises productivity and workers’ incomes. The correlation between capital stock per member of the labour force (adjusted for undercount in Canada’s case) – for which we use the term “available worker” – and output per available worker across countries is clear (Figure 2).3
The fact that capital formation is both a result of productivity growth and a driver of it makes recent trends in Canada’s capital stock troubling. Figure 3 shows real stocks of each type of capital per available worker.
Total non-residential capital per available worker in Canada peaked in the last quarter of 2015.4 By the third quarter of 2025, per-worker levels of all types of capital were well below the late 2015 benchmark. IP products per available worker were down 4 percent. Engineering construction was down 6 percent. Non-residential buildings were down 12 percent. M&E was down a dramatic 20 percent. The dismal summary: the latest figures show the average member of Canada’s labour force had 9 percent less capital to work with than in 2015.
Because we do not have comparable time-series of capital stocks for many other countries, we turn to a closely related flow measure – gross business non-residential investment – to set up an international comparison over time. Figure 4 shows the Canadian numbers for the three types of business investment – non-residential structures (buildings and engineering), M&E and IP products – per available worker since 1990.
Absent major changes in estimated depreciation and write-offs, changes in gross investment should closely track changes in net capital stock. From 1990 to 2014, notwithstanding setbacks during the slump of the early 1990s and the 2008-2009 financial crisis and recession, the trend in investment per worker was up. But during the second half of the 2010s, investment in structures and M&E per member of the workforce declined, and investment in IP products flatlined. The economic shutdowns and uncertainty around the COVID-19 pandemic hurt business investment in everything except IP products.
Since then, performance in all three categories has been lacklustre. Adjusted per-available-worker investment in the third quarter of 2025 was only about $15,000 in 2024 dollars – down almost one quarter from its 2014 peak of $19,400.
Predictably, low levels of new investment have coincided with ageing of the capital stock and a decrease in the average remaining productive lives of assets.5 When new investment exceeds depreciation and scrapping, the remaining useful life of assets tends to rise, as it did in most categories before 2015. When new investment falls short of depreciation and scrapping, the remaining useful life of assets declines, as it has since then. In 2024, the remaining useful life ratio of non-residential buildings was 1 percent below its 2015 peak, whereas the ratios for IP and engineering construction were 13 and 7 percent lower than their 2015 benchmarks, respectively. An exception is machinery and equipment, where a shift in spending toward longer-lived assets such as transportation equipment has offset weak gross spending. Overall, the remaining useful life ratio of non-residential capital in 2024 was 4 percent below its 2015 peak. This trend highlights the need for increased investment to maintain Canada’s productive capacity as its capital stock ages and becomes obsolete.
Canada’s Investment Performance in International Perspective
Many factors that affect business investment in Canada also affect other developed countries. Over the long term, the growing importance of intangible assets beyond those measured in IP products, such as organizational efficiency, and services that escape traditional measures of value-added, such as internet search engines, may make lower levels of traditional business investment consistent with rising living standards everywhere. Short-term influences such as the pandemic and trade uncertainty also affect many countries. We can check Canada’s experience against that of the United States and other OECD countries with comparable data (the same countries that appear in Figure 2). Is Canada’s apparent path toward lower capital intensity part of a broader and possibly benign global pattern, or is Canada on a unique path that raises unique concerns?
Canada versus the United States
Canada and the United States collect similar capital investment data, and Statistics Canada takes particular care to compare Canadian to US prices. We can therefore measure investment per available worker in the two countries with some confidence that we are getting meaningful comparisons.
We convert the different types of capital investment into Canadian dollars using Statistics Canada’s measures of relative capital-equipment price levels to adjust for purchasing power differences.6 This approach gives a clearer sense of the “bang per buck” spent on structures, M&E or IP products on either side of the border. The results of these calculations appear in Figure 6, panels A through D.
Canada has a longstanding edge in investment in structures (panel A), reflecting the importance of non-residential buildings and engineering structures in natural resource industries. This gap was particularly wide in 2014, at almost $4,000 per worker, when Canadian investment in natural resources, notably oil and gas production and transmission, was booming. Since then, it has shrunk – to less than $500 in 2024.
The picture for M&E investment (panel B) is markedly different. The United States has always invested more heavily in M&E, and that advantage has grown over the past 15 years. Recently, US M&E investment per available worker has been almost three times higher than in Canada – about $11,000 annually in the US compared to $4,600 in Canada. Given the potentially outsized importance of M&E investment for productivity growth (Sala-i-Martin 2001, Rao et al. 2003, Stewart and Atkinson 2013), this gap bodes poorly for the competitiveness of Canadian workers and for Canada’s attractiveness as a place to live and work.
The IP products gap (panel C) is worse yet. In 2024, the Canadian figure stood at about $3,300, up from about $2,600 in 2014, while the US figure stood at $10,600, up from $7,000 in 2014. Part of this gap reflects slumping exploration expenditures and their associated IP by Canada’s struggling resource sector. In general, Canadian firms tend to use IP products owned abroad more than US firms do, which reflects in part Canada’s relative lack of success in commercializing domestic intellectual property.
Looking at all three categories combined (panel D), the United States has outpaced Canada since the 1990s. The gap narrowed in the 2000s but widened markedly after the mid-2010s and expanded further after the pandemic, reaching $13,300 per potential worker in 2024. That is a chasm. Differences in investment per worker on that scale could represent a significant shortening of the replacement and upgrade cycle for equipment such as trucks, excavators, machine tools, workplace equipment, and the potential replacement of entire information and communications technology systems – meaning US workers benefit from more modern tools and higher productivity.
One way to summarize these differences is to ask how many cents of new investment per available Canadian worker occur for every dollar of new investment per available US worker. Figure 7 presents our measure of investment in Canada per dollar of its US equivalent in total and in each investment category.
Canada’s relatively robust rate of structures investment stands out in Figure 7. The surge in the early 2010s is striking: in 2013, each available Canadian worker was getting $1.63 for every dollar received by a US worker. The subsequent decline is just as striking. By 2024, the average member of the Canadian workforce received $1.05 of new non-residential structures for every dollar received by the average member of the US workforce.
As the comparison in Figure 6 suggests, the contrast is worse for M&E. After improving from just 50 cents around the turn of the century to nearly 70 cents around the time of the 2008-2009 financial crisis and slump, Canada’s relative performance has deteriorated. In 2015, M&E investment for every available Canadian worker per dollar enjoyed by a US worker stood at 47 cents for every US dollar. By 2024, it had dropped to a dismal 41 cents – a number that has fallen further since (Robson and Bafale 2025).
The situation with IP products is worse yet. A declining trend since the mid-2000s has led to the point where the average member of the Canadian workforce in 2024 enjoyed only 32 cents of new investment in IP products for every dollar enjoyed by their US counterpart. The measurement of IP products in the two countries is not identical (Box 1), but focusing on the comparable categories reveals that US investment per worker in software is about double Canadian investment per worker, and that US investment in R&D is about four times Canadian investment.
Canada versus the OECD
Widening the international comparison to other OECD countries offers more perspective on Canada’s situation.7 This broader and more forward-looking view comes with caveats. Not all OECD countries break down business investment by type the same way Canada and the United States do, and some measures, notably IP products, differ across countries. Therefore, we use aggregate investment with less confidence that we are comparing like with like. We also do not have current measures of relative prices for different types of investment. We resort to a less precise “bang-per-buck” adjustment: purchasing-power-adjusted exchange rates benchmarked to relative prices of capital investment goods and services in 2017.
For consistency, we use the same OECD measures for the United States as well, which means that the per-available-worker numbers in Canadian dollars are not identical to those in our Canada-US comparison. But the big picture – notably, the story of Canadian underperformance – is consistent (Figure 8).8
Investment per available worker in the other OECD countries with comparable data has typically been less robust than in the United States but more robust than in Canada. This tendency was less pronounced in the early 2010s, when Canada’s resources sector was booming and many other advanced economies were suffering the lingering effects of the 2008-2009 financial crisis and slump. At that point, the gap between investment per Canadian labour-force member and those in other OECD countries (excluding the United States) narrowed, and the two measures were almost equal in 2014.
Since then, the gap has widened again. The OECD’s projections for 2025 yield a figure of about $19,300 of new capital per available worker this year for the other OECD countries, compared with just $15,800 for Canada. In other words, the OECD’s projections for countries other than Canada and the United States indicate that gross new capital per available worker in Canada will be about 20 percent less than in those countries this year.
Figure 9 highlights this relative performance by showing Canadian investment per worker for each dollar invested elsewhere. The figure shows how much new capital each available worker in Canada enjoyed per dollar of new capital per available worker in the United States, the OECD as a whole and in the other OECD countries since 1991, along with the figures calculated from the OECD’s 2025 projections.
For every dollar of investment received by the average worker across the OECD as a whole, the average Canadian worker enjoyed about 75 cents in the early 2000s. Excluding the United States, Canadian workers enjoyed 79 cents. By 2014, this gap had narrowed: the average Canadian worker was enjoying some 89 cents of new investment for every dollar invested per worker in the OECD overall, and 97 cents relative to workers in other OECD countries. By 2025, however, Canadian workers will likely enjoy only about 70 cents of new capital for every dollar enjoyed by their OECD counterparts. The figure compared to workers in OECD countries other than the US is 82 cents. The figure compared to US workers is a dismal 55 cents.
Canada’s Productivity Performance in International Perspective
Higher investment is not a goal in itself. Subsidies and regulations that spur investment in uneconomic assets could raise capital spending but lower productivity and future incomes.9 Our concern about these numbers is their implication that Canadian businesses either do not see opportunities and competitive threats that would prompt them to undertake productivity-improving capital projects, or that when they see such opportunities and threats they respond slowly or incompletely. To that extent, these numbers presage trouble for Canadian workers.
As the relationship in Figure 2 illustrates, and as previous research such as Rao et al. (2003) has noted, countries with higher capital intensity tend to have higher productivity and higher wages. Likewise, countries with lower capital intensity tend to lag on both fronts. Unless human capital per worker is rising and/or multifactor productivity is rising fast enough to offset it, falling built-capital per worker means less output generated per hour worked.
In the 1990s, the US economy produced $27,000 more per available worker than Canada, and the gap has widened since. In the 2000s and 2010s, Canadian output per available worker averaged $128,000 and $136,000, respectively, compared with $164,000 and $184,000 in the United States. By 2024, Canada generated $143,000 per available worker, compared to almost $200,000 in the United States (Figure 10).
Canada generated more output per worker than in other OECD countries in the 1990s, but that advantage has disappeared. Specifically, in the 1990s, Canadian workers produced $3,000 more per worker than their counterparts in other OECD countries. By 2024, notwithstanding a productivity decline post-COVID, workers in other OECD countries were generating $10,000 more per worker than those in Canada.
As with investment per available worker, we can highlight Canada’s relative performance by showing Canadian output per available worker for each dollar of output generated per available worker elsewhere (Figure 11).
In the 1990s, Canadian workers produced 80 cents for every dollar of output generated by US workers. By the 2010s, the ratio was around 74 cents, and by 2024, it had fallen further to 72 cents. In the 1990s, Canada generated $1.03 per worker for every dollar generated per worker in other OECD countries. By 2024, this figure had dropped to 93 cents.
Diagnoses and Possible Responses
What lies behind these ominous numbers and how might Canadian governments respond? Causation flows both ways between labour productivity and investment, but an investigation can usefully start by asking why Canadian businesses may not respond to opportunities and threats as much as they did previously or compared to businesses in other countries. We explore that question in the next subsection, and then ask why Canadian businesses might see fewer opportunities and threats than before and fewer than those in other developed countries.10
Why Might Canadian Businesses Respond Less to Opportunities and Threats?
Do Canadian businesses have some structural predisposition against innovation, entrepreneurship, investment and productivity growth? Porter (2023) provides a list of commonly blamed factors, including low population density, a cold climate, reliance on resource-sector revenues, weak private-sector research and development efforts and interprovincial barriers. As Porter points out, however, other countries with similar characteristics are outperforming Canada. Moreover, factors that have remained unchanged for decades cannot fully explain Canada’s poor performance since the mid-2010s, unless their impact has intensified. What, then, might have changed?
One possible factor is Canada’s bias toward residential construction.11
The federal government backs mortgage lending through Canada Mortgage and Housing Corporation (CMHC) insurance, likely leading lenders to favour residential over non-residential investments (Omran and Kronick 2019). Although mortgage lending has exceeded business lending in Canada since the mid-1980s, a tougher environment for non-residential investment and higher immigration since the mid-2010s may have made residential investment even more attractive. While imports can augment the resources available for capital investment in a given year, domestic output over time limits the total amounts available for consumption and investment of all kinds. As a result, a growing share of residential investment in GDP could limit the responsiveness of non-residential investment to opportunities and threats.
Another clearly negative influence has been the hostile regulatory environment for Canada’s fossil fuel industry since 2015.12
While global investment in oil and natural gas dropped when prices weakened in 2014, the subsequent recovery spurred a much stronger response in the United States than in Canada. Oil and gas investment per worker in Canada has fallen relative to the US, indicating a muted response to strong demand and high prices on the Canadian side of the border. A hint about the importance of the regulatory environment in the Canadian data is the relatively robust performance of investment in conventional oil production in Canada, which has followed a path more similar to that of the US industry. In contrast, investment in oil sands projects, which involve larger commitments of capital for longer periods, has been more subdued.
Porter’s list of suspects also includes the small scale of many Canadian businesses. The widening gaps between the effective tax rate on small businesses and both the general corporate income tax rate and personal income tax rates, combined with generally low interest rates, might have dulled business response to incentives that could have otherwise spurred investment and growth. The wider the gap between the small business tax rate and other rates, the stronger the incentive to keep earnings and assets below the thresholds at which the small business rate phases out, increasing marginal tax rates over that range. This creates distortions (OECD 2025a) and a “lock-in’’ effect, where businesses are incentivized to reinvest earnings within even mediocre firms rather than taking them as personal income. This incentive varies with the return on assets: the lower the rate of return, the larger the marginal effective rate on earnings in the clawback zone.
Dachis and Lester (2015) argue that providing preferential tax treatment to small businesses steers capital from larger, more productive firms to smaller, less productive ones. Since 2009, the gap between effective small business tax rates and ordinary corporate and higher-income personal tax rates has widened, and is wider in Canada than in other G7 countries. Against a backdrop of generally lower returns on assets, this widening gap might help explain relatively lower business investment in Canada in recent years.
The US tax reforms of 2017 likely lowered investment in Canada and certainly did so relative to the United States. Prior to 2017, Canada had improved its tax treatment of investment relative to the United States, with reforms from the late 1980s to the early 2010s reducing the federal general corporate income tax rate from nearly 38 percent to 15 percent and reducing the aggregate marginal effective tax rate on investment in Canada (Chen and Mintz 2015, Bazel and Mintz 2021). These steps strengthened Canada’s investment performance and capital stock (Wen and Yilmaz 2020). As noted already, Canada’s investment performance relative to the US and other OECD countries did improve from the early 1990s until 2014, when the slump documented in this report began.
Those 2017 US reforms, notably the reduction of the federal corporate income tax rate from 35 to 21 percent and faster write-offs for M&E, undid Canada’s business tax advantage (Bazel and Mintz 2021, McKenzie and Smart 2019). As intended, the US reforms lowered the marginal effective tax rate on business investment. Bazel and Mintz (2021) calculate the average US federal and state effective marginal rate at less than 26 percent in 2019, down from nearly 40 percent in 2000. By contrast, the average Canadian federal and provincial/territorial rate was above 26 percent, down much less from nearly 30 percent in 2000.
Chodorow-Reich et al. (2023) compare investment by US-based companies to investment by similar companies abroad, including those in Canada, around the time of the reforms and find a stronger investment performance among the US group, post-reforms. Crawford and Markarian (2024) similarly show that the reforms reversed Canada’s previous tax advantage. They find that US companies significantly increased their capital spending compared to Canadian firms after the reforms.
The US tax reforms also aimed to encourage US-based multinationals to repatriate profits held abroad. Although success in that respect would likely depress capital formation in Canada (Mathur and Kallen 2017, McKenzie and Smart 2019), that result is not guaranteed. Foreign investments can complement domestic investments, and the immediate post-reform US global intangible low-tax income (GILTI) regime applied only to foreign income above 10 percent of foreign tangible capital, which created an offsetting incentive for businesses to invest abroad. However, matched-firm analyses by Chodorow-Reich et al. (2023) found weaker investment among Canadian firms than among US firms following the reforms, and Crawford and Markarian (2024) conclude that the surge in US investment was driven primarily by domestic activity.
A notable trend since 2017 is the decline in Canadian M&E investment per worker relative to the United States, despite Canada responding to the US reforms by introducing accelerated depreciation on almost all capital assets in 2018. This suggests that some of the robust US domestic investment might have come at Canada’s expense or that other factors made Canadian companies’ investment weaker than that of their US counterparts.
The GILTI regime also addressed previous incentives for US multinationals to hold and commercialize IP products abroad (Singh and Mathur 2019). Since the 2017 reforms, Canada’s performance in IP investment relative to the US has been worse than its performance in other asset types. The GILTI rules imposed such a significant tax burden that many IP investments yielded higher after-tax returns in the US than overseas. This reduced the tax advantage of locating intangible assets outside the US. While this does not prove causation, it strongly suggests that the US reforms have played a significant role.13
Why Might Canadian Businesses See Fewer Opportunities and Threats?
A regular critique of Canadian business, also noted by Porter (2023), is a lack of entrepreneurial drive and risk tolerance. These traits may have become more problematic with the rise of information and communication technology, which rewards countries with stronger human capital in these areas. This could explain Canada’s recent poorer showing against the United States.
Another reason for Canadian businesses revising their investment-spurring expectations down, at least relative to US firms, is increased population growth since the mid-2010s.14 This surge reflects higher immigration, shifted toward students and temporary foreign workers, and lower economic stream thresholds. This may have led businesses to favour labour substitution over capital investment (Doyle et al. 2024).
The rising share of government consumption may also mean fewer opportunities for Canadian businesses.15 Government consumption – spending on public employees and other resources – draws directly on the same resources as the private sector. It is expected to rise during downturns, such as the early 1990s, the 2008 financial crisis, the 2014 oil-price collapse, and the pandemic, while business investment – which is strongly affected by economic cycles – falls. But if government consumption remains elevated as the economy strengthens, it can crowd out private spending, including business investment. Canada’s post-pandemic experience is concerning because government consumption has continued to rise while business investment has struggled (Figure 12). Although recent slack in the Canadian economy might appear to reduce the potential for government consumption to crowd out other uses of resources, the sluggish growth in productive capacity prefigured by current feeble investment suggests that competition for resources by government will remain a problem if governments do not reduce their claims on the economy.
Another factor behind Canada’s lower investment rates is US protectionism. Donald Trump’s recent trade policies are exacerbating a problem with many roots. Secure access to the US market has long been a goal of Canadian trade policy, ensuring that Canada remains an attractive production base. Even before Donald Trump’s 2017 inauguration, the 2016 campaign featured anti-NAFTA rhetoric from both parties, potentially discouraging Canadian investment. The 2024 campaign prefigured more protectionism, which hammered Canada’s exports of goods to the United States after his inauguration, down 22 percent between January and August 2025.
Domestic policy uncertainty may also have reduced business dynamism, slowing productivity growth and blunting competition that spurs investment. Key sectors – such as energy, plastics, financial services and telecommunications – have faced restrictive regulations, reducing innovation, competition and investment across the economy. Cette et al. (2025) provide evidence that phasing out restrictive regulations in these key upstream sectors could significantly boost productivity and investment.
The OECD’s Product Market Regulation (PRM) project quantifies regulatory burdens by comparing national regulations to international best practices (OECD 2024). The latest PRM data compare 2023 to 2018. In 2018, Canada scored 1.43, slightly better than the OECD average of 1.46 (lower scores indicate less distortion), but worse than the 0.8 average of top performers. By 2023, Canada improved to 1.38, yet lagged behind the OECD average (1.30) and top performers (0.67). Problem areas include licensing, foreign direct investment barriers, public procurement, and governance of state-owned enterprises (OECD 2024).
Furthermore, indexes of policy uncertainty rose far more in Canada after 2014 than in the United States, Europe and even globally (Figure 13).16 While trade tensions have boosted the Canadian index, other policies that undermine business confidence are more directly under the control of Canadian policymakers. Eliminating internal trade barriers and phasing out supply management in dairy, eggs and poultry would reduce these distortions, lowering prices for consumers and costs for businesses that use the affected products as inputs.
What tax-related influences might account for slower productivity growth in Canada and the reduced perception by Canadian businesses of investment opportunities and threats?
One influence is the increased distortion from varying marginal effective tax rates across industries and capital types. Bazel and Mintz (2021) find inter-industry and inter-asset dispersion in marginal effective tax rates more than doubled from 2016 to 2020. Manufacturing investments faced a 13.7 percent average rate – negative in Atlantic Canada due to tax credits – while communications investments faced an average rate of 22.1. Such disparities reduce overall capital productivity.
Labour mobility and personal income tax salience have grown. Post-pandemic remote work enabled more Canadians to work abroad, and emigration data – though incomplete and affected by a methodology change17 – show increased churn since 2015.18 Remote work may have increased opportunities for higher-earning Canadians to work abroad.19 The associated loss of high-skilled workers may reduce incentives for domestic capital investment.
Populist tax policies further undermine investment confidence. The “Canada Recovery Dividend,” imposed on the largest banks and insurers post-COVID, and higher corporate tax rates on large financial institutions introduced in the 2022 budget, lacked economic rationale (Kronick and Robson 2023). The 2021 luxury tax was based on a similar logic (Halpern-Shavin and Balkos 2023). The abortive move to increase capital gains tax rates in 2024 badly shook entrepreneurial confidence. Like policy uncertainty, perceptions of capricious tax policy reduce the dynamism that could otherwise spur consumer-friendly investment.
Potential Responses
The list of likely negative influences on investment in Canada that may have worsened since 2014 is long, and the list of potential policy responses is nearly as long. Some issues are easier to address in the short run than others.20
The bias toward residential construction is difficult to tackle. Slowing the inflow of permanent and temporary immigrants, whose rapid growth has intensified housing market pressure, would reduce the draw of residential investment on resources otherwise available for non-residential capital investment and lessen any disincentive created by abundant low-skilled labour (Doyle et al. 2024). But the government’s announcements have so far not moved the actual numbers much (C.D. Howe Institute 2025).
Current plans to cut business immigration and shift away from human-capital-based selection toward filling in-demand occupations risk undermining Canada’s ability to attract high-skill workers (Mahboubi 2025). Prioritizing lower-skill positions does little to encourage the high-skilled labour that complements business investment.
By contrast, the hostile regulatory environment for Canada’s fossil fuel industry is easier to fix. The case for Canada to suppress its fossil fuel production to lead global emissions reduction has never been convincing. Global energy demand continues rising, fossil fuels supply most of the world’s energy, and Canadian fossil fuels are economically, strategically and environmentally preferable to most others. The federal government’s recent announcements about easing impediments to expanded production and exports are promising; if followed by action, they could boost capital investment measurably in the years to come.
The materialization of US protectionism demands a proactive and strategic defence of Canada’s trade interests, mirroring the diplomatic intensity seen during the 1988 Canada-US Free Trade Agreement and the evolution of NAFTA into the Canada-US-Mexico Agreement (CUSMA). As the 2026 CUSMA review approaches, Ottawa must calibrate trade concessions and complementary initiatives – such as boosting Canadian defence capabilities – and reinforce the mutual benefits of North American economic integration to US businesses, consumers and policymakers. Canada must also reduce its trade exposure to the US by diversifying trade via agreements with the UK and the Association of Southeast Asian Nations (ASEAN), accelerating high-impact energy and mineral projects, investing in trade infrastructure, and working with provinces to lower internal trade and labour mobility barriers.
Reducing policy uncertainty requires clearer processes and criteria. Businesses need stable rules and predictable outcomes. The federal government needs more rigorous ex post evaluations of regulations (OECD 2025b). At present, it often misses critical insights from the real-world evidence on whether rules work as intended. The federal government’s recent initiatives to accelerate approvals for major projects may help, and a national infrastructure plan sounds good, but specific initiatives such as privatizing federal airports are too few and far off to make a difference.
Addressing the bevy of negative tax-related distortions is required. These include the gap between effective tax rates on small and large businesses; the lower effective tax rate on investment in the post-2017 United States; uneven tax rates across regions, sectors and assets (exacerbated by the November 2025 budget’s faster write-offs for selected machinery and processing equipment only); and Canada’s high personal income tax rates all point to the need for comprehensive, long-overdue tax reform. Options include adopting an allowance for corporate equity (Milligan 2014; Boadway and Tremblay 2016), shifting to a cash-flow tax base (McKenzie and Smart 2019) or taxing only distributed profits (Mintz 2022) could foster more investment and higher productivity. To stimulate innovation, Scientific Research and Experimental Development (SR&ED) incentives should better support large firms, link post-secondary research funding to commercialization plans and reorient the Industrial Research Assistance Program (IRAP) toward commercialization (Lester 2025). Eliminating capital gains tax on Canadian small and medium-sized enterprise (SME) shares would incentivize domestic scale-up. A review of small business supports is also needed to ensure they do not entrench low-productivity firms.
Near-term reforms may need to be less ambitious. Consensus on Canada’s tax system flaws and solutions is weaker than in the United States before its 2017 reforms.21 Major tax reforms are easier when they reduce revenue, but most senior governments in Canada are wary of forgoing revenue at that scale. The most promising near-term responses may be simple reductions in the most distorting tax rates – a lower general corporate income tax rate and lower top personal rates.
Though politically challenging, such cuts are easy to legislate, and evidence suggests the relevant tax bases are elastic enough to limit revenue loss.22 Lower top rates do not fix all tax system flaws that blunt business responses to opportunities, but they are uniquely broad in reducing distortions that suppress investment and productivity.
Another near-term option to jolt Canada out of a low-investment, low-productivity trap is a temporary general investment tax credit. Though more complex to legislate and administer than a tax rate cut, a general investment tax credit (ITC) is a familiar tool with predictable effects. Ideally, it would replace the Atlantic Investment Tax Credit and pre-empt other sector-specific ITCs like the Clean Technology Manufacturing Investment Tax Credit. However, a meaningful general credit – say 5 percent – would entail major short-run revenue costs.
Applying a lower tax rate to business income from IP products would directly address Canada’s lagging performance in this sector. The term “patent boxes” is too narrow: applying the lower rate to income from IP embedded in other goods and services would better incentivize broader IP investment and align with emerging international norms than a lower rate on income from patents alone. The federal government could offset near-term revenue costs by reducing R&D subsidies for small firms, which likely promote too much low-quality, non-commercializable work (Lester 2022).
Beyond changing the tone of tax policy, the federal government must change its fiscal stance. It should rein in regular program spending and subsidies delivered through the tax system, which are disguised spending that raise borrowing costs and interest payments. Even after pandemic-related measures wound down, projections in successive fall economic statements and the November 2025 budget have shown projected federal spending rising sharply (Robson 2025).
Call to Action
Ongoing economic uncertainty continues to plague Canadian firms, which, according to the Bank of Canada’s latest Business Outlook Survey, report weak investment intentions and limited expansion plans (Bank of Canada 2025). This backdrop increases the urgency for policy changes that can reverse Canada’s unprecedented, prolonged decline in capital per worker.
The risk that Canadian workers will become increasingly concentrated in lower-value activities relative to their US and international peers should prompt Canadian policymakers to take action. Canada’s persistently weak business investment, relative to its historical performance and that of OECD economies, threatens long-term prosperity and competitiveness.
It is encouraging that Canada’s low productivity and chronic underinvestment have recently gained more prominence in public discourse. Awareness is a critical first step. Addressing the challenge requires decisive action, however: more effective tax and regulatory policies, and a fundamental reorientation of economic policy toward sustained, long-term growth.
The authors extend gratitude to Don Drummond, Alexandre Laurin, John Lester, Nick Pantaleo, Daniel Schwanen, Trevor Tombe and several anonymous referees for valuable comments and suggestions. The authors retain responsibility for any errors and the views expressed.
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The views expressed here are those of the authors and are not attributable to their respective organizations. The C.D. Howe Institute does not take corporate positions on policy matters.
Next year, the United States will host the world’s 20 largest economies for the first time since 2009. Coinciding with America’s 250th anniversary, the 2026 G20 will be a chance to recognize the values of innovation, entrepreneurship, and perseverance that made America great, and which provide a roadmap to prosperity for the entire world. We’ll showcase these values and more when we host the G20 Leaders’ Summit in December 2026 in one of America’s greatest cities, Miami, Florida.
Under President Trump’s leadership, the G20 will use four working groups to achieve progress on three key themes: removing regulatory burdens, unlocking affordable and secure energy supply chains, and pioneering new technologies and innovation. The first Sherpa and Finance Track meetings will be held in Washington, DC, on December 15-16, followed by a series of meetings throughout 2026. As the global economy confronts the changes driven by technologies such as Artificial Intelligence, and shakes off ideological preoccupations around green energy, the President is prepared to lead the way.
We will be inviting friends, neighbors, and partners to the American G20. We will welcome the world’s largest economies, as well as burgeoning partners and allies, to America’s table. In particular, Poland, a nation that was once trapped behind the Iron Curtain but now ranks among the world’s 20 largest economies, will be joining us to assume its rightful place in the G20. Poland’s success is proof that a focus on the future is a better path than one on grievances. It shows how partnership with the United States and American companies can promote mutual prosperity and growth.
The contrast with South Africa, host of this year’s G20, is stark.
South Africa entered the post-Cold War era with strong institutions, excellent infrastructure, and global goodwill. It possessed many of the world’s most valuable resources, some of the best agricultural land on the planet, and was located around one of the world’s key trading routes. And in Nelson Mandela, South Africa had a leader who understood that reconciliation and private sector driven economic growth were the only path to a nation where every citizen could prosper.
Sadly, Mandela’s successors have replaced reconciliation with redistributionist policies that discouraged investment and drove South Africa’s most talented citizens abroad. Racial quotas have crippled the private sector, while corruption bankrupts the state.
The numbers speak for themselves. As South Africa’s economy has stagnated under its burdensome regulatory regime driven by racial grievance, and it falls firmly outside the group of the 20 largest industrialized economies.
Rather than take responsibility for its failings, the radical ANC-led South African government has sought to scapegoat its own citizens and the United States. As President Trump has rightly highlighted, the South African government’s appetite for racism and tolerance for violence against its Afrikaner citizens have become embedded as core domestic policies. It seems intent on enriching itself while the country’s economy limps along, all while South Africans are subject to violence, discrimination, and land confiscation without compensation. Its former Ambassador to the United States was openly hostile to America. Its relationships with Iran, its entertainment of Hamas sympathizers, and cozying to America’s greatest adversaries move it from the family of nations we once called close.
The politics of grievance carried over to South Africa’s Presidency of the G20 this month, which was an exercise in spite, division, and radical agendas that have nothing to do with economic growth. South Africa focused on climate change, diversity and inclusion, and aid dependency as central tenets of its working groups. It routinely ignored U.S. objections to consensus communiques and statements. It blocked the U.S. and other countries’ inputs into negotiations. It actively ignored our reasonable faith efforts to negotiate. It doxed U.S. officials working on these negotiations. It fundamentally tarnished the G20’s reputation.
For these reasons, President Trump and the United States will not be extending an invitation to the South African government to participate in the G20 during our presidency. There is a place for good faith disagreement, but not dishonesty or sabotage.
The United States supports the people of South Africa, but not its radical ANC-led government, and will not tolerate its continued behavior. When South Africa decides it has made the tough decisions needed to fix its broken system and is ready to rejoin the family of prosperous and free nations, the United States will have a seat for it at our table. Until then, America will be forging ahead with a new G20.
Marco Rubio was sworn in as the 72nd secretary of state on January 21, 2025. The secretary is creating a Department of State that puts America First.
Today, building on President Trump’s historic commitment to confront Antifa’s campaign of political violence, the Department of State is designating German-based Antifa Ost, along with three other violent Antifa groups in Italy and Greece, as Specially Designated Global Terrorists and intends to designate all four groups as Foreign Terrorist Organizations, effective November 20, 2025. The designation of Antifa Ost and other violent Antifa groups supports President Trump’s National Security Presidential Memorandum-7, an initiative to disrupt self-described “anti-fascism” networks, entities, and organizations that use political violence and terroristic acts to undermine democratic institutions, constitutional rights, and fundamental liberties. Groups affiliated with this movement ascribe to revolutionary anarchist or Marxist ideologies, including anti-Americanism, “anti-capitalism,” and anti-Christianity, using these to incite and justify violent assaults domestically and overseas.
The United States will continue using all available tools to protect our national security and public safety and will deny funding and resources to terrorists, including targeting other Antifa groups across the globe.
Designations of Antifa Ost and Three Other Violent Antifa Groups
Today, the Department of State announces the designation of Antifa Ost, Informal Anarchist Federation/International Revolutionary Front, Armed Proletarian Justice, and Revolutionary Class Self-Defense as Specially Designated Global Terrorists (SDGTs) and the intent to designate all four groups as Foreign Terrorist Organizations (FTOs), effective November 20, 2025.
Antifa Ost
Antifa Ost (also known as Antifa East and Hammerbande) is a Germany-based militant group. Antifa Ost conducted numerous attacks against individuals it perceives as “fascists” or part of the “right-wing scene” in Germany between 2018 and 2023 and is accused of having conducted a series of attacks in Budapest in mid-February 2023.
On September 26, 2025, Hungary declared Antifa Ost to be a terrorist organization and added the group to its national anti-terrorism list.
Informal Anarchist Federation/International Revolutionary Front (FAI/FRI)
FAI/FRI is a militant anarchist group that primarily operates in Italy with historical self-proclaimed affiliates across Europe, South America, and Asia. FAI/FRI declares the necessity of the revolutionary armed struggle against nation states and “The Fortress Europe.”
Since 2003, FAI/FRI has claimed responsibility for threats of violence, bombs, and letter bombs against political and economic institutions, including a courthouse and other “capitalist institutions.”
Armed Proletarian Justice
Armed Proletarian Justice is a Greek anarchist and “anti-capitalist” group that has attempted and conducted improvised explosive device (IED) attacks against Greek government targets.
Armed Proletarian Justice claimed responsibility for planting a bomb near the Greek riot police headquarters in Goudi, Greece on December 18, 2023.
Revolutionary Class Self-Defense
Revolutionary Class Self-Defense is a Greek anarchist and “anti-capitalist” group. The group links its actions to broader political and social issues and cites opposition to “capitalist structures,” “state repression,” and solidarity with Palestine.
Revolutionary Class Self-Defense claimed responsibility for two IED attacks targeting the Greece Ministry of Labor (February 3, 2024) and the Hellenic Train offices (April 11, 2025).
Terrorist designations expose and isolate entities and individuals, denying them access to the U.S. financial system and resources they need to carry out attacks.
All property and property interests of designated individuals or groups that are in the United States or that are in possession or control of a U.S. person are blocked. U.S. persons are generally prohibited from conducting business with sanctioned persons. It is also a crime to knowingly provide material support or resources to those designated, or to attempt or conspire to do so.
Persons that engage in certain transactions or activities with those designated today may expose themselves to sanctions risk. Notably, engaging in certain transactions with them entails risk of secondary sanctions pursuant to counterterrorism authorities.
Today’s actions are taken pursuant to section 219 of the Immigration and Nationality Act and Executive Order 13224. FTO designations go into effect upon publication in the Federal Register.
Petitioners requesting removal of those designated from the Specially Designated Nationals and Blocked Persons List should refer to the Department of State’s Delisting Guidance page.
Budget 2025 with Bill Robson: What Canadians Need to Know
November, 2025 – Canada does not have a credible fiscal plan. After Ottawa revealed the details of its “sea change” budget, the C.D. Howe Institute’s President and CEO Bill Robson explains why Mark Carney’s first budget in the age of Trump fails to get a passing grade.
Canada is facing significant budgetary challenges, with projected deficits and increased government spending raising concerns about fiscal sustainability and economic health.
Earlier this month marked the 80th session of the United Nations General Assembly (UNGA80), which opened on September 9, 2025. UNGA High-Level Week also took place this week and ends today, when leaders from around the world will gather in New York City.
The 80th Anniversary of the founding of the UN is an opportunity to return the organization back to its founding mission of promoting peace and security around the world. This year the United States is prioritizing three themes through their engagement at the United Nations: Peace, Sovereignty, and Liberty.
“POURING IN OVER FOUR YEARS OF THE INCOMPETENT BIDEN ADMINISTRATION AND NOW WE HAVE IT STOPPED, TOTALLY STOPPED. IN FACT, THEY’RE NOT EVEN COMING BECAUSE THEY KNOW THEY CAN’T GET THROUGH. BUT WHAT TOOK PLACE IS TOTALLY UNACCEPTABLE. THE U.N. SUPPOSED TO STOP INVASIONS NOT CREATE THEM AND NOT FINANCE THEM.
IN THE UNITED STATES, WE REJECT THE UNITED STATES MASS NUMBERS OF PEOPLE FROM FOREIGN LANDS CAN BE PERMITTED TO TRAVEL HALFWAY AROUND THE WORLD, TRAMPLE OUR BORDERS, CAUSE CRIME AND DEPLETE OUR SOCIAL SAFETY NET. WE HAVE REASSERTED THAT AMERICA BELONGS TO THE AMERICAN PEOPLE AND I ENCOURAGE ALL COUNTRIES TO TAKE THEIR OWN STANCE IN DEFENSE OF THEIR CITIZENS, AS WELL. YOU HAVE TO DO THAT BECAUSE I SEE IT. I’M NOT MENTIONING NAMES, I SEE IT AND I COULD CALL EVERY SINGLE ONE OF THEM OUT, YOU ARE ENJOYING YOUR COUNTRIES, THEY ARE ENJOYING — BEING DESTROYED.
THEY ARE BEING BY ILLEGAL ALIENS LIKE NOBODY EVER SEEN BEFORE. ILLEGAL ALIENS ARE POURING IN AND NOBODY IS DOING ANYTHING TO CHANGE IT, TO GET THEM OUT. IT IS NOT SUSTAINABLE AND BECAUSE THEY CHOOSE TO BE POLITICALLY CORRECT, THEY ARE DOING ABSOLUTELY NOTHING ABOUT IT.” President Donald Trump
This article courtesy of the U.S. Department of State.
September 2025 – Canada’s immigration policy continues to move in the wrong direction and requires a fundamental course correction, according to a new Communiqué from the C.D. Howe Institute’s Immigration Targets Council.
In “Immigration Policy Still in Need of a Course Correction,” the Council – composed of leading academics and policy experts – stresses that who is selected matters more than meeting numeric targets. They determined that immigration should be guided by human capital and long-term prosperity, not short-term labour market fixes or non-economic objectives. Notably, members also emphasized the importance of transparent, predictable policy that ensures economic immigrants have strong skills, earnings potential, and integration prospects.
Second Meeting of the C.D. Howe Institute Immigration Targets Council
The C.D. Howe Institute Immigration Targets Council held its second meeting on August 26, 2025, bringing together leading academics and policy experts to provide recommendations on Canada’s immigration-level targets and system design.1
Members agreed that Canada’s immigration policy has moved in the wrong direction and needs a fundamental course correction. Members stressed that the labour market skills and earnings potential of immigrants – both temporary and permanent – matter more than meeting numeric targets. Immigration policy should raise average human capital, rather than focusing narrowly on filling short-term labour market gaps, which prevents wage increases and capital investment to enhance productivity, or meeting non-economic objectives such as increasing Francophone immigration outside Quebec. Policy should also be transparent, predictable, and oriented toward long-term prosperity, ensuring that economic immigrants have strong skills, earnings potential, and integration prospects.
Building on these principles, the Council recommended annual permanent resident admissions of 365,000 in 2026, 360,000 in 2027, and 350,000 in 2028, reflecting the Council’s median votes. For 2026, this recommendation is modestly below the government’s current target of 380,000. Some members favoured a gradual reduction over three years to return to historical norms, while others supported higher levels to ease transitions from the non-permanent resident (NPR) population.
The group also raised serious concerns about the rapid growth and complexity of the NPR (Non permanent residency) population, as well as persistent challenges in the asylum system.
Members emphasized the importance of clear guardrails for the NPR population, recommending that the government maintain a ceiling of 5 percent of Canada’s population for NPRs in 2026, with a review in early 2027. They noted that the optimal NPR share requires balancing inflows, outflows, and clear pathways for temporary residents employed in high-skill occupations to transition to permanent residency, using objective criteria such as earnings. Improving efficiency in the asylum system was viewed as critical to protect genuine claimants and reduce pressures on the broader immigration system, since many currently see asylum as a pathway to permanent residency.
The Council further agreed that immigration programs require substantial reforms.
Regarding temporary immigration, members expressed concern that the international student system has become a pathway for low-wage labour rather than a means of attracting top global talent. They recommended higher admission standards, stronger language and academic requirements, limits on off-campus work, and stronger federal oversight to ensure only high-quality institutions and programs are eligible. Similarly, the Temporary Foreign Worker Program should be scaled back and not be used as a substitute for raising wages or improving working conditions, since relying on temporary workers can reduce employers’ incentives to offer better pay or workplace standards. Reducing reliance on low-skilled temporary workers – except in sectors such as agriculture, where transitions take time – was viewed by the group as essential to encourage productivity growth and higher wages for Canadian workers.
For permanent immigration, members were critical of the proliferation of boutique pathways in the economic class, such as category-based selection – targeted draws from the Express Entry pool based on specific attributes like occupation or language – and provincial nominee programs that prioritize lower-skilled workers, which allow provinces and territories to nominate candidates to meet regional labour market needs. They highlighted the need to simplify and strengthen the selection mechanism and agreed that Canada should move toward a single, transparent system centred on Express Entry and the Comprehensive Ranking System (CRS), a points-based tool used to assess, score, and rank candidates in the pool. They supported a human-capital-based model for economic principal applicants, which evaluates individuals on their education, work experience, and language ability, with a revised CRS that places greater weight on predictors of long-term success. New criteria should include the field of study for all applicants and verified earnings in Canada for those with prior Canadian experience. All economic principal applicants, they stressed, should be required to meet the CRS threshold. Members also agreed that these reforms – across temporary and permanent immigration programs, together with improving the integrity of the asylum system – are essential to reducing the size of the non-permanent resident population.
In addition, members highlighted the importance of fast-track pathways and policies to attract top-tier global talent. They called for stronger federal–provincial coordination and targeted initiatives to recruit individuals with extraordinary achievements in fields with lasting impact, such as science, medicine, and artificial intelligence. For high-profile research leaders, this should include pathways that allow them to bring their teams. Attracting such talent, they noted, requires not only immigration pathways but also the infrastructure and support that world-class research demands.
In conclusion, the Council emphasized the urgent need to restore a principled and sustainable immigration policy. By focusing on raising human capital, maintaining guardrails on the non-permanent resident population, addressing weaknesses in the asylum system, and reforming the economic immigration system, Canada can ensure that immigration contributes to long-term prosperity and sustains public confidence.
Members of the C.D. Howe Institute Immigration Targets Council:
Members participate in their personal capacities, and the views collectively expressed do not represent those of any individual, institution, or client.
Convener:
• Parisa Mahboubi, C.D. Howe Institute
Members:
• Don Drummond, Queen’s University
• Pierre Fortin, Université du Québec à Montréal
• David Green, University of British Columbia
• Daniel Hiebert, University of British Columbia
• Michael Haan, Western University
• Jason Kenney, Bennett Jones LLP
• Mikal Skuterud, University of Waterloo
• Christopher Worswick, Carleton University
• Donald Wright, C.D. Howe Institute and Global Public Affairs
August, 2025 – Canada is not building homes quickly enough to meet rising needs, and red tape combined with low productivity is intensifying pressure on the sector. A new report from the C.D. Howe Institute explores how innovative construction technologies could help accelerate delivery and improve efficiency – if supported by the right policy conditions. The Silo predicted this dilemma over a decade ago and highlighted some of these issues and solutions in this “Tiny House” post.
In the report titled “Building Smarter, Faster: Technology and Policy Solutions for Canada’s Housing Crisis,” Tasnim Fariha outlines how innovative construction technologies – such as modular and panelized systems and mass timber – can enhance labour productivity in residential construction. While these approaches are not a silver bullet, they may offer valuable tools for increasing housing supply and managing construction workforce constraints.
Building Smarter, Faster: Technology and Policy Solutions for Canada’s Housing Crisis
Canada’s housing shortage is worsening. The Canada Mortgage and Housing Corporation (CMHC) estimates that to restore 2019 affordability levels in the market, housing starts need to be doubled. CMHC is projecting a need for 430,000–480,000 housing starts annually. But the country is falling far short. Labour shortages, weak productivity in residential construction, and slow permitting processes are making it harder to meet needs.
Innovative construction methods – including modular, panelized, mass timber, and 3D printing – offer potential to improve productivity and accelerate housing delivery, but adoption remains limited due to high upfront costs, fragmented regulations, and insufficient data on performance in the Canadian context.
The federal government’s $26 billion Build Canada Homes initiative signals a strong commitment to innovation, yet without tackling regulatory, financial, and logistical obstacles, these technologies won’t scale or deliver meaningful cost savings. To realize the productivity benefits, governments must streamline permitting, harmonize building code interpretation, reduce development charges, and support workforce training, among other steps.
Introduction
Canada’s housing sector is experiencing a multifaceted crisis characterized by escalating prices, acute affordability challenges, and a critical misalignment between housing supply and population growth. Demographic pressures – such as strong population growth – combined with economic factors like elevated interest rates, soaring housing costs and land prices are reshaping Canada’s housing market. Escalating housing costs have effectively priced out many potential buyers, compelling a larger proportion of the population to enter the rental market, thereby driving increased investment in rental and multi-family housing units (Statistics Canada 2024). However, those units have become much more expensive to build, too, which is reflected in higher rents and fewer starts than necessary to meet demand.
This modal shift reflects both market adaptations to economic constraints and broader structural changes in housing demand and affordability. On top of that, long-standing restrictive regulatory frameworks, including restrictive zoning regulations, substantial development charges, and land use constraints, contribute to housing supply limitations and price escalations (Dachis and Thivierge 2018). Addressing these structural obstacles is crucial for ameliorating persistent supply shortages, rising costs, and broader affordability challenges. The industry has been raising these issues for several years now. For example, in early 2024, the Canadian Home Builders’ Association (CHBA) released a comprehensive sector transition strategy identifying specific recommendations for systematic change in four areas: financial system, policy, labour, and productivity. In 2025, the Canada Mortgage and Housing Corporation (CMHC) emphasized that the pace of housing starts must double to gradually restore affordability to 2019 levels.
Many countries are leveraging prefabrication technologies – such as modular construction, mass timber, panelized systems, and on-site 3D printing – to accelerate homebuilding, increase productivity in the face of tight labour markets, and improve sustainability. In Canada, however, adoption remains limited amidst industry-specific challenges, complex regulations, and insufficient incentives to support these innovations.
Despite their promise, these technologies have not consistently delivered cost savings in the Canadian context. Modular, panelization, mass timber, and 3D concrete printing methods often face higher upfront costs, insurance premiums, or material expenses. To support the adoption of these innovative construction methods in Canada, more country-specific evidence is needed to guide policymakers, regulators, and developers. While international data highlight its benefits – such as speed, cost-effectiveness, and sustainability – Canadian decision-makers require more local insights. Academic-industry partnerships can help generate this evidence by analyzing best practices, labour dynamics, project outcomes, and measurable savings within the Canadian context (Dragicevic and Riaz 2024).
This paper aims to identify the main challenges facing the adoption of innovative home-building technologies in Canada. Drawing on a range of sources – including academic research, government and industry reports, and documents from builders’ associations – it offers an introductory examination of the issues at play. It does not present innovative construction methods as the sole solution to Canada’s housing crisis, but rather as a tool to improve labour productivity and accelerate residential development, particularly when supported by stable market conditions, coordinated government action, and a supportive regulatory environment. While recognizing the potential of these technologies, the paper highlights the need for more publicly available data and independent research to benchmark their performance against traditional building methods. The key recommendations from this paper – aimed at addressing the critical barriers of risk, complexity, and inconsistency – include:
Financial Incentives and Risk Mitigation: Low-cost financing and tax credits to de-risk investments by builders, and construction-financing insurance for off-site construction to boost lender confidence; standardized mortgage and home insurance rules to reduce uncertainty for buyers; and tax incentives for maintenance and repairs of homes built with innovative technologies to build trust among lenders and buyers.
Regulatory Streamlining and Efficiency: Expedited fund disbursement by CMHC to accelerate project timelines of purpose-built rentals and affordable housing; streamlined permitting processes and fast-track approvals for innovative projects; elimination of duplicative inspections for modular builds to reduce delays; reduction of development charges and related fees to improve overall housing affordability; and further research to assess how Canada’s multi-layered regulatory framework compares with international practices and whether it may be limiting competitiveness.
Standardization and Harmonization Across Jurisdictions: Standardizing interpretation of building codes across municipalities to ensure consistency and avoid costly, time-consuming redesigns; standardizing – and where necessary, harmonizing – transportation regulations on modular and prefabricated components across provinces to facilitate efficient, large-scale production and delivery.
Current Challenges in the Housing Market
Supply Shortage
Currently, Canada is not building enough homes to meet its needs. In fact, the housing shortfall isn’t closing – it’s widening. When CMHC first sounded the alarm in 2022, it estimated that Canada needed to build roughly 500,000 housing units per year through 2030 to bring affordability back to early-2000s levels. Last year, the country started building just 245,000 units – less than half the target. Now, CMHC’s latest projections scale down the target but still call for 430,000 to 480,000 housing starts annually over the next decade, merely to restore affordability to 2019 levels. In regions like Ontario, British Columbia, Nova Scotia, and Montreal, the shortfall is even more severe.
Urban centres are disproportionately impacted by limited housing supply. Housing costs are dramatically outpacing income growth, creating substantial barriers for middle-class families, first-time buyers, and young professionals seeking homeownership. Shortage of supply and higher housing costs suppress the formation of new, smaller households, pushing more people into shared or doubled-up living arrangements. Building more housing would allow Canadians to form the types of smaller households they increasingly prefer, such as living alone or only with a partner or children (Lauster and von Bergmann 2024). A striking indicator of this supply crisis is the unprecedented decline in dwellings per 1,000 people (see Figure 1), a reversal from Canada’s historical trend of increasing housing supply. This decline highlights the pressing need for strategies to realign the housing supply with population needs.
Productivity Challenges
Residential construction productivity has not recovered in the post-pandemic period, contrasting with the gradual recovery in the broader construction industry and the overall economy (Figure 2). Recent economic analyses show the industry is expanding by increasing its share of the overall workforce while its share of output is simultaneously declining (Caranci and Marple 2024).
One contributing factor may be the construction sector’s tendency to retain its existing workforce during downturns, avoiding mass layoffs to preserve skilled labour for future booms. Despite the sluggish output growth from this sector since 2022, it continues to expand in terms of employment. For example, between 2020 and 2023, employment grew by 15 percent across all industries and 21 percent in construction overall, while residential building construction saw a 26 percent increase (Statistics Canada 2025a). While this strategy may protect long-term capacity, it can also depress short-term productivity metrics during periods of reduced construction activity. If this dynamic persists, it could have long-term consequences for Canada’s housing infrastructure and broader economic growth.
Affordability Crisis
Despite the urgent need for housing, affordability remains a barrier that limits the purchasing power of many Canadians and prevents the market from meeting housing needs. Home prices have risen nearly 40 percent since 2016, contributing to a significant decline in homeownership across the country. While recent changes to down payment rules and extended amortization periods aim to support buyers, high interest rates continue to erode affordability and heighten mortgage insecurity for both new and existing homeowners. Development taxes – including development fees, lot levies, and amenity fees – have increased by 700 percent over the past two decades and can now account for up to 25 percent of a home’s sale price (CHBA 2024). Between 2011 and 2021, the share of Canadians living in owned homes decreased by 2.5 percent, with nearly all age groups experiencing a drop in homeownership rates.
This shift has led to an increased demand for rental housing, prompting developers to prioritize the construction of more budget-friendly living spaces. According to the CMHC, 72 percent of all housing starts in the first half of 2024 were apartments, with 47 percent of these designated for rental units. However, while increased rental construction is a positive trend, it remains insufficient to close the affordability gap. More housing units for homeownership are required, too. Rising home prices, population growth, and high mortgage rates have driven rental costs higher, further exacerbating affordability challenges and placing additional strain on low-income households. The growth of corporate rental ownership by Real Estate Investment Trusts (REITs), as well as secondary rentals by investors, has played a notable role, too. The average rent for a typical two-bedroom unit across Canada rose by 45 percent between 2018 and 2024, according to the CMHC Rental Market Survey.1 In 2022, Statistics Canada reported that 245,900 households were on the waitlist for social and affordable housing, underscoring the critical need for increased housing supply.2
Labour-Augmenting Home Building Technologies: A Promising Tool for Easing the Housing Crisis
Technological innovation in construction may offer a promising path to improving labour productivity (see Box 1 for a comparison of conventional and innovative homebuilding methods). These labour-augmenting technologies3 have the potential to significantly enhance efficiency and accelerate the pace of homebuilding. Labour-augmenting technologies allow workers to produce more – whether in quantity, quality, or both – within the same amount of work hours. They align with the concept of increasing the capacity of human capital without expanding the workforce. Such progress can arise from various sources, including advancements in machinery, software, work processes, or the education and skills of the workforce. Research suggests that labour-augmenting technological change stimulates gross domestic product (GDP) growth and increases long-run total employment. In open, developed economies, focusing on enhancing the efficiency and productivity of skilled workers yields the greatest benefits (Ross et al. 2024).
Conventional homebuilding methods rely heavily on strenuous physical labour and are vulnerable to weather-related disruptions and higher on-site safety risks. Although specific data on the residential construction sector are limited, the construction industry as a whole remains one of the most hazardous sectors, with on-site building particularly prone to accidents due to the complex and variable nature of the work environment. In contrast, modern homebuilding technologies – such as off-site prefabrication and digital design tools – can reduce project failure rates, shorten construction timelines, enhance defect detection, and significantly improve worker safety (Patel and Kaushal 2024). Working in a stable, climate-controlled factory setting – without the disruptions of a transient worksite – can lead to greater worker satisfaction and productivity (Hoínková 2021).
Modular construction has been around for several decades, involving off-site fabrication in safe, controlled settings and reducing workers’ exposure to harsh outdoor environments. Case studies from countries like Australia, the UK, and the US suggest that modular approaches can reduce construction timelines by 20 to 50 percent compared to traditional methods (Bertram et al. 2019). In panelization, prefabricated panels are assembled quickly on-site, eliminating sequential tasks and allowing different stages of construction to occur simultaneously. This significantly reduces project completion times while minimizing safety risks and physical labour demands. Compared to modular construction, panelization is often more flexible and efficient in terms of storage, transportation, and on-site logistics, making it a more scalable solution in certain contexts. Cross-Laminated Timbers (CLT) used in mass timber construction are easier to handle and assemble. Timber is a suitable material for prefabrication, and its insulating properties create safer working conditions in cold weather. Although somewhat more expensive than other materials, mass timber is valued for its ability to store carbon, contributing to more sustainable construction practices.
Another advantage of shifting to off-site construction is a reduced reliance on labour, especially as Canada’s construction industry faces the retirement of nearly 260,000 workers (22 percent of the workforce) by 2030, requiring over 309,000 new recruits (BuildForce Canada 2021). Research on the global construction sector shows that off-site construction offers a promising solution by enabling 30 to 60 percent of project work to be completed in controlled environments, leading to a potential 5 to 10 times productivity boost through better labour management (Barbosa et al. 2017). Controlled settings also improve worker attraction and support the application of Lean Construction principles. Engaging higher-skilled labour in tasks such as integrating electrical and mechanical systems or operating automated machinery can yield significant productivity gains. Meanwhile, lower-skilled workers can still be effectively engaged in other aspects of the prefabrication process. This approach helps ease the industry’s skilled labour shortage while improving supervision, safety, quality, material efficiency, and schedule adherence (Forestry Innovation Investment 2021).
The time savings and productivity gains cited above are largely drawn from global data across the broader construction sector and may not fully reflect the experience of residential construction in Canada, where adoption of these technologies has been slower and less standardized. The wide variation in estimated time savings often stems from differences in regulatory environments, labour availability, factory capacity, and the degree of integration with on-site workflows. Still, these figures illustrate the potential of innovative construction methods to enhance efficiency. More Canadian-specific research is needed to quantify the net productivity gains – both in time and cost – across different home-building technologies.
Demographic and regional shifts strengthen the case for modular and prefabricated housing. Urban growth, ageing populations, and smaller households are driving demand for compact, denser housing in central areas where land is limited and speed is essential. Modular construction supports this need through rapidly deployable fourplexes, mid-rises, and Accessory Dwelling Units (ADUs) on infill sites – smaller, self-contained homes located on the same lot as a primary residence. It has also proven effective for student housing, offering speed and flexibility. For example, Selkirk College’s residence in BC used a hybrid of modular and mass timber construction to reduce waste, lower costs, and accelerate delivery, earning high marks for energy efficiency while meeting urgent student housing needs.
Similarly, Trinity Western University’s Jacobson Hall in BC was built in just nine months, and the University of British Columbia’s (UBC) 18-storey Brock Commons Tallwood House saw a more than 10 percent reduction in build schedule, with the structure completed in under 70 days after prefabricated panels arrived on-site. In Northern and remote communities like Nunavut and Northern Ontario – where housing needs are urgent and labour shortages acute – off-site construction allows homes to be built in southern factories and rapidly assembled on-site, bypassing the logistical and workforce challenges of traditional construction.
Lastly, it is crucial to assess Canada’s position on the production possibility frontier (PPF), which represents the maximum number of homes that can be built using available resources, such as labour, materials, and technology, without overextending or underutilizing them. Canada’s litany of problems includes high construction costs, elevated mortgage rates, soaring house prices, adverse weather conditions, and regulatory barriers like zoning laws and building codes, along with a lengthy permitting process. So it is reasonable to infer that Canada is currently operating inside the PPF. This indicates productive inefficiency. The country is not fully leveraging its resources to produce the maximum number of homes possible (productive inefficiency may not be directly quantifiable in precise terms due to data limitations). However, in a more conducive environment where regulatory hurdles are reduced and permit approvals are quicker, labour-augmenting technological advancements could shift the frontier outward, increasing labour productivity. This shift could enable Canada to build more homes more quickly and efficiently, helping to address the ongoing housing shortage.
Where Does Canada Stand on Housing Innovation?
Many countries are leveraging modular construction and mass timber to accelerate homebuilding and improve sustainability. While Canada has begun to explore similar approaches to those used in the US and Australia, its adoption has been slower. The reason: structural barriers, regulatory complexities, and a lack of appropriate support. Scandinavian countries, like Sweden, have embraced off-site construction at scale, where 96 percent of homes are built off-site and 84 percent of detached homes use prefabricated elements (Modular Intelligence 2024). These countries benefit from economies of scale, smaller geographies and unified building codes, with higher volumes justifying the upfront investment in off-site manufacturing. Although a direct comparison of productivity or construction costs between Canada and Sweden is difficult due to differences in labour markets, regulations, and building types, off-site construction has proven more efficient than traditional methods within the Scandinavian context. This relative efficiency has driven greater industry uptake and enabled more advanced forms of prefabrication to emerge – supported by long-term investment, automation, and integration into mainstream housing delivery. Moreover, in Europe and Asia, prefabricated construction differs from that in North America in both the materials used and the size of modules or panels (Forestry Innovation Investment 2021). Understanding how these regions arrived at their current practices can offer valuable insights for industry leaders and policymakers.
Recognizing the urgent need for technological innovation to address the current housing crisis, the Canadian government announced a $600 million package in the 2024 budget. This includes a $50 million Homebuilding Technology and Innovation Fund to scale up and commercialize technologies like modular and prefabricated homes, $500 million to support rental housing using modular construction, and $11.6 million to develop a Housing Design Catalogue featuring standardized and efficient blueprints. The Housing Design Catalogue, released earlier this year, offers standardized low-rise designs focused on traditional construction to support gentle density and infill across Canada, with plans to include modular and prefabricated methods in future updates.
Greater potential for transformation lies in the recently announced initiative by the federal government, an agency called Build Canada Homes (BCH). It aims to catalyze the housing industry and create higher-paying jobs by offering $25 billion in debt financing and $1 billion in equity financing to support innovative Canadian prefabricated home builders. Its premise is that prefabricated and modular housing methods have the potential to reduce construction time by up to 50 percent, cut costs by 20 percent, and lower emissions by 22 percent compared to traditional building approaches. BCH also plans to issue bulk orders to manufacturers to stabilize demand, promote the use of Canadian materials like mass timber and softwood lumber, and expand apprenticeship opportunities to grow the skilled trades workforce.
It is too early to assess the impact of these initiatives. The distribution of funds involves lengthy bureaucratic processes, and the market requires time to adapt. Research and development, being inherently time-intensive, further slows immediate results. While these initiatives may hold significant promise for addressing Canada’s housing crisis – particularly in an environment with fewer structural and regulatory barriers – their effectiveness depends on first tackling the core obstacles that continue to hinder housing development and discourage investment in productivity-enhancing innovations.
Government support plays a critical role in driving a sector’s success and growth. As part of the HousingTO 2020-2030 Action Plan,4 the City of Toronto committed to creating 1,000 new modular homes. By 2021, 250 homes were approved, and since then, 216 modular homes have been completed, contributing to the city’s efforts to address housing shortages and provide affordable living spaces. A report from the Auditor General of the City of Toronto5 stated that due to incomplete data and lack of benchmarking, the effectiveness and comparability of modular construction versus traditional methods – regarding cost and speed – could not be assessed. It recommended improvements in project planning, cost monitoring, and data collection to allow for clearer evaluations in the future. Vancouver is also utilizing temporarily available space to build modular affordable housing with support from CMHC and the Vancouver Affordable Housing Agency (VAHA). Calgary and Edmonton are adopting similar initiatives.
In 2020, the National Building Code of Canada (NBC) increased the limit for mass timber construction from 6 storeys to 12 storeys, reflecting advancements in technology and growing confidence in the safety and sustainability of mass timber. Last year, British Columbia updated its provincial building codes to allow mass-timber structures up to 18 storeys. However, due to higher costs, adoption has so far been largely limited to public sector projects.
Canada’s housing market is gradually adapting and embracing innovative technologies at a faster pace. A growing number of companies are now offering innovative housing solutions in Canada, providing faster, sustainable, and innovative alternatives to traditional construction methods. The Kakatoots (Siksika Nation) or Star Lodge in Alberta,6 the Leamington project in Ontario,7 and the Merritt and UBC project in British Columbia8 are some of the ongoing 3D-printed home projects designed to combat the housing crisis in areas experiencing severe labour shortages.
Key Barriers to Housing Innovation
Despite these advancements, the adoption of innovative home-building technologies continues to face substantial challenges:
High overhead costs, risks of investment, and workforce constraints. Modern construction methods are heavily constrained by the high initial investment and overhead costs associated with high-tech tools and equipment, such as prefabrication machinery, 3D printers, and robotics. In addition to utilizing low-skilled labour for certain tasks, some high-skilled workers trained in operating sophisticated equipment are also required, necessitating formal education and specialized skills development programs. Such training is resource-intensive, limiting its feasibility to larger firms with the financial capacity to invest in workforce development. However, in Canada, some of these larger firms have exited the modular construction space because the anticipated efficiency gains have failed to materialize. Without a consistent flow of orders, even large firms may struggle to sustain operations.
Depressed and volatile housing market. Canada’s housing market is marked by unpredictable boom-bust cycles and a lack of long-term stability, which discourages sustained investment. Volatility in financial markets and frequent shifts in monetary and immigration policy further heighten risks for both builders and homebuyers. Factory-built housing relies on scale and repetition to be cost-effective – firms need a steady throughput to reduce the burden of high overhead costs. However, current market instability makes it difficult to maintain consistent production. On the other hand, high development charges, land levies, and amenity fees drive up housing prices across the entire industry, further dampening affordability and demand, and in turn, restricting the supply of new homes. These also make it more difficult for innovative builders to scale up and compete effectively.
Financing and insurance challenges. Modular or prefabricated homes come with unique challenges compared to traditional houses. Since up to 80 percent of a modular project is completed off-site in a factory, manufacturers typically require substantial upfront payments to secure materials and begin production. However, current lending practices – both among private banks and public programs – are often structured around on-site progress payments. Hence, they rarely accommodate this model, significantly restricting access to financing for modular projects (Dragicevic and Riaz 2024). Additionally, in terms of mortgage and home insurance, modular and prefabricated homes often face inconsistent treatment across provinces, lenders, and insurers. Mortgage providers may require additional documentation, impose stricter conditions, or offer less favourable terms compared to traditional homes. For example, while CMHC does insure mortgages for modular homes, it requires that the home be permanently affixed to a foundation and comply with all local building codes – criteria that may be interpreted or enforced differently across municipalities. Some private mortgage insurers and lenders may impose further conditions or decline to finance certain factory-built or movable units, especially if they are not CSA-certified or permanently sited. On the home insurance side, modular homes may be subject to higher premiums or limited coverage due to perceived risks, misclassification, or unfamiliarity with the building method, sometimes even resulting in denied claims or coverage gaps.9
Financial support alone is not sufficient while structural barriers remain in place. Under the Apartment Construction Loan Program (previously known as Rental Construction Financing Initiative), all financing is subject to approval by CMHC. While there have been some improvements, the process can still take considerable time and needs to be streamlined. There are examples of firms exiting the Canadian market and shifting operations to the US, citing delays in CMHC fund disbursement as one of the contributing factors behind their decision.10 The same is true for the Housing Accelerator Fund, which flowed to municipalities from the federal government. While some major cities have significantly exceeded their annualized housing supply targets in terms of permits issued, others have permitted fewer units than projected under their baseline expectations.11 These challenges undermine the primary advantage of prefabrication: the ability to build faster.
Municipal permit approval is slow for all types of housing. According to the Canadian Construction Association (CCA), it also takes nearly 250 days to obtain a building permit from the municipalities or the regional authorities in Canada – three times longer than in the US – placing Canada 34th out of 35 Organisation for Economic Cooperation and Development (OECD) countries in building permit timelines. In some cities, the delays are even worse. Toronto and Hamilton take approximately 25 and 31 months, respectively, to issue permits (CHBA 2025). Municipal process delays during construction can also eliminate all time advantages of off-site construction and drive up costs.
Inconsistency among municipalities in interpreting building codes. A major challenge for scaling up is that different municipalities, sometimes in the same province, interpret the building codes in different ways, requiring time-consuming and costly customized designs. The same can be true within one municipality, with variable interpretations between building officials. This dramatically impacts repeatability and replication that could make the process faster and more cost-effective for builders, and cheaper for homebuyers.
Transportation-related hurdles. Transportation is another challenge in off-site construction, particularly for modular systems, which face strict road permitting requirements that vary by jurisdiction. While flat packing is efficient for panels and CLT, modular transport is more complex, especially across provinces. For example, module widths allowed in the Prairies can reach 7.3 metres, while in BC, they are limited to 4.88 metres, creating constraints for project delivery (Forestry Innovation Investment 2021). Similar constraints apply to transportation entering Ontario. These differences further hinder the feasibility of large-scale, duplicated production.
Duplicative inspections create inefficiencies and difficulties, as two authorities are involved – CSA-certified bodies inspect factory-built components, while local Authorities Having Jurisdiction (AHJs) handle on-site work (Forestry Innovation Investment 2021). However, many AHJs lack familiarity with off-site construction and are often unclear about their jurisdiction and the acceptability of the off-site components that should not be subjected to duplicative inspections. This confusion can delay approvals, drive up costs, and create barriers for modular and panelized projects.
Regulatory inefficiencies push firms out of Canada. For example, in 2024, a large modular construction company closed its Kitchener, Ontario factory, cutting 150 jobs. Citing overregulation, financing delays, and rising costs, the company moved operations to the US, where it found a more business-friendly environment.
Policy Pathways and Conclusions
Cost competitiveness and investment risk remain the two most pressing barriers to scaling innovative home-building technologies. According to Keynes’ law, the market will naturally shift toward innovative home-building technologies when sufficient demand exists, and the supply side is prepared to meet it within a business-friendly environment. However, this is not currently the case in Canada, as both demand and supply are constrained by structural inefficiencies, financing gaps, and regulatory hurdles. The goal should not be to restrict these technologies to publicly subsidized, affordable rental projects, but to encourage their widespread use in the regular market. This would enable large-scale production to reduce per-unit costs through economies of scale, achieve more competitive pricing and improve affordability.
To mitigate the challenges and to encourage more innovative home-building projects, the following policy actions and further research should be considered:
The federal government – and other levels of government providing financial support – should work to minimize structural barriers, such as bureaucratic complexities and delays in fund disbursement, across all housing projects. This will accelerate delivery and reduce costs, complementing broader housing goals. While all housing supply efforts deserve timely support, streamlining financing processes for innovative home-building approaches – such as modular and prefabricated construction – will help unlock productivity gains and build capacity in this developing segment of the industry.
To encourage builders to invest in innovative construction, the federal government should provide low-cost financing and investment tax credits. This would help them address high upfront costs and de-risk substantial investments in tools, machinery, and workforce training. Additionally, adopting output-based repayment models – rather than time-based – can help firms remain viable during housing market downturns.
Federal funding can help accelerate the transition to factory-built homes through targeted programming. For instance, the CHBA is advocating for Contribution Agreement Funding to establish a Factory-Built Systems Hub.12 The Hub would offer education and training for builders and officials, help address regulatory barriers, foster innovation in factory-built construction, and provide a concierge service to assist with access to government transition funding.
To boost traditional financial institutions’ confidence in financing off-site construction, CMHC should introduce construction financing insurance tailored to modular and prefabricated housing. While this insurance may add some initial cost, it would help address lender uncertainty and reduce risk premiums –improving affordability for buyers and predictability for builders. A key barrier is that financial institutions currently lack sufficient data to confidently compare off-site construction with traditional methods. This would provide the assurance needed to support lending for a relatively unfamiliar building process. This extra layer of security can be gradually reduced as lenders become more comfortable with these projects.
The federal and provincial governments should standardize the rules and eligibility requirements for mortgages and home insurance for these types of homes to eliminate regulatory uncertainty for buyers. Income tax credits for the maintenance and repair of these homes could build trust among potential buyers, lenders, and insurance companies.
Standardizing – and where possible, harmonizing – transportation requirements across provinces is crucial for the factory-built industry. Consistent regulations would enable cost and time savings by allowing the replication of identical units without the need for costly customization or delays due to jurisdictional differences.
Overall, development charges and related fees should be reduced to improve housing affordability and stimulate construction activity. A more dynamic housing market will enable the industry to benefit from economies of scale.
Municipalities should adopt a standardized interpretation of building codes to maintain consistency. Without this, efforts to develop a housing design catalogue for the industry will have limited value. Indeed, with standardization, existing housing catalogues that builders already have could be deployed easily.
Eliminating duplicative inspections would greatly streamline the construction process and avoid unnecessary costs and delays. Additionally, municipal officials need more training and education to increase their familiarity with off-site building methods and where inspection responsibilities lie.
All municipalities and local authorities should publicly announce clear target timeframes for residential permit approvals, inspection processes, and all municipal approval processes. The goal: to accelerate housing construction and provide much more certainty for development timelines for industry. They should introduce a fast-track permit approval system for residential construction projects utilizing innovative technologies. Time savings and productivity improvements offered by innovative construction methods will not be realized if delays and lengthy administrative procedures persist.
Further research is needed to benchmark Canada’s regulatory environment against peer countries and assess whether overregulation may be discouraging investment or prompting firms to relocate to more business-friendly jurisdictions. This includes studying how countries like Sweden have successfully scaled housing innovations – such as modular construction, off-site manufacturing, and mass timber – and evaluating which aspects of their experience could inform Canadian policy. While a full exploration of these international comparisons is beyond the scope of this paper, it remains a critical area for future investigation.
While some policy recommendations apply broadly to improving overall housing supply, they are essential for creating the enabling conditions that allow modular and prefabricated projects to thrive. At the same time, targeted and preferential measures specifically supporting innovative home-building technologies are also necessary to overcome their unique challenges and accelerate their adoption. Although not a panacea to the ongoing housing crisis, wider adoption of these technologies has the potential to ease pressure in the short term by accelerating construction and to improve affordability in the long term through greater efficiency and scalability. For the Silo, Tasnim Fariha Senior Policy Analyst at the C.D. Howe Institute.
The author extends gratitude to Colin Busby, Nicholas Dahir, Parisa Mahboubi, Carolyn Whitzman and several anonymous referees for valuable comments and suggestions. The author retains responsibility for any errors and the views expressed.
Canadian Home Builders’ Association. 2024. Sector Transition Strategy. Ottawa: Canadian Home Builders’ Association. February 8. https://www.chba.ca/sectortransition/.
Hořínková, Dita. 2021. “Advantages and Disadvantages of Modular Construction, Including Environmental Impacts.” IOP Conference Series: Materials Science and Engineering 1203 (3): 032002. https://doi.org/10.1088/1757-899X/1203/3/032002.
Lauster, Nathanael, and Jens von Bergmann. 2025. “The New Rules: Housing Shortage as an Explanation for Family and Household Change across Large Metro Areas in Canada, 1981–2021.” The History of the Family. February: 1–30. https://doi.org/10.1080/1081602X.2024.2448986.
Patel, Jainil, and Vinayak Kaushal. 2024. “Comparative Review Study of Modular Construction with Traditional On-Site Construction.” Preprints. June. https://doi.org/10.20944/preprints202406.0301.v1.
Ross, Andrew G., Peter G. McGregor, and J. Kim Swales. 2024. “Labour Market Dynamics in the Era of Technological Advancements: The System-Wide Impacts of Labour Augmenting Technological Change.” Technology in Society 77: 102539. https://doi.org/10.1016/j.techsoc.2024.102539.
May, 2025 – Canada cannot rely on immigration alone to address the challenges posed by its ageing population and relentless decline in fertility rates [ see Canada’s Soaring Housing and Living Costs Stop Baby Making CP], according to a new report from our friends at the C.D. Howe Institute. Without a broader population strategy, rising immigration could fuel rapid growth while straining housing, healthcare, and infrastructure – without fully resolving rising old-age dependency ratios or labour force pressures.
In this post, Daniel Hiebert confronts an important policy dilemma: although immigration increases overall population and helps address short-term labour gaps, the long-term trade-offs are significant. Without corresponding investment and planning, rising immigration risks compounding the very pressures it aims to alleviate.
“This is a particularly opportune moment to reflect on how immigration fits into Canada’s long-term demographic strategy, especially as both permanent and temporary immigration surged between 2015 and 2024, and are now being scaled back,” says Hiebert. “We need to think ahead about what kind of future we are building — and how we get there.”
Based on current patterns, it takes five new immigrants to add just one net new worker, once dependents and added consumer demand are factored in — a reality that undermines assumptions about immigration as a direct fix for labour shortages.
Hiebert argues that Canada must move beyond short-term immigration planning and adopt a long-range population strategy — one that combines immigration with other tools like delayed retirement, increased workforce participation, and stronger productivity growth. The alternative, he warns, is a “population trap”: a scenario where growth outpaces the country’s capacity to support it, undercutting prosperity in the process.
The report also calls on governments to coordinate immigration levels with long-term planning in housing, healthcare, education, and infrastructure.
“There’s no question that immigration is integral to Canada’s future,” says Hiebert. “But assuming it can carry the load alone ignores the structural pressures we’re facing — and the investments we need to make today to ensure future stability.”
Balancing Canada’s Population Growth and Ageing Through Immigration Policy
Canada faces twin demographic pressures: an ageing population and rapid population growth driven by immigration. The report argues that immigration levels must strike a careful balance – sufficient to offset some effects of low fertility and an ageing workforce, but not so high as to outpace infrastructure and economic capacity.
A sustainable population strategy requires coordinated planning across immigration, infrastructure, workforce participation, and capital investment. The report calls for long-term planning that aligns immigration policy with economic and social goals and emphasizes the need to manage absorptive capacity to avoid overburdening housing, healthcare, and public services.
Introduction
Declining fertility is a global trend and is especially pronounced in countries with high levels of economic development. These countries share the common challenge of ageing populations, with rising old-age dependency ratios (OADRs)1 and a shrinking portion of the population in prime working age. Several policy responses have been established to deal with this emerging reality, including pronatalist and other family-based social programs, efforts to enhance automation and productivity, incentivization of a larger proportion of the population to enter the formal labour force, delaying retirement benefits, and increasing the rate of immigration. The success of these approaches has varied, raising critical questions for policymakers: which strategies are the most efficient? What are their costs? And which policies offer the best balance between risk and reward?
This Commentary explores the potential role and limitations of immigration in alleviating Canada’s challenges of low fertility and ageing. This is a particularly opportune moment to consider such an issue given that both permanent and temporary immigration strongly increased between 2015 and 2024 and will be reduced for the 2025 to 2027 period.
Using custom demographic projections, this paper examines how various immigration scenarios – ranging from historical rates to the peak of 2024 – will affect Canada’s demographic outlook over the next 50 years. The analysis investigates the role immigration could play in mitigating the effects of an ageing population, while also acknowledging the associated trade-offs, including pressures on infrastructure and rapid population growth. The findings highlight that Canada’s immigration policy, while important, should be framed within a long-term population strategy that aligns immigration policy with broader economic and social goals – including capital investment, productivity, delayed retirement, and expanded social infrastructure – to ensure sustainable growth and enhanced prosperity for all Canadians.
Canada’s Demographic Challenge and Recent Immigration Policy Responses
Canada’s current demographic challenge is the product of two primary factors: low fertility and the ageing and retirement of the Baby Boom generation. Canada’s fertility rate first rapidly declined from the peak of the Baby Boom (1950s) to the early 1970s, when it first fell below the replacement level. Since then, it has continued with a slower, though persistent decline, interrupted by occasional slight recoveries. Most recent calculations reveal that Canada’s fertility rate is now at 1.26 – a level unprecedented in Canadian history and among the lowest globally. The consequences of low fertility are particularly pronounced today due to the ageing of the Baby Boom generation. In 2025, this cohort ranges in age from 59 to 79 years old, while the average age of retirement in Canada was 65.1 in 2023. Around two-thirds of boomers have already reached the age of 65, with the remaining third expected to follow in the coming years. The impact of this demographic shift is therefore ongoing and continues to affect the labour market and economy at large.
Throughout its history, Canada has turned to immigration to resolve demographic challenges (Hiebert 2016). From the late 1940s to the mid-1980s, Canada admitted an average of 150,000 permanent residents annually, though numbers fluctuated. By the end of that period, concerns over low fertility began to be articulated. This prompted the government to increase annual immigration levels to 250,000, a figure that was quite consistent over the following 30 years, with annual rates ranging from the low to high 200,000s. By the end of the 20th century, immigration accounted for over half of Canada’s population growth and labour force expansion.
The most recent shift in immigration policy began in late 2015 under the Liberal government, which pursued an expansionary strategy. Annual immigration targets and admission levels increased – save for the 2020 pandemic year – leading to a target of 500,000 for 2025. However, this target will no longer be realized following the revised plan announced at the end of 2024. Along with increased permanent immigration, the government had adopted a more facilitative approach to temporary migration, leading to rapid growth in the number of international students, temporary foreign workers, and other non-permanent residents. In 2023, the Canadian population expanded by 1.27 million, representing an annual growth rate of 3.2 percent, which is highly unusual among advanced economies. For example, the average population growth rate of the other G7 countries in 2023 was less than 0.5 percent (Scotiabank 2023).2
Given Canada’s low fertility, 98 percent of this growth stemmed from net immigration, both temporary and permanent (Statistics Canada 2024a). Today, Canada is approaching a point where all population growth and most of the impetus for population renewal (Dion et al. 2015) will come from immigration. However, the “big migration” trajectory of 2015 to 2024 has shifted. While public opinion historically supported ambitious immigration targets, this sentiment changed sharply in 2024. Concerns about housing shortages, infrastructure strain, and what has been termed a “population trap” – where population growth outpaces capital investment capacity – have fueled resistance to current immigration levels. These pressures clearly influenced the 2025 to 2027 plan, which curtails permanent immigration targets by approximately 20 percent and tightens restrictions on temporary migration programs.
Short- and Long-Term Immigration Policy
Before focusing on the relationship between immigration and demography, it is instructive to explore a fundamental tension in immigration policy: should the Government of Canada prioritize the “maximum social, cultural and economic benefits of immigration”3 for today or for the future? These goals may not always align: satisfying the needs of today may have long-term consequences – a trade-off familiar to anyone who has managed a budget.
It has been long underappreciated that Canada’s immigration policy is built around a combination of short- and long-term goals. Economic selection practices provide a helpful example. Since the introduction of the points system nearly 60 years ago, selection priorities have oscillated between addressing short-term labour market needs (e.g., incorporating and/or prioritizing job offers in selection criteria) and building the human capital of the future workforce, under the assumption that highly skilled individuals can adapt and drive productivity, and therefore prosperity. Striking the right balance between these priorities is challenging and requires careful planning.
The balance between short- and long-term immigration perspectives is reflected in the combination of the economic selection system and levels planning. The former – which includes permanent skilled immigration – involves trade-offs between filling immediate labour shortages and building future human capital.4 The latter determines the scale and composition of Canada’s permanent immigration system. In contrast, temporary migration programs are almost entirely shaped by short-term planning horizons – with the partial exception of the International Student Program, which operates in accordance with a medium-term planning horizon in five-year increments.5
These issues are pivotal to considerations of the relationship between immigration and demography. The impact of immigration extends beyond the number of admissions. If immigrants are selected to enhance the human capital of Canada’s workforce and integrate productively, they can potentially raise per capita GDP and mitigate the challenges of an ageing population (Erkisi 2023; Montcho et al. 2021). Conversely, if the system prioritizes lower-skilled individuals, fails to utilize the skills of highly educated immigrants, or admits newcomers at a scale that exceeds the economy’s capacity to absorb them, it risks lowering per capita GDP and compounding demographic challenges (Smith 2024).
Immigration, therefore, has both scale and compositional effects. Scale impacts include changes to population size, age structure, and regional distribution, which directly affect housing demand and social services. Compositional impacts include broader socioeconomic outcomes such as income inequality, productivity, and trade relationships. While this paper focuses on scale impacts, readers should bear these compositional effects in mind.
Another critical consideration is the relationship between admission levels and the expected economic outcome of admitted immigrants. In Canada’s Express Entry system, admission thresholds are adjusted based on the number of entries. Larger admission cohorts tend to lower the points threshold, potentially reducing the overall human capital of entrants (Mahboubi 2024).
Immigration and Canada’s Demographic Challenge
This paper argues that long-term considerations should play a larger role in immigration levels planning. Immigration decisions made today shape Canada’s demographic structure for decades, as immigrants become part of the population, contribute to fertility, enter the workforce, and eventually retire. These stages must be incorporated into demographic projections and policy planning, yet they are often overlooked due to the focus on immediate needs and political cycles.
To illustrate the long-term demographic impact of immigration, consider two extreme scenarios. In the first, Canada’s fertility rate declines to 1.0 (the 2023 rate in British Columbia) and net migration falls to zero, implying no population growth from migration. Under these conditions, Canada’s population would shrink from 40 million in 2023 to 12.3 million by 2100. In the second scenario, the extraordinary 2023 growth rate of 3.2 percent continues indefinitely, with rising migration levels. By 2100, Canada’s population would reach 452 million.
While neither of these scenarios is realistic, they illustrate the decisive influence that fertility and migration have in shaping the future scale of Canada’s population. Despite their seemingly preposterous nature, the key point remains: with fertility rates remaining low,6 the state is entirely responsible for determining the scale of the Canadian population. Decisions about temporary visas and permanent residence serve as the primary levers of control. Policymakers must recognize that the choices made today will have profound and lasting effects on Canada’s demographic and economic future.
Population Projections and Their Implications
Statistics Canada produced a recent population projection for various scenarios in January 2025, covering the period of 2024 to 2074.7 Across the scenarios, total fertility rates range from 1.13 to 1.66, permanent immigration rates vary from 0.70 to 1.2 percent per year, and net temporary migration figures are assumed to decline in the short term before stabilizing. The selected scenarios suggest that the projected population of Canada would range from 45.2 to 80.8 million in 2074 – a difference of over 35 million people, roughly equivalent to Canada’s current population. The scale of infrastructure and social investments needed to accommodate such growth would be enormous.
Beyond sheer numbers, government policy also affects the age structure of Canada’s future population. The OADR is expected to rise, and increased immigration is often proposed as a solution. However, the retirement age is, to an important extent, a social construct and this paper explores the efficiency of changing Canada’s retirement age compared with adjusting immigration levels to address the issue.
While migration can temporarily mitigate low fertility effects by maintaining a larger workforce, it cannot fully offset population ageing (Robson and Mahboubi 2018). Even doubling Canada’s population through immigration would only reduce the average age by five years, as immigrants’ average age is close to that of the receiving population (around 30 versus 40).8 Doyle et al. (2023) argue that increasing immigration could delay ageing impacts but would require continuously higher volumes, becoming unsustainable.9 Immigrants are typically concentrated in the labour force ages (25-40) but, in 30-35 years, this group will be approaching retirement, creating an economic challenge similar to the Baby Boom generation’s retirement. Unless increasing rates of immigration are in place continuously (an unrealistic scenario), at some point society must adjust to a smaller, older population.
Moreover, there appear to be additional costs to rapid population growth that are driven by high immigration. Doyle et al. (2023 and 2024) contend that when the labour force expands faster than investment in capital and infrastructure, the result is a dilution of capital per worker, reducing Canada’s productivity and living standards. This concern highlights not only the pace of immigration-driven growth but also Canada’s historically low levels of business and infrastructure investment, suggesting a need to boost investment alongside population growth.10
Research shows that while larger immigration targets increase real GDP through a larger labour supply, they could also reduce GDP per capita (El-Assal and Fields 2018).11 Indeed, in recent years of very high population growth through net international migration (2022-2023), Canada’s level of real GDP per capita has been stagnant.12
Furthermore, house price escalation associated with a surge in demand may negatively affect fertility decisions, particularly for families renting homes (Dettling and Kearney 2014; Fazio et al. 2024). In other words, compensating for low fertility through high rates of immigration may indirectly contribute to additional fertility decline.
Studies show that immigration alone has a limited impact on altering age composition (Robson and Mahboubi 2018). Even doubling immigration rates would only slightly improve the OADR (Beaujot 2001). All of the immigrants admitted by Canada between 1951 and 2001, for example, are believed to have reduced the median age of Canadians in 2001 by only 0.8 years.
The effect of younger immigrants, as seen in Australia’s approach, would improve outcomes,13 but Guillemette and Robson (2006) found that this impact would still be modest. An unintended consequence of focusing on younger immigrants is that it contrasts with Canada’s economic selection system, which rewards human capital development. Half of the 2022 Express Entry applicants were 30 or older (IRCC 2022), challenging the idea that immigration could rapidly reduce the average age of the population.14
A Custom Glimpse of the Future
To update our understanding of the role immigration could play in Canada’s demography, this section explores the results of a special population projection, using Statistics Canada’s microsimulation model called Demosim, to assess the impact of varying immigration rates on the Canadian population in the future. Two demographic outcomes are highlighted in this analysis: population size and the OADR.
While population size is a straightforward measure, the exclusive focus on the OADR – without also considering the youth dependency ratio (YDR) – may raise questions about the completeness of the analysis. After all, both young and older people place disproportionate demands on social services. One could also argue that increasing the rate of immigration (depending on the age profile of newcomers, other things being equal) could reduce the OADR while increasing the YDR. There are two major reasons for focusing on the OADR in this analysis. First, it is the most widely used indicator of the ageing population and has particularly profound impacts on the cost of healthcare, Canada’s most expensive social program.15 Second, while the YDR and OADR reflect dependency burdens, they have very different long-term implications: a high YDR represents a short-term fiscal cost but also an investment in the future workforce. In contrast, a rising OADR signals a more permanent shift in the age structure of the population, with fewer economic offsets. For these reasons, and to maintain analytical clarity and focus, the YDR has been omitted from this analysis.
Demographic variables used in the projection, except for the immigration rate, were either held constant (e.g., fertility rate at the 2023 level of 1.33 and the temporary resident population assumed to remain constant at around two million after 2021) or based on assumptions from recent Statistics Canada projections (e.g., emigration rate, life expectancy).16 Using the 2021 base population,17 projections were provided for 50 years. Six scenarios were created based on annual permanent immigration rates ranging from 0.3 percent to 1.8 percent. These correspond to immigration levels in 2025 between around 125,000 and 750,000, based on the 2024 Q4 population estimate of 41.5 million. From 2000 to 2015, the immigration rate averaged 0.6 percent per year (Scenario 2), rising to nearly 1.2 percent per year by 2024 (Scenario 4). The 2025-2027 immigration plan aligns with Scenario 3, at a rate of around 0.9 percent. In essence, the scenarios reflect both current and recent immigration rates, allowing for expansion or contraction, as shown in Table 1.
Population projections vary significantly across the scenarios (Figure 1). As Canada’s natural population growth is rapidly approaching zero and is expected to turn negative in the coming years – and with emigration remaining steady – an immigration rate of 0.3 percent of the population would result in virtually no net international migration. Under this scenario, the population would begin to decline slightly. At the same time, Canada’s OADR would more than double, rising from 29.5 retirees (65 and older) per 100 working-age individuals (18-64) to 48.2 in 2046 and 61.6 in 2071 (Figure 2).18 Such a demographic structure would be unprecedented and pose a significant challenge to economic prosperity. For context, Japan currently has the highest OADR globally, at approximately 48 per 100.19
The second scenario, reflecting Canada’s immigration levels from 2000 to 2015, would add 4.6 million to the population by 2046 and another two million by 2071. The OADR would rise to 44.5 by 2046 and 55.8 in 2071. The third scenario most closely aligns with the 2025 to 2027 immigration plan (though it excludes the projected reduction in temporary residents). If immigration remains at 0.9 percent of the population for the next 50 years, the national population would reach 55.6 million in 2071, and the OADR would be 50.8. The fourth scenario extends the higher 1.2 percent immigration rate from 2024, projecting a population of 67.2 million by 2071. Despite this growth, the OADR would still rise to 46.5 by 2071 – similar to Japan’s current level. Reducing the immigration target from 1.2 percent to 0.9 percent in the 2025-27 plan would result in 11.6 million fewer people by 2071, assuming a stable rate. The sixth scenario, though ambitious, is instructive. If IRCC raised the permanent immigration target to 1.8 percent annually and maintained it for 50 years, Canada’s population would increase to nearly 62 million by 2046 and exceed 91 million by 2071. Even with this growth, the OADR would still rise to 39.5 by 2071. A visual scan of the relevant figure suggests that it would take an immigration rate of around 2.7 percent per year to hold the dependency ratio constant. Moreover, it would be challenging to sustain Canada’s high-human-capital selection threshold in the Express Entry system under this scenario.
Note another important trend. Figure 1 shows that the population diverges across the six scenarios over time, demonstrating the growing efficiency of immigration rates in changing Canada’s population growth over time. In contrast, the OADRs across the scenarios in Figure 2 remain roughly parallel after 2046 and begin to converge a little in the later years, illustrating that immigration ultimately becomes less efficient at altering the age structure of the population over time. Why? A population with low fertility receiving a steady flow of younger immigrants will, in the short term, have a younger average age due to the immigrants’ youth. However, as the immigrant population ages, its average age eventually surpasses that of the receiving population, making the overall population older in the long term.20 Therefore, the effect of steady immigration on the age structure diminishes over time, and only a continuous increase in immigration would prevent this.
Further, it is also important to acknowledge that once there is a sustained period of high immigration (i.e., the case of Canada between 2015 and 2024), a dramatic reduction in the rate of immigration will result in a demographic “bulge” with a large cohort followed immediately by a smaller one – akin to the relationship between the Baby Boom and Generation X. This would ultimately set in motion the same demographic dynamic that Canada faces today, with the larger generation eventually retiring and the OADR increasing. The demographic lesson is clear: shocks in the age structure of a population – whether through dramatic increases or declines in fertility or through major changes in the rate of net migration – place stress on infrastructure and, if they are large, may challenge the long-term stability of the welfare state.
Before reflecting further on these findings, consider the impact of varied immigration rates on the cultural composition of the Canadian population (Vézina et al. 2024). In 2021, approximately 44 percent of the Canadian population had an immigrant background – either as non-permanent residents, immigrants, or individuals with at least one immigrant parent (see Table 2). Under the third scenario, which aligns with the 2025 to 2027 immigration plan, this proportion would nearly reverse by 2046 and change even more dramatically by 2071, with nearly two-thirds of all Canadians being persons with an immigrant background.21
Such a shift would redefine immigrant integration and public perceptions of multiculturalism. Whether this level of cultural change would be widely accepted remains uncertain. If the high 2024 immigration rate was sustained, nearly three-quarters of Canadians in 2071 would be either immigrants or children of immigrants.
Immigration and Other Policy Levers in Addressing Population Ageing
This section assesses how immigration compares to other policy tools in addressing the demographic challenges of an ageing population. Governments have several policy tools to either shape demography directly or mitigate societal consequences. The key concern in an ageing society is the impact of a shrinking labour force on the ability to sustain social services such as healthcare, education, and pensions. The principal direct policies are encouraging fertility and increasing immigration (Lee 2014). Governments can also address the fiscal impact of ageing by: boosting workforce participation among working-age adults; delaying retirement and enlarging the working-age population; raising tax rates; reducing expenditures – especially those related to the elderly population; and increasing the productivity of labour (Lee et al. 2014; Beaujot 2017). Some of these choices are more efficient than others. Pronatalist policies have been established in some 60 countries, yet none have been successful in restoring fertility to a replacement level (UNFPA 2019). Moreover, their effects tend to be short-lived.22
How efficient is immigration in mitigating population ageing and its effects? The data explored so far indicate that while increasing the rate of immigration is highly effective at generating population growth, it is less effective at significantly changing the age composition of the population. A recent analysis by British Columbia Ministry of Advanced Education and Skills Training provides additional depth on this issue.23 Their study presents a simple but informative labour force participation ratio: for every 10 permanent immigrants admitted to the province, six will find work relatively quickly, while the remaining four will be too young or old, pursuing education, or not immediately ready to join the labour market. This reflects the broader reality that approximately half of all economic-class immigrants are spouses and dependents and that only around 60 percent of immigrants are admitted through the economic class to begin with.
It would be tempting, but also simplistic, to see this as the direct impact of immigration on the labour force (i.e., 10 newcomers equate to six net new workers), but there is an important additional dimension that must be considered. Adding 10 people to the population generates consumer demand for goods and services including shelter, food, transportation, and many other things. Meeting this demand requires four additional workers. These four additional workers expand the scale of the economy but do not create net new workers (Fortin 2025).
When 10 newcomers are admitted, given that four will not immediately enter the labour force and another four workers will be required to satisfy extra consumer demand, only two net new workers are added. That is, to add one net new worker to the labour force requires five new permanent immigrants (and therefore approximately two additional dwellings). This is nicely summarized in a ratio: 10-6-4-2. There is no reason to expect that this ratio would be appreciably different in other provinces or Canada as a whole. Just as immigration is more efficient at increasing the size of the population than it is at changing the age structure, the same holds true for the relationship between immigration and net workers added to the labour force.
An example can help illustrate this point. Imagine an ageing society with a population of one million and 1,000 doctors. As more doctors retire than can be replaced through domestic training, the government looks to immigration to fill the gap. It estimates that 100,000 newcomers must be admitted, since only a small fraction of new immigrants will be doctors. This produces the desired effect, and the number of doctors remains stable. However, the population has grown to 1.1 million, and to preserve the same level of access to care, 1,100 doctors are now required. Simply stabilizing the labour force while adding population is an insufficient way to resolve emerging labour shortages because it ignores the additional demand created by population growth (Fortin 2025). This mirrors the earlier point: immigration adds workers, but it also adds consumers. As a result, the net gain to the labour force is much smaller than the headline number of newcomers might suggest.
It is beyond the scope of this paper to investigate the efficiency of all the other measures in mitigating the effects of ageing or increasing the size of the labour force. However, Figure 3 illustrates the demographic impact of one such lever – delaying the average retirement age to 70, compared to maintaining it at 65 – as an example to demonstrate how different policies vary in their ability to influence the OADR.
Figure 3 shows that, under this policy shift, maintaining immigration at the rate of the 2025 to 2027 plan (Scenario 3) would be sufficient to stabilize the OADR to 2046 – keeping it just below 30, similar to its level in 2021. None of the immigration scenarios alone achieve this outcome if the retirement age stays at 65. While the OADR increases over time in all scenarios, delaying retirement significantly slows both the pace and magnitude of this rise.24 However, the purpose of this example is not to propose a specific change. Instead, it highlights the relative effectiveness of this particular lever and emphasizes the need for a multifaceted strategy to address demographic challenges.
In summary, Canada’s demographic challenges stem from low fertility and the retirement of the Baby Boom generation. Immigration can delay and mitigate the effects of ageing but cannot fully counteract them without immediate and dramatic increases. As long as immigration remains within historical levels, ensuring a sufficient workforce will require a combination of immigration and complementary policies.25
Demography and Levels Planning
The policy dilemma implied by demographic realities is both straightforward and immensely complex: it is now impossible to maintain the age composition of the Canadian population while also maintaining its size without turning back the clock more than 50 years in terms of fertility. At the extremes, there are two stark policy choices: maintain the current size of the Canadian population but adjust expectations to accommodate a vastly higher OADR (approximately that of Scenario 1); or maintain the age structure of the Canadian population and plan for a vastly larger population (larger than any projected in the scenarios used in this study). The real policy choice will lie somewhere between these extremes and will require a combination of accommodations.
Table 3 summarizes more realistic options by showing the level of population increase and the different OADRs projected for 25 and 50 years forward. It compares the scenarios that most closely approximate Canada’s permanent immigration targets for the recent past – Scenario 2 (pre-2015 consensus), Scenario 4 (2024 rate), and Scenario 3 (2025 to 2027 plan). Had the Liberal government maintained the earlier rate of immigration after 2015 (that is, maintaining the 0.6 percent rate of immigration), Canada’s population would have grown by around 7.5 million by 2071, but with an OADR higher than any country today (55.8 senior citizens per 100 working-age people). By shifting to, and maintaining, a 1.2 percent annual immigration rate between 2015 and 2024, the population would grow much faster – by 29 million more people over half a century – while the OADR would be lower, at 46.5 per 100. Notice that the change in policy would lead to nearly four times the population growth compared to the reduction in the OADR, which improves by only 17 percent. Scaling back the rate of permanent immigration in 2025 to 2027 moderates both the population increase and the OADR improvement. Nevertheless, it would still yield a population growth of over 17 million in the next 50 years, with Canada’s OADR surpassing that of contemporary Japan.
Regardless of the choice being made, Canada will be both larger and older in the coming decades. This shift has significant implications and calls for strategic long-term planning. For example, the country will need to invest simultaneously in child benefits and new schools, as well as in elder care facilities. Housing demand will continue to mount unless significant changes occur in housing investment policies and outcomes. It also means investing in infrastructure to sustain key public services – such as increasing hospital capacity and expanding public transit. Without these adjustments, the quality of life for Canadians would decline. Crucially, this must occur while public finances are adjusted in light of a rising OADR (or the retirement age is raised).26 It also necessitates a continuing cultural diversification of the population through immigration and temporary migration. Ongoing and growing investments in social inclusion will be required.
The greatest challenge for government is to decide on the optimum balance between ageing and growth while securing public buy-in for immigration policies.27 All of this must occur against the backdrop of other pressing issues such as global climate change, geopolitical instability, technological change, and political polarization – not to mention the need to be mindful of the relationship between immigration, ethnocultural diversity, linguistic and religious groups, Indigenous Peoples, and other equity-seeking groups. Assiduous attention must be paid to Canada’s demographic challenge, despite these powerful intersecting concerns.
Consider financial investment, where growth is based on compounded rates of interest. One of the most common recommendations made by financial advisors is to harness the power of compounded growth by starting to invest early in one’s life. Even small amounts invested in one’s twenties can pay remarkable dividends forty years later. The same logic applies to population management; demographic choices today will have far-reaching consequences in subsequent decades. Adding four to five million to Canada’s population over the next decade cannot simply be undone at the end of that period. The same ageing pressures will remain, but with a larger population that may require even higher immigration levels. As long as fertility remains well below replacement, this issue will persist – regardless of Canada’s population size. There will always be the looming threat of population decline and its consequences.
Short and Long Policy Horizons
Population change is cumulative and difficult to reverse, making it imperative to consider the long-term implications of both temporary and permanent immigration together. This requires viewing them as components of the same system – particularly given the many pathways that allow temporary residents to transition to permanent status, and the increasing reliance on temporary residents within Canada’s permanent immigration system (Crossman et al. 2020). In recent years, temporary migration has increasingly become a kind of “down payment” to Canada’s permanent immigration system, a shift that has transformed Canada’s immigration system into a more fluid, two-step process, although this flow-through process may be interrupted given the latest levels plan (i.e., there is a large gap between the number of temporary residents in Canada and the “room” accorded to that population in the new plan). A comprehensive approach also demands that levels plans, which currently establish expectations for a three-year period, be developed with longer time horizons in mind.28 In other words, immigration levels should reflect Canada’s immediate priorities as well as its long-term goals, including the potential for future population renewal. The focus on present needs should not overshadow a forward-looking vision for the country, as current policies play a decisive role in shaping Canada’s future.29
A common point made in public discussion of Canadian immigration policy is that levels planning should pay more attention to absorptive capacity. This means aligning the number of both temporary and permanent residents with the growth of social services – notably education and healthcare – as well as housing and other infrastructure. The concept of absorptive capacity can be interpreted in passive or active terms. Under a passive approach, levels planning would be guided by the current state of social services and infrastructure including housing, which would determine the appropriate level of immigration (e.g., based on an acceptable range of physicians, housing completions, etc., per 1,000 persons). Conversely, an active approach would flip the direction of causality and establish the parameters of social spending and infrastructural investment based on population growth which, in an era of low fertility, is essentially a function of the scale of temporary and permanent immigration. In this latter situation, IRCC would play a more central role in national planning, as immigration targets would shape the long-term scale of government spending across a wide range of responsibilities. This process would be greatly facilitated by a conscious, long-term population strategy at the heart of levels planning. In such a framework, all sectors of society – government, private business, and non-profit social services – could make informed decisions to guide their investments with far more assurance of long-term patterns of demand. This would be a potent indirect benefit of a population-based approach to migration and immigration management.
There are important tradeoffs between these approaches. A passive approach may be more cautious and politically feasible in the short term, but risks underestimating long-term needs and perpetuating reactive policymaking. An active approach, by contrast, allows for proactive investment and planning – but only if there is full follow-through. If governments commit to population growth targets without ensuring that social and physical infrastructure keep pace, the result could be increased strain on housing, healthcare, and public trust.
While this paper supports an active approach, its core aim is to push for long-term thinking and to encourage an informed public conversation about the choices ahead.
Regardless of which approach is chosen, the issue of social license is key. As noted earlier, a majority of Canadians have recently come to believe that population growth generated by immigration has outstripped the development of social and physical infrastructure. In 2023, this growing perception led to a substantial shift in public support for the number of newcomers that were being admitted. The government must ensure that population growth, infrastructure capacity, and capital investment are aligned – and clearly communicated to the public. This means developing a population strategy alongside an economic strategy. These are not competing priorities, but complementary and mutually reinforcing goals.
Conclusion
Given its low fertility, Canada’s demographic and economic future would be bleak in the absence of immigration. Even under low immigration scenarios (0.3 and 0.6 percent of the population per year), Canada would enter uncharted territory with respect to its OADR. At the same time, immigration is more efficient at increasing the population size than it is at either adding net new workers to the economy or fundamentally altering the age structure of the population. Higher rates of immigration may address short-term labour shortages, provide important skills, and stimulate economic activity (a higher GDP), but their effect on prosperity (GDP per capita) depends on whether they are accompanied by robust productivity growth, capital investment, and innovation. Moreover, they present challenges to Canada’s infrastructure, particularly in housing supply and healthcare availability. Without such complementary investments, rapid population growth could lead to a population trap – where population growth outpaces investment capacity – ultimately lowering prosperity, and potentially worsening fertility rates.
Canada’s demographic future depends on policy decisions made today, which carry long-term consequences that require careful planning and adaptation. While immigration level planning includes multi-year targets and considers a range of factors, in practice it often focuses on managing short-term pressures rather than shaping a long-term population vision. With fertility rates at historic lows, Canada’s reliance on immigration for population growth is intensifying. While immigration is a relevant tool for mitigating population ageing, it cannot prevent Canada from ageing on its own. This impasse highlights the need for a comprehensive population strategy that aligns with a long-term economic strategy – recognizing that growth and economic planning are complementary, not competing, goals. The strategy must also balance population growth with the challenges of an ageing society and address social priorities, including ethnocultural diversity and inclusion, Canada’s linguistic landscape, and Indigenous reconciliation.
A sustainable path forward must integrate immigration with policies to boost workforce participation, promote productivity, incentivize capital investment, and consider measures such as delayed retirement, all while recognizing the potential social and economic trade-offs involved. Without a clear and proactive strategy, Canada risks mounting economic and social pressures. A well-managed, long-term population plan, grounded in both economic realities and social capacity, will be essential to maintaining prosperity and ensuring that growth benefits all Canadians. For The Silo, Daniel Hiebert -Emeritus Professor of Geography at the University of British Columbia.
References
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Dungan, Peter, Tony Fang, Morley Gunderson, and Steve Murphy. 2023. “Macroeconomic Impacts of Immigration in the Canadian Atlantic Region: An Empirical Analysis Using the Focus Model.” IZA Institute of Labor Economics 16527: 1-25. https://docs.iza.org/dp16527.pdf
Fazio, Dimas, Tarun Ramadorai, Janis Skrastins, and Bernardus Ferdinandus Nazar Van Doornik. 2024. “Housing and Fertility.” SSRN Electronic Journal. https://dx.doi.org/10.2139/ssrn.5046571.
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In 2024, Canada’s labour market showed modest growth, with job creation continuing but lagging rapid population growth. This led to an increase in the unemployment rate, reflecting a mismatch between labour force expansion and job creation rather than a decline in sector-specific labour shortages.
Ongoing challenges persist, such as declining labour productivity, sector-specific labour shortages, underemployment, demographic shifts and disparities, and regional imbalances.
Our international comparisons show that Canada typically ranks at or below the Organisation for Economic Co-operation and Development (OECD) average in terms of labour force participation and employment rates for certain population segments. This is largely due to weaker performance in specific regions, such as the Atlantic provinces, and pension policies that incentivize early retirement.
This labour market review emphasizes the need for tailored policies to improve labour market outcomes for seniors and immigrants. Recommendations include gradually increasing the retirement age, offering high-quality training support, and easing labour mobility barriers.
Introduction
The labour market is where economic changes most directly affect working-age Canadians, influencing their job opportunities and income. The supply of labour also determines the availability of Canadians’ skills and knowledge to employers who combine them with capital to produce goods and services that drive our national income and its distribution among income classes. Therefore, the labour market is one of the most important components of Canada’s – or any – economy.
In 2024, Canada’s labour market saw moderate growth, with employment rising to 20.7 million jobs. However, the employment rate declined to 61.3 percent, down from 62.2 percent in 2023, and remains below the pre-pandemic level of 62.3 percent in 2019. While over 1.7 million employed persons have been added since 2019, employment growth has lagged behind population growth, partly due to an aging population, despite high levels of immigration.1 The unemployment rate also increased, reflecting a gap between job creation and labour force expansion, partly due to limited absorptive capacity to keep pace with population growth.
Job vacancies have decreased since mid-2022, but over half a million positions remained unfilled during the third quarter of 2024 (12 percent higher than the pre-pandemic level). Of these vacancies, the majority were full-time (432,810 positions), with more than 31 percent remaining vacant for the long term – persisting for over 90 days. Despite high full-time vacancies, more than half a million workers were underemployed in 2024, seeking full-time work while employed part-time, indicating mismatches between the skills needed by employers and the skills offered by job seekers. Among sectors facing labour shortages, factors such as better relative wages and working conditions appear to be helping, particularly in industries like construction. Healthcare, on the other hand, may benefit from raising wages and reducing training costs to better attract and retain workers.
Further, Canada faces declining labour productivity, which can be attributed to factors such as stagnant capital investment and automation, high reliance on temporary foreign workers to fill low-paying positions, underemployment (including immigrants’ overqualification), a growing public sector with lower productivity, and shifts in industry composition.
This inaugural C.D. Howe Institute labour market review highlights major differences in the labour market across provinces and sectors and among socio-economic groups. It shows that labour force participation and employment of older workers and recent immigrants still have room for improvement.
Canada needs targeted workforce development policies to improve labour market participation and outcomes for diverse population groups and encourage a longer working life (Holland 2018 and 2019). Our recommendations are to:
Gradually raise the normal retirement age from 65 to 67 and delay pension access.
Support older workers with flexible work, part-time options, and self-employment, especially in the Atlantic provinces.
Invest in high-quality training programs for underrepresented groups, focusing on digital skills and job search strategies.
Streamline credential recognition and licensure for skilled immigrants and ease labour mobility in regulated occupations while maintaining the quality of professional services.
Enhance settlement strategies for immigrants, including workplace-focused language training.
Businesses should integrate automation and artificial intelligence (AI) to boost productivity while improving retention and encouraging later retirement by offering training2 and flexible scheduling (Mahboubi and Zhang 2023).Finally, better informing Canadians about learning and training opportunities and addressing financial and non-financial barriers would improve their training participation rates and empower them to acquire the skills needed in a changing labour market.
Overview of Canada’s Labour Market
Canada’s labour market has undergone major changes over time, influenced by factors such as the COVID-19 pandemic, globalization, technological progress, and demographic shifts. These forces have affected the functioning of the labour market, with demographic changes playing a particularly important role. This section reviews key indicators (i.e., labour-force participation, employment and unemployment) and highlights the major trends and disparities in provincial and national labour markets.
The labour force has grown steadily since 1976 but experienced a decline in 2020 due to the pandemic. The lockdowns and public health measures significantly reduced worker participation, especially among women, in the labour market. However, once the restrictions were lifted, workers returned, and the labour force fully recovered. By 2024, Canada had 22.1 million people in the labour force, an increase of about 1.9 million from 2019, mainly driven by the expansionary immigration policy that the country has followed until recently.3 Immigrants accounted for 56 percent of this increase in the labour force, while non-permanent residents made up 32 percent.4
Although the labour force has grown over time, the labour force participation rate (LFPR) has trended downward over the last two decades. This trend is largely driven by an aging population, as participation rates drop sharply after age 54 and continue to decline with age. While the LFPR among prime-aged workers (25-54) reached a record high in 2023, the overall rate remained below pre-pandemic levels and declined further in 2024, reaching 65.5 percent despite high levels of immigration.5 Three factors contributed to this decline compared to pre-pandemic levels: a lower participation rate among youth, a substantial increase in the older population (aged 55 and over) and a decline in the latter group’s participation rate. This decline in older workers’ participation is primarily due to aging, as the proportion of seniors aged 65 and over within the 55-and-over age group increased from 54.8 percent in 2019 to 60 percent in 2024.
The employment rate is more sensitive to economic conditions and fluctuates with cyclical changes in the unemployment rate. It is also influenced by factors such as government policies on education, training, and income support, as well as employers’ investments in skill development and their effectiveness in matching people to jobs. Despite some volatility during economic booms and recessions, the employment rate trended upward until 2008 but has declined since then, mirroring the impact of an aging population on the participation rate (Figure 1). The pandemic caused a sharp decline in the employment rate, followed by a modest recovery. In 2024, the rate, however, declined again by approximately one percentage point to 61.3 percent, as employment growth (1.9 percent) failed to keep pace with the population growth (3 percent).
Regional disparities in employment persist across Canada. Alberta consistently maintains the highest employment rate, while Newfoundland and Labrador lags. Despite significant improvements since 1976, the Atlantic provinces continue to face challenges with employment. For its part, Ontario’s employment rate – historically the second highest in the country – has been below the national average since 2008. Regional differences in economic development, sectoral specialization patterns, educational attainment, family policy, and demographic characteristics are factors behind these employment disparities. For example, Newfoundland and Labrador and New Brunswick had the highest old-age dependency ratios (OADs) in 2024 at 39 and 37 percent, respectively, while Alberta remains the youngest province with an OAD ratio of less than 23 percent.6
The unemployment rate, a key short-term indicator, tends to rise during economic downturns and fall back during recovery, affecting employment outcomes in the opposite direction (Figure 1). The onset of the pandemic in 2020 led to a temporary surge in the unemployment rate to 9.7 percent – a four-percentage point hike from the previous year. As the economy recovered, the unemployment rate plummeted to a record low of 5.3 percent in 2022. However, by 2024, it had risen to 6.3 percent, a figure that remains relatively low by historical standards but higher than the pre-pandemic rate in 2019.
While employment grew by 1.7 million people between 2019 and 2024, the labour force expanded even faster, increasing by 1.9 million people. This imbalance – where the labour force grew more quickly than employment – pushed the unemployment rate higher, reflecting a loosening labour market and making it more challenging for job seekers to secure employment.
Overall, the labour force and employment in Canada have been expanding due to a surge in immigration. Despite unemployment rates remaining higher than the pre-pandemic level, this primarily reflects the exceptional growth in the labour force rather than a lack of job creation. The labour market continues to adjust to the increase in labour supply through strong job creation.
Looking ahead, several uncertainties and factors could influence unemployment rates. For example, the imposition of trade tariffs by the United States poses a direct risk to export-related jobs. In 2024, 8.8 percent of workers – equivalent to 1.8 million people – were employed in industries dependent on US demand for Canadian exports.7 Sectors most vulnerable to these risks include oil and gas extraction, pipeline transportation, and primary metal manufacturing.
On the other hand, stricter immigration policies that limit the inflow of permanent and non-permanent residents may reduce the growth of the labour force, which could, in turn, place downward pressure on the unemployment rate. However, the ongoing arrival of refugees, which contributes to the growing population of non-permanent residents, could lead to higher unemployment rates, particularly if newcomers face significant challenges integrating into the labour market.
To mitigate the negative impacts of aging on the labour market and address labour needs, it is important to encourage greater participation of underrepresented groups and seniors, ensure new entrants and young workers are equipped with the relevant skills to meet the labour market needs and enhance the productivity of the existing workforce. However, declining labour productivity poses an additional challenge that requires urgent attention.
Trends in Labour Productivity
Labour productivity8 in Canada has generally trended upward until the pandemic, but with a general downward trend in its growth rate. In 2020, average productivity surged to $68.5 per hour worked (in 2017 dollars), mainly driven by compositional changes in employment towards more productive jobs, particularly in the business sector, since most job losses were among low-wage workers. However, this gain proved short-lived; by 2023, productivity fell to $63.6, returning to nearly the same level as in 2019 (Figure 2).
Declining productivity has contributed to a reduction in real GDP per capita, which is a key indicator of Canadians’ living standards. Although Canada’s GDP rose by 6.9 percent (in 2017 dollars) between Q4 2019 and Q4 2023, GDP per capita decreased by 0.2 percent over that period. Since 2020, Canada’s GDP per capita growth has averaged an annual decline of 1.3 percent, compared to a growth rate of 1 percent per year between 2010 and 2019 (Wang 2022). Labour productivity continued to decline in 2024 as real GDP growth fell short of the growth of hours worked. This stands in stark contrast to the robust growth of labour productivity seen in the US during the same period.
Several factors, including human capital stock, skills utilization, overqualification, the concentration of immigrants in low-skilled jobs, limited capital investment, and slow adoption of technology, have likely contributed to recent poor labour productivity trends (Wang 2022; Robson and Bafale 2023, 2024). Notably, the combined influx of immigrants and non-permanent residents has driven the majority of employment growth between 2019 and 2024, accounting for 89 percent of the total increase in employment. Although immigrants and non-permanent residents are more likely than Canadian-born workers to have a university education, many are overqualified and work in jobs that require only a high-school diploma (Mahboubi and Zhang 2024). According to the 2021 census, the overqualification rate among immigrants9 and non-permanent residents was 21 percent and 32.4 percent, respectively, while only 8.8 percent of Canadian-born individuals with a bachelor’s degree or higher were overqualified (Schimmele and Hou 2024). With rising immigration, Canada’s productivity will increasingly depend on how effectively it leverages and develops the skills of new immigrants (Rogers 2024).
The recent influx of newcomers can help mitigate the impact of an aging population as they tend to be younger, typically being at their prime working age (Maestas, Mullen and Powell 2023). However, the concentration of immigrants and non-permanent residents in lower-skilled, low-paying sectors and occupations reduces productivity and, consequently, their contribution to GDP per capita. According to Lu and Hou (2023), between 2010 and 2019, non-permanent residents (work permit holders) were increasingly concentrated in several low-paying industries: accommodation and food services, retail trade, and administrative and support, waste management and remediation services.10 Collectively, these industries accounted for 45 percent of all temporary foreign workers in 2019. With the surge of non-permanent residents, one would expect the situation to have worsened in 2023 since the cap for hiring low-wage temporary foreign workers in 2022 increased from 10 percent to 30 percent in seven sectors, including accommodation and food services and to 20 percent for other industries.11 Similarly, Picot and Mehdi (2024) found that immigrants contribute approximately equal amounts of lower-skilled and higher-skilled labour, with 35 percent of those who landed in 2018 or 2019 working in lower-skilled jobs by 2021.
Relying on temporary foreign workers and immigrants to fill lower-skilled, low-paying jobs means that labour becomes a cheaper option than capital, which naturally disincentivizes businesses from investing in productivity-enhancing technology.12 Increases in the supply of labour also discourage business investment in skills upgrading for the existing workforce (Acemoglu and Pischke 1999).
Increases in labour supply without corresponding higher capital investment will also depress productivity. According to Robson and Bafale (2023), a larger labour force resulting from high immigration will not lead to higher living standards if workers are not equipped with better tools to produce and compete. Young and Lalonde (2024) also found that two-thirds of productivity declines since 2021 stem from this population shock.
Technological advancements, particularly digitalization and AI, offer opportunities to boost productivity. Mischke et al. (2024) find that digitalization and other technological advances could add up to 1.5 percentage points to annual productivity growth in advanced economies. Nevertheless, Canada has been slow in capital investment, automation and AI adoption.
The expansion of the public sector also poses challenges. Compared to 2019, public-sector employment increased by 19.6 percent in 2024, while private sector employment only saw an 8.5 percent increase. Consequently, public-sector jobs in 2024 accounted for 21.5 percent of all employment in Canada, up from 19.6 percent in 2019. However, public-sector productivity has lagged the business sector since 2019. In 2023, it was $58.20 per hour worked, 1.5 percent lower than its 2019 level and 1.5 percent below that of the business sector. With a higher share of public employment in the economy, this lower productivity in the public sector reduces overall labour productivity.
Lastly, significant variations in productivity across industries within the business sector shape Canada’s overall performance (Appendix Figure A1). Some industries, such as educational services, experienced notable productivity gains of 25 percent between 2019 and 2023. In contrast, some low-productivity industries faced substantial declines, with that of holding companies decreasing by 60 percent and construction and transportation dropping by 10 percent.13 Labour productivity in industries with the largest employment gains remained unchanged (professional, scientific, and technical services) or declined (public administration) during the same period (Appendix Figure A2). In contrast, agriculture and accommodation and food services witnessed productivity increases, likely due to investments in machinery and automation accompanying employment declines.
Therefore, the industrial distribution of jobs, shifts in industry composition, and demographic changes within industries can greatly affect Canada’s overall productivity. Tackling Canada’s productivity challenges will require substantial capital investment, targeted initiatives in skills development, technological advancements, and industry-specific strategies to promote sustainable economic growth.
Employment by Skill Level
Skill-biased technological changes – innovations that primarily benefit highly skilled workers, such as those proficient in technology, complex problem-solving, and critical thinking – have increased the demand for high-skilled labour in today’s job market. Despite the limitations of that approach, education has generally been used as a proxy for skills. In response to labour market needs, there has been a significant surge in higher education attainment among Canadians over time. The proportion of the population aged 25 and over having a postsecondary certificate, diploma or university degree rose from 37 percent in 1990 to 69 percent in 2024. According to OECD (2024), Canada has the highest postsecondary education attainment rate among core working-age individuals (25-64).
Despite these educational advancements, Canada faces productivity challenges and lags in technological adoption, particularly relative to the United States. One explanation is that although higher levels of education should translate into greater skills – leading to enhanced productivity, employability and adaptability to labour market changes – other factors such as education quality, experience, on-the-job training, capital investment, technological advancement, skill utilization, and age can substantially influence individuals’ skills levels (Mahboubi 2017b and 2019; Robson and Bafale 2023).
Skills and education levels heavily influence labour-market outcomes. For example, labour force participation, including among seniors, increases with educational attainment and those with higher education tend to remain in the labour market longer. This can mitigate some of the negative effects of an aging labour force, as significantly more seniors today possess a formal education above high school compared to decades ago and can take advantage of the ongoing shift from physical work to knowledge-based work.
In parallel with increases in the supply of highly educated labour, there has been a shift in skills requirements among employers.14 Figure 3 shows employment in high-skill-level occupations has seen remarkable growth over the past three decades, increasing by 299 percent from 1987 to 2024. Notably, during the pandemic, employment in high-skill-level roles continued to grow, even as jobs in other skill categories declined. By 2024, high-skill-level occupations accounted for 23 percent of total employment. Despite this growth, medium- and low-skill-level occupations remain predominant, employing approximately 8.1 million and 5.8 million workers, respectively, compared to 4.8 million in high-skill roles. In the last two decades, immigrants and non-permanent residents have increasingly taken both high-skilled and low-skilled jobs. Between 2001 and 2021, they accounted for half of the employment growth in professional and technical skill occupations (Picot and Hou 2024). Over the same period, employment in lower-skilled occupations decreased by half a million. However, more immigrants and non-permanent residents increasingly occupied low-skilled positions, while Canadian-born workers significantly transitioned away from these roles (Picot and Hou 2024). By 2021, immigrants were more concentrated in professional and lower-skilled occupations compared to their Canadian-born counterparts.
In general, the Canadian labour market has performed well since the pandemic, with particularly strong employment growth for high-skill level occupations. As demand for high-skilled labour continues to grow, improving education quality, promoting on-the-job training, and better utilizing the skills of the workforce are essential for maintaining this balance, maximizing the benefits of educational advancements, enhancing productivity and meeting the evolving demands of the labour market.
Imbalances of Labour Supply and Demand
Studying the relationship between unemployment and job vacancies provides insight into labour supply and demand imbalances. It allows us to examine two problems that hinder business growth and slow the economy down: the lack of sufficient employment opportunities for job seekers and the absence of people with the right skills to fill existing jobs.
This relationship is often described by the Beveridge curve, which illustrates how job vacancy rates and unemployment typically move in opposite directions. However, as noted by Blanchard, Domash, and Summers (2022), shifts in this relationship can occur due to factors such as increased labour demand or structural changes in the economy, leading to both higher vacancy rates and higher unemployment simultaneously.
From 2021 to mid-2022, Canada experienced a tight labour market, with an increase in job vacancies alongside declining unemployment. In response, the federal government relaxed several immigration policies to help address these shortages. However, Fortin (2024, 2025) found that a surge in immigration, particularly driven by temporary immigrants, may aggravate job vacancy rates in the overall economy, as observed in Canada between 2019 and 2023. While immigration can initially alleviate skilled labour shortages, it can also intensify shortages in the broader economy due to increased demand from newcomers for goods and services.
In 2024, the labour market transitioned from a state of tightness to a slackening one. In the third quarter of 2024, job vacancies in Canada totalled more than 572,000,15 marking a 12 percent increase compared to the pre-pandemic level in Q4 2019. With 1.5 million unemployed people in the labour market, there were more than two job seekers for every vacant position during that quarter. However, the provincial situations varied (Figure 4). For example, while British Columbia experienced a relatively tighter labour market, with fewer than two unemployed persons for each vacant position, there were more than four unemployed persons available per vacant position in Newfoundland and Labrador. However, the long-term vacancy rate – the share of openings that remained vacant for 90 days or more in total vacancies – in that province was 36.9 percent, which was four percentage points higher than the British Columbia rate in the third quarter of 2024. This indicates both limited employment opportunities for those unemployed and a mismatch between existing skills and those demanded by employers.
Imbalances between labour supply and demand in Canada also exist at the industry level (Figure 5). For example, while the healthcare sector faces severe labour shortages, the information, culture and recreation industry has the highest unemployment-to-vacancy ratio, indicating an excess labour supply. One interesting observation is that while both the construction and manufacturing sectors had similar levels of excess labour supply, the vacancy rate in construction was significantly higher at 3.6 percent, compared to 2.2 percent in manufacturing. This suggests that employers in the construction sector face more challenges in finding workers with the right skills.
The unemployment-to-job vacancy ratios across industries excluded some 612,000 unclassified unemployed persons: those who had never worked before or were employed more than a year earlier. According to Statistics Canada, about 43 percent of job vacancies in the third quarter of 2024 were for entry-level positions, which is helpful for those unclassified unemployed persons as these roles typically do not require prior experience. However, the specific skills and education requirements of these entry-level positions remain unclear.
An analysis of educational requirements for vacancies in the same quarter shows that 48 percent of all job vacancies required post-secondary training or education. Positions requiring post-secondary education below a bachelor’s degree had an unemployment-to-job vacancy ratio of 2.6, while those requiring a bachelor’s degree or higher faced a higher ratio of 4.1. In contrast, vacancies requiring only a high-school diploma or less had a lower unemployment-to-job vacancy ratio of 1.8. However, employers find it more challenging to secure suitable candidates for positions requiring higher educational levels and specialized skills, particularly at wage levels that candidates are willing to accept.
Wages play an important role in reducing labour market imbalances, as they affect both the supply and demand for labour and encourage labour mobility and reallocation. Between Q4 2019 and Q3 2024, the average offered hourly wage saw the largest increases in industries such as arts and entertainment, agriculture, and information and cultural industries (over 30 percent). These sectors also experienced the most significant reductions in job vacancies, suggesting that offering higher wages can help alleviate labour shortages. To address shortages more broadly, there may also need to be a restructuring of relative wages and working conditions between occupations with labour shortages and those with surplus labour.
Offered wage, or stated salary, rates for vacant positions should largely depend on the growth of job vacancies and the difficulties in finding candidates to fill them. However, Figure 6 shows that industries experiencing a surge in vacancies post-pandemic did not respond consistently. In fact, the average hourly offered wage in these industries fell short of the national average, which was 27 percent between Q4 2019 and Q3 2024. For example, despite substantial growth in vacancies and a shortage of candidates in healthcare, the average offered wage growth in this industry only increased by 23 percent. This is largely due to government control over wages, making them less responsive to market forces. Policies like Ontario’s Bill 124, which capped annual wage increases at one percent for civil servants from 2019 to 2022, have contributed to this restraint. Additionally, multi-year labour contracts and provincial efforts to reduce deficits and debt post-COVID have further limited wage growth in the sector.
In Q3 2024, the average hourly offered wage in the utilities sector only increased by 2 percent compared to the pre-pandemic level, despite a 48 percent increase in job vacancies. Employers in this sector need to raise wages to attract and retain workers with the necessary skills. Otherwise, they will rely on their current workforce to work longer hours to maintain operations, which can lead to lower productivity per additional hour of work and retention challenges.
The average offered wage rate by occupation follows a similar trend (Appendix Figure A3). For example, despite a 59 percent increase in job vacancies, the wage rate for occupations in education, law and social, community and government services only rose by 16 percent, which is below the national average. This further highlights the need for employers to raise wages and improve working conditions to attract and retain workers.
Outcomes by Demographic Characteristics
While labour market indicators point to a strong post-pandemic recovery characterized by high employment, not all working-age Canadians have equally participated in and benefited from this resurgence, highlighting untapped potential across different population groups. Notably, recent demographic trends highlight that the older population and immigrants experience distinct labour market outcomes. Seniors (aged 65 and over) have substantially lower labour force participation rates compared to other demographics, raising concerns about both their economic security and potential contributions to the workforce. Additionally, immigrants frequently face employment barriers that limit their ability to fully integrate into the labour market and contribute to addressing the challenges posed by an aging population. Understanding the labour market outcomes for these groups is important for identifying the obstacles they face and formulating targeted policy recommendations to enhance their participation and success in the workforce.16
Age
There are significant variations in labour force participation across age groups. As expected, seniors exhibit the lowest participation rates, with their engagement in the labour market declining substantially after age 65 (Figure 7). Seniors’ participation rate is low across all provinces, albeit with varying degrees. For instance, Saskatchewan has the highest participation rate for seniors at 18.5 percent, while Newfoundland and Labrador records a notably lower rate of 11.5 percent. The four provinces in the Atlantic region, where the aging problem is more severe, have the lowest participation rate. A lack of employment opportunities for seniors in this region seems to be a major driver, with their unemployment rate significantly higher than both the national average and their counterparts aged 25 to 64 (except for Nova Scotia) (Figure 8).
While seniors participate far less than other Canadians in the labour market, Figure 9 shows significant shifts in their average retirement age over time and notable differences across employment types. Self-employed workers consistently retire later than other workers, with their average retirement age exceeding 68 in recent years, while public sector workers tend to retire earlier. These trends likely reflect variations in pension structures, job security, and financial incentives across employment types. Between 1976 and 1998, the average retirement age of all workers declined by four years to 60.9, likely influenced by the introduction of early retirement pension schemes in order to free up jobs for younger workers (OECD 2017). However, this shift had no obvious impact on younger workers’ employment. Many economists also warned that these measures were shortsighted, as the aging of the baby boomer generation would eventually create new challenges. Meanwhile, concerns about the financial sustainability of pension systems grew due to the increasing life expectancy and subsequent rising costs of providing retirement income (Banks et al. 2010; Herbertsson and Orszag 2003; Jousten et al. 2008; Kalwij et al. 2010; OECD 2017).
In response, the federal government in 2012 increased financial penalties for early retirement to encourage longer working lives.17 Consequently, the average retirement age of all workers began to rise and reached 65.3 in 2024, slightly surpassing its 1976 level. However, the persistent gap between the public sector and self-employed workers suggests that policy adjustments – such as pension reform or incentives for longer careers in the public sector – could be considered to encourage more uniform retirement patterns across employment types. The recent influx of immigrants may also help to alleviate the impact of the retirement wave, as immigrants are more likely to keep working and retire later. According to Fan (2024), the average retirement age among immigrant workers is around 66 over the last decade, two years older than that for Canadian-born workers.
Accordingly, the LFPR of seniors has increased substantially from a historical low of 6 percent in 2001 to 15 percent in 2024. Termination of mandatory retirement, lack of sufficient savings, higher educational attainments, and better health conditions among seniors have contributed to these LFPR increases.18 Hicks (2012) predicts that social and economic pressures will lead to further delay in retirement in the future. For example, of all seniors aged 65 to 74, including both Canadian-born and immigrants, one in ten were employed in 2022 (Morissette and Hou 2024). Nine percent reported working by necessity, while immigrant seniors were more likely to do so than their Canadian-born counterparts.
In the long run, labour productivity growth is the primary driver of Canada’s GDP per capita growth, though the participation rate of seniors can also have a significant impact. Wang (2022) found that during the pandemic, declines in employment and participation rates driven by young people and seniors were major contributors to the sharp drop in GDP per capita. He estimated that if work intensity, the employment rate, and the participation rate had maintained their pre-pandemic momentum from 2010 onward, Canada’s GDP per capita could have been 4 percent higher in 2021 than it was.
As babyboomers are gradually retiring, their lower LFPR will continue to influence the overall participation rate. Vézina et al. (2024) found that the overall participation rate is expected to continue declining in the short term, regardless of the number of immigrants selected. Across various scenarios, the overall participation rate appears to be more sensitive to changes in the participation of seniors than to increases in immigration.19 As a result, keeping older workers, particularly those aged 55 and over, in the labour market could significantly impact the future overall participation rate. As more older workers remain employed, improvements in employment assistance, labour market flexibility, and skills upgrading will be essential (Vézina et al. 2024).
International Comparisons of Pension and Retirement Policies
An international comparison reveals that differences in pension and retirement policies play a crucial role in explaining disparities in employment and retirement decisions across countries (Figure 10). Factors such as the flexibility to choose between continuing to work or claiming a pension, legal provisions regarding age-based termination of employment, and employers’ retention strategies – such as offering on-the-job training and flexible work schedules – greatly influence retirement timing.
One of the most significant factors contributing to the variation in employment decisions across OECD countries is the normal age at which individuals can claim full pension benefits. For instance, in 2022, over 32 percent of Iceland’s population aged 65 and over was employed, although the normal retirement age is 67, with the earliest pension access at age 65. In contrast, only about 14 percent of Canada’s population in the same age group remained employed despite having a higher life expectancy. This discrepancy can be explained by Canada’s normal retirement age of 65, with pension benefits available as early as age 60.
Cross-country analyses show that policy reforms reducing financial incentives for early retirement were key drivers behind the increase in old-age employment (Coile et al. 2024). To address challenges related to aging populations, many countries such as Australia, Denmark, the UK, Japan and Italy have raised, or plan to gradually increase, the retirement age to encourage longer working lives. Denmark and Sweden have even indexed their mandatory retirement ages to life expectancy. Canada should consider similar approaches by raising the normal retirement age and delaying the earliest access age.
Immigrants
International immigration has significantly contributed to Canada’s population and labour force growth. Between 2019 and 2024, immigrants and non-permanent residents accounted for 68 percent of the population growth and over 88 percent of the increase in the labour force. However, immigrants often encounter various obstacles such as language barriers, a lack of Canadian work experience and varying recognition for foreign education and experience (Mahboubi and Zhang 2024). These challenges can limit their employment opportunities and earnings. Furthermore, as Canada faces an aging population, the challenge of integrating immigrants into the workforce becomes even more critical. While aging workers often possess valuable experience, they may struggle with the physical demands of certain jobs or require retraining. Newcomers, on the other hand, may not be immediately equipped to fill these gaps in employment. The productivity levels of immigrants can also be affected by their integration into the labour market, as they may require additional training and support to navigate workplace expectations and cultural nuances.
In 2024, immigrants aged 25 to 54 had a lower employment rate (by 4.3 percentage points) compared to non-immigrants (Figure 11). This gap has narrowed since 2006 and continued to decline even through the pandemic despite the latter’s greater impact on immigrants.20 The remaining gap is mainly due to the lower employment rate of female immigrants.
Employment outcomes of immigrants, particularly among women, depend predominantly on the number of years spent in Canada. For women aged 25-54, the employment gap between female non-immigrants and more recent immigrants (who landed less than 5 years) was 15.5 percentage points. This gap narrowed to 10.6 percentage points for immigrants who landed between 6 and 10 years and further to 6.2 percentage points for those who have been in Canada for more than 10 years.
Over the last decade, the improvements in immigrant employment rates are likely attributed to several factors. These include an increased selection of economic immigrants from non-permanent residents with Canadian work experience, the implementation of the Express Entry21 system for immigration selection, and favourable economic conditions where the demand and supply of immigrant labour are broadly aligned (Hou 2024). In addition, the growth in managerial, professional, and technical occupations accelerated in the late 2010s (Frenette 2023), which would benefit recent immigrants with a university education. Recent immigrants in the prime age group of 25 to 54 have seen faster employment rate growth since the early 2010s, with a notable increase of 13.1 percentage points from 2010 to 2024, compared to a 3.5 percentage point increase among non-immigrants.
However, it’s important to note that some of these conditions may change in the short term. For example, the employment rate for recent immigrants stalled from 2022 to 2023, a period when labour shortages eased, and levels of both permanent and non-permanent immigration rose rapidly (Hou 2024). As such, the dynamics of labour supply and demand have changed, particularly with the increases in the labour supply of new immigrants and non-permanent residents coupled with a cooling labour market and rising unemployment. This could negatively affect the employment outcomes of foreign-born residents in Canada more than those of Canadian-born individuals, as immigrants are often disproportionately affected during economic downturns. In 2024, there was a large increase in the unemployment rate of recent permanent immigrants, rising from 8 percent in 2023 to 9.9 percent. This is more than double the unemployment rate of non-immigrants, indicating the difficulties recent immigrants face in securing employment.
The employment rate of immigrants residing in some provinces is lower than the national rate, such as Ontario and PEI (Figure 12). The relatively poor employment outcomes among immigrants in these provinces may stem from specific employment barriers unique to immigrants, as the unemployment rate of non-immigrants in these provinces remains below the national rate. However, immigrants in Newfoundland and Labrador have a higher employment rate than non-immigrants. In contrast, the employment gap between immigrants and non-immigrants is most pronounced in Quebec, a province with the highest employment rate for non-immigrants in Canada. This gap can, to some extent, be due to a large gap in the unemployment rates of these two population groups. The unemployment rate of immigrants in Quebec is twice that of non-immigrants (or a gap of 3.5 percentage points). Grenier and Nadeau (2011) show that the lack of knowledge of French largely explains why the employment rate gap between immigrants and non-immigrants is larger in Montreal than in Toronto. Greater emphasis on official language training could enhance their ability to fully participate in the local labour market.
Policy Discussion
While the Canadian labour market has shown resilience post-pandemic and continued to perform relatively well in 2024, significant disparities across regions, industries, and demographic groups highlight opportunities to improve participation and employment outcomes. Further, Canada’s declining productivity poses a challenge to the labour market’s ability to drive sustained economic growth and competitiveness.
Demographic shifts, particularly an aging population, continue to affect participation rates and contribute to some shortages. Notably, the expansion of the health industry and the associated labour shortages are closely tied to Canada’s aging population. However, in some industries, average offered wages have not risen enough to attract a larger labour supply, and employers have not sufficiently adopted alternative strategies, such as capital investment and automation, to address their workforce needs.
Addressing these challenges requires a holistic approach. Beyond automation and higher wages, investing in existing workers and removing barriers to labour-market participation by underrepresented groups – such as women, youth, Indigenous Peoples, and seniors – can significantly improve labour market outcomes.
Regional differences in economic conditions contribute to provincial variations in the participation of seniors, while differences in pension and retirement policies play an important role in driving discrepancies in retirement timing across countries. Gradually increasing the normal retirement age is a strategy adopted by some countries to encourage later retirement among seniors. In Canada, the federal government in Budget 2019 offered a way to make later retirement financially more attractive by increasing the Guaranteed Income Supplement (GIS) earnings exemption, allowing seniors to retain more of their increased income if they choose to work. However, provincial measures aimed at boosting older workers’ labour force participation have had mixed results. For instance, Lacroix and Michaud (2024) found that a tax credit in Quebec designed to boost employment among older workers had no significant impact on transitions in or out of the labour force, with only modest effects on earnings for those aged 60 to 64. The study concluded that this measure was not a cost-effective way to increase public revenue or employment rates for older workers.
While the Conservative government in 2012 announced a plan to gradually raise the eligibility age for Canada’s Old Age Security benefits from 65 to 67 starting in 2023, the newly elected Liberal government cancelled the plan in 2016. However, with an aging population and increasing longevity, Canada should reconsider gradual adjustments to the normal retirement age and the earliest access age to help sustain public pension systems and ease demographic pressures. This approach aligns with successful international models, though it requires careful implementation to account for differences in job types and income levels.
Seniors today are healthier and living longer, and delaying retirement can offer both personal and economic benefits and ease demographic transitions (Robson and Mahboubi 2018). Longer working lives allow individuals to accumulate greater retirement savings, reducing the risk of financial insecurity in old age. Working longer has also been linked to better cognitive function, mental well-being, and social engagement.
That said, raising the retirement age would affect workers differently depending on their occupations and financial situations. While high-income, knowledge-based workers may benefit from extended careers through flexible work arrangements or hybrid options, many low-income workers in physically demanding jobs – such as those in construction, manufacturing, or caregiving – may find it challenging to work longer. Policies promoting flexible work options, lifelong learning initiatives, and encouraging and monitoring training program uptake22 can help older workers stay in the workforce longer and maintain their skills (Mahboubi and Mokaya 2021).23 Targeted support, such as enhanced workplace accommodations, phased retirement options, and retraining programs for workers in physically demanding jobs, could ensure that a later retirement age does not disproportionately burden lower-income individuals.
In response to population aging and existing labour shortages, Canada has increasingly relied on higher levels of immigration. However, the overqualification of immigrants’ skills and credentials, particularly among those from non-Western countries, remains a persistent issue. The successful integration of newcomers into the workforce is important to mitigate the short-term impact of an aging population on the labour market and enhance productivity. For example, recognizing the credentials of foreign-trained professionals in fields like healthcare could increase their productivity and earnings, helping to address the chronic shortage of healthcare workers. However, many skilled immigrants hold qualifications in regulated fields overseen by provincial regulatory bodies, which creates considerable barriers to entering the labour market. While these regulations aim to uphold public safety, they differ among provinces. Over the past few years, several provincial governments have taken steps to reduce barriers for foreign-trained immigrants. For instance, British Columbia and Nova Scotia have expedited credential assessments for foreign-trained healthcare professionals, which helped expand their healthcare workforce. Other provinces should consider adopting similar initiatives.
Licensed workers, either immigrants or non-immigrants, in these occupations also face barriers if they wish to change their province of residence. Easing provincial labour mobility in regulated professions could help reduce regional labour shortages in these sectors. Ensuring immigrants’ skills and qualifications are recognized and accepted by employers is also important.
Canada also needs to adopt more effective settlement strategies, with a strong emphasis on improving language proficiency for immigrants who struggle with communication skills. Language training tailored to workplace culture can also bridge language gaps and help newcomers obtain licences to integrate into the labour market. A notable example is the Health English Language Pro (HELP) program, which was launched by ACCES Employment to support internationally educated physicians. The program pairs Canadian physician volunteers with internationally trained medical graduates to help them acquire the necessary medical English skills. Furthermore, in recent years, the expansion of language training facilities has not kept pace with the explosive increase in the number of permanent and temporary immigrants. Governments need to systematically evaluate settlement service agencies to assess the returns on investment and enhance the effectiveness of these services in the labour market.
In addition to reducing regional disparities and improving labour market fluidity – making it easier for workers to transition between jobs – Canada should also focus on increasing GDP per capita by encouraging greater capital investment (Robson, Kronick and Kim 2019; Gu 2024; Robson and Bafale 2023 and 2024) and promoting the adoption of new technologies (e.g., AI, robotics, and automation), with a focus on increasing productivity and complementing the skills of the existing workforce.
Canada’s labour productivity has declined recently – a worrisome trend. Enhancing labour productivity involves addressing skill shortages, overqualification and mismatches. Policies that encourage training and promote automation, as well as higher wages in high-demand sectors, are essential. The potential of AI should also be explored to support labour productivity and mitigate skills and labour shortages (Mahboubi and Zhang 2023). However, it is equally important to provide support for the displacement of low-skilled workers who may be impacted by automation. Governments and employers should focus on training programs that align with the evolving demands of the labour market, including reskilling and upskilling initiatives for those at risk of displacement.
Conclusion
Addressing the challenges of an aging population, a lower senior participation rate, the overqualification of immigrants’ skills, and declining labour productivity requires comprehensive and targeted policy interventions. Canada’s labour market will benefit from proactive measures that support both its existing workforce and newcomers while addressing the demographic pressures ahead.
To ensure sustainable economic growth and greater labour market participation, the following policy actions should be considered:
The federal government should gradually raise the normal retirement age to 67 and assess the benefits of delaying the earliest access age for pension benefits, in line with successful international models.
Provincial governments should adopt targeted policies to support older workers, such as promoting flexible work arrangements, part-time career opportunities, and self-employment options, particularly in regions like the Atlantic provinces, where senior participation is notably low.
All levels of government should invest in high-quality training programs that equip individuals with the skills needed for the evolving labour market, such as digital skills and job search strategies, with a focus on underrepresented groups like seniors, Indigenous Peoples, and youth.
Provinces and regulatory bodies should collaborate to streamline the licensing process for skilled immigrants, enabling foreign-trained professionals to meet local regulatory requirements more efficiently. They should also work together to ease labour mobility in regulated occupations, ensuring that qualifications are recognized across regions without compromising service quality.
The federal government should invest in enhancing settlement strategies for immigrants, including providing language training tailored to workplace culture. It is also important to evaluate the effectiveness of existing programs to ensure they adequately support newcomers’ integration into the workforce.
Employers, in collaboration with governments, should integrate automation and advanced technologies such as AI to boost productivity while ensuring that workers’ skills align with the evolving demands of the economy.
By implementing these policies, Canada can better navigate labour market imbalances, enhance its labour force participation, and position itself for sustainable economic growth in the face of demographic and technological change.
The authors extend gratitude to Pierre Fortin, Mikal Skuterud, Steven Tobin, William B.P. Robson, Rosalie Wyonch, and several anonymous referees for valuable comments and suggestions. The authors retain responsibility for any errors and the views expressed.
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Newcomers increase consumption and spending, and are actually contributing to demand for labour in other sectors.
Study in Brief
This study investigates the effects of Canada’s expansive immigration policy, implemented between 2016 and 2024, on labour shortages. It explores how the influx of permanent and temporary immigrants has affected the balance between labour supply and demand, with attention to whether the policy has met one of its key objectives – alleviating shortages in labour markets.
It provides an analysis of labour market dynamics through the lens of the Beveridge curve, which tracks the joint path of unemployment and job vacancies over time. The study compares labour market tightness before, during, and after the pandemic and evaluates how rapidly rising immigration and the adoption of remote work have affected job vacancy rates in Canada.
The arrival of immigrant workers has expanded the supply of labour to employers, but has also generated additional income and spending, and hence greater demand for labour throughout the economy. The macroeconomic evidence from this study indicates that, on balance, the increase in demand generated by immigration has more than likely outpaced the additional supply, potentially making economy-wide labour shortages more widespread rather than alleviating them.
Introduction
Canada’s immigration levels began to accelerate in 2016, following a period of relative stability. From 2001 to 2015, the annual inflow of immigrants, including both permanent and temporary admissions, was reasonably stable at around 0.85 percent of the overall population. In the following years, despite a temporary contraction during the pandemic, this rate rose fourfold, reaching up to 3.2 percent of the population in 2023.
This post-2015 expansion was consistent with recommendations from the Advisory Council on Economic Growth, established by Minister of Finance Bill Morneau in 2016. The Council’s 2016 report suggested that the annual number of permanent economic immigrants should be increased from 300,000 in 2016 to 450,000 in 2021, and to nearly double this number later. Its stated objectives were to increase population growth, reduce the old age dependency ratio, generate a bigger GDP, and accelerate the rise in real GDP per capita by easing shortages of high-skilled workers and other means. Policymakers, encouraged by the perceived success of Canada’s immigration program, embraced the idea that higher immigration levels could deliver even greater economic and demographic benefits.1 The Council also urged the government to facilitate admissions of temporary workers and attract more international students. The government responded by increasing permanent immigration levels from 270,000 in 2015 to 480,000 in 2024, allowing uncapped increases in temporary immigration, and trying to address shortages of low- as well as high-skilled labour.
The C.D. Howe Institute’s research has shown that the benefits of immigration in mitigating population aging, and supporting the growth of GDP per capita, have been more limited than expected (Mahboubi and Robson 2018; Doyle, Skuterud and Worswick 2024). The present study is an attempt to assess whether the policy has succeeded in meeting the goal of easing the challenges employers face in finding suitable candidates for their job openings. The answer to this question has clearly been a big “yes” at the level of the individual employer. Many employers are benefiting from the contribution of their new immigrant workers, which is the basis for the unrelenting support for more immigration by representative national business organizations.
It is less clear whether immigration has helped alleviate labour shortages in the overall economy. Immigration not only expands the supply of labour, but also adds to the demand for labour. Putting more immigrants to work generates an expansionary multiplier effect on gross domestic product (GDP) and national income. As the additional income is spent on various consumption and investment goods by households, businesses and governments, the demand for labour increases. The net effect of immigration on the difference between supply and demand in the aggregate economy is, therefore, a priori uncertain. It could be negative or positive.
My goal in this study is to uncover what simple economic logic, and the statistical evidence from Canadian macrodata, reveal about the direction and quantitative importance of the net effect of rising immigration on the economy-wide balance between the demand for, and the supply of, labour. I find that the demand has likely matched or exceeded the supply and has therefore increased the overall job vacancy rate at any given level of unemployment.
Labour Shortages and Job Vacancies
What do “labour shortages” mean, and how have they evolved since Canada’s immigration rate began to increase eight years ago? Employers feel they are short of labour when the number of unfilled job openings significantly exceeds the number of available employees with the necessary skills and qualifications to meet their operational needs. Each month, Statistics Canada reports the extent of labour shortages in various sectors and regions from its Job Vacancy and Wage Survey. It is called the “job vacancy rate” and is an estimate of the number of job vacancies as a percentage of total labour demand, including all occupied and vacant salaried jobs.
Data on the job vacancy rate have been available since 2015 (Figure 1). After the oil-induced economic slowdown of 2014-2015, job vacancies increased from 2.3 percent of labour demand in mid-2016 to 3.3 percent in early 2020. No vacancy data were available from April to September 2020 due to a six-month pandemic-related pause in Statistics Canada’s survey. Moving through the spring 2020 recession, but with the unemployment rate still very high, job vacancies then increased swiftly, reaching a peak of 5.7 percent of all occupied and vacant jobs in the second quarter of 2022. But with the economic slowdown and slackened labour markets subsequently accompanying high interest rates, vacancies fell back to 3.0 percent of labour demand in the third quarter of 2024.
Immigration and Labour Supply and Demand
Since 2015, Canada’s job vacancy rate has fluctuated in response to three key macroeconomic factors: rising immigration, the pandemic, and fluctuations in aggregate economic activity.
Immigration has risen steadily in recent years, with both permanent and temporary entries increasing in each non-pandemic year (Figure 2). Permanent admissions rose from 272,000 in 2015 to 472,000 in 2023. This upward trend was guided by the multi-year immigration-level targets set each year since 2017 by the government in its Annual Report to Parliament on Immigration. For example, the target for permanent admissions in 2023 was set at 465,000 in the 2022 Report.
Temporary immigration includes holders of study or temporary work permits, asylum seekers, and their family members. They are collectively referred to as “non-permanent residents” by Statistics Canada. Prior to 2024, temporary immigration was excluded from the government’s annual targets. It was uncapped and followed demand from businesses and educational establishments. The net annual addition to temporary permits (new entries less exits to permanent residence and to abroad) rose from basically zero in 2015 to 190,000 in 2019, and 821,000 in 2023 (Figure 2).
Overall, total immigration – the sum of permanent and temporary immigration – increased fivefold from 263,000 in 2015, to 1,293,000 in 2023. Was this fivefold surge in immigration over eight years able to lower the job vacancy rate and reduce labour shortages in the aggregate Canadian economy? How could it not? Prima facie, the arrival of new immigrant workers increases the supply of labour, allowing recipient employers to ameliorate their personnel gap, at least in part. The addition of immigrant labour might suggest the “common sense” inference that labour scarcity has been effectively eased up throughout the economy.
However, it is erroneous to assume that simply because immigration solves the personnel shortage of individual employers, it will necessarily solve the problem of labour scarcity in the aggregate economy.
The error comes from focusing narrowly on increasing the supply of labour, while neglecting the simultaneous increase in the demand for labour that is generated by immigration. With more immigrants in the workforce, employers can produce more goods and services and generate more income for themselves, their employees, and their suppliers – a good thing. However, to assess the overall effect of immigration on labour scarcity, it is crucial to consider that this additional income will be spent on various consumer and investment goods. Immigrants allocate their new income, along with any savings brought from abroad, to essentials such as food, clothing, housing, transportation, personal care, and leisure. In turn, employers and their chains of suppliers invest more in construction, machinery and intellectual property. Furthermore, immigrants, employers and suppliers all contribute to taxes, which governments allocate to meet the increased demand for social services, including public housing, education, and healthcare. The growing demand for private and public goods and services will expand aggregate labour demand.
In other words, the hiring of immigrants initially adds to the supply of labour, but it also ends up adding to the demand for labour once the new income generated is spent throughout the economy and a multiplier effect is generated on GDP. On net, it is a priori uncertain whether the supply increases more than the demand, in which case labour would be made less scarce overall, or whether it is the demand that increases more than the supply, in which case labour would be made scarcer.
As a first attempt to clarify the picture, let us see how the excess of labour supply over labour demand evolved from 2016 to 2024 (Figure 3). I take labour supply to be the entire labour force (all workers who are employed or are looking for work), and labour demand to be the sum of employment and job vacancies (all jobs that are occupied or ready to be filled). Expressed as a percentage of the labour force, the difference between the two – excess supply – boils down to the difference between unemployment and job vacancies. Excess supply goes up or down depending on whether unemployment increases more or less than job vacancies.
Figure 3 shows that the excess supply of labour has fluctuated widely since 2016. In the pre-pandemic period 2016-2019, it declined from 5.4 percent to 2.9 percent of the labour force. Labour became scarcer. During the pandemic year 2020, it shot up to 6.1 percent of the labour force. But in the aftermath, labour demand outpaced supply again so that by mid-2022 excess supply had dropped to a low of 0.3 percent of the labour force. Since then, it has risen back to 4.1 percent.
The time path of the excess supply of labour cannot alone determine whether the rise in immigration since 2016 has increased labour supply more or less than labour demand. Excess supply results from the interplay of three simultaneous determinants: rising permanent immigration and accelerating temporary immigration, the disruptions caused by the pandemic and its potential after-effects, and fluctuations in aggregate activity. For example, the declining excess supply in the pre-pandemic period 2016-2019 was the combined outcome of rising immigration and aggregate economic expansion. But the impact of rising immigration cannot be separated out from that of aggregate economic expansion by just looking at the trend in excess supply. Correctly identifying the net effect of each of the two factors requires a more comprehensive economic and statistical analysis of the data.
The Shifting Beveridge Curve
To identify the net effect of immigration on labour shortages, I will use a well-established tool called the Beveridge curve. The Beveridge curve offers valuable insights by highlighting the observed inverse relation between vacancies and unemployment.
William Beveridge (Beveridge 1960) used the unemployment rate as a main marker of fluctuations in aggregate activity, a practice business cycle analysts still follow to this day (Romer and Romer 2019; Hazell et al. 2022). He observed that vacancies and unemployment typically move in opposite directions through business cycles. He attributed the negative relationship to the pressure exerted by aggregate activity on economic potential. When aggregate economic activity was moving up to its full potential (as in Canada in 2016-2019), there were fewer unemployed workers and more job vacancies. Conversely, when activity was moving away from potential (as in Canada in 2023-2024), there were more unemployed workers and fewer job vacancies. Since 1960, this inverse relation between the job vacancy rate and the unemployment rate – now called the Beveridge curve – has played a key role in macroeconomic analysis of labour markets. It has been abundantly studied by researchers and has been identified in job vacancy and unemployment data in many countries (e.g., Blanchard and Diamond 1989; Pissarides 2000; Archambault and Fortin 2001; Elsby, Michaels and Ratner 2018; Michaillat and Saez 2021).
It is instructive to examine the trajectory of the Canadian unemployment – job vacancy relation in two-dimensional space from 2015 to 2024 (Figure 4). First, following the 2015 economic slowdown, the economic expansion of 2016-2019 brought a decrease in the unemployment rate and an increase in the job vacancy rate along a path that was consistent with a negatively sloped Beveridge curve. The sudden outbreak of the pandemic in early 2020 shattered this trajectory. The unemployment – job vacancy pair was sent far outward toward the northeast corner of the chart. From then until the end of 2021, it followed a new Beveridge curve to the northwest. During the recovery following the pandemic recession in the spring quarter of 2020, the unemployment rate decreased and the job vacancy rate increased along a path that was about parallel to that of 2015-2019, but at a much higher level. For instance, whereas the unemployment rate was the same in the summer quarter of 2021 as in the winter quarter of 2016 (7.25 percent), the job vacancy rate was twice as large in the former (4.2 percent) as it was in the latter (1.9 percent). Finally, as the pandemic faded, the unemployment – job vacancy pair did a loop to the west. A new post-pandemic Beveridge curve emerged along a southeasterly trend that looked parallel to, but somewhat higher than, the old pre-pandemic path of 2015-2019.2
This visual check reveals that there have been three distinct periods in the inverse relationship between job vacancies and unemployment, known as the Beveridge curve: pre-pandemic, pandemic and post-pandemic. The start and end of the pandemic significantly affected the vertical position of the Beveridge curve in the unemployment – job vacancy space. Although the three branches are not perfectly aligned, they appear to be nearly parallel. According to the statistical results in Table 1 below, a one percent change in the unemployment rate corresponds to about a 1.5 percent change in the opposite direction in the vacancy rate – this is sometimes referred to as the Beveridge curve “elasticity.”
The shifts in the Canadian Beveridge curve during the pandemic are not an entirely unexpected development. Shifts have occurred from time to time in the past.3 As Figure 4 has shown, the Canadian Beveridge curve looked relatively stable before the pandemic in 2016-2019. Figure 5 is an idealized illustration of the position it occupied in the unemployment – job vacancy space in this period. However, starting in 2020, it shifted significantly. It first moved outward during the pandemic in 2020-2021 and then returned inward after the pandemic in 2022-2024.
As an initial assessment of the magnitude of these movements, I use the actual values of unemployment and job vacancies to calculate the implied monthly shifts in the Figure 5 Beveridge curve from January 2016 to October 2024. I then illustrate the implied vertical movements of the job vacancy rate corresponding to a given reference unemployment rate of 5.5 percent4 by averaging the results for each year from 2016 to 2024. The vertical height of the Beveridge curve calculated in this way increased from 2.8 percent in 2019 to nearly 6 percent in 2020-2021, and dropped back to 3.2 percent in 2024 (Figure 6).
The Beveridge curve’s elevation at around 3.2 or 3.3 percent in the post-pandemic period 2023-2024 is higher than its height of 2.8 or 2.9 percent in the pre-pandemic period 2018-2019. This can be attributed to shifts in the ratio of two background factors: the intensity of labour reallocation across occupations, industries and regions, and the efficiency of the matching process between job openings and job seekers (Blanchard, Domash and Summers 2022). At any given rate of unemployment, the job vacancy rate and the Beveridge curve will be higher in relation to the intensity of labour reallocation and the inefficiency of job matching.
The first factor, the intensity of labour reallocation, is captured by the monthly flow of hires as a percentage of the labour force. It is shown as an index with 2019 = 100 in Figure 7. It increased by some 10 percent during the pandemic of 2020-2021. Labour moved from transport industries and those requiring person-to-person contact toward electronic communications and home deliveries. There was a displacement from traditional businesses and occupations to those allowing work from home. However, in 2022-2024 labour reallocation calmed down and its intensity decreased by some 15 percent below its 2019 level. This pushed the Beveridge curve downward.
The second factor, the efficiency of job matching, reflects the capacity of labour markets to generate hires at the observed levels of unemployment and job vacancies. It is an index with 2019 = 100 in Figure 8. It experienced a sharp drop of nearly 20 percent during the pandemic (2020-2021). Factors contributing to this decline include the increasing physical distance between vacant positions and available candidates, as well as the widening gap between the demand for and supply of skills. Also, the rise in illnesses and the increased popularity of remote work during the pandemic likely may have contributed to a decline in job search intensity. As a result, employers found it more difficult to match job offers with suitable job seekers. Matching efficiency did not recover from 2022-2024. It remained some 20 percent below its pre-pandemic level of 2018-2019. This pushed the Beveridge curve upward.
Going from 2019 to 2024, movements in labour reallocation and matching efficiency had opposite effects on the height of the Beveridge curve. But the upward pressure on the curve from the 20 percent drop in matching efficiency was greater than the downward pressure from the 15 percent decline in labour reallocation. Therefore, as already pictured in Figures 4 and 6, the net outcome is that, going over the pandemic, the Beveridge curve wound up at a higher level in 2024 than in 2019, implying a higher job vacancy rate for any given unemployment rate.
So far, I have used the Beveridge relation between job vacancies and unemployment as a broad interpretive framework for macroeconomic developments in Canada over the 2015-2024 period. First, I have focused on the effect of fluctuations in aggregate economic activity (captured by changes in unemployment) on the job vacancy rate. Second, I have noted that the onset and ending of the pandemic have been big shifters of this unemployment – job vacancy trade off upward in 2020-2021 and downward in 2022-2024. Nevertheless, third, I have shown that, mainly due to a persistent 20 percent drop in job matching efficiency since 2019, the Canadian Beveridge curve was occupying a higher vertical position in 2023-2024 than before the pandemic.
In addition to the pandemic, Canada’s immigration policy, characterized by rising immigration levels, is another major development that has impacted labour markets in recent years. Like the pandemic, this policy may have affected the level of the unemployment rate along the Beveridge curve, as well as the vertical position of the curve, through its impacts on labour reallocation and matching efficiency. The following sections try to assess the existence and magnitude of these potential effects of immigration.
Economic Logic
The Beveridge framework can be used to explain how the expansion of immigration in Canada before and after the pandemic could have produced a lasting decrease or increase in labour shortages. Excluding the pandemic’s influence, rising immigration may affect aggregate labour shortages in two mechanical ways: by causing labour markets to slide up or down along the Beveridge curve, or by shifting the entire position of the Beveridge curve upward or downward, resulting in a larger or a smaller number of job vacancies for any given unemployment rate.
The first scenario involves a slide along the Beveridge curve. If rising immigration moves the economy up and to the northwest, unemployment decreases and vacancies increase; if the economy descends to the southeast, unemployment increases and vacancies decrease, as shown in Figure 5.
A permanent increase in unemployment along a given Beveridge curve is not what is generally hoped for by policymakers and the public. We want to achieve a permanent reduction in labour scarcity without being forced to suffer a permanent increase in unemployment. Nevertheless, it is important to understand how rising immigration could impact unemployment permanently, such that a higher or lower unemployment rate would be structurally needed to keep inflation low and stable over time.
A rough check on whether a higher immigration rate has raised or lowered the national unemployment rate consists of seeing if the excess of the national rate over the rate of the experienced group, formed by the Canadian-born plus the immigrants landed more than five years earlier, was higher or lower in 2023 than in 2015. Labour force data indicate that the excess of the national rate over the rate of this experienced group did increase in this period, but by just 0.1 percentage point, owing essentially to the rising labour force share of immigrants landed less than five years earlier. Seen in this light, rising immigration does not seem to have had a meaningful direct effect on structural unemployment. This result is consistent with research by Dion and Dodge (2023), who found no significant change in the national unemployment rate needed to keep inflation stable, known as the noninflationary rate of unemployment, that could be attributed to rising immigration.
It is a relief to see that rising immigration has not entailed a permanent reduction in the job vacancy rate by permanently pushing the national unemployment rate upward. There is evidence, though, that rising immigration has led to greater cyclical volatility of unemployment. First, the phenomenal expansion in the number of new residents since 2021 is known to have contributed to the strong demographic pressure on the demand for housing and, hence, to the significant increase in the cost of rented and owned accommodation. The Bank of Canada has acknowledged that the persistence of high shelter inflation consequently acts “as a material headwind against the return of inflation to the 2 percent target” (Bank of Canada 2024). In other words, through this channel, rising immigration is prolonging the current period of slower growth and higher unemployment. Second, the difference in cyclical sensitivity of the unemployment rate, between the above-defined experienced group and immigrants landed less than five years earlier, seems to have increased. In the economic slowdown during the spring quarter of 2024, the unemployment rate was 4.0 points higher than a year before for immigrants landed less than five years earlier, but only 0.7 point higher for the experienced group. The difference of 3.3 points between them was larger than in the 2009 and 2020 recessions. It could be due in part to the rising share of the low-skilled population of immigrant workers, which is more exposed to layoffs.
This study is primarily concerned with the permanent structural effects of rising immigration on unemployment, which look small, and not with the short-term economic and social costs associated with the greater cyclical volatility of unemployment around its steady state. Nevertheless, the possibility that these short-term costs are real should be kept in mind. Easing labour scarcity by tolerating more unemployment, whether of the short- or long-term variety, is an outcome our policies should try to avoid.
The other way rising immigration may have impacted aggregate labour shortages is by moving the vertical position of the entire Beveridge curve up or down in the unemployment-job vacancy space. Ultimately, we want to know whether rising immigration has increased the job vacancy rate and worsened labour shortages, or whether it has decreased the vacancy rate and alleviated the shortages, at every given level of unemployment.
The combined visual evidence presented by Figures 4 to 8 above implies that the Beveridge curve did shift upward somewhat from the pre-pandemic to the post-pandemic period, particularly due to a persistent 20 percent drop in job matching efficiency. Has rising immigration in Canada contributed to this evolution? Bowlus, Miyairi and Robinson (2016) conducted a longitudinal study of the job search behaviour of immigrants to Canada in 2002-2007. Results imply that heightened immigration may reduce matching efficiency in the short run, as new immigrants often face a lower rate of job offers than natives during their initial integration period. Based on US data, Barnichon and Figura (2015) focused on the two primary determinants of aggregate matching efficiency: worker heterogeneity and labour market segmentation. They pointed out that matching efficiency would decline if workers with a lower-than-average search efficiency became more represented among job seekers, or if the dispersion between tight labour submarkets and slack ones increased. These two conditions would seem to apply to the Canadian context with rising immigration. Lu and Hou (2023) have identified a major shift of immigration toward lower-skilled workers, and a significant relative tightening of labour markets such as construction, accommodation, food, business support services, education, healthcare, and social services. The statistical analysis below will provide a test of whether in recent years rising immigration has in fact shifted the Beveridge curve upward and intensified labour scarcity, or not.
Rising immigration is not the only macroeconomic development that may conceivably have affected aggregate labour shortages in the post-pandemic period. It is entirely conceivable that some of the changes triggered suddenly by the pandemic shock may have persisted into the post-pandemic era. Potentially, the most important of these is the widespread shift to work from home (Aksoy et al. 2023). The pandemic can be seen as a mass natural experiment that brought millions of workers in Canada, and other countries, to suddenly experience more work from home, to value its benefits, and to stick to it thereafter, often with a surprising upside in productivity.
The percentage of Canadian workers aged 15 to 69 who work most of their hours from home was 7 percent in early 2020. It sprang to 41 percent in the great confinement month of April 2020, and then declined as the pandemic evolved and faded out. But it was still holding up around 20 percent in the first half of 2024, which was three times as large as the 7 percent of early 2020.
The large increase in the percentage of Canadians working primarily from home has introduced an increase in worker heterogeneity compared to the pre-2020 period. With more workers satisfied with their work from home, fewer are incentivized to seek new jobs, particularly of the traditional variety. Following the Barnichon and Figura (2015) result, this could partly explain the reduction in job matching efficiency that has so far kept the Beveridge curve at a higher level than otherwise.
The economic logic developed in this section suggests that rising immigration and increased work from home may have contributed to the 20 percent loss of matching efficiency that has kept the post-pandemic height of the Canadian Beveridge curve at a level higher than before the pandemic. (However, fully confirming this hypothesis is beyond the scope of this study).
Statistical Analysis
This section summarizes an analysis of the factors influencing job vacancies in Canada, focusing on immigration and the rise of work-from-home arrangements. Introducing the rate of work from home as a factor is done to verify whether the shift to work from home that was initiated by the pandemic, but persisted in 2022-2024 (Schirle 2024), affected the position of the Beveridge curve.5
The analysis spans six Canadian regions – Atlantic Canada, Quebec, Ontario, the Prairies (Manitoba and Saskatchewan), Alberta, and British Columbia – across the periods from 2015 to 2019 (pre-pandemic) and 2022 to 2024 (post-pandemic).
Table 1 summarizes the key findings of the statistical results. Consistent with expectations, it shows that the Beveridge relationship between vacancies and unemployment is negative, with a precisely estimated elasticity of -1.42 in the two models. The results also show that immigration has been a significant contributor to the rise in job vacancies in Canada. Specifically, Model 1 estimates that a one percentage point increase in the immigration rate is associated with an 8.12 percent increase in the job vacancy rate after one year. It suggests that rising immigration has pushed the Beveridge curve upward, increasing the job vacancy rate at each unemployment rate over the period. However, when accounting for the rise in work-from-home arrangements in Model 2, the effect of immigration is smaller, at 3.21 percent,6 reflecting the additional impact of remote work.7 The positive effect of work-from-home arrangements is estimated at 0.85 percent.
These results suggest that both factors – immigration and remote work – have played a significant role in pushing the Beveridge curve upward, making it more difficult to match available workers with job openings.
While both factors contribute to the rise in job vacancies, their high correlation complicates the ability to isolate their individual effects. The correlation between immigration and remote work is particularly strong, which makes it challenging to assess their independent impacts.8 As a result, the evidence for immigration’s effect on job vacancies in Model 2 is less powerful than it would be if the data allowed sharper estimation.9 However, the findings from Model 2 indicate that the combined effects of both immigration and remote work have contributed to higher job vacancies, suggesting that increasing immigration alone is unlikely to solve labour shortages in the short term.
To be specific, statistical calculation of Model 2 indicates an 82 percent chance that rising immigration has left the job vacancy rate unchanged or raised it, and only an 18 percent chance that it has lowered it.10 In other words, increased immigration is more than four times as likely to have raised the aggregate demand for labour by as much as, or more than, the supply than to have increased it by less than the supply. In short, it is unlikely that rising immigration in Canada has helped the country solve its economy-wide problem of labour shortages by reducing the job vacancy rate at any given unemployment rate.
A natural question is whether the effect of immigration on job vacancies varies between permanent and temporary immigration. So far, an expanded version of Model 2, which distinguishes between these factors by analyzing the permanent and temporary immigration rates separately, has found no significant difference in their four-quarter total effects.11 Future analyses could benefit from disaggregating data by industry, as the impact of immigration and working from home may vary across sectors. For instance, remote work affects sectors like technology differently than it does retail or construction.
Discussion and Conclusion
This paper’s conclusion, drawn from statistical analysis of the macrodata runs, is contrary to the views of business organizations, which have campaigned relentlessly in favour of increases in permanent and temporary economic immigration in the past several years (e.g., Business Council of Canada 2022; Canadian Manufacturers & Exporters 2023; Canadian Federation of Independent Business 2021; Conseil du patronat du Québec 2022). Their position is understandable and grounded in a genuine concern to address labor shortages. By filling the vacancies, economic immigration enables firms to produce more and maintain or increase profitability.
The evidence presented here does not question the important role immigration can play for individual employers, whose need for additional employees is acute and urgent. However, in economics, everything depends on everything. The direction and importance of a phenomenon, confirmed at a microeconomic level with regard to a particular business, government organization, or sector, can be different or even reversed at the macroeconomic level, once all spillovers into the rest of the economy are accounted for. In his 1955 introductory textbook, the renowned American economist Paul Samuelson warned against the risk of the “fallacy of composition,” where it is assumed that what is true for individual parts is automatically true for the whole economy.
In the case of immigration, the fallacy of composition consists of believing that the advantages accruing to employers that hire immigrants can simply be added up and said to extend to the whole economy. What the present study has uncovered is that this belief is not corroborated by the macroeconomic evidence from the recent experience of Canadian regions. It is true that immigration eases up the dearth of personnel in firms that hire newcomers, which is clearly a good thing. But it is also true, conversely, that it worsens the shortage of labour in industries that must cater to the additional demand for goods and services generated by the addition to total GDP. The induced increase in the demand for labour in the aggregate economy can offset or even exceed the initial expansion of supply, so that it contributes to amplify economy-wide labour shortages on net. The insights I have extracted from Canadian regional data suggest that rising immigration has more likely redistributed or increased labour scarcity across the economy than reduced it overall. The political implication is that, if labour shortages persist or increase in the whole of the country despite fast-rising immigration, the insistent demand of business organizations for more immigration will not calm down; labour shortages will persist or intensify.
The vision of immigration as an economy-wide offset to labour scarcity is also reductionist. To take account solely of the hoped-for benefits accruing directly to employers of new immigrants overlooks the fact that immigration is a global and transformative phenomenon. The purpose of immigration is not only to serve the interests of a particular group. It is of concern to a whole society for reasons that are no doubt partly economic, but also demographic, cultural, social, and humanitarian. Society is morally obligated to welcome and integrate all immigrants in the most humane manner. This requires much time and money. Society must also make sure that the pace of immigration is not so fast that it leads ethnic groups to “hunker down” (as Putnam 2007 found) and provokes serious economic disequilibria in sectors that must absorb the induced increase in demand, such as construction, housing, health, education and social services. The overall pace and composition of immigration must balance individual interests against the challenges it brings to society.
Among these costs are the negative potential repercussions on productivity and wage growth stemming from the open-door immigration policy that Canada has followed until recently. Two key implications merit attention. First, investment in housing, business investment to equip newcomers with required physical and human capital, and government investment in public infrastructure to provide social services have not been able to keep pace with fast-rising immigration. Second, the open-door policy has made it easy for employers to rely on low-skilled foreign workers to meet high labour demand, which has been concentrated in low-wage industries (Lu and Hou 2023). While immigration alleviates immediate labour shortages, it may suppress wage increases that would otherwise occur as labour markets tighten and affect capital investments.
For example, in the 12 months leading to 2024Q3, overall wages increased by 4 percent, outpacing inflation at 2 percent, but sectoral differences were stark: wages grew by 3.2 percent in the business sector compared to 6.3 percent in the non-commercial sector. These dynamics suggest that wage growth patterns are influenced by a blend of short-term factors and structural shifts, including immigration trends.
Data also show that business sector labour productivity in Canada is on a slippery slope. From 2021Q3 to 2024Q3, output per hour went down cumulatively by 2.3 percent, whereas it would have gone up by 3.2 percent if it had increased at the same rate as in 1999-2019 (Statistics Canada, table 36-10-0206). While there are many factors behind this slowdown in productivity growth, the high immigration rate may have been a contributor.
In March 2024, the government suddenly announced a reversal of its immigration policy. Immigration Minister Marc Miller committed his department to cutting Canada’s non-permanent resident population from 6.5 percent of the overall population in early 2024 to 5 percent in early 2027. In November, details of the plan were set in the 2024 Annual Report to Parliament on Immigration (Government of Canada 2024, Annex 4). There would be 446,000 fewer entries of new non-permanent residents than exits in each of 2025 and 2026. Annual temporary immigration would be negative to this extent. The Annual Report also announced that the annual target for admissions to permanent immigration would be reduced from 485,000 in 2024 to 395,000 in 2025, 380,000 in 2026 and 365,000 in 2027.
If implemented as intended, scaling back the number of temporary and permanent immigrants will impact Canada’s aggregate labour supply significantly in 2025-2027. The working-age (15-64) population will stagnate instead of increasing by 800,000 or more, as it did in each of 2023 and 2024. An implication of the evidence reported above in Table 1 is that labour demand will likely decline alongside the reduction in labour supply because there will be 800,000 fewer consumers in the Canadian economy. While this policy reversal may not directly address the job vacancy rate, it could reduce vacancies by decreasing the overall demand for labour. As a result, while Canada’s aggregate GDP may contract, GDP per capita could increase, particularly if a smaller portion of national savings is directed toward demographic investments and the composition of immigration shifts toward fewer low-skilled immigrants.
The government’s policy reversal is a first step toward moderation. While it presents challenges, it also offers opportunities for improvement. When employers do not have the luxury of recruiting a rising stream of newcomers who are willing to accept low wages, it may push them to invest more in technology and work reorganization, and hence increase productivity. Furthermore, with a more moderate immigration level, the issue of the lack of absorptive capacity in the economy to provide enough skill-equivalent jobs to high-skilled immigrants will be less acute. Immigrants will see their skill utilization increase and their overqualification rate decrease. This shift could enhance Canada’s ability to attract global talent, aligning with the 2016 recommendation from the Advisory Council on Economic Growth that immigration should help address the shortage of high-skilled workers.
Appendix: Statistical Methodology and Data
This appendix provides a detailed description of the statistical analysis conducted to assess the factors influencing the job vacancy rate in Canada. The analysis spans 27 non-pandemic quarters, covering two periods: 2015Q2 to 2019Q4 (pre-pandemic) and 2022Q4 to 2024Q3 (post-pandemic). It includes data from six Canadian regions – Atlantic Canada, Quebec, Ontario, the Prairies (Manitoba and Saskatchewan), Alberta, and British Columbia. Each of these regions has a population of more than 2 million.
The dataset consists of 162 observations, representing the six regions across the 27 quarters. All labour market and population data are sourced from publicly available Statistics Canada tables. The job vacancy rate and unemployment rate are expressed as ratios of seasonally adjusted job vacancies and unemployment to the labour force. These variables are logarithmically transformed to account for the convexity of the Beveridge curve.
To estimate the relationship between job vacancies and its key determinants, two regression models are specified:
• Model 1 includes the unemployment rate, the immigration rate (measured as the total number of new permanent immigrants and net additional non-permanent residents relative to the population, annualized), and three unconstrained lagged values of the immigration rate.
• Model 2 builds upon Model 1 by including the rate of work from home as an additional explanatory variable. The work-from-home rate is the fraction of workers aged 15 to 69 who work most of their hours from home in their main jobs. This model tests whether the pandemic-induced shift to remote work, which persisted post-pandemic, has affected the Beveridge curve and the job vacancy rate.
Both models incorporate regional and seasonal fixed effects to account for regional disparities and seasonal fluctuations in the labour market.
The author is grateful to Mario Fortin, Gilles Grenier, Jeremy Kronick, Nicolas Marceau, Parisa Mahboubi, Pascal Michaillat, Mario Polèse, Statistics Canada data analysts, Mikal Skuterud, Daniel Schwanen, Christopher Worswick and several anonymous referees for valuable comments and suggestions. The author retains responsibility for any errors and the views expressed.
References
Advisory Council on Economic Growth. 2016. “The Path to Prosperity: Resetting Canada’s Growth Trajectory.” Report of the Advisory Council on Economic Growth to the Minister of Finance of Canada. October.
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The Global Cooperation Barometer indicates that international cooperation has “flatlined”, driven by heightened geopolitical tensions and instability, but positive momentum in climate finance, health and innovation offers hope. In an era of heightened volatility, leaders will need to embrace “disordered” cooperation and dynamic, solutions-driven decision-making to deliver tangible results and build trust. AI and other emerging technologies are reshaping the global landscape and driving upheaval. Concerted cooperation will be critical to harness benefits and minimize risks.
Geneva, Switzerland, January 2025 – The World Economic Forum’s Global Cooperation Barometer offers a critical assessment of the state of global cooperation, showing a world grappling with heightened competition and conflict, while also identifying various areas where leaders can drive progress through innovative collaboration. Released amid geopolitical, technological and sociopolitical upheaval, the Forum’s flagship annual report underscores the urgency of addressing shared challenges and offers leaders guidance on what cooperation can look like in a shifting world.
The Global Cooperation Barometer 2025, developed in collaboration with McKinsey & Company, uses 41 indicators to measure the current state of global cooperation. The aim is to offer leaders a tool to better understand the contours of cooperation broadly and along five pillars: trade and capital flows, innovation and technology, climate and natural capital, health and wellness, and peace and security. Now in its second edition, the Barometer draws on new data to provide an updated picture of the global cooperation landscape, with a particular focus on the impact of the new technological age.
“The Barometer is being released at a moment of great global instability and at a time when many new governments are developing agendas for the year, and their terms, ahead,” said Børge Brende, President and CEO of the World Economic Forum. “What the Barometer shows is that cooperation is not only essential to address crucial economic, environmental and technological challenges, it is possible within today’s more turbulent context.”
“This second edition of the Global Cooperation Barometer focuses on where cooperation stands today and what it can look like in the new technological age,” said Bob Sternfels, Global Managing Partner, McKinsey & Company. “Advancing global innovation, health, prosperity and resilience cannot be done alone. Leaders will need new mechanisms for working together on key priorities, even as they disagree on others, and the past several years have shown this balance is possible.”
The latest edition of the Barometer highlights that global cooperation is at a critical juncture. The report’s analysis reveals that after trending positively for a decade and surpassing pre-pandemic levels, overall cooperation has stagnated.
This has been driven by a sharp decline of the peace and security pillar of the Barometer over the past seven years, caused by mounting geopolitical tensions and competition which have significantly eroded global collective security. Levels of conflict and attendant humanitarian crises have increased in the past year to record levels, driven by crises including, but not limited to, the Middle East, Ukraine and Sudan.
As the largely stable cooperative order that defined the post-Cold War period is giving way to a more fragmented landscape, solutions to pressing challenges – from climate action to technological governance – require collaboration. And despite the global security crises, the new findings indicate that collaboration has continued in various areas including vaccine distribution, scientific research, renewable energy development, and more – offering models for future cooperation.
Notably, peace and security have declined sharply in recent years, but other pillars of the Barometer have remained resilient and reveal emerging opportunities for international cooperation,
Innovation and technology. While geopolitical competition is rising in regard to certain frontier technologies such as semiconductors, overall global cooperation on technology and innovation advanced in 2023, in part due to digitization of the global economy. This helped drive the adoption of new technologies, a strong ramp-up in the supply of critical minerals – and a related drop in price of lithium batteries – and a rebound in student mobility. However, rapid disruption from emerging technologies such as AI is reshaping the global landscape, raising the possibility of a new frontline of geostrategic competition or even an “AI arms race”. Cooperative leadership and inclusive strategies will be key to harness its vast potential while tackling risks.
Climate and natural capital: Cooperation on climate goals improved over the past year, with increased finance flows and higher trade in low-carbon technologies such as solar, wind and electric vehicles. Yet, urgent action is required to meet net-zero targets as global emissions continue to rise. Greater global cooperation will be essential to scale up technologies and secure the financing needed to meet climate goals by 2030.
Health and wellness: Some health outcomes, including life expectancy, continued to improve post-pandemic, but overall progress is slowing compared to pre-2020. While cross-border assistance and pharmaceutical R&D have declined, and cooperation on trade in health goods and international regulations stalled, various health metrics including child and maternal mortality remain strong. Given rising health risks and ageing populations, leaders should invest in global cooperation to bolster public health and sustainable health systems.
Trade and capital flows: Metrics related to the flow of goods and services, trade, capital and people had mixed outcomes in 2023. Goods trade declined by 5%, driven largely by slower growth in China and other developing economies, while global fragmentation continued to reduce trade between Western and Eastern-aligned blocs. Despite this, global flows of services, capital and people showed resilience. Foreign direct investment surged, particularly in strategic sectors like semiconductors and green energy, while labour migration and remittances rebounded strongly, surpassing pre-pandemic levels.Looking ahead, leaders will need to find ways to work together, even as competition increases, as tangible results will be crucial to maintain public trust and support. The report concludes by underscoring the urgent need for adaptive, solutions-driven leadership to navigate a turbulent global landscape. By pivoting towards cooperative solutions, leaders can rebuild trust, drive meaningful change and unlock new opportunities for shared progress and resilience in the complex years ahead.
About the Global Cooperation Barometer Methodology
The Global Cooperation Barometer – first launched in 2024 – evaluates global collaboration across five interconnected dimensions: trade and capital, innovation and technology, climate and natural capital, health and wellness, and peace and security. The Barometer is built on 41 indicators, categorized as cooperative action metrics (evidence of tangible cooperation, such as trade volumes, capital flows, or intellectual property exchanges) and outcome metrics (broader measures of progress like reductions in greenhouse gas emissions or improvements in life expectancy). Spanning 2012–2023 and indexed to 2020 to reflect pandemic-era shifts, the Barometer normalizes data for comparability (e.g., financial metrics relative to global GDP and migration metrics to population levels) and weights it equally within and across pillars.
About the Annual Meeting 2025
The World Economic Forum Annual Meeting 2025, taking place in Davos-Klosters from 20 to 24 January, convenes global leaders under the theme, Collaboration for the Intelligent Age. The meeting will foster new partnerships and insights to shape a more sustainable, inclusive future in an era of rapidly advancing technology, focusing on five key areas: Reimagining Growth, Industries in the Intelligent Age, Investing in People, Safeguarding the Planet, and Rebuilding Trust. Click here to learn more.
From: Chris Christie To: Nervous Canadians Date: November 6, 2024 Re: Canada Should Embrace the Opportunities of a Second Trump Presidency
A second Donald Trump presidency, if approached strategically, offers Canada more opportunities than risks.
Donald Trump’s campaign rhetoric is often erratic, of that there is no doubt. And I, as you might have heard, am not a Donald Trump advocate.
But what happens in governance under Trump is a far cry from his provocative online posts or bombastic speeches, as I argued in the latest C.D. Howe Institute Regent Debate. His track record speaks for itself, and whether you choose to acknowledge it or not, Canada has already benefitted from Trump-era policies.
Let’s take the US-Mexico-Canada Agreement – CUSMA in the Canadian rendering – as a prime example. Trump’s renegotiation of NAFTA wasn’t just about putting “America first.” It was about reshaping trade relationships in North America to benefit all three countries. The agreement secured economic ties between the US, Canada, and Mexico in a way that ensures long-term growth for all parties involved.
Trump views that agreement as one of his crowning achievements, and rest assured, it’s not going anywhere. It is a durable platform for growth in North American trade.
Looking forward, the question isn’t whether Trump is unpredictable. It’s whether Canada can recognize and leverage the opportunities his policies present.
With Trump re-elected, his administration will continue to focus on policies that drive economic growth – lower taxes, reduced regulations, and energy independence. A booming US economy means a stronger Canada, as our two economies are deeply intertwined. When one prospers, the other stands to benefit through increased trade and investment.
Trump’s approach to trade – especially tariffs – has often been misunderstood. Yes, his speech-making is aggressive. But we need to separate rhetoric from reality. Trump’s actual policies were more measured than many anticipated. And they will be again.
The real adversary for Donald Trump is China, not Canada. If Trump tightens the screws on China’s unfair trade practices, it could create space for Canadian companies to flourish on a more level playing field, particularly in sectors like technology and intellectual property, where China has been a major violator.
Trump’s economic philosophy – focused on cutting taxes and regulations to unleash private-sector growth – should also serve as a wake-up call for Canada. Under Prime Minister Trudeau, Canada has taken a ruinous policy road, with higher taxes and more government intervention in business.
But what if Canada aligned itself more closely with the pro-growth policies Trump advocates?
Imagine the potential for Canadian businesses if they operated in an environment with fewer barriers to growth. A thriving private sector in Canada would strengthen the economy and create more opportunities for collaboration and trade with the US.
I won’t pretend that a second term comes without challenges. But instead of focusing on the personality occupying the Oval Office, Canada should focus on how to navigate the opportunities presented by our shared future as neighbours and trade partners.
It’s time to stop seeing Trump as an unpredictable threat and start recognizing the potential opportunities his policies can bring. Canada stands to benefit if it plays its cards right. For the Silo, Chris Christie.
Chris Christie was the 55th Governor of New Jersey and a participant in the C.D. Howe Institute’s recent Regent Debate. Send comments to Chris via this link.
The Pakistani national who allegedly plotted to travel to New York to murder Jews was seeking refugee status in Canada, according to an immigration consultant.
Muhammad Shahzeb Khan, who came to Canada in June 2023 on a student visa, was arrested on Sept. 4 by the RCMP for allegedly intending to carry out a mass shooting targeting Jews in New York City. He was charged by U.S. authorities with attempting to provide material support and resources to a designated foreign terrorist organization, the Islamic State of Iraq and al-Sham (ISIS), and the United States is seeking to have him extradited.
Fazal Qadeer, an immigration consultant who had worked with Khan, said Khan was applying for refugee status on the basis of sexual orientation, saying he is gay, CBC reported on Oct. 7.
It is not known what Khan’s refugee claim status was when he was arrested, but Qadeer said Khan had recently had a lengthy interview with Immigration, Refugee and Citizenship Canada (IRCC).
Immigration Minister Marc Miller said in September that Khan entered Canada on a student visa.
According to a U.S. criminal complaint that was unsealed in September 2024, Khan repeatedly expressed his support for ISIS and his intention to carry out a terrorist attack around November 2023.
That month, he began interacting online with an undercover FBI agent, and explained his plan to attack Jewish religious centres in the United States around the time of the one-year anniversary of Hamas’s Oct. 7 terrorist attack against Israel.
In a statement, IRCC said it would not comment on individual cases, but that all asylum claimants receive an “independent and fair assessment on the individual merits of their claim,” which included whether they fear persecution based on race, religion, political opinion, nationality, or if they are LGBT.
Minister ‘Confident’ in Screening System
Khan’s arrest came months after a father and son were arrested by the RCMP in Richmond Hill, Ont., for allegedly being in the “advanced stages of planning a serious, violent attack in Toronto.” The two are facing nine terrorism charges, including conspiracy to commit murder on behalf of ISIS.
Ahmed Eldidi had been admitted into Canada in 2019 and later given citizenship, while Mostafa Eldidi was granted refugee status, according to documents provided by IRCC.
Miller defended Ottawa’s immigration system when appearing before the House of Commons public safety committee in September, saying the government remains “confident in the way our biometric system works in the progressive screening that operates in our country.”
Miller told the committee that Ahmed Eldidi had his initial temporary resident visa application refused because of concerns he would not leave Canada at the end of his authorized stay, but his second application was approved after an officer was satisfied he merely intended to visit Canada. He was given a favourable recommendation, Miller said, and officers found no issues that made him inadmissible to Canada.
Conservative MPs on the committee questioned screening procedures and accused the Liberal government of removing the mandatory requirement for police background checks for arrivals from some countries including Pakistan in 2018.
The IRCC’s website currently states that those applying for permanent residence, citizenship, or the International Experience Canada program “may need to provide a police certificate for any other programs” if they have a prior criminal record, but does not specifically mention Pakistan. For the Silo, Matthew Horwood.
Featured image- RCMP logo is seen outside the force’s ‘E’ division headquarters in Surrey, B.C., on March 16, 2023. The Canadian Press/Darryl Dyck.
On August 30, the US requested consultations respecting Canada’s Digital Services Tax Act under the dispute settlement procedure set out in the Canada-US-Mexico Agreement (CUSMA). The US maintains that by imposing the tax, Canada has failed to provide US service providers and investors treatment no less favourable than it provides to Canadian service providers and investors. Given Canada’s unique trade relationship with the US, this could have major implications.
The essence of the complaint is that Canada is violating a specific CUSMA obligation to grant US firms terms that are no less favourable than its own companies receive.
This is called national treatment. The crux of the US argument is that the revenue and earnings thresholds are so high that no Canadian service provider would be subject to the tax, but at least some US providers would be. While the DST is not discriminatory on its face, its practical effect is discriminatory.
Canada’s taxation of digital services has been an on-going contentious issue with the US. The new legislation entered into effect on June 20 and imposes a 3-percent levy – retroactive to January 1, 2022 – on revenue (not income) earned from digital services when certain thresholds are met. Annual gross revenues in a calendar year must exceed €750 million for the tax to apply. The taxpayer must also earn at least C$20 million in Canadian digital services revenue in a calendar year. Affected companies are to start paying the tax next June 30.
On August 1, the Congressional Research Office released a paper outlining multiple concerns. It cites industry associations that maintain that Canada’s DST could “cost US exporters and the US tax base up to $2.3 billion annually and could directly result in the loss of thousands of full-time US jobs.” The paper also cites possible violations of CUSMA and WTO obligations.
The paper also notes that the United States Trade Representative (USTR) has applied sanctions under Section 301 of the 1974 Trade Act against digital services taxes enacted by other countries. Section 301 is much broader in its application than either CUSMA or the WTO.
The CUSMA panel could decide for the US if the facts establish that only US companies meet the €750 million threshold for overall earnings and whose Canadian digital earnings exceed C$20,000,000.
Aside from the possibility of an adverse panel decision and action by the US under Section 301, there are other factors that Global Affairs Canada should consider before the Canadian government commences with the retroactive portion of the tax.
CUSMA is up for renegotiation on July 1, 2026. The process on the US side starts with a USTR report to Congress, due by the end of 2025, that will include an assessment of CUSMA’s operation, as well as a recommendation on CUSMA extension. As Canadian initiatives to impose digital taxes have been a US concern for years now, the recommendation will doubtless address the question of Canada’s DST regime. If that regime remains an open issue and US concerns are not satisfied, the stage could be set for the ultimate demise of CUSMA in 2036.
CUSMA Article 32.6 also provides that a party can withdraw from CUSMA upon giving six months’ notice to the other parties.
Decision time for the Canadian government falls on June 30, 2025, and it has to decide whether to go ahead and start collecting its retroactive DST and face the inevitable hostile reaction of its largest trading partner. This has to be carefully managed, or this small issue could become a big one. For the Silo, Jon Johnson.
Jon Johnson is a former advisor to the Canadian government during NAFTA negotiations and is a Senior Fellow at the C.D. Howe Institute.
The Indonesian Pharmacist Association or more popularly abbreviated as Pafi is a forum for pharmacists in Indonesia to participate in improving the level of public welfare, especially in the fields of Public Health and Pharmacy, in addition to their daily duties.
One of the active branches that continues to strive to improve the quality of pharmaceutical services is Pafi Muara Bungo. For more complete information, check the website .
To facilitate providing the best service to the community, Pafi Muara Bungo continues to develop various initiatives and programs, including providing online registration for pharmacist members in the district.
The PAFI organization is a Professional Organization that is Work and Service-oriented.
In this case, it has 4 goals, such as:
Realizing a Just and Prosperous Society based on Pancasila and the 1945 Constitution quoted from the central PAFI, in fact, Indonesian Pharmacists have existed since the Proclamation of Independence of the Unitary State of the Republic of Indonesia on August 17, 1945, have fought side by side with all groups of society, to eliminate colonialism from the face of the earth of Indonesia, and have actively participated in defending the Unitary State of the Republic of Indonesia and then participated in Community and State Development.
Therefore, Indonesian Pharmacists are one of the development potentials that have never been absent in the struggle for state development until today, continuing to optimize services to the Indonesian people.
Realizing Optimal Health for the Indonesian People
The second goal of PAFI is to realize optimal health for the Indonesian people. In this case, PAFI Muara Bungo is actively disseminating information about health and the importance of proper drug use. Such as, recommendations to increase awareness before consuming these drugs, consulting with doctors and pharmacists before using drugs, and providing education related to disease prevention.
Developing and improving Indonesian Pharmaceutical Development
Developing and improving development in the world of automatic pharmacy can also increase efficiency and accuracy in providing services to the wider community.
Both the central Pafi and Pafi Muara Bungo in particular have developed an integrated pharmaceutical information system. It is expected to be able to provide faster and more accurate information online. So that health information is easily accessible to various levels of society.
Improving Member Welfare
One of the main goals of Pafi Muara Bungo is to improve the competence and welfare of its members. Various training and seminar information for Muara Bungo pharmacy experts is updated on the website.
It is hoped that with the increasing competence possessed, the welfare of Pafi members will also increase. Good news for pharmacists can join the training, the first step, register first to become a member of Pafi Muara Bungo.
Training and seminars on pharmacy management, the use of technology in pharmacy services, and the development of soft skills such as communication and auto services can be followed. In addition, there is a lot of job vacancy information for fresh graduates and pharmacists for better jobs. For the Silo, Anna Melnikova.
Let’s Hope for Solid Hit from the PBO’s Third Swing at Carbon Tax Analysis
The “corrected” analysis by the Parliamentary Budget Office of the carbon tax and rebates is due soon. One hopes it will get more things right in this third crack at evaluating the government of Canada’s assurance that most Canadians will receive enough from the carbon tax rebates to cover their cost of paying the tax.
Reporting in 2022 and in an update last year, the PBO analysis confirmed the government assertion so long as induced economic effects from the carbon levy are not included. However, once the economic damage from the levy is included, the PBO concluded that the rebates fall short of keeping family budgets whole.
The PBO’s conclusion was seized on by Conservative politicians and others to justify calls to revoke the carbon tax. Now, more knives have come out. The NDP says it would scrap the tax on households and put the burden on large emitters, but it does not yet explain how it would square that with the current big-emitter carbon tax. And BC, where carbon taxing began in Canada, has said it would drop the tax if Ottawa removed the legal requirement.
Much is at stake with this third PBO swing.
After the second report, the PBO admitted that its analysis had included, in addition to the carbon tax on households, the tax on large emitters as well. The economic impacts had been taken from work passed over to the PBO by Environment and Climate Change Canada (ECCC), which included the effects of the tax as applied to both industrial and household payers. The budget officer said the error was small and had little consequence for the analysis and promised a corrected version this fall.
The Canadian Climate Institute estimates that 20-48 percent of the emissions reduction by 2030 will come from the levy on large emitters compared to 8-14 percent from households. Given the scale of the large emitters tax, it is likely that it has significant economic effects on any forecast. Fixing this should not, however, be the most consequential revision to its analysis.
The PBO’s first two efforts had an analytical asymmetry. It measured the economic cost originating in the tax, exaggerated as it turned out, but did not attempt to capture the economic benefits (not to mention any health gains) from the effects of the household carbon levy in mitigating climate change. Put differently, their work was, in effect, based upon the faulty premise that climate change brings no economic damage. The massive and growing costs of cleaning up fire and flood damage and adapting to the many other consequences of global warming bear evidence of such costs. The PBO could and should do its own analysis of those climate change costs and, hence, the benefits of mitigation. Or it could more easily tap into the substantial body of available literature.
Lowering Canada’s Gross Domestic Product
In Damage Control, the Canadian Climate Institute estimated climate change would lower the Gross Domestic Product by $35 billion from what it would otherwise have been in 2030; the impact would rise to $80 to $103 billion by 2055. Through cutting emissions, the household carbon tax will reduce this cost. International literature is rich, and the PBO could review it for applicability to Canada. As but one example, Howard and Sterner’s (2017) meta-analysis on the impacts of climate change concluded most studies underestimated them. Their preferred estimate points to a GDP hit of between 7 and 8 percent of GDP if there are no catastrophic damages and 9 to 10 percent if there are. Conceptual thinking is also advancing. Consideration is being given to there being “tipping points” where a certain degree of climate change may have much more non-linear dramatic economic effects. Some, like Stern and Stigliz, even question the worth of comparing an economic outlook with mitigation action against a status quo baseline as the PBO has done. They argue that without mitigation, there may not be a sustainable economic outcome.
Finally, those still inclined to think that a corrected Fall 2024 PBO report will provide ammunition to “axe the tax” need to ask themselves two questions.
First, is there value in the emissions reduction resulting from the household carbon tax? The Canadian Climate Institute concludes that the 8-14 percent contribution to emissions reduction by 2030 will grow in later years. Even with the tax and all the other policies announced to date, there is a 42-megatonne gap in Canada’s 2030 emissions reduction target. More than 200 Canadian economists signed an open letter asserting that “carbon pricing is the lowest cost approach because it gives each person and business the flexibility to choose the best way to reduce their carbon footprints. Other methods, such as direct regulations, tend to be more intrusive and inflexible, and cost more.” If not the household carbon tax, then what else?
Don Drummond is the Stauffer-Dunning Fellow in Global Public Policy and Adjunct Professor at the School of Policy Studies at Queen’s University and a Fellow-In-Residence at the C.D. Howe Institute.
To: Canadians concerned about prosperity From: Don Wright Date: September 4, 2024 Re: Some Basic Living Standard Arithmetic for Governments
Governments often talk about “creating jobs,” but what they really do is choose some jobs at the expense of others. With their myriad spending, taxing and regulatory decisions, all governments try to direct job growth to different sectors – public or private, services or goods, resources or non-resources, and so on.
We all hope governments choose wisely.
It would help if they started paying more explicit attention to one factor: The impact of their decisions on Canadians’ standard of living.
A country’s standard of living is largely determined by the wages and net government revenue its tradeable goods and services sector can pay while remaining competitive against international competitors. If a company or sector is uncompetitive, it will have to either lower its wages, pay less tax or go out of business. These pressures on companies are never-ending. They determine both the wages a sector can afford to pay, and, through the interconnectedness of labour markets, average wages across the economy.
Some industries are so productive they can pay relatively high wages and significant taxes and yet remain competitive.
Industries that aren’t as productive can only pay lower wages and less tax.
Governments whose policies have the effect of moving labour from one sector to another had better pay attention to such facts.
Canadians may not like it but many of the country’s best-paying and most tax-rich jobs are found in natural resources. I was head of British Columbia’s public service. For most of B.C.’s history the province’s economic base has been dominated by natural resource industries – forestry, mining, oil and gas, agriculture and fishing. For a variety of reasons, these industries face strong political headwinds. Many groups press to constrain them and diversify away from them. The alternatives proposed include technology, film and tourism.
A few years ago, I asked officials in the province’s finance ministry to assess the relative performance of these different industries along the two key dimensions of average wages and net government revenue. In 2019-20 B.C. spent approximately $11,700 per citizen. Half the population was employed that year. So, to “break even” (i.e., have a balanced budget), the province had to collect $23,400 per employed person. If you look at things this way, each industry’s “profit” or “loss” is simply its revenue per employee less $23,400.
No such calculation will be exact, of course.
Several assumptions have to be made to get to an average “profit” or “loss” per employee. But, with that caveat, the numbers the officials brought back were telling. The industry with the biggest return to the province was oil and gas, at $35,500 per employee. Forestry was next, at $32,900. Then mining, at $14,900, and technology, though only at $900.
By this measure of profit and loss, however, film was a money loser, at -$13,400, and so was tourism, at -$6,900.
The negative numbers for the film industry reflect the very significant subsidies that B.C. (like many other provinces) provides to this sector. The negative number for the tourism sector primarily reflects low average wages per employee, which translate into relatively low personal income tax, sales tax and other taxes paid by employees.
These “profit or loss” numbers are not in any way a judgment about workers in these sectors. People find the best employment available to them in the labour market. Relative demands in that market are determined by many factors, none of which workers control. That said, if governments consciously move resources from the “profit” industries to the “loss” industries, they had better be aware of the consequences for wages, taxes and the overall standard of living.
The numbers I’ve cited were for a single year in British Columbia. The same analysis for other provinces or for Canada as a whole would likely produce different numbers – though I’d be surprised if the overall pattern were much different. Voters will draw their own conclusions about the impact on British Columbians’ standard of living from constraining the resource industries and promoting other industries instead.
Unfortunately, this type of analysis is rarely done when Canadian governments make decisions about what types of jobs they want to give preference to through their taxation, spending and regulatory decisions. They should do more of it. Ultimately, if [they] care about Canadians’ standard of living, governments need to start paying attention to the basic arithmetic of that standard of living.
Don Wright, senior fellow at the C.D. Howe Institute and senior counsel at Global Public Affairs, previously served as deputy minister to B.C.’s premier, cabinet secretary and head of the public service.
June,2024 – Lengthy delays and regulatory uncertainty is deterring investment in major infrastructure projects in Canada, according to a new report from the C.D. Howe Institute. In “Smoothing the Path: How Canada Can Make Faster Major-Project Decisions”, authors Charles DeLand and Brad Gilmour find that Canada’s regulatory approval process is creating high costs for investors and preventing critical projects in hydrocarbon production, mining, electricity generation, electricity transmission, ports and other infrastructure from being built.
Sectors that have historically driven business investment and productivity in Canada—mining, oil and gas—are most affected by complex regulatory procedures.
While investments in these sectors have supported high incomes for workers and high revenues for government in the past, they are now trending downwards. “Canada is struggling to complete large infrastructure projects in a reasonable time frame and at a reasonable price and the proposed amendments to the Impact Assessment Act (IAA) are insufficient,” says Gilmour.
Canadians have been debating whether Canada’s regulatory and permitting processes strike the right balance between attracting investments in major resource projects and mitigating potential harm from those investments.
These regulatory processes typically apply to complex and expensive projects, such as mines, large hydrocarbon production projects (oil sands, liquefied natural gas [LNG], offshore oil), electricity generation (hydroelectric dams, nuclear), electricity transmission (wires), ports and oil or natural gas pipelines. These projects often involve multiple levels of jurisdiction and can prove particularly slow to gain government approval.
Canada struggles to complete large infrastructure projects, let alone cheaply and quickly. We propose improving major project approval processes by: (a) ensuring that provincial and federal governments respect jurisdictional boundaries; (b) leaving the decision-making to the expert, politically independent tribunals that are best positioned to assess the overall public interest of an activity; (c) drafting legislation with precision that focuses review on matters that are relevant to the particular project being assessed; and (d) confirming the need to rely on the regulatory review process and the approvals granted for the construction and operation of the project.
Paul Jenkins – The West and a Workable New World Order?
From: Paul Jenkins
To: Global governance observers
Date: May 2, 2024
Re: The West and a Workable New World Order?
One can describe the so-called liberal world order as a set of ideas for organizing world democracies. While openness and trade, rules and institutions, and co-operative security have been the principles that have shaped the liberal order, it also required sovereign nation states to provide the foundation for the creation and development of a system of intergovernmental organizations, or system of global governance.
In the aftermath of the Second World War, the system was designed primarily for the advancement, economically and politically, of Europe and the United States. Yet since 1945 the liberal world order has evolved, giving impetus to the steady increase in global economic integration to the benefit of many nations and people.
Advances in science and technology have been critical to the evolution of the liberal order, but there has also been a need for the structures of global governance to evolve and keep pace.
On the economic front, for example, the collapse of the Bretton Woods system of fixed exchange rates, following Richard Nixon’s 1971 decision to abandon the dollar’s link to gold, gave rise to the creation of the G7. And the Asian Crisis of 1999 led to the creation of the G20.
Throughout the entire postwar period, however, tensions inherent between the sovereign authority of the nation-state and the need for collective global governance increasingly challenged the liberal order.
Indeed, the advent of the Cold War led to the liberal world order becoming hegemonic, organized around the economic and political strength of the United States with its dominance of global governance through the various institutions making up the global governance system.
But over the years, pushback took hold. As the benefits of global economic integration spread and the United States was no longer the singular engine of growth, both democratic and autocratic countries found voice and began to resist the principles that shaped the liberal order. Even core nations of the liberal order began to voice their concerns in the aftermath of the Global Financial Crisis as the market-based financial system failed to self-regulate (as had been advertised), and as the liberal order proved unable to provide social protection for those adversely affected by globalization.
Effectively, a new world order began to unfold, with the resulting slowing and even fragmentation [DS1][PJ2] of global economic integration.
At the same time though, virtually all nations, regardless of regime or stage of development, are facing the same challenges: Financial instabilities, rising inequality, weak productivity growth, climate change, spread of infectious disease, AI, cyber security and on and on.
These vulnerabilities represent global risks that can only be tackled and minimized through collective action. This in turn requires a new world order that treats the world as it is, not how we wish it to be.
What does this mean for the West, and in particular the United States and Canada?
The unique advantages of the United States are its open society, fair and law-based market economy, and allure for talent from around the world. To sustain these advantages, maintaining its wealth and its position as the centre of the free world, it cannot close its doors to further global economic integration.
Geopolitically, what might this look like?
John Ikenberry argues that the answer can be found in the principles of sovereignty, territorial integrity, and non-intervention of the Westphalian system, the 1648 treaties that ended the Thirty Years’ War and established the modern nation state. The key insight of the Westphalian system is that all countries are vulnerable to the same global risks. The leap forward in mindset that is required is the acceptance that states are the rightful political units of legitimate rule.
For the West, and the United States in particular, this implies the need to accept these new realities, and in so doing, the need to work together to build a new world order that preserves their liberal democratic values, and those of its allies, while at the same time recognizing that the economic challenges they face are not unique to them.
The unfolding relationship between the United States and China will define whether we achieve a workable new world order.
The economic incentives are there for this to happen.
For China, the incentive is further progress in closing both its internal income gap as well as the gap between itself and the developed world. The payoff would be setting in place the foundation for a sustained rise in living standards for all its citizens.
For the United States, the incentive is in preserving its strength as an open society and its vision of the world that has considered the interests of others. In many respects, it remains uniquely capable of playing the central role in sustaining the global economic system.
The challenge in re-imagining such a new world order is geopolitical. The task is to renew global governance with today’s realities in sharp focus.
Paul Jenkins. Mister Jenkins is a former senior deputy governor of the Bank of Canada and a senior fellow at the C.D. Howe Institute.
Canada Minister of Public Safety Dominic LeBlanc speaks in the Foyer of the House of Commons on Parliament Hill in Ottawa, on March 20, 2024. (The Canadian Press/Spencer Colby)
After learning that samples of deadly Ebola and Nipah viruses had been sent from Canada’s top-security lab in Winnipeg to China, Public Safety Minister Dominic LeBlanc said his reaction was similar to that of an MP who expressed incredulity upon learning of the move.
“I’m really concerned about the March 2019 incident where [Winnipeg lab scientists Xiangguo Qiu and Keding Cheng] were implicated in a shipment of live Ebola in Hanipah [Nipah] viruses on a commercial Air Canada flight. How the hell did that happen?” NDP MP Charlie Angus asked during a House of Commons Canada-China committee meeting on April 15.
In response, Mr. LeBlanc said, “When I saw that report, and publicly, I had the same reaction as you.”
A partly redacted national memo sent by the prime minister’s national security advisor to Prime Minister Justin Trudeau on June 29, 2017.
The minister deferred Mr. Angus’ question to the Public Health Agency of Canada, saying, “I don’t have any [information], but I had the same reaction as you, Mr. Angus.”
Mr. LeBlanc, who became minister of public safety in July 2023, was previously minister of intergovernmental affairs starting in July 2018.
The National Microbiology Laboratory (NML) in Winnipeg shipped 15 different strains of Nipah and Ebola viruses to the Wuhan Institute of Virology (WIV) in China on March 31, 2019. The package was sent from Winnipeg to Toronto and then on to Beijing via a commercial Air Canada flight.
Ms. Qiu and Mr. Cheng
The request to the NML management for the shipment of the viruses was facilitated by Ms. Qiu. The shipment was eventually approved by the NML management.
Ms. Qiu and Mr. Cheng, a married couple, were escorted out of the NML in July 2019 while under RCMP investigation. The couple were fired from their positions on Jan. 20, 2021, for having undisclosed ties to Chinese regime entities.
In 2021, in response to MPs’ questions about why the NML shipped virus samples to the Wuhan lab, laboratory management said the shipment followed all proper protocols and was in response to a letter from the Chinese lab indicating that they were to be used to understand their pathophysiology—the nature of infection—and the development of antivirals.
Declassified intelligence documents show that Ms. Qiu also sent antibodies and other materials to China without prior approval.
Shipments included antibodies for the China National Institute for Food and Drug Control, as well as small amounts sent to laboratories in the United Kingdom and the United States for testing.
The documents show that Ms. Qiu discussed the shipment of Ebola and Nipah with WIV employees in July 2018, and initially suggested that a formal agreement is not necessary as “no one owns the IP.” She also expressed “hope there is another way around” rather than issuing a formal agreement.
The documents also show that Ms. Qiu signed on to a project at WIV involving research on Ebola, and that some of the virus strains that were shipped from NML were meant for this project. Ms. Qiu had asked that the project remain a secret to her Canadian management as WIV was in the process of requesting the transfer of the virus strains from NML, the documents say.
Researchers work in the National Microbiology Laboratory in Winnipeg, Man., where the ZMapp antibody “cocktail” was created to fight Ebola. PHOTO BY HANDOUT
The Wuhan lab has been involved in synthetic biology research on the deadly Nipah virus, according to testimony from a U.S. scientist. Synthetic biology involves creating or redesigning biological entities and systems.
“The Nipah virus is a smaller virus than SARS2 [the virus causing COVID-19] and is much less transmissible,” Dr. Steven Quay, a Seattle-based physician-scientist, told a U.S. Senate subcommittee hearing on Aug. 3, 2022. “But it is one of the deadliest viruses, with a greater than 60 percent lethality” and 60 times deadlier than SARS2, he said. “This is the most dangerous research I have ever encountered.”
Chinese Talent Recruitment
During the April 15 House committee meeting, Mr. LeBlanc acknowledged revelations from the declassified documents that Ms. Qiu was involved in China’s Thousand Talents Program. The program was recognized by U.S. authorities as China’s efforts to “incentivize its members to steal foreign technologies needed to advance China’s national, military, and economic goals.”
It is clear that “elements from a Chinese-sponsored recruitment program were involved” at the Winnipeg lab, Mr. LeBlanc said. “It is well known that such programs are one way that China seeks to incentivize academics to participate in activities that exploit advancements in Canadian technologies.”
China is using the programs “to improve its military and intelligence capabilities, as well as the economic competitiveness all at the expense of Canada’s national interest,” the minister said.
He declined to address concerns raised by Conservative MP Michael Cooper regarding the delay in removing Ms. Qiu from the NML, saying it should be addressed to the health minister whose department is in charge of the Public Health Agency of Canada, which in turn oversees the NML.
Although concerns about the two were first raised in 2018, they weren’t fired until three years later. For The Silo, Andrew Chen. Omid Ghoreishi and Noé Chartier contributed to this report
A press photographer works next to the logo of the World Economic Forum (WEF) at the opening of their annual meeting in Davos on Jan. 15, 2024. (Fabrice Coffrini/AFP via Getty Images)
Close interactions between Canadian cabinet ministers and the World Economic Forum are well-documented, but a newly revealed letter suggests forum staff may have been doing more work with the federal government than previously disclosed.
In an undated letter to a WEF official, former Finance Minister Bill Morneau praised the organization and its collaboration to achieve “common” objectives.
“I would also like to take this opportunity to express my sincere appreciation to the WEF staff, for the support provided to the Government of Canada,” wrote Mr. Morneau in the letter obtained through the access-to-information regime.
Neither the WEF nor the Canadian government typically advertise what support the forum provides. The finance department has not replied to a request for information about the date of the letter and details of how WEF staff helped the government.
The letter was addressed to Philipp Rösler, a former German politician who served as a WEF manager and head of its Centre for Regional Strategies.
The federal government is known to have been involved in at least two WEF policy initiatives: the Known Traveller Digital Identification (KTDI) project and the Agile Nations network.
KTDI was a pilot project between Canada, the Netherlands, and private sector interests to develop a system of digital credentials for airplane travel between countries. Agile Nations is a group of countries working to streamline regulations to usher in the WEF-promoted “Fourth Industrial Revolution” that includes gene editing and artificial intelligence.
KTDI began in 2018, and Canada signed onto Agile Nations in November 2020, a few months after Mr. Morneau resigned during the WeCharity scandal. Both projects were worked on while Mr. Morneau was finance minister from 2015 to 2020.
Since both these projects fell outside of Mr. Morneau’s portfolio as finance minister, it seems to suggest that his letter of appreciation to the WEF was referring to other joint collaborations.
Canada’s then-minister of Finance Bill Morneau speaks to the Canadian Club of Canada in Toronto, on March 6, 2020. (Cole Burston/The Canadian Press)
The WEF’s mission statement says it is dedicated to “improving the state of the world.” It gathers leaders in the fields of politics, business, and activism to promote progressive policies on issues like climate change and making capitalism more “inclusive.” As is routine with the organization, it did not respond to requests for comment.
Critics of the WEF, which gathers world elites to shape global policies, often disagree with its progressive agenda and warn about its influence on countries.
“No staff, no ministers, no MPs in my caucus will be involved whatsoever in that organization,” Conservative Party Leader Pierre Poilievre said in January.
He added that officials who attend the forum’s annual meeting in Davos are “high flying, high tax, high carbon hypocrites” who travel in private jets while telling average citizens not to “heat their homes or drive their pickup trucks.”
Alberta Premier Danielle Smith has also criticized the WEF, saying in 2022 she finds it “distasteful when billionaires brag about how much control they have over political leaders, as the head of that organization has.”
Ms. Smith was likely referring to comments made by WEF founder and chairman Klaus Schwab in 2017, when he said said he was “very proud” to “penetrate the cabinets” of world governments, including that of Prime Minister Justin Trudeau.
“I know that half of his cabinet or even more than half of his cabinet are actually Young Global Leaders of the World Economic Forum,” Mr. Schwab told an audience at Harvard University.
WEF founder Klaus Schwab delivers a speech during the “Crystal Award” ceremony at the World Economic Forum annual meeting in Davos, on Jan. 16, 2023. (Fabrice Coffrini/AFP via Getty Images)
Davos Links
Mr. Morneau’s letter to the WEF comes from internal Finance Department records and is the only document in the release package that pertains to Mr. Morneau. It consists mostly of praise for the organization.
“As a Steward of Economic Growth and Social Inclusion, I have had the privilege of observing first-hand and benefiting from the WEF’s important contributions to foster public and private collaboration towards developing concrete solutions for strong, broad-based economic growth,” he wrote, adding that WEF analysis of different topics such as “structural reform priorities” was “helpful to develop substantive policy measures.”
He wrote that “as we enter another ambitious year for the WEF, I look forward to a continued fruitful collaboration to pursue our common objective of achieving stronger, sustainable and more inclusive growth.”
Other department records relate to current Finance Minister Chrystia Freeland and her involvement with the WEF. She is a board member of the forum and also an alumnus of the Young Global Leaders program that Mr. Schwab referenced.
Mr. Morneau, who resigned as minister in 2020, is listed on the WEF website as an “agenda contributor“ and a ”digital member.” He was a regular participant at the group’s annual meetings in Davos, Switzerland, while he was in office.
During those years, the Finance Department’s media relations office wasn’t shy about advertising ministerial trips to Davos.
“Canada’s strong presence at the Forum underscores the importance of this meeting for shaping the international agenda and advancing economic opportunities for Canadians,” read a January 2020 press release from the department announcing Mr. Morneau’s trip.
The Finance Department has not returned inquiries in recent years pertaining to Ms. Freeland’s involvement with the WEF, nor has it issued press releases referencing her involvement.
Some have questioned whether Ms. Freeland’s role as deputy prime minister and finance minister as well as a forum board member constitutes a conflict of interest. The Office of the Conflict of Interest and Ethics Commissioner said in its 2022 annual report it received more than 1,000 requests in a two-month period from members of the public to investigate the participation of MPs and ministers in the WEF.
The office said the requests “did not provide sufficient information to warrant an investigation.” Ms. Freeland’s leadership position with the WEF has been declared to the office and has therefore been cleared.
OTTAWA—Near the two-year anniversary of the federal government’s invocation of the Emergencies Act, hundreds of people gathered on Parliament Hill on Feb. 17 to celebrate the original Freedom Convoy protest and a recent victory in Federal Court.
People gather on Parliament Hill for the two-year anniversary of the Freedom Convoy protest, on Feb. 17, 2024. (Matthew Horwood/The Epoch Times)Protesters march in downtown Ottawa to mark the two-year anniversary of the Freedom Convoy protest, on Feb. 17, 2024. (Annie Wu/NTD)People gather on Parliament Hill in Ottawa to mark the two-year anniversary of the Freedom Convoy protest, on Feb. 17, 2024. (Annie Wu/NTD)
“This is like coming home again. It’s a big family reunion,” said Edward Vachon, who attended the original trucker protest in early 2022.
“The spirit that was there two years ago is still here. We still have the same convictions and we’re standing up.”
Hundreds of people, many of whom attended the original truckers’ Freedom Convoy protest in downtown Ottawa, gathered on Parliament Hill and on Wellington Street in front of the Hill, waving Canadian flags and holding signs against government overreach.
Dozens of vehicles drove by the protest honking and waving Canadian flags throughout the day, but the Ottawa Police Service ensured that none of them parked downtown. The police wanted to avoid a repeat of the original Freedom Convoy protest where trucks encamped in the downtown core for weeks.
Later in the afternoon, the crowd participated in a march through downtown Ottawa under the close watch of Ottawa police.
Protesters gather on Parliament Hill in Ottawa to mark the two-year anniversary of Freedom Convoy on Feb. 17, 2024. (Annie Wu/NTD)Protesters gather on Parliament Hill in Ottawa to mark the two-year anniversary of Freedom Convoy on Feb. 17, 2024. (Annie Wu/NTD)
Bethan Nodwell, who helped organize the original Freedom Convoy protest, said the 2022 event “changed the course of Canadian history.” She said many of the people attending this weekend’s event were “forever changed” by the convoy and will continue to meet every year to celebrate “the new Canada that was born in 2022.”
Genevieve Desmarais, wearing a Canadian flag draped around her back, told our friends at The Epoch Times that she came to the Freedom Convoy protest two years ago because she was upset by government overreach with its COVID-19 restrictions.
Louis Desmarais said he saw the day’s events not only as a commemoration of the anniversary of the trucker protest but also as a celebration of the recent victory in Federal Court.
On Jan. 24, Federal Court Justice Richard Mosley ruled that the Liberal government’s use of the Emergencies Act “was not justified in relation to the relevant factual and legal constraints that were required to be taken into consideration.”
“Finally, we got a federal judge to say ‘No, it was wrong to call the Emergencies Act, it wasn’t justified.’ That’s a big moment,” Mr. Desmarais said.
“Now the lawsuits are going to come out, that’s going to bring out the truth about all the lies, so that’s a step in the right direction.”
Protesters gather on Parliament Hill in Ottawa to mark the two-year anniversary of Freedom Convoy on Feb. 17, 2024. (Annie Wu/NTD)Protesters gather on Parliament Hill in Ottawa to mark the two-year anniversary of Freedom Convoy on Feb. 17, 2024. (Annie Wu/NTD)
Federal Court Justice Mosley found that invocation of the Emergencies Act infringed on Section 2(b) and Section 8 of the Canadian Charter of Rights and Freedoms. Section 2(b) deals with “freedom of thought, belief, opinion, and expression,” and Section 8 deals with the “right to be secure against unreasonable search seizure.”
The freezing of protesters’ bank accounts was also not “minimally impairing,” Justice Mosley said, as the directive was overly broad and there were “less impairing options available.”
Emboldened by the court ruling, the original organizers of the Freedom Convoy filed a $2 million lawsuit on Feb. 13 against the federal government for violating their charter rights when it invoked the Emergencies Act. On Feb. 14, a total of 20 people who had their bank accounts frozen under the act also filed a tort lawsuit against federal ministers and financial institutions behind the decision.
Justice Mosley’s ruling was in contrast with that of the Public Order Emergency Commission created after the Emergencies Act was invoked, tasked with evaluating whether its use was justified. Justice Paul Rouleau, who oversaw the commission, ultimately said the government was within its rights to invoke the act on Feb. 14, 2022, to clear the protests.
Deputy Prime Minister Chrystia Freeland said Ottawa will appeal Justice Mosley’s ruling, saying that the decision to invoke the act was done following “careful deliberation” and was “the necessary thing to do.”
Protesters gather on Parliament Hill in Ottawa to mark the two-year anniversary of Freedom Convoy on Feb. 17, 2024. (Annie Wu/NTD)
Doha, January 2024 //The Arab Center for Research and Policy Studies announced the results of their public opinion poll regarding the Israeli war on Gaza on Wednesday 10 January 2024. The poll was carried out on a sample of 8000 respondents (men and women) from 16 Arab countries. The survey questions were selected to determine the opinions of citizens in the Arab region on important topics related to the Israeli war on Gaza.
The results of the survey demonstrate the locality of the war as felt by Arab public opinion, with 97% of respondents expressing psychological stress (to varying degrees) as a result of the war on Gaza. 84% expressed a sense of great psychological stress.
Extent of psychological stress felt during the war on Gaza
About 80% of respondents reported that they regularly follow news of the war, compared to 7% who said that they do not follow it, a further indication that the Arab public sees this war as a local event. To access the news 54% of respondents relied on television, compared to 43% who relied on the internet.
Extent of news followship about Israel’s war on Gaza
It is noteworthy that the results highlighted that Arab public opinion does not believe that the military operation carried out by Hamas on 7 October 2023 was in pursuit of a foreign agenda. 35% of respondents considered that the most important reason for the operation was the continued Israeli occupation of the Palestinian territories, while 24% attributed it mostly to defence against Israel’s targeting of Al-Aqsa Mosque, and 8% saw it as a result of the ongoing siege of the Gaza Strip.
The most important motivations for Hamas to carry out the military operation on 7 October 2023
Most important
Second most important
The ongoing Israeli occupation of Palestinian land
35
13
Defending al-Aqsa Mosque against attacks
24
21
The ongoing blockade of Gaza
8
12
Ongoing and expanding settlement on Palestinian land
6
8
Liberating Palestinian detainees and prisoners in Israeli prisons
6
13
Israel’s rejection of the establishment of a Palestinian state
4
5
The United States’ failure to achieve a just peace
2
3
The international community’s disregard for Palestinian rights and the ongoing occupation
4
5
Halting the normalization process between Arab governments and Israel
2
3
Carrying out the plan or agenda of a foreign power such as Iran
2
2
Other
2
1
Don’t know / Declined to answer
5
0
No second option
0
14
Total
100
100
While 67% of respondents reported that the military operation carried out by Hamas was a legitimate resistance operation, 19% reported that it was a somewhat flawed but legitimate resistance operation, and 3% said that it was a legitimate resistance operation that involved heinous or criminal acts, while 5% said it was an illegitimate operation.
Assessments of Hamas’ military operation on 7 October 2023
The results showed that there is an Arab consensus of 92% expressing solidarity with the citizens of the Arab region with the Palestinian people in Gaza. While 69% of respondents expressed their solidarity with Palestinians and support for Hamas, 23% expressed solidarity with Palestinians despite opposing Hamas, and 1% expressed a lack of solidarity with the Palestinians.
Solidarity with Palestinians and support for Hamas
The majority of respondents rejected comparisons between Hamas and ISIS made by predominately Israeli and Western politicians and media personalities.
Comparisons between Hamas and ISIS
When asked about the responses of regional and international powers to Israel’s war on Gaza, 94% considered the US position negatively, with 82% considering it very bad. In the same context, 79%, 78%, and 75% of respondents viewed positions of France, the UK, and Germany negatively. Opinion was split over the positions of Iran, Turkey, Russia, and China. While (48%, 47%, 41%, 40%, respectively) considered them positively (37%, 40%, 42%, 38%, respectively).
Evaluation of international and regional positions
In the same context, 76% of respondents reported that their position toward the United States following the Israeli war on Gaza had become more negative, indicating that the Arab public has lost confidence in the US. Furthermore, respondents demonstrated a near consensus (81%) in their belief that the US government is not serious about working to establish a Palestinian state in the 1967 occupied territories (The West Bank, Jerusalem, and Gaza).
About 77% of respondents named the United States and Israel as the biggest threat to the security and stability of the region. While 51% saw the United States as the most threatening, 26% considered the biggest threat to be Israel. While 82% of respondents reported that US media coverage of the war was biased towards Israel, only 7% saw it as neutral.
How opinion on US policy in the Arab region has changed since the war on Gaza
Evaluation of US seriousness in establishing a Palestinian state in the 1967 Occupied Palestinian lands
Biggest threats to the peace and stability of the region
Greatest Threat
Second Greatest Threat
Gaza war
2022
2020
2018
Gaza War
2022
2020
2018
United States
51
39
44
43
25
25
23
28
Israel
26
41
37
37
33
28
38
40
Iran
7
7
10
13
10
13
19
15
Russia
4
6
2
3
8
8
4
7
France
2
2
2
1
10
5
3
1
Turkey
2
2
2
1
3
2
5
2
China
1
2
1
0
2
2
2
0
Other
1
—
—
—
2
—
—
—
Don’t know / Declined to answer
6
1
2
2
0
—
—
—
No second option
0
—
—
—
7
17
6
7
Aggregate
100
100
100
100
100
100
100
100
Evaluation of US media coverage of the war on Gaza
Arab public opinion sees the Palestinian Cause as an Arab issue, and not exclusively a Palestinian issue. A consensus of 92% believe that the Palestinian question concerns all Arabs and not just the Palestinians. On the other hand, 6% said that it concerns the Palestinians alone and they alone must work to solve it. It is worth noting that this percentage is the highest recorded since polling began in 2011, rising from 76% at the end of 2022, to 92% this year. Some countries recorded significant increases. In Morocco, it rose from 59% in 2022 to 95%, in Egypt from 75% to 94%, in Sudan from 68% to 91%, and in Saudi Arabia from 69% to 95%, a statistically significant increase that represents a fundamental shift in the opinions of the citizens of these countries.
Consideration of the Palestinian Cause as an Arab issue over time
Arab public opinion is almost unanimous in rejecting recognition of Israel, at a rate of 89%, up from 84% in 2022, compared to only 4% who support its recognition. Of particular note is the increase in the percentage of those who rejected recognition of Israel in Saudi Arabia from 38% in the 2022 poll to 68% in this survey. Such a statistically significant increase also applies to other countries such as Morocco, where the percentage rose from 67% to 78%, and Sudan, where it increased from 72% to 81%.
Support/opposition for recognizing Israel over time
When asked about their opinions on what measures Arab governments should take in order to stop the war in Gaza, 36% of respondents stated that Arab governments should suspend all relations or normalization processes with Israel, while 14% of them stated that aid and support should be brought into Gaza without Israeli approval, and 11% said that the Arab governments should use oil as a weapon to assert pressure on Israel and its supporters.
Measures that should be taken by Arab governments to stop the war on Gaza
Most important measure
Second most important measure
Suspend relations or normalization with Israel
36
15
Deliver aid to Gaza without Israeli approval
14
16
Use the oil weapon to pressure Israel and its supporters
11
13
Establish a global alliance to boycott Israel
9
11
Provide military aid to Gaza
8
10
Announce military mobilization
5
6
Reconsider relations with the United States
4
6
Reconsider relations with states that support Israel’s war on Gaza
3
5
Build alliances with states that have taken practical steps against Israel
3
4
Other
3
2
Don’t know / Declined to answer
4
0
No second option
0
12
Total
100
100
There is a near consensus among Palestinian respondents from the West Bank (including Jerusalem), around 95%, that safety and freedom of movement between the governorates and cities of the West Bank and their sense of security and personal safety have been affected negatively since 7 October 2023.
Negative effects experienced in the West Bank since 7 October 2023
A further 60% of Palestinian respondents in the West Bank said that they had been subjected to or were witnesses to raids by the occupation army forces, while 44% said that they were subjected to arrest or interrogation by the Israeli army, and 22% reported that they were subjected to harassment by settlers.
Frequency of witnessing or happening upon incidences of raids, arrests, or settler harassment in the West Bank since 7 October 2023
This survey is the first of its kind to gauge public opinion on the topic across the Arab region. The field work was conducted from 12 December 2023 to 5 January 2024 in Mauritania, Morocco, Algeria, Tunisia, Libya, Egypt, Sudan, Yemen, Oman, Qatar, Kuwait, Saudi Arabia, Iraq, Jordan, Lebanon, and the West Bank, Palestine (including Jerusalem). The surveyed communities represent 95% of the population of the Arab region and its far-flung regions. The sample in each of the aforementioned communities was 500 men and women, drawn according to cluster and self-weighted sampling methods to ensure that every individual in each country had an equal probability of appearing in the sample.
For the Silo, Dr Ahmed Hussein, researcher at the Arab Center for Research and Policy Studies.
