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2018 OECD Economic Surveys: Canada 2018

image of OECD Economic Surveys: Canada 2018

Well-being is high in Canada, and the economy has regained momentum, supported by a rebound in exports and strengthening business investment. Macroeconomic policies are gradually becoming less stimulatory, and budget policies are sustainable in the long term, although difficulties remain at the provincial level. House price appreciation has slowed and even reversed in some locations, partly in response to macro-prudential and tax measures, reducing wealth gains and the associated boost to private consumption, but prices and household debt remain high and affordability poor. The major risks to the economic outlook are greater trade restrictions, notably in the United States, and a housing market correction. Progress is being made in improving workforce inclusion, but challenges remain, notably in the areas of increasing female labour force participation, improving labour market information to reduce qualifications mismatches and supporting later retirement through more lifelong learning and flexibility in working hours. Canada has a well-run immigration system. Immigrants are generally well integrated, although their earnings are considerably lower than those of the comparable native-born. Selection of economic immigrants has been refined and integration programmes developed to close this gap, but these measures need to be taken further. Meeting Canada’s climate-change commitments will also be challenging.

SPECIAL FEATURES : INCLUSIVENESS; IMMIGRATION



 

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Making the most of immigration

Canada’s immigration policy aims to promote economic development by selecting immigrants with high levels of human capital, to reunite families and to respond to foreign crises and offer protection to endangered people. Economic-class immigrants, who are selected for their skills, are by far the largest group. The immigration system has been highly successful and is well run. Outcomes are monitored and policies adjusted to ensure that the system’s objectives are met. A problematic development, both from the point of view of immigrants’ well-being and increasing productivity, is that their initial earnings in Canada relative to the native-born fell sharply in recent decades to levels that are too low to catch up with those of the comparable native-born within immigrants’ working lives. Important causes of the fall include weaker official language skills and a decline in returns to pre-immigration labour market experience. Canada has responded by modifying its immigration policy over the years to select immigrants with better earnings prospects, most recently with the introduction in 2015 of the Express Entry system. It has also developed a range of settlement programmes and initiatives to facilitate integration. This chapter looks at options for further adjusting the system to enhance the benefits it generates.

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