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Canada Bolsters Immigration of Skilled Construction Workers to Tackle Housing Supply Crisis

(Bloomberg) -- Canada's commitment to enhancing its workforce with construction expertise is coming to fruition, hinting at the potential success of a specialized immigration initiative. However, there is a concern that progress may not be swift enough to bridge the growing gap in housing supply.

Recent data indicate a promising 29% surge in the admission of permanent residents championing trades skills in the first quarter when compared to the average quarterly rate of the previous year. This pace, if maintained, could result in Canada welcoming approximately 17,800 skilled workers in the construction field within the current year.

This increase is a direct consequence of changes in immigration policy designed to draw more tradespeople to bolster homebuilding efforts. Prime Minister Justin Trudeau's administration views this influx as a key strategy in its ambitious goal to expedite construction and introduce 3.9 million new homes by 2031, an endeavor crucial to alleviating housing pressures and renewing the governing party's waning favorability among the electorate.

Canadian Immigration Minister Marc Miller has acknowledged the need to enhance the alignment between the talents brought into the country and the demands of the construction industry. In August, Miller unveiled the nation’s first selection program specifically targeting newcomers with trade expertise, a strategic move to combat the shortage of skilled labor in the sector.

While such policy reforms are not a single cure-all for the deep-rooted issue of underbuilding, they are beginning to address a paradox experienced by many advanced economies: the influx of immigrants aggravates housing shortages, yet, paradoxically, these nations require more migrants to fuel construction activities and reinstate housing affordability.

For deeper insights, the Global Housing Shortages Are Crushing Immigration-Fueled Growth article sheds light on the complex dynamics at play.

“We find ourselves at a juncture where any and all contributions towards accelerating the pace of housing starts in Canada must be considered,” says Mathieu Laberge, the senior vice president at the Canada Mortgage and Housing Corporation, reflecting on the multitude of factors influencing construction. “The labor component is critical, but we must also explore innovative building methodologies to accelerate the process.”

According to a study conducted by the Royal Bank of Canada, Canada's housing market may require upward of 500,000 additional construction workers to meet homebuilding needs in the upcoming decade. The report emphasizes the necessity of realigning the immigration system to better reflect the imbalance of skills and the long-term needs of the labor market.

To provide a glimpse of the scale of recent immigration, last year Canada welcomed approximately 470,000 new permanent residents, a fraction of which, 2.9%, were skilled in trade occupations such as carpentry, contracting, electrical work, plumbing, and welding. An elevated intake this year could elevate trades occupations' representation among newcomers to a projected 4%, provided the country meets its target of 485,000 new permanent residents.

However, it is important to note that the representation of skilled trades within newcomers is still lower than the roughly 8% of the overall employed Canadian population engaged in construction, highlighting the ongoing gap between the presence of trades in immigration numbers versus the actual industry workforce.

One of the hindrances to a equitable representation is Canada's primary immigration channel, a points-based system that tends to favor university education and higher levels of language proficiency. This can inadvertently place skilled trade candidates at a disadvantage. As a result, certain sectors experience a surplus in workforce relative to job creation, whereas industries like construction continuously face a shortfall in meeting employer demand.

The dominant professions among successful permanent-resident applicants, according to the most recent government reports, are typically not in the trades. Instead, they span across professions like software engineering, information system specialization, computer programming, and areas within service supervision as well as advertising and marketing.

Insights from the first quarter revealed that admissions in 13 out of 61 trade occupations at least doubled compared to the average quarterly figures of the preceding year. Positions such as crane operators, residential and commercial installers, heating and air conditioning mechanics, and machine fitters witnessed the most significant upticks during this period.

Despite a rise in immigrant skilled labor and a subsequent decline in job vacancies, the construction industry still grapples with shortages. This issue is but one of the obstacles hindering housing supply, joining the ranks of zoning restrictions, convoluted permitting processes, the high costs associated with construction, and currently surging interest rates.

The tangible results of the construction industry's augmentation with skilled immigrants will be the ultimate gauge of this policy's success, according to Bahoz Dara Aziz, press secretary for Minister Miller. The government’s focus, as underscored by Aziz, remains firmly on bringing about more home construction and vital infrastructure projects across Canada.

In conclusion, Canada's deliberate recalibration of immigration to address skill shortages in the construction sector is pivotal for tackling the housing supply crisis. As policymakers and industry experts await the outcomes, the construction landscape in the coming years will reflect the efficacy of these strategies in fostering growth, providing affordable housing, and establishing a more balanced immigration system. The collaboration between new policies, the construction industry, and the influx of skilled tradespeople will play a crucial role in determining Canada's overall economic stability and growth.

For more information and the full context of Bloomberg's coverage, assistance was provided by Jay Zhao-Murray, and the content is also available through the Bloomberg L.P.