For decades, the rapid influx of immigrants has helped developed Western countries such as Canada, Australia, and the United Kingdom solve demographic problems, such as an aging population and declining birth rates.
Overall, migrants have saved the economies of these developed countries during the pandemic. However, after the pandemic, these countries are facing the same dilemma of a surge in numbers – one of the surest drivers of economic growth is declining, and housing and other issues are becoming more and more serious.
Developed countries need more labor
According to an exclusive analysis by Bloomberg Economics, 13 economies in the developed world began at the end of last year and simultaneously entered a state of recession in GDP per capita. But immigration-driven economic growth is not a complete failure. In fact, most developed countries need more labor.
In Australia, for example, around 1 million migrants (3.7% of the population) have entered since June 2022 to fill long-standing labour shortages in sectors such as catering, aged care and agriculture.
And in the UK, immigrants from Ukraine, Hong Kong and other places have filled the void of the post-Brexit labour shortage.
In the United States, the phenomenon of "walking the line" and cross-border smuggling has always existed, and the job market and economy are as hot as ever.
Canada and the United States have accepted more immigrants than ever before. Last year, the number of immigrants per 1,000 inhabitants in Canada was 32, compared with less than 10 in the United States.
The population cannot exceed the limits of what it can bear
Canada's experience shows that there are limits to immigration-driven growth: once the number of new arrivals exceeds the country's absorptive capacity, people's living standards also fall.
BMO's research estimates that even if Canada maintains its previous level of GDP growth amid record population growth, life will still be more difficult, especially for younger generations and immigrants who landed post-pandemic – just as GDP per capita began to plummet due to the post-pandemic surge in immigration and central bank tightening monetary policy.
Although millions of Americans are also facing a housing crisis in real terms, their real disposable income growth has outpaced home price growth over the past few decades. Conversely, the median price of housing in Canada's largest cities (e.g., Toronto) is now $1.3 million, almost three times that of equivalent cities in the U.S., such as Chicago.
The housing crisis forced Canada to limit the growth of temporary residents for the first time. Currently, Canada aims to cut foreign temporary workers, international students and refugees by 20 per cent, or 500,000 over the next three years.
The change in policy has prompted some immigrants to abandon Canada and move to immigrant cities such as Melbourne, Australia. However, the housing crisis is a common problem in developed countries. The same pressures are playing out in Australia, which is facing its worst housing crisis ever.
Australia adjusts its "unsustainable" immigration policy
Australia's GDP per capita has now fallen to a two-year low.
Housing shortages, soaring rents and house prices have prompted Australia's Labor government to crack down on student visas. Last month, Australian authorities made immediate adjustments to the employer visa program, introducing English language requirements and reducing the maximum length of stay in a range of low-skilled positions, citing "unsustainable" net migration.
In a recent report, the Australian Economic Development Council (CEDA), an independent think tank, found that the hourly wage gap between newcomers and natives widened between 2011 and 2021. On average, immigrants who have lived in Australia for 2-6 years earn more than 10% less than their peers.
Immigrants have saved the UK economy and pushed up house prices
A full-blown recession in continental Europe is no longer news, with massive influx of refugees, housing shortages and economic failures already weighing heavily on Europe's economy, especially in countries such as Germany, France, Austria and Sweden.
Post-Brexit Britain isn't much better, and record levels of immigration are starting to weigh on the economy. In the second half of last year, the UK's overall GDP fell by 0.4% due to a technical recession; GDP per capita has fallen by 1.7% since the beginning of 2022, with six of the seven quarters declining and the other stagnating.
However, in the UK, labour brought in by immigrants fills a widespread labour shortage, especially in the medical and social care sectors. More than 850,000 people in the UK have dropped out of the labour market since the start of the pandemic.
The UK's GDP has expanded by 23% since the beginning of 2010, but on a per capita basis it is 12%. During the same period, the population surged by 11% to about 7 million people. The Office for National Statistics said in January that more than 90% of population growth between 2021 and 2036 is expected to come from immigration.
The post-Brexit immigration system aims to stop cheap labour from Europe and prioritize highly skilled workers.
Housing shortages due to population growth have pushed house prices to more than eight times average incomes in England and Wales, and up to 12 times in London. In 1997, they were 3.5 times and 4 times their income, respectively. The supply shortage has also caused rental costs to soar at a record rate over the past 12 months, exacerbating the cost-of-living crisis for young people in the UK in particular.