London: It may have fallen out of political favour, but a world without migration looks bleak for advanced economies.
Analysis of United Nations data by Fitch Ratings shows halting immigration would drastically reduce the potential working population of Group-of-Seven nations (G-7), leaving aging societies more dependent on a smaller labour force and resulting in greater financial stress on pension systems and potentially slower growth.
Under the UN’s base case scenario—current immigration levels being maintained until 2050, followed by a gradual reduction of half by 2100—Canada would see its potential workforce boosted by 11%. But stopping inflows completely would see it drop by 43% in the same period, Fitch says.
Without new immigrants, the US would be faced with a 16% reduction in its working age population by the end of the century, and the UK—where concern about levels of foreign workers featured prominently in last year’s Brexit vote—would experience a 20% drop.
While few politicians are as extreme as to suggest a total ban, UK Prime Minister Theresa May aims to cut annual inward migration to around a third of current levels. Meanwhile, President Donald Trump has promised to overhaul the US immigration system, taking steps to crack down on certain types of work visa and seeking to deport undocumented immigrants. In Canada, restrictions imposed by former Prime Minister Stephen Harper to force employers to hire more Canadians have already caused difficulties in some industries.
Skewed birth rates across the globe mean between 2015-2020, India alone will account for almost 30% of the global increase in people of working age. Restricting the movement of people between those nations with too few jobs to keep pace with their birth rate and those facing a decline in the available labour force, will lead to severe imbalances warns James McCormack, global head of sovereign ratings at Fitch.
“Politically expedient protective measures undertaken ostensibly for the retention of jobs and the promotion of better economic opportunities for residents are more likely to result in weaker growth and lower national income levels over time. A number of advanced economies, including the US and UK, will be reliant on continued immigration in the years ahead to avoid declines in working-age populations and slower growth.”Bloomberg