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Presentation to the 5th International Research Conference on Social Security By Carole Vallerand Senior Policy Manager, International Policy and Agreements Wednesday, March 7, 2007

Objectives of presentation
 Provide an outlook for migration, demographic and labor market developments in Canada a well as trends in income among immigrants.  Examine the critical aspects of Canada’s public pension system as these relate migrants  Discuss the role of social security agreements and why these are important to Canada


Outlook: key trends
 Canada’s is a traditional settling country:
– 3.5 million immigrants over the last 15 years – One of the highest per capita permanent immigration flows in the world: roughly 0.7 % in recent years – 18 % of the Canadian population is foreign-born – Half a century ago, most immigrants came from Europe. The top 5 countries were: the U.K., Italy Germany, Netherlands, Poland and the U.S. – Today, most immigrants come from Asia. The top 5 countries are: China, India, Hong Kong, Shri Lanka and Pakistan


Outlook : Key trends (cont’d)
 Over the last ten years, there has been an increase in the number of temporary foreign workers:
– new foreign workers entering in Canada: from 71,000 in 1996 to 99,141 in 2005 – foreign workers present in Canada: from77,000 in 1996 to 152,000 in 2005 – The top two source countries for new entrants: the U.S. and Mexico – The top two source countries for foreign workers present in Canada: the U.S and the Philippines


Outlook : Key trends (cont’d)
 Canada’s population is ageing. Between 2005 and 2030, we expect that:
– It will increase from 32 million to 39 million – In 2005, 66 % of the growth came from immigration, rising to 100 % in 2030 – Working-age population will also continue to increase, but immigration accounts for 100 % of that growth sometime after 2010 – Domestic labor supply will still be the largest source of new entrants (approximately 81%) – The ratio of working-age population to those 65 years and older will decline from 5:1 to 3:1

Outlook : Key trends (cont’d)
 Canada will not face a general shortage of labor due to population ageing over the next ten years
– But, there will be significant pressures in selected occupations, e.g., home builders and renovators, health-related workers, civil engineers or senior management

 Immigrants represent a vulnerable group
– Very little improvement in their financial situation despite they had much higher levels of education than a decade ago.
• In 2004, low-income rates among immigrants during their first year in Canada were 3.2 times higher than those of Canadianborn people

– Labor market conditions and age at landing influence their social protection as well as their current and future financial situation

How does Canada’s public pension system affect migrants?
 Two main schemes:
– Residence based Old Age Security (OAS) program: basic OAS and two income-tested benefits – Mandatory, contributory, social insurance plan: the Canada Pension Plan (CPP) – Both allow for conclusion of social security agreements

 Key features:
– Contains no nationality-based restrictions – 10-residence rule to be eligible to the basic OAS – 40 years of residence to receive a full OAS benefit. Partial pension is earned at 1/40th for each year of residence

How does Canada’s public pension system affect migrants? (cont’d)
 Key features (cont’d):
– OAS basic pension is exportable anywhere in the world with 20 years of residence – Only one valid contribution is required to qualify for the CPP retirement benefit, providing easy access for new immigrants in the labor force – CPP benefits are exportable anywhere in the world without restrictions – Social Security Agreements between Canada and other countries can help individuals to qualify for benefits.

Social Security Agreements pursue four objectives:
 Equality of treatment by reducing or eliminating benefit eligibility restrictions based on citizenship in social security schemes of other countries  Exportability of benefits by reducing or eliminating restrictions on payments abroad  Easier access to benefits by totalizing together periods of social security coverage under the schemes of two countries  Continuity of social security coverage when a person is working temporarily in another and to prevent situations of “double coverage”

Since 1977, Canada has concluded 50 bilateral Social Security Agreements
Asia: Japan*, Korea, Philippines Africa: Morocco* Europe: Austria, Belgium, Croatia, Cyprus, Czech Republic, Denmark, Estonia*,Finland, France, Germany, Greece, Hungary, Italy, Iceland, Ireland, Jersey/Guernsey, Latvia*, Lithuania*, Luxembourg, Malta, Netherlands, Norway, Portugal, Slovakia, Slovenia, Spain, Sweden, Switzerland, Turkey, United Kingdom (coverage only) Middle-East: Israel (coverage only) North America: United-States, Mexico The Caribbean &Central America: Antigua and Barbuda, Barbados, Dominica, Grenada, Jamaica, St.Kitts and Nevis, Saint Lucia, Saint Vincent and the Grenadines, Trinidad and Tobago South America: Chile, Uruguay Oceania: Australia, New- Zealand (in both cases, benefit only)


Social security agreements provide economic benefits to migrants, the societies they join and their countries of origin
 Benefits to migrants:
– Generate additional sources of income: CDN $663 million paid to 242,000 individuals in 2005 – Result in cost savings to Canadians working in Canadian companies operating abroad

 Benefits to Canada:
– Almost CDN $553 million in foreign benefits paid in Canada in 2005 – Reduce public pension costs and increase tax revenues – Cost savings to Canadian companies operating abroad

 Benefits to other countries:
– Around CDN $110 million in Canadian benefits paid abroad in 2005

Provide a net economic gain for Canada


Key considerations for concluding social security agreements
 Presence and compatibility of public pension schemes – a prerequisite  Other factors include:
– Sustainability of public pension schemes – Administrative capacity – Diplomatic considerations


Key messages
 Migration will continue to be important for Canada to mitigate demographic and labor market pressures.
• But, it is only part of the solution

 Immigrants are a vulnerable group and their labor market conditions and access to social security are key in ensuring their financial security throughout their lives.  Canada’s public pension design fares well as it relates to migrants.
• But is there still room for improvement? • How do we fare compared with other countries?

 Canada will continue to look for opportunities to conclude social security agreements
• Extension of social security coverage is important to enable to enable the possibility of concluding social security agreements