SOCIAL SECURITY FOR MIGRANTS: THE CANADIAN CASE

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SOCIAL SECURITY FOR MIGRANTSTHE CANADIAN CASE

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

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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 Canadas public
  pension system as these relate migrants
• Discuss the role of social security agreements
  and why these are important to Canada

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Outlook key trends

• Canadas 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

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Outlook Key trends (contd)

• 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

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Outlook Key trends (contd)

• Canadas 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 51 to 31

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Outlook Key trends (contd)

• 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 Canadian-born people
• Labor market conditions and age at landing
  influence their social protection as well as
  their current and future financial situation

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How does Canadas 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

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How does Canadas public pension system affect
migrants? (contd)

• Key features (contd)
• 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.

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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

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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)

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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

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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

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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.
• Canadas 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

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