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COVID-19 puts international student-driven economic growth in Canada at risk

Stephanie Hughes
Financial Journalist

The COVID-19 pandemic could put a strain on Canada’s international student sector, according to a new report by RBC. The study, published Tuesday morning, found that there was a 45 per cent drop in international student permits in March compared to last year.

The immediate impact is the loss of student revenue coming from overseas, according to Andrew Schrumm, the senior manager of research at RBC. This could account for $6 billion annually that higher education institutions will not see. This lost revenue doesn’t just hit universities and colleges; it has a ripple effect across Canada’s gross domestic product (GDP). “The greater spending is about $22 billion of spending when you add up rent and food and all the other consumption.” Schrumm told Yahoo Finance Canada. “It’s a considerable chunk of money coming into Canada.”

According to a RBC report published last week, there has been a 45 per cent drop in students entering with study visas in March. The beginning of the fall semester is uncertain as much of the world remains under lockdown.

 

Canada’s economy could benefit from international students even after their four-year programs end. According to the report, about 11,000 new permanent residents a year WERE foreign students who pursued their degrees in Canada. With global travel at a near standstill, it puts a pause on immigration growth for the country. “Generally speaking, our labor force without immigration is declining,” said Schrumm.

“We have an honest demographic concern in Canada, as many Western countries do. We can't sustain our economy without introducing more workers.”

Permanent residents who studied in Canada are crucial for the future economic growth of a country with an aging population. Statistics Canada found that the natural birth rate in the country was waning as the population aged and fertility rates declined. In recent years, births in the country contributed less than one-third to the population, with immigration growth picking up the slack by contributing the other 75 per cent.

Canada’s GDP growth has increased by about a one per cent on average since the 2008/09 crisis, according to an immigration report by the Conference Board of Canada. The report further forecast that this rate could slip below one per cent as the baby boomer generation begins to retire, what many call the ‘Silver Tsunami’ that creates a gap in the labour force. The Conference Board of Canada projected that growth driven by immigration could put the GDP annual growth rate at 1.8 per cent from 2018 to 2040.

This growth has been interrupted by the global pandemic. RBC described the COVID-19 impact on general Canadian immigration in a report released late last week, showing that immigration made up 80 per cent of the 580,000 population increase in 2019.

Remote-Learning gives international students more options

RBC’s report explored how remote-learning would change the future of education. For many students, it could give them more options: they can learn from anywhere and they are not tethered to a traditional academic calendar.

For international students, online learning from Canadian universities may not hold the same appeal as the hands-on, workplace-based learning that’s required for certain fields - especially for the premium international tuition prices.

The uncertainty of the job market in Canada may also dissuade many students and immigrants from taking the risk to relocate. The federal government extended more options to allow them to collect 50 per cent of the course credentials required by the Canadian university from their own country if they cannot arrive to Canada sooner. The government also assures access to post-graduate work permits.

The report argued that these movements would force universities and colleges to be more creative in attracting students to their physical campus spaces – especially the international student crowds who have always paid much higher tuition costs than their domestic counterparts. Schrumm admits that this could be a challenge for higher education and for the rest of Canada.

“The question continues to be whether or not the offering of remote learning from a Canadian school is still worth it for a lot of students who now from abroad have more options if online learning is more prevalent among universities and colleges around the world.”