CIC News > Latest News > Analysis > A perfect scorecard: Canada’s immigrants are faring much better in the labour market New evidence provides plenty of reason to be optimistic about the future labour market outcomes of newcomers

A perfect scorecard: Canada’s immigrants are faring much better in the labour market New evidence provides plenty of reason to be optimistic about the future labour market outcomes of newcomers

Kareem El-Assal

Kareem El-Assal

Shelby Thevenot

Shelby Thevenot

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Immigrant underemployment has been a longstanding challenge in Canada, but recent evidence runs in contrast to the negativity that often surrounds this subject. 

While it is true that many immigrants are working below their paygrade, which according to a recent report by the Royal Bank of Canada costs the economy an estimated $50 billion in annual GDP, Statistic Canada data shows considerable progress is being made on this front.

A Perfect Scorecard

When assessing various immigrant labour force metrics, everything that we want to be happening is actually occurring: More immigrants are in the labour market and are employed, fewer of them are underemployed, and their wages are on the rise.

Among core-aged workers (those between the ages of 25-54), the participation rate of Canada’s newcomers (those in Canada for five years or less) stood at 78 per cent in 2018 compared with 74 per cent in 2006.

This is a positive finding because it suggests that newcomers today are integrating into the labour market more quickly than their predecessors (the participation rate represents the percentage of people within a specific cohort that are working or are looking for a job).

The newcomer employment rate (the share of a worker cohort with a job) has also improved — it was 71.3 per cent in 2018 compared with 65.2 per cent in 2006.

Similarly, immigrants who have been in Canada between 5 and 10 years have seen their employment rates rise significantly to 79.5 per cent in 2018 compared with 75.6 per cent in 2006.

The unemployment rate (the share of a worker cohort looking for a job) has declined. Among newcomers, it stood at 8.6 per cent in 2018, which may seem high, but is a marked improvement compared with what it stood at after the 2008-09 recession (14.7 per cent) and back in 2006 (11.5 per cent). It has also dropped among other immigrant cohorts—it stood at just 5.3 per cent in 2018 for immigrants that have been in Canada between 5 and 10 years compared with 7.3 per cent in 2006.

Immigrant wages are also rising. A 2018 Statistics Canada report noted that “immigrants admitted to Canada in 2015 earned the highest entry wages of any cohort admitted since 1981.”

Moreover, core-aged immigrants with a university degree saw their wages increase by 3.5 per cent in 2017 compared with the previous year (the Canadian-born cohort saw a 0.9 per cent increase).

Find out if you are eligible for any Canadian immigration programs

Two Factors at Play

The first major factor that can explain the better performance of immigrants is Canada’s tightening labour market.

With more baby boomers retiring, Canadian employers are increasingly counting on immigrants to fill the void. According to a Conference Board of Canada study, all 9.2 million baby boomers will retire over the next decade, which means that employers will need to become even more reliant on immigrants.

Reforms to Canada’s immigration policy are the second factor. These include reforms to selection policies as well as expanded efforts to support newcomer settlement and integration.

Expression of interest systems launched by the federal government (Express Entry) and provinces across Canada are likely contributing to improved immigrant outcomes. By ranking applicants against one another based on human capital factors such as age, work experience, education, and language ability, the federal government and provinces are now giving preference to the highest-scoring immigrants.

This marks a departure from Canada’s previous system where immigrants were selected so long as they met a certain points threshold, even if there were other candidates waiting behind them who had higher scores.

Canada’s Provincial Nominee Program (PNP) is also likely contributing to the improvements. An evaluation by Immigration, Refugee, and Citizenship Canada (IRCC) noted that the vast majority of PNP arrivals become established economically, with high employment rates, and earnings that increase over time.

More temporary residents are now transitioning to permanent residents under Express Entry and the PNP (“two-step migration”). This is sound policy as Statistics Canada research has shown that immigrants who previously worked or studied in Canada initially have a large earnings advantage over those without prior experience living in Canada.

Settlement Services

The federal government and provinces and territories fund settlement supports for immigrants such as language training, employment services, among others. IRCC is the largest funder of such services and has increased its annual settlement budget fivefold over the past two decades to $1.5 billion today.

It is likely that this increased investment is contributing to the labour market improvements immigrants have recently enjoyed.

Room for improvement and reasons to be optimistic

As noted by a recent CIC News article, immigrants continue to face labour market barriers that undermine their ability to make even more significant contributions to Canada’s economy.

At the same time, they are doing better in the labour market, which is probably due to baby boomer retirements and refinements to immigration policy.

These two factors will continue, which should leave us feeling optimistic that immigrants will continue to enjoy stronger labour market outcomes.

Find out if you are eligible for Express Entry

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3 thoughts on “A perfect scorecard: Canada’s immigrants are faring much better in the labour market New evidence provides plenty of reason to be optimistic about the future labour market outcomes of newcomers

  1. Liliana

    These numbers are very interesting but I don’t see any statistic that shows the percentage of immigrants working in their field . We can be working but sometimes very far from our capabilities and knowledge. That number can show how difficult is to make a career in your field with or without the “Canadian Experience”. Some things have to change to make the transition smoother. More employers have to be more open to hire immigrants and give us the opportunity.

  2. TJ

    If Canada wants to be a high service, high human capital country new entrants need to be ateast 2x revenue and tax positive like singapore. Adding new people to and ecological footprint that is already the 4th worst per capita contributor of CO2 emmissions in the world is only going to contribute quicker to our demise. We need to be building new high margin businesses like Google/Amazon in Canada. In the face of automation and wanting to move us of natural resource and energy extraction this is a very low bar on where we need to be. Our per capita median income growth has been 0% in the last 5 years. Another 5 years of this and we will be in a world of hurt unless there are huge policy changes

  3. Adewale Ibironke

    Canadian employers still need to do more to encourage skilled immigrants to come in to Canada. As it is now, there is still a high number of employers unwilling to employ people without the so-called Canadian experience.

    More disheartening is the fact that people with work experience as much as 15 years are expected to take up entry level roles. Canadian employers need to be more welcoming to immigrants and give them opportunities to prove themselves. They should be ready to commit some resources to helping them bridge gaps, where necessary. Even if they wont employ at the same level they were back home, a level or 2 levels below may be a good start. We are intelligent, hardworking and smart.

    Many highly skilled expartriates working in our home countries, including Canadians reported to us back home and we relocate to Canada and suddenly we are not good enough!

    Employers should do more to support government efforts in attracting highly skilled migrants and retain such, otherwise as the years go by, underemployed immigrants who are highly skilled will return home or seek career advancement in other countries where their skills are commensurately valued.

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