New immigrants performing better in Canadian labour market

Shelby Thevenot
Published: June 29, 2020

Immigrants are having better outcomes in the Canadian labour market, in some instances, they are performing better than Canadian-born workers.

New immigrants are on average younger and better educated than Canadian-born workers in the labour market, according to a recent report titled, The Improved Labour Market Performance of New Immigrants to Canada, 2006-2019.

Economist Kimberly Wong compared the participation rate, employment rate, unemployment rate, and hourly wages of three groups: very recent immigrants who had been in Canada for less than five years; recent immigrants who had five to 10 years in the country; and Canadian-born citizens. The data was collected from the Statistics Canada Labour Force Study between 2006 and 2019 and published by the Centre for the Study of Living Standards.

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Though immigrants had a higher participation rate and employment rate, there was still a wage gap and higher unemployment rates.

Immigrants had a higher participation rate and employment rate than Canadian-born workers by the end of the 13 year period.

By 2019 immigrant participation rates surpassed the Canadian-born by 4.5 percentage points for very recent immigrants and 10.0 percentage points for recent immigrants. The employment rates of very recent immigrants exceeded the rate of Canadian-born workers by 1.5 percentage points and recent immigrants surpassed them by 8.7 percentage points.

Unemployment rates decreased for immigrants, but they were still higher than Canadian-born workers. By 2019 the unemployment rates of both very recent and recent immigrants were greater than the rate of the Canadian-born by 4.0 and 1.0 percentage points, respectively.

Wages adjusted for the cost of living for very recent immigrants grew, but they were still earning between $2.87 and $4.32 dollars per hour less than the Canadian born.

Six reasons why immigrant outcomes have improved

The report suggests six reasons for the general improvement in the labour market performance of new immigrants:

  • more immigrants had university degrees;
  • the strong labour market of the late 2010s may have benefitted immigrants more than Canadian-born workers;
  • federal and provincial programs aimed at immigrant workers, such as the Provincial Nominee Program (PNP), likely helped labour performance;
  • support services could have enhanced integration into the labour market; and
  • foreign credential recognition could have improved
  • Improved labour market information may have better helped immigrants prepare for the Canadian job market

Room for improvement

There were also two reasons for the slower gains in relative wages compared to other labour market indicators:

  • challenges faced by immigrants in Canada such as discrimination, language barriers, and smaller social networks may have affected earnings more than employment; and
  • job mismatching, where university-educated people work in a job that is unrelated to their studies, did not improve, which could explain why the relative wages of highly-educated immigrants did not improve.

“Given their lower average age and higher education relative to the Canadian working-age population, new immigrants represent an important strength for the Canadian economy, from the perspective of their contribution to the labour force and to tax revenues,” the report said. “This contribution could be even greater if the gaps in unemployment rates and relative wages were reduced further.”

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