Recent newcomers faring well in Ontario’s labour markets

The Financial Accountability Office of Ontario has released the findings of a report on the Labour Market Outcomes of Permanent Residents in Ontario and its Major Cities.

The report explains that the employment outcomes of new permanent residents play a significant role in the province’s economic growth. International immigration to Ontario reached a record 227,424 in 2022 and is expected to stay high.

According to the report, immigrants have contributed to nearly two-thirds of the increase in Ontario’s workforce since the mid-2010s.

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The number of immigrants who arrive in Ontario is driven in part by the federal Immigration Levels Plan. Each year Immigration Refugees and Citizenship Canada (IRCC) sets targets for the number of new permanent residents who will be admitted to the country. The Plan for 2024-2026 shows that Canada will welcome 485,000 permanent residents in 2024 and 500,000 in both 2025 and 2026.

Ontario is the most popular province for newcomers. Some of this can be attributed to the large allocation of nominations the province receives for its Provincial Nominee Program (PNP). PNPs allow provinces to select the economic immigrants who are the most likely to successfully integrate into the provincial economy and nominate them to IRCC for permanent residence.

Ontario receives the highest number of PNP allocations of any province. In 2023, the province had 16,500 allocations, almost double the allocation for 2022.

Most newcomers to Ontario in their core working years

Ontario welcomed 227,424 immigrants in 2022. Most of them (92%) are within what is considered to be core working age (under 54).

Further, 80% of recent immigrants of core working age have post-secondary education credentials and 38.5% have Canadian work or study experience. This is a change from long-established immigrants (those who have been in Canada for more than five years). The data shows that 66.7% of established immigrants in Ontario have postsecondary credentials and 5.4% have Canadian work or study experience.

Over half of Ontario’s newcomers are economic immigrants

The report found that in the 1980s, 43.4% of newcomers to Ontario were economic immigrants (or those who are considered skilled workers) and this has increased over the past several decades to 51.7%.

Most economic immigrants arrive through an Express Entry managed program, such as the Federal Skilled Worker Program (FSWP), Canadian Experience Class (CEC), or the PNP.

At the same time, there are fewer immigrants arriving in Ontario through family class sponsorship, going from 34.3 % to 25%.

Median wage is climbing

The report highlights data from 2020 that shows those who arrived in Ontario with a bachelor's degree or higher were found to earn a higher median wage ($61,200) than those who did not. They experienced the smallest gap in median wage compared to non-immigrants with the same education.

The highest wages for recent immigrants were found to be for those who immigrated through the CEC. It was found that on average, CEC newcomers earned $60,100 one year after admission to Canada.

Those who arrived through the FSWP, Federal Skilled Trades Program (FSTP) or the PNP had wages below the median wage of the total population one year after admission. Data shows that in 2020, these newcomers in these programs earned a median wage of less than $43,000.

Labour participation

Recent immigrants are increasing their labour participation rate. The report explains that in 2006, the participation rate for newcomers was 13% lower than it was for non-immigrants and that gap has narrowed to 3.5%.

Still, while participation rates are comparatively high, the study found that nearly 16% of newcomers with a university degree were underemployed in 2021 and working in positions that do not require more than a high school education in 2021.

The report notes that foreign credential recognition is a major labour market barrier for licensed professions such as those in the healthcare industry, which is currently experiencing a major labour shortage.

Further, the unemployment rate of immigrants in Ontario remained higher than that of non-immigrants. The report data explains that between 2006 to 2022, the unemployment rate for all core working-age immigrants averaged 7.4 %. This is more than two percentage points higher than the 5.2% average unemployment for Canadian-borns.

What industries do newcomers work in?

The report quotes 2021 census data that shows approximately 83% of working age immigrants in Ontario were employed in the services sector.

Other industries with a higher distribution of immigrants than non-immigrants included professional, scientific, and technical services (4.2%), transportation and warehousing (3.5 % higher), and finance and insurance (3%).

It also found that the number of immigrants holding professional occupations is higher among recent immigrants than established immigrants.

Again, using data from the 2021 Census, the report showed that 31.2% of core working age immigrants who landed in Ontario 2016-2021 held professional occupations, which is higher than the 25.5% of immigrants who landed in 2011-2015.

Most settle in Toronto

The highest number of recent immigrants to Ontario chose to settle in Toronto. The study found that 67% of recent immigrants chose Toronto as their new home in 2021 and that on average, 82 % of newcomers who arrive in Toronto choose to stay, meaning Toronto has a far higher retention rate than other Ontario cities.

This helps explain why most immigrants in Toronto are established. It was found that of the established immigrants who landed in the 1990s, 74.4 % lived in Toronto in 2021.

A higher share of recent immigrants compared to established immigrants was found in Ottawa-Gatineau (+2.1 %), Kitchener-Cambridge-Waterloo (+1.8 %), London (+1.5 %) and Hamilton (+0.6 %).

Still, the report shows that the number of immigrants who choose to settle in Ontario has declined from a peak of 59.6%. The proportion got as low as 36.1% in 2017 but has continued to rise to the current 42.5%.

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