Recent trends show Canada’s immigrants are doing quite well in the labour market. Immigrant underemployment has been a longstanding issue in Canada, but recent evidence runs contrary to the negativity that often surrounds this topic.
While it’s a fact that thousands of immigrants are working below their paygrade, which according to the latest report by the Royal Bank of Canada costs the economy about $50 billion in annual GDP, Statistic Canada data shows considerable improvements is being made on this front.
A Perfect Scorecard
When evaluating various immigrant labour force standards, everything that we expect to be happening is actually occurring: More new immigrants are in the labour market and are gainfully employed, only some of them are underemployed, and their wages are increasing.
Among core-aged workers (those between the ages of twenty (25)-fifty-four (54), the participation rate of Canada’s new immigrants (those in Canada for five years or less) stood at Seventy-eight (78) per cent in 2018 in constrast to Seventy-four (74) per cent in 2006.
This is a positive result because it suggests that new immigrants today are gradually integrating into the labour market than their predecessors (the participation rate shows the percentage of people within a specific group that are working or are searching for a job).
The new immigrants employment rate (the share of a working group with a job) has also improved — it was Seventy-one (71.3) per cent in 2018 compared with Sixty-five (65.2) per cent in 2006.
Similarly, immigrants who have been in Canada between Five (5) and Ten (10) years have seen their employment rates increased significantly to 79.5 per cent in 2018 in contrast to 75.6 per cent in 2006.
The unemployment figure (the share of a working group looking for a job) has decreased. Among newcomers, it stands at 8.6 per cent in 2018, which may look high, but is a marked advancement compared with what it stood at the aftermath of the 2008-09 recession (14.7 per cent) and back in 2006 (11.5 per cent). It has also declined among other immigrant groups —it stands at just 5.3 per cent in 2018 for immigrant that has been in Canada between five (5) and ten (10) years compared with 7.3 per cent in 2006.
Immigrant salaries and wages are also increasing. A 2018 Statistics Canada report reveals that “immigrants welcomed to Canada in 2015 earned the highest entry salary of any group admitted since 1981.”
Moreover, core-aged Newcomers with a university degree saw their income increased by 3.5 per cent in 2017 compared with the last year (the Canadian-born group saw a 0.9 per cent increase).
Two Factors at Play
The first major factor that can explain the better performance of newcomers in Canada’s stiffening labour market.
With more baby boomers ageing and retiring, Canadian employers are increasingly relying on immigrants to fill the void. According to Canada Conference Board study, all 9.2 million baby boomers will retire over the next ten (10) years, which means that business owners will need to become even more reliant on immigrants.
Reforms to Canada’s immigration policies are the second factor. These include reforms to selection policy as well as increased efforts to support immigrants settlement and integration.
Expression of interest systems inaugurated by the federal government and Canadian provinces are likely contributing to improved immigrants outcomes. By ranking candidates against one another based on human capital factors such as age, educational qualifications, work experience, and language ability, the federal government and province are now giving preferences to the highest-scoring newcomers.
This marks a departure from Canada’s former system where migrants were selected so long as they fulfill a certain points benchmark, even if there were other applicants waiting behind them who had a higher scores.
Canada’s Provincial Nominee Programs (PNPs) are also likely contributing to the improvement. An assessments by Immigration, Refugee, and Citizenship Canada (IRCC) reveals that the large majority of PNP arrivals become established economically, with very high employment rates, and earning that increase over time.
More temporary residents are now obtaining permanent residents under Express Entry and the PNPs (“two-step migration”). This is good policy as Statistics Canada research has shown that immigrants who formerly worked or studied in Canada first have a large earning advantage over those without prior work experience residing in Canada.
The government of Canada and it’s provinces fund settlement have supports for immigrants such as employment services, language training, among others. IRCC is the biggest funder of such services and has increased its yearly settlement budget fivefold over the last twenty years to $1.5 billion today.