Canadian immigrant labour market outcomes were improving before COVID

A recent Statistics Canada report examines how immigrant employment rates and wages compared to Canadian-born workers over the past two decades.

In a recent report, Statistics Canada compared immigrant and Canadian employment and wages between 2000 and 2019. They found the outcomes differed depending on which outcome they were measuring, gender, and years in Canada. The study looked at employment rate, that is instances of employment, as well as weekly wages of men and women ages 25 to 54.

Immigrant men who had been in Canada for less than 10 years were getting jobs at a faster rate than Canadian-born men during the study period. The relative employment rate of immigrant women who had been in Canada for less than five years also improved slightly.

The earnings gap between immigrant and Canadian-born workers with similar socioeconomic characteristics widened between 2000 and 2015. There was some improvement in the earnings gap for both men and women in the subsequent study years. The improvements could be due to the rising demand for labour in the late 2010s.

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Factors contributing to improved outcomes

The study brought up some of the key contributors to improved outcomes for Canadian immigrants.

Improved immigrant outcomes in the labour market can generally be attributed to policy changes, and economic conditions. Policy changes affecting immigrant selection throughout the study period, as well as an improved economy post 2009 may have helped immigrants perform better in the labour market.

In summary, the study found improved outcomes for immigrants were informed by:

• favourable economic conditions;
• more emphasis on immigrants with Canadian experience;
• higher selection criteria for language and education;
• more support for settlement programs; and
• selection based on regional population and labour market needs.

Immigrant economic outcomes tend to be more sensitive to economic changes than those of their Canadian-born counterparts. This is especially true for employment rates, and earnings, the study says. For instance, there was a strong demand for labour in the study years after 2015. This resulted in improved earnings, especially for new and recent immigrant men. However, these improvements were not felt among all groups equally. Immigrant women fell behind their Canadian counterparts in terms of earnings. The wage gap for immigrant men and women who had been in Canada for 10 years or more saw little improvement during the study period. The employment rate for these long-term immigrants improved slightly among men, but not among women.

Another factor that may have contributed to immigrants’ recent economic outcomes was Canada’s increasing trend towards “two-step” immigration selection. In other words, more immigrants are being selected from a pool of temporary foreign workers. The study suggested that expanding two-step immigration selection may have been “more important than any other single factor” in improving immigrant economic outcomes since 2000. Other studies have shown new permanent residents who have Canadian work experience tend to do better in the job market compared to immigrants who were selected from abroad.

In the early 2000s, Canada revised its points grid in the immigrant selection system. Immigrants with higher levels of education got more points. Language requirements were also strengthened. As a result of these changes, the study suggests entry earnings of new immigrants increased.

Canada also changed settlement policies to address employment barriers such as foreign credential recognition. In the late 1990s and 2000s, Canada also put more money into settlement programs and also introduced licensing regulation, as well as bridge training and mentoring.

In the early 2000s, there were concerns that the immigration system was not adequately responding to labour shortages. Provinces also needed to grow their populations, and meet labour demands. As a result, some existing programs expanded, and some new ones were created. More immigrants were selected through the Provincial Nominee Program (PNP), especially in Western Canada. Previous studies have shown PNP candidate tend to earn more than their Federal Skilled Worker Program (FSWP) counterparts during their first few years in Canada. FSWP candidates, do not necessarily need Canadian experience to be eligible for permanent residence. In 2008, Canada created the Canadian Experience Class, allowing temporary workers with eligible work experience to become permanent residents. Then in 2013, Canada created the Federal Skilled Trades Program to focus more on candidates who had more practical experience than formal education.

Analysis: What about immigrant performance post-pandemic?

During the pandemic, a high concentration of immigrants worked in hard-hit sectors, resulting in immigrants being disproportionately affected by coronavirus-related closures.

Furthermore, travel restrictions and other public health measures have been barriers for new immigrant arrivals. This has forced Canada to admit more immigration candidates who are already in the country, since they are less likely to be affected by these measures.

In the most recently-published Labour Force Survey from March, Canada’s economy was closer to pre-pandemic levels than ever. Industries that employed high numbers of immigrants were starting to see some resurgence. These gains were likely short-lived, however, as the third wave of the coronavirus forced tighter restrictions across Canada in April.

The federal government’s 2021 Budget lays out Canada’s spending priorities for immigrants. Some items that may have implications for immigrant outcomes include reforms to the Express Entry system, enhancements to the Temporary Foreign Worker Program, support for racialized newcomer women, and pathways to permanent residence for essential workers and graduates.

As was seen during economic downturns in the two decades prior, immigrants may feel the effects harder than Canadian-born workers. Post-pandemic immigrant outcomes may not necessarily improve, we may still see gaps in wage and employment while the economy stabilizes. As such, policymakers will need to keep a close eye on the post-pandemic labour market outcomes of immigrants to ensure they are not left behind.