By Matt Lundy* – June 2023
Of late, the employment rate for recent immigrants – those who landed in Canada within the past five years – has topped 70 per cent, the strongest level on record. Just a decade ago, it was about 10 percentage points lower.
“In the last 10 to 15 years, new immigrants are doing really, really well,” said Feng Hou, a principal researcher at Statistics Canada, whose work focuses on immigration and labour. “The economic outcomes improved, relative to those who came in much earlier.”
To some degree, these newcomers have benefited from a tight labour market that has forced companies to cast a wider net in their search for employees. But there’s a lot more contributing to the trend.
Mr. Hou said the biggest factor in the employment surge is that Canada has increasingly moved toward a two-step immigration process. This means that a larger share of people who become permanent residents have already worked in Canada as temporary residents.
In 2018, for instance, almost half of adult economic immigrants had previous earnings in Canada, up from just 8 per cent in 2000.
In many cases, people have lived in Canada for years and have established careers when they’re granted permanent residency, the stage at which they become a “recent immigrant.” This helps boost the employment numbers.
Sandeep Kaur is the embodiment of the two-step process. She graduated from the University of Alberta with a master’s degree in 2019. By the time she was approved for permanent residency the following year, she was already building a career in the telecom sector. Today she works in research and development at Ciena Corp. in Ottawa and recently achieved a major milestone in her life: purchasing a home.
“Coming here as a student, with a huge loan to clear, and then getting the house within five years in Canada as an immigrant is quite a big achievement,” she said.
Economic immigrants who gained skilled work experience as temporary residents have the highest initial earnings among all cohorts of immigrants. It’s an advantage they continue to enjoy in the years after landing.
But the pay trajectory can be grim for immigrants who worked in low-skilled jobs as temporary residents.
“The starting point matters,” read a 2018 study co-authored by Mr. Hou. “The types of jobs that potential immigrants are initially selected into shape their long-term labour market outcomes. Immigrants who were specifically recruited to work in low-paying, low-skilled jobs may not have the ability to move to high-paying, skilled jobs,” and they often struggle to adjust to structural and cyclical changes in the labour market.
This is relevant to Canada’s shifting immigration strategy. As employers complain about staffing challenges, federal policy makers have made it easier to hire cheaper labour from abroad.
For instance, the Temporary Foreign Worker Program was overhauled last year, in part so companies could fill a greater proportion of their jobs with low-wage foreign labour. The federal government has also temporarily removed a limit on work hours for international postsecondary students.
As Canada ramps up its intake of immigrants in the coming years, the risk is that it will select more people who get stuck in low-skilled jobs.
“The pandemic saw a big increase in two-step immigration and much of it toward immigrants with lower skill levels,” said Mikal Skuterud, a professor of labour economics at the University of Waterloo, via e-mail. “The proof will be in the pudding, but once we have the data, we may find that the longer-term outcomes of these folks is not so impressive after all.”
Another potential issue for newcomers is worsening affordability. Canada’s population grew by more than one million last year, largely because of new temporary residents such as international students.
A shortage of housing, combined with this surge in demand, is leading to exorbitant costs. In many cities, rents have risen more than 20 per cent in the past year alone.
Ms. Kaur talks about the cost of living and other challenges in adapting to Canada on her YouTube channel, Sandy Talks Canada, which has more than 150,000 subscribers.
She was drawn to Alberta in part because of lower living costs. She moved to Ottawa for work but recommends that immigrants look beyond the typical places – such as Toronto – when they arrive.
“Ontario is, I would say, probably not the best choice right now, unless you have a specific reason to move” there, she said. “I have seen many people in recent times – even students – struggling to get part-time jobs over there because the competition is so high” in the Greater Toronto Area.
“You can always move, but it’s important to know where to go first,” she said.
Matt Lundy is an economics reporter for The Globe and Mail’s Report on Business section.
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