Despite higher education levels, immigrants experience higher unemployment and lower incomes than workers born in Canada, according to a new report.
Released Monday by RBC Economics, the report outlines the increasing size of the employment and wage gap for immigrants in Canada over the past 30 years.
While there was little difference between the unemployment rates of new immigrants and those born in Canada in 1981, a large gap emerged during the 1980s and 1990s, the report found.
By 2006, employment rates among immigrants were significantly higher than those among Canadian born—6.9 percent compared to 6.4 percent.
In 2005, the entire population of immigrants working full time in Canada earned an average of $45,000 a year, about $700 or two percent less than the average wage for Canadian-born workers. Those arriving in the previous five years earned just $28,700 on average.
The report estimates that the potential increased incomes for immigrants if their skills were rewarded similarly to Canadian-born workers would be $30.7 billion, or 2.1 percent of GDP in 2006 (the latest census data available).
Similarly, the potential immigrant unemployment rate would have translated into approximately 42,000 additional jobs.
“Employment growth is slowing as Canada’s population ages, which make it essential that every worker produce at their full potential,” said Dawn Desjardins, assistant chief economist, RBC.
“Underutilizing skilled labour is a gap we need to fill and immigrants represent more than 20 percent of our population. Even small improvements in immigrant outcomes could contribute positively to the Canadian economy.”
Working-age (16-64) immigrants in Canada are more likely to have a university degree than those who are Canadian born, and are older, on average. They are also more likely to live in large cities where earnings tend to be higher.
By gender, male immigrants have a higher earnings gap than female immigrants—about $16,500 for men and $7,000 for women. Conversely, the excess in the unemployment rate for women is larger than that for men, at 2.5 percentage points compared to a 0.7 percentage point difference for men.
The research suggests that gaps may be due to both genuine skill differences between immigrants and Canadian-born workers, and labour market inefficiencies that prevent immigrants from making full use of their skills, the report said.
Improved immigrant outcomes could be brought about through more extensive language training, faster credential recognition, or other integration initiatives, the researchers suggest. More rigorous evaluation of existing programs would also be helpful in understanding why gaps persist and how they can be addressed.
“This report shows that we are still not recognizing the skill level and talent that newcomers bring to Canada, and it’s as much the country’s loss as it is our immigrants,” said Camon Mak, director, Newcomer and Multicultural Markets, RBC.
“Canada was built on immigration, and that’s just as true today.”