Incomes of skilled immigrants could increase by as much as $30 billion if paid like Canadian-born workers
TORONTO -Immigrant workers are discriminated against by Canadian employers who don’t see their level of education and experience and thus do not pay them similar wages as they wood Canadian born workers.
Despite higher education levels, immigrants experience higher unemployment rates and lower incomes than workers born in the country, according to a new report issued by RBC Economics.
The report, Immigrant Labour Market Outcomes in Canada: The Benefits of Addressing Wage and Employment Gaps, estimates that the potential increased incomes for immigrants if observable skills were rewarded similarly to Canadian-born workers is $30.7 billion or 2.1 per cent of GDP in 2006 (the latest census data available).
“Employment growth is slowing as Canada’s population ages, which make it essential that every worker produce at their full potential. Underutilizing skilled labour is a gap we need to fill and immigrants represent more than 20 per cent of our population,” said Dawn Desjardins, assistant chief economist, RBC. “Even small improvements in immigrant outcomes could contribute positively to the Canadian economy.”
The report outlines the increasing size of the immigrant employment and wage gap in Canada during the past 30 years. While there was little difference between the unemployment rates of new immigrants and the Canadian-born in 1981, a large gap emerged during the 1980s and 1990s. By 2006, immigrants had unemployment rates that were significantly higher than those of Canadian born — 6.9 per cent for immigrants, compared to 6.4 per cent for the Canadian born. In 2005, the entire population of immigrants working full time in Canada earned an average of $45,000 yearly, which is about $700 or two per cent less than the average wage for Canadian-born workers; however, the most recent among them earned just $28,700, on average.
The report concludes that immigrants tend to possess an observable-skills profile that would usually be associated with higher economic rewards. The population of working-age (16-64) immigrants in Canada is more likely to have a university degree than the Canadian born, and is older, on average. They are also more likely to live in large cities, where earnings tend to be higher.
Adjusting for immigrants’ observable characteristics makes a big difference. If we take into consideration the stronger profile of immigrants, the ‘potential’ immigrant unemployment rate would have translated into approximately 42,000 additional jobs.
By gender, male immigrants had a higher earnings gap than female immigrants (24 per cent compared to 17 per cent). In dollar terms, this is about $16,500 for men and $7,000 for women. Conversely, the excess in the unemployment rate for women was larger than that for men, at 2.5 percentage points, compared to a 0.7 percentage point difference for men.
The research to this point 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. In either case, there could be room to improve on immigrant outcomes through more extensive language training, faster credential recognition, or other integration initiatives. More rigorous evaluation of existing programs would also be helpful in understanding why gaps persist and how we can best address them.
“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.”
