Canada has over time been attracting a high number of immigrants each year. This number has also been increasing each year (Reitz, 2005). About 20% of the country’s population is made up of foreigners. Based on the data from the Organization for Economic Co-operation and Development, the annual immigration flow of the country is now one of the highest among the OECD members. For example, in the year 2011, the country received some 249,000 new immigrants, which was more than the number it received in 2010 (281,000). The two main cited reasons for this immigration are job search and education. Since 2008, the rate at which the country integrates foreign-born individuals in the labor force has been growing, same as for its citizens.
About 50% of the country’s immigrants are highly educated individuals or have the knowledge or professional skills necessary to secure well-paying jobs. Moreover, some of the foreign students who finish their university education in Canada opt to stay in the country to secure jobs. Some of the reasons Canada attracts high numbers of immigrants include its labor mobility, developed infrastructure, and the presence of an environment that is conducive. Lately, the country management has been making some changes in the policy of immigration and is now putting more emphasis on the immigration of skilled labor.
The increase in the number of foreigners is of benefit to the Canadian economy, due cultural diversity they bring, and the development of new and cheap ways of doing things. The country aims to attract between 169,000 and 185,000 new immigrants by the end of 2015 (Stay, 2014). However, despite all these initiatives, immigrants have never fared as well as their Canadians counterparts as far as the labor market is concerned. In spite of the recent increase in public approval of immigration, the earnings and employment opportunity gaps between the native-born Canadians and immigrants has been widening over time. The natives have higher chances of getting jobs and also receiving better pay than the immigrants. This is contradictory, considering the large percentage of Canadian immigrants that has a University degree.
Difference in Employment opportunities between Immigrants and Native-born Canadians
There have been variations in the employment gap between immigrants and the native-born Canadians over time. This gap seems to be widening with education. For example, the gap between Canadian-born and immigrant workers is largest for the group with the most education. In fact, the high school graduates from Canada have higher chances of securing a job than the newcomer University graduate immigrants. Moreover, immigrants who have been in the country for about five years or less are about four times more likely to remain jobless than their Canadian Counterparts. According to statistics, 14% of immigrate graduates who have stayed in the country for less than five years are unemployed. In general, only 3.3% of the Canadians with a university degree are unemployed and 5.6% of immigrants with the same level of education, who have been in the country for ten years or more.
The graph below shows the unemployment rates on immigrants and native-born Canadians with the same level of education
The general trend in the variation for both market forces participation and the employment can be analyzed better from the year 2008. This was the year Canada started experiencing some economic downturn. During this period, the unemployment and employment rates for core –aged immigrants were 6.8% and 77.4% respectively. At the same time, their native-born Canadian counterparts corresponding figures for these rates were 4.6% and 84.1% respectively. By 2009, the rate of employment for immigrants had fallen by 1.8% and that for their Canadian-born counterparts by 2.0%. This made the general unemployment rate for immigrants rise to 9.6 %.
In 2009, (during the labor market downturn), the percentage of the immigrants that were employed was 74.9%, and 82.2% for their Canadian-born counterparts. From 2010 to 2011, the core aged immigrants’ employment grew by 4.3%, making the unemployment rate to drop by 1.1% to 8.4%. This made the employment rate to rise to 75.6%. During this period, the employment rate for the Canadian never changed.
Changing for Employers by Immigrants
In 1991, the group of immigrants aged 25 and 34 and had stayed in the country for about five years were less likely than their counterparts to have full time and paid employment for the next twenty years. This period is from 1991 to 2010. Only 59% and 64% of the immigrant women and men respectively had paid employment throughout this period. These figures are very different from those of their Canadian native counterparts, which stood at 71% and 79% respectively (Morissette, 2013).
Source: Statistic Canada
Also, during this period, the rate at what immigrants changed their employees was high than that of the native-born employees. The two primary reasons for the change of employers were quitting jobs and layoffs. The number of employers that immigrant women and men changed during this period averaged 5 and 4.8 respectively, as opposed to 4.3 and 4 for their native-born counterparts (Morissette, 2013).
One of the reason the immigrants changed their employers more often than native-born employees was their inability to secure jobs in large organizations. In 1991, the percentage of immigrant woman and men that were working in large organizations (with 500 employees and above) were 43% and 30% respectively (Morissette, 2013). These figures are very low compared to that of their native-born counterparts, which was 53% and 50% (Morissette, 2013). However, these figures have been changing with time, and nowadays more and more immigrants are being absorbed by these large firms.
Since 2006 till today, immigrants from Africa have been experiencing the highest unemployment rate or lowest employment rate of all the immigrants. The group that is highly affected is the one that have stayed in Canada for less than five years (René, 2013). This group recorded unemployment rate of 21.3% in the year 2011 and employment rate of 55.7%. The unemployment and employment rates for their counterparts who have stayed in Canada for more than ten years were 9.1% and 77.3% respectively.
Difference in Earnings between Immigrants and Native-born Canadians
As stated above, the earnings between immigrants and the Canadian citizens in the country have never been the same. For example, in early 1970s, the immigrants were earning about 85% of the wages of the wages that Canadian Citizens earned. After ten years, these rates changed to 92%. According to Statistics, these rates then declined to 60% by the late 1990s, which then rose to 78% after fifteen years. In the year 2008, new educated immigrants (graduates) earned about 67% of their educated Canadian-born counterparts (Statistics Canada, 2008). It is evident from these rates that the difference in earnings between the two groups is irregular (does not change smoothly with time), making it hard to predict its future trend.
However, something is certain: considering that the current immigrants are more experienced or educated that than the previous generations, it is right to state that the deterioration is now more severe. For example, between 2001 and 2007, about 80% of the foreigners who entered the country due to job search had a university degree (Statistics Canada, 2008). Only 25% of the Canadian-born counterparts had the same level of education (Statistics Canada, 2008). Moreover, sources state that the largest gap in earnings between Canadian-born workers and immigrants was among the group that had University degrees.
These trends have been changing with time. For example, earlier research by Picot (2005) shows that although Canadian immigrants from the 1970s would earn very little as compared to their Canadian-born counterparts, they could catch up within 20 years. This is very different from immigrants who entered the country in 1980s, for they still earned about 15% less than Canadian-born employees 20 years later. It is very interesting that between the year 2000 and 2005, the average wages for university educated male immigrants who had stayed in the country for about five years dropped from $30,731 to $25,334. At the same time, the wages for Canadian-born men in the same education level rose from $58,253 to 58,843 (Picot 2005). These changes correspond to a 10% increase in the earning gap between the two groups. The income between university-educated Canadian-born and immigrant women also worsen during this period. The income between 2000 and 2005 for female immigrants who had stayed in the country for less than five years dropped from $17,756 to $16303 (Picot, 2005). At the same time, the earnings of their female Canadian-born counterparts grew from $40,633 to $41,875 (Picot, 2005). These changes correspond to a 6% increase in the earning gap between the two groups. However, things have been changing for the better for immigrants since then.
Despite all this difference, it is evident that immigrants with university degrees are less likely to experience chronic poverty than those with low levels of education (Picot 2005). However, the number of educated immigrants who are chronically poor is increasing with time.
The effects of skills on earnings
The right way of measuring the effects skills have on earnings is by determining the relationship between earnings and other factors that affect earnings. These determinants include educational attachment, work experience, the number of years in the country, native language, and immigrant status.
In this example, the change in trend will start from the year 2006. According to the 2006 Census, male immigrants earned about half of the amount Canadian-citizens earned with the same education level and experience. In women, the immigrants earned 44 percent of their Canadian-born counterparts during this period. From that time on, these rates continue rising with an average of 2.8 percent in women and 2.5 percent in men per year, with respect to Canadian-born workers. However, the catch-up rate for this group of immigrants to the Canadian-citizens diminished over time.
The difference in earnings between these groups has been decreasing over time as immigrants continue to enter into large firms. In the year 2010, 39 percent of male immigrants were working in organizations that have more than 500 workers, as opposed to 30 percent in 1991. The percentage of Canadian natives that has been working in these firms has remained constant for the last twenty years.
The earning difference between native-born and immigrant women has also been converging over time. For example, the annual average salaries and wages of female immigrant employees were recorded at 93 percent of the female Canadian -born in the year 2010. This recorded a raise from 78 percent in 1991. Moreover, the percentage of the two groups’ participation in large firms has been increasing with time.
In general, in both sexes, earning convergence have been observed for the last 20 years among both more-educated and less-educated (high school diplomas and trade certifications) workers. For example, regardless of education or skills, in 2010, immigrant women were earning about 95% of those of their Canadian-born counterparts. In the same year, more-educated and less-educated immigrant men were earning about 93% and 78% of their native-born counterparts respectively. By the end of 2015, these gaps in earnings might be very narrow.
Statistics states that differences in pension coverage have been narrowing with time. For example, at the end of 2010, around 44% of Canadian men immigrants had a deferred profit-Sharing plan or registered pension plan, compared to about 56% for their Canadian-born counterparts (René 2013). Twenty years ago, only 25% of the immigrants had registered the same, compared to 50% for their Canadian-born counterparts. Regardless of job experience, skills or education, immigrant employees have been increasing their DPS or RPP coverage at a faster rate than Canadian-born employees.
Some of the Reasons for These Gaps
Failure to recognize Immigrants’ Credentials
It is challenging for an immigrant with foreign certifications and credentials to compete with a native-born Canadian with the same level of education, skills, knowledge, and experience in the job market. Due to the failure for the company to recognize foreign credentials, the hiring manager may have the notion that the immigrant applicant is not competent enough for the job. The immigrant is left, and the Canadian-born applicant is taken. This reason partly explains why many newcomers (immigrants), take a lot of time before they secure their first job in Canada. Even if they happen to be recruited, their wages are way below that of their native workmates. It is only after working for some time in the company that the management realizes how capable, skillful, experienced and potential the immigrant in question is, that their wages are increased. This can take time.
This factor is very common not only in the Canadian markets, but also in most of the organizations in the world that accept applicants from different places. A Canadian study found that applicants with English-sounding names are 40% more likely to be considered for a job interview upon job application than the applicants with ethnic-sounding names. Moreover, although highly-educated persons with ethnic sounding names also get good jobs in the country, immigrants are victims of exploitation and discrimination in the workplace. This action may make them unable to keep a well-paying job, due the lack of morale or workplace stress associated with the same. This partly explains why immigrants exchange employers over time more than their Canadian native-born counterparts.
A good command of the language that is used in the workplace is crucial. A job applicant with a university education level, skills, and experience may not be considered for a position due to their poor command of the required language. This is especially for those jobs that involve dealing with customers directly. Again, unable to express oneself in the workplace language during the interview may make the interviewing body doubt the applicant’s certification. Literacy skills (both cognitive ability and language) partly explain the immigrants’ higher unemployment and lower earnings rates. Keeping customers happy through satisfying their needs is the primary aim of every organization. This can only happen through good communication skills. That is why some organizations offer training classes for their employees to improve their literacy skills.
Quality of Education
Some employers believe that the quality of education offered from in developing countries is of low quality, and so these students are not skillful enough. However, this argument is somehow groundless considering that the percentage of immigrants with a university degree is about twice that of the native-born Canadians. Another factor that relates to the level of education and employability is the class of immigrants. Some immigrants come to Canada as refugees, others for family reunification, and others as skilled labor. The category of skilled labor is expected to perform better in the labor market due to its qualifications.
Systems of education vary with countries. Education institutions put more emphasis on training those areas that are much marketable in the country. This avoids skills mismatch. The fact that one has a degree in a particular field does not mean that they are skillful, knowledgeable or competent in all areas. It is true that a significant portion of Canadian immigrants is educated, but this still does not mean they are more compatible in the Canadian labor market than the natives. McBride (2004) argues that the immigrants’ skills mismatch in Canada contributes to about 14% of the wage gap between them and the natives.
Canada has been increasing the number of immigrants over time. The main reason for their coming is to search for employment and education. About 50% of the immigrants are educated or have the skills to secure well-paying jobs in the country. However, immigrants have never fared well as Canadian citizens in the Canadian labor market. In average, native-born Canadian earn more, and also their rate of unemployment is low than that of immigrants. This difference seems to change with factors such as education, experience, and the number of years one has stayed in the country. It is interesting that the earning and job opportunity gap between immigrants and native-born Canadians is widest among the higher education level group. Some of the effects contributing to these changes include discrimination, failure to recognize foreign credentials, skill mismatch, language skills, and the level of education.
Dietz, J (2009). The Evaluation of Immigrants’ Credentials: The Role of Accreditation, Immigrant Race, and Evaluator Biase. Canadian Labour Market and Skills Researcher Network, No. 18
McBride, S. (2004). Post-secondary Field of Study and the Canadian Labour Market Outcomes of Immigrants and Non-Immigrants. Ottawa: Statistics Canada.
Morissette, R. (2013). Worker Reallocation in Canada. Analytical Studies Branch Research Paper Series, no. 348. Statistics Canada Catalogue no. 11F0019M. Ottawa: Statistics Canada.
Reitz, J. (2005). Tapping immigrants’ Skills: New Directions for Canadian Immigration Policy in the Knowledge Economy. Choices. 11(1), 3-18
René M (2013). Twenty Years in the Careers of Immigrant and Native-born Workers. Retrieved June 14, 2015 from www.statcan.gc.ca/pub/11/11-626-x2013032-eng.htm
Picot, G. (2005). The Deterioration Economic Welfare of Immigrants and Possible Causes Analytical Studies Branch Research Paper Series, No. 262. Ottawa: Statistics Canada
Statistics Canada (2008). Earnings and Incomes of Canadians Over the Past Quarter Century, 2006 Census. Statistics Canada Catalogue number. 97-563-X.
Stay Current with Canadian Immigration News, 2014. Retrieved June 14, 2015 from www.cicnews.com