Wages for newcomers lag those paid to the Canadian-born

March 25, 2010
The Toronto Star

Don Drummond
TD Financial Group

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Don Drummond: Newcomers lag the Canadian born in wages and opportunity.

Michael Stuparyk/Toronto Star

With the nation’s low birth rate and aging demographic depleting and sapping the growth of the domestic labour force, Canada will increasingly depend on immigration to fill in the gaps in the coming decades.

By 2011, immigration will account for all net labour force growth. Within a decade, visible minorities will make up one in five working Canadians.

Yet, as we point out in our recent report, the Changing Canadian Workplace, our current immigrants are struggling to integrate into the Canadian workplace, and the disparity between Canadian-born citizens and immigrants is growing.

In the past, immigrants could generally hope to close the earnings gap over time. Those who arrived in the ’70s and ’80s generally earned about 90 to 100 per cent of an equivalent Canadian-born citizen within 20 years or so, but this is not necessarily the case any more. Male immigrants who arrived within the five years leading up to the 2006 census earned just 61 per cent of what an equivalent Canadian-born citizen earned.

There are a wide number of factors that contribute to the disparity. Canada’s EI program has very high eligibility requirements, and, as a result, a low coverage rate relative to those who are unemployed. For Canadian workers to avoid being trapped in poverty, the EI program must be able to support them during transitions in employment.

Four out of five recent immigrants have a mother tongue that is neither English, nor French. Their literacy skills in those languages are significantly below those of Canadian-born citizens. Newcomers often cite language as a hurdle they face in the Canadian workplace. Clearly, the importance of language training for immigrants will only heighten in coming years.

Another challenge relates to credential and experience recognition. How many times have we heard of, or come across, highly-educated newcomers who are not permitted to work in their fields of choice?

To some degree, the provincial nominee program has been effective in matching skilled labour in other countries to the needs of each province. But the number of spots available in these programs is very limited and is just a small fraction of the overall number of immigrants.

The federal government is also working to improve the integration of new immigrants. It has recently announced a program that will speed up the immigration process for those entering under the skilled worker class in occupations now facing skilled labour shortages. A recent federal-provincial program was also proposed to ease the transition of skilled professionals who may spend years working in an unrelated field, because their experience and credentials are unrecognized here in Canada.

As for current immigrants, the newly minted programs do little to fix the glaring earnings and labour outcome discrepancies that they face.

Some of these earnings and labour outcome gaps will work themselves out with future generations. The unfortunate caveat is that immigrants are at a very high risk of falling into low-income status. Specifically, one-third of immigrant children below the age of 15 were considered to have low-income status in 2005.

This only adds to the challenges faced by new Canadians. Having low-income status will clearly inhibit a person’s ability to pursue post-secondary education, regardless of how much value is placed on it, and so puts even more emphasis on improving access for lower-income individuals.

Given the increasingly critical role immigrants will play in our nation’s economy, more efforts must be made in both the public and private sector to eliminate disparities between those new Canadians and those born here.

Reference: Toronto Star