The Economic Cost of Underemployment

What is “underemployment” and could it be costing your organization? Ashani Ponnamperuma, Research and Partnerships Specialist at TRIEC, explains.

In Canada, it’s estimated that underemployment and poor labor market integration of immigrants costs the economy billions in lost earnings each year. Studies show being over-educated and underemployed results in lower earnings, lower productivity and lower life satisfaction for immigrants, often contributing to systemic economic exclusion. Underemployment, when an individual is working in a position that is not commensurate with their experience and skills, is not a barrier unique to immigrants.

However, immigrants are more likely to be underemployed: 29.6% of immigrants estimated to be over – educated* for the jobs that they are working in, compared to 12% of people born in Canada. It doesn’t end there. Once immigrants secure a job that matches their skills and experience, both established and recent immigrants are less likely to receive a promotion than their Canadian-born counterparts.

So, how can your organization reduce underemployment among your immigrant workforce?

The business case for addressing underemployment in an organization is substantial, the most significant argument being that increasing retention and maximizing human capital, (supporting the people you currently have to work to the best of their ability) will reduce recruitment costs and enhance the organization’s brand as an “Employer of Choice.”

TRIEC, working with its partner Active Career Advancement Project at SUCCESS, recently piloted an immigrant career advancement program in a large financial services institution, to help immigrant professionals progress within the organization. The program worked with the organization, and several of their high potential employees identifying the needs on both sides. Together with the organization and an external training provider, we then developed, coordinated and evaluated a customized and holistic solution that incorporated both managers and employees.

The outcomes were overwhelmingly positive with over half the participants advancing into roles that were more commensurate with their skills and experience. Similarly, their managers reported being better able to support their employees’ advancement. Overall, the process deepened both parties’ engagement and commitment to their organization and helped foster a culture of inclusion. To learn more about how TRIEC can help your organization tackle underemployment contact our Employer Engagement team today.

To learn more about how TRIEC can work with your organization to support your newcomer employees to progress, contact the Employer Engagement team today. *Over-education is defined as employment in an occupation that is below an individual’s skills or work experience (Chen, Smith and Mustard 2010).