Occupational outcomes of immigrants: Lower versus higher skilled jobs

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By Garnett Picot (IRCC), Feng Hou (StatCan), and Eden Crossman (IRCC)

April 2022

This study was jointly conducted by Immigration, Refugees and Citizenship Canada and Statistics Canada.

Project reference number: R5-2021

Summary

The extent to which immigration should be oriented towards filling higher or lower skilled jobs in the Canadian economy is garnering increased attention. In particular, some COVID-19 induced labour market conditions, including increased difficulties filling jobs in some industries and occupations, are driving the debate. Specifically, there is discussion regarding the possibility of increasing lower skilled immigration by altering the economic class selection system. This study aims to inform this discussion by examining the current contribution of immigrants to higher and lower skilled labour in the Canadian labour market. While information on the educational attainment of immigrants is readily available, as is that on the intended occupation for a small share of immigrants, these type of data are not a good indication of the kinds of jobs filled by immigrants. Little is known regarding the extent to which immigrants actually fill higher or lower skilled jobs. This paper addresses that shortcoming. Before contemplating any significant shifts in immigrant selection, it is useful to know the role currently played by immigrants in the Canadian labour market.

The analysis is based on the integrated 2016 Census and Longitudinal Immigration Database (IMDB) and focusses on the occupational skill outcomes of employed immigrants aged 20 to 64 in 2016. For this study, occupations at National Occupational Classification (NOC) levels O, A and B are considered to be higher skilled, while those at levels C and D are considered to be lower skilled.

Findings show that in 2016, immigrants were slightly more likely to fill lower skilled jobs (40%) than were their Canadian-born counterparts (36%). By category of admission, almost one-third (31%) of economic principal applicants (PA) and 37% of economic spouses and dependants (SD) contributed to lower skilled employment. This tendency towards lower skilled employment is particularly strong among provincial nominees; 40% of recent immigrants (in Canada for five years or less) entering via that program were in lower skilled jobs. Among all adult employed immigrants who landed as refugees or family class, roughly 50% were in lower skilled jobs and 50% were in higher skilled employment. Most of the higher skilled jobs held by refugee and family class immigrants were NOC B trades and technical jobs, whereas the economic class immigrants were more evenly distributed between NOC B and NOC A professional jobs.

The correlation between formal educational attainment and holding a higher or lower skilled job is not as high as might be expected, whether among the Canadian-born or immigrants. For more highly educated immigrants, country of education is one of the best predictors of their economic outcomes. Most of the difference between Canadian-born and immigrants in the tendency to fill lower skilled jobs was accounted for by immigrants whose highest level of education was received in countries other than developed English-speaking /Northern/Western European countries.

Overall, the results of this analysis show that the immigration system currently represents a significant share of lower skilled labour in Canada, more than half of it currently coming through the economic class. These results raise two issues that are discussed in the conclusion. First, if the balance between lower and higher skilled immigrants is to be altered, what factors should be considered? Second, are a significant number of lower skilled jobs filled by highly educated immigrants, and if so, why?

Introduction

There is presently considerable debate regarding the extent to which immigration should be oriented towards filling higher or lower skilled jobs in the Canadian economy (e.g., Alboim, Cohl, and Pham 2021; Banerjee and Hiebert 2021; Esses, McRae, et al. 2021; Alboim and Cohl 2020). This discussion has garnered increased attention during the present COVID-19 pandemic as the focus has shifted to those who are referred to as “essential workers”, and who are often considered lower skilled. Traditionally, economic immigrants in particular have been selected based on a “human capital model”, which orients immigration towards higher educated individuals.^{Footnote 1} However, not all economic immigrants occupy higher skilled jobs. For some, their education and training is oriented towards intermediate or lower skilled jobs. In addition, a few highly educated economic immigrants end up as intermediate or lower skilled workers. This outcome may occur for several reasons, including for example, foreign credential recognition issues or deficiencies in skills relevant for the Canadian labour market.^{Footnote 2} This particular issue is discussed in more detail in the conclusion. Family class immigrants and refugees are not selected based on their human capital and, with lower educational levels on average, are more likely to enter intermediate or lower skilled jobs, although many also likely enter higher skilled occupations.

While information on the educational attainment of immigrants is readily available, as is that on the intended occupation for a small share of immigrants, these type of data are not a good indication of the kinds of jobs filled by immigrants. Little is known regarding the extent to which immigrants actually fill higher or lower skilled jobs. This paper addresses that shortcoming. Before contemplating any significant shifts in immigrant selection, it is useful to know the role currently played by immigrants in the Canadian labour market.

This report relies on the integrated 2016 Census and Longitudinal Immigration Database (IMDB) to examine occupational skill outcomes of immigrants.^{Footnote 3} The focus is on the occupational skill distribution among employed workers aged 20 to 64 in 2016. The skill levels are based on the definitions imbedded in the National Occupational Classification (NOC), specifically NOC skill levels O, A, B, C and D, defined below. The focus is on examining the skill levels of the jobs held by immigrant men and women, immigrants in different immigrant classes (economic, family, and refugee), with different levels of educational attainment, and educated in different source regions. Comparisons of these outcomes are made with the types of jobs held by Canadian-born workers. Two issues raised by the results are discussed in the conclusion.

Defining skill levels

The 2016 Census provides information on the job held by each respondent during the reference week in May 2016. Based on the 2016 National Occupational Classification (NOC) system, each job is assigned a four digit occupational code. The NOC has established skill levels for each occupation, based primarily on the education and training required to do the job. The NOC skill levels include:

• NOC O: management occupations including legislators.
• NOC A: professional occupations requiring a university degree, either a BA, MA, or PhD.
• NOC B: occupations requiring 2 to 3 years of postsecondary education at a college or technology school, or requiring 2 to 5 years of apprenticeship training, or 3 or 4 years of secondary school plus at least 2 years of on-the-job training.
• NOC C: occupations requiring at least 3 or 4 years of secondary school and short duration on-the-job training.
• NOC D: occupations with no formal educational requirement and some limited on-the-job training.

In this paper, occupations at NOC levels O, A and B are considered to be higher skilled, those at levels C and D lower skilled. See the appendix for a detailed list of the occupational major groups included at each skill level.

The skill level of jobs held by immigrants

All adult immigrants

Overall, in 2016, employed immigrants aged 20 to 64 demonstrated roughly the same tendency to fill lower and higher skilled jobs as their Canadian-born counterparts.^{Footnote 4} Among all immigrants, 60% were in higher skilled jobs (NOC O, A, or B) and 40% in lower skilled (NOC C or D) occupations. Among the Canadian-born, the comparable numbers were 64% and 36% respectively.^{Footnote 5} In terms of the types of jobs filled, immigrants were marginally more likely than the Canadian-born to be filling professional jobs (NOC A), less skilled jobs requiring some secondary school (NOC C), and unskilled jobs with no formal educational requirements (NOC D). Immigrants were less likely than the Canadian-born to be in skilled jobs requiring college or apprenticeship training, such as the trades and technical jobs (NOC B), as well as to be in management positions (NOC O).

~ Includes immigrants granted PR status in another category such as public policy and humanitarian and compassionate cases.

Sources: Statistics Canada, 2016 Census of Population and Longitudinal Immigration Database

~Includes immigrants granted PR status in another category such as public policy and humanitarian and compassionate cases.

Sources: Statistics Canada, 2016 Census of Population and Longitudinal Immigration Database

The result is that immigrants played a significant role in the labour market at all skill levels, with, if anything, a slightly higher tendency of immigrants to be in lower skilled jobs. Immigrants aged 20 to 64 accounted for one-quarter (24%) of all employment in 2016. There was some variation by skill level. A high of 28% of very low skilled jobs (NOC D) were filled by immigrants, with a low of 21% among skilled trades and technical jobs (NOC B). About one-quarter (26% each) of professional (NOC A) and lower skilled (NOC C) jobs were filled by immigrants.

Overall, in terms of their distribution in occupational skill levels, immigrants are not considerably different than the Canadian-born. Of course, this is a very high-level view of skills and jobs. Immigrants no doubt fill particular niches and types of specific occupations, as do the Canadian-born. This paper presents a broad overview of occupational skill levels.

Recent immigrants

Perhaps not surprisingly, recent immigrants (in Canada for five years or less) are more likely to be in a lower skilled job. Almost one-half of recent immigrants (48%) were occupying lower skilled jobs in 2016. There may be many reasons for this result. Some recent immigrants have difficulty locating appropriate employment during the first few years in Canada.^{Footnote 6} However, there was significant variation by immigrant class. Principal applicants entering under the Federal Skilled Worker Program (FSWP), Canadian Experience Class (CEC)^{Footnote 7}, and Quebec Skilled Worker Program (QSWP), were less likely to be in lower skilled jobs than the Canadian-born (28%, 15%, and 33% respectively, compared to 36% among the Canadian-born). Economic principal applicants (PA) entering under provincial nominee programs, “other” programs (mostly caregivers), as well as spouses and dependants (SD) of economic PA, the family class and refugees all had higher rates of lower skilled employment than the Canadian-born (ranging from 40% to 72%). Among longer-term immigrants (in Canada for 10 years or more), 61% held higher skilled jobs and 39% held lower skilled jobs in 2016.

~Includes immigrants granted PR status in another category such as public policy and humanitarian and compassionate cases.

Sources: Statistics Canada, 2016 Census of Population and Longitudinal Immigration Database

Mostly in caregiver programs.

~Includes immigrants granted PR status in another category such as public policy and humanitarian and compassionate cases.

Sources: Statistics Canada, 2016 Census of Population and Longitudinal Immigration Database

~Includes immigrants granted PR status in another category such as public policy and humanitarian and compassionate cases.

Sources: Statistics Canada, 2016 Census of Population and Longitudinal Immigration Database

~Includes immigrants granted PR status in another category such as public policy and humanitarian and compassionate cases.

Sources: Statistics Canada, 2016 Census of Population and Longitudinal Immigration Database

Differences between men and women

Among both immigrants and the Canadian-born, women are marginally more likely to be in lower skilled jobs than men, although the difference is not great. Again, this is at an aggregate level, and a focus on specific occupations would no doubt indicate a clustering of women in particular types of lower skilled occupations, and men in others. However, the focus of this analysis is on the contribution of immigrants to lower and higher skilled jobs in general. Among immigrants, 37% of men and 44% of women occupied a lower skilled job in 2016. This difference was largely due to a higher proportion of women filling NOC C jobs, those with somewhat higher skill requirements in the lower skill category. These numbers are somewhat higher than those observed for the Canadian-born, where 34% of men and 37% of women held lower skilled jobs. While a similar pattern was evident among recent immigrants, the proportion with lower skilled jobs was, not surprisingly, higher (43% of men and 54% of women held lower skilled jobs).

~Includes immigrants granted PR status in another category such as public policy and humanitarian and compassionate cases.

Sources: Statistics Canada, 2016 Census of Population and Longitudinal Immigration Database

~Includes immigrants granted PR status in another category such as public policy and humanitarian and compassionate cases.

Sources: Statistics Canada, 2016 Census of Population and Longitudinal Immigration Database

Variation by immigrant class

There is significant variation in the utilization of immigrants by occupational skill level, depending on their immigrant class. When generalizing, one often thinks of economic immigrants, particularly principal applicants, as highly educated and hence filling higher skilled jobs. In contrast, family class immigrants are likely seen as a combination of lower and higher skilled, and refugees as more likely on the lower end of the skill spectrum.

The census data suggest a somewhat different picture. Employed economic immigrants aged 20 to 64 were as likely as the Canadian-born to be in a higher or lower skilled job. In 2016, 34% of all immigrants landing via the economic category (including principal applicants, spouses, and dependants, and in Canada since 1980^{Footnote 8}) were contributing to employment in lower skill jobs, 66% to higher skilled jobs.^{Footnote 9} The split for the Canadian-born is virtually the same (Table 1). As expected, a somewhat higher share of principal applicants held higher skilled jobs (69%). However, a significant share of economic immigrants fill lower skilled jobs. Even among longer-term economic immigrants who have been in Canada for over 10 years, 31% were in lower skilled jobs (Table 3) (29% among longer-term economic principal applicants and 32% among longer-term economic spouses and dependants). A recent policy paper by Banerjee and Hiebert (2021) recommended that 10% to 20% of economic immigrants - notably principal applicants - should be lower skilled (NOC C or D) to help meet the demand for lower skilled workers in Canada. However, one-third of economic principal applicants already fill lower skilled jobs. There may be a number of reasons for this occupational outcome. These reasons are discussed in the summary and discussion section below.

Among all adult employed immigrants^{Footnote 10}who landed as refugees or family class, roughly 50% were in lower skilled jobs in 2016, and 50% were in higher skilled, mainly NOC B, employment (Table 1). These two classes contribute significantly to higher skilled employment in Canada. Most of the higher skilled jobs held by refugee and family class immigrants were NOC B skilled trades/technical jobs (close to 30% each), with fewer in NOC A professional jobs (less than 15%), whereas those in the economic class were more similarly distributed between NOC A and B jobs (at about 30% each).

Part of the reason for the relatively high contribution to lower skilled labour among the economic class relates to the pattern observed among the Provincial Nominee Program (PNP). Since this program had been in existence for a relatively short while at the time of the 2016 census^{Footnote 11}, the focus here is on the outcome of “recent” economic immigrants (in Canada for five years or less). Only 20% of the economic principal applicants (recent immigrants) selected via the PNP occupied professional jobs at NOC skill level A, compared to almost 40% among those who entered via the Federal Skilled Worker Program (FSWP) or the Canadian Experience Class (CEC) (Table 2). The other significant difference between the PNP and principal applicants in other economic programs was the share in lower skilled jobs; 40% of PNP entrants compared to 28% of FSWP and 15% of CEC entrants. Economic class spouses and dependants also had a relatively high likelihood of being in a lower skilled job as a recent immigrant, with over one-half doing so (55%) in 2016. Among recent immigrants, this roughly matches the outcomes for the family class (55% in lower skilled jobs); refugees had a much higher likelihood of being in lower skilled (two-thirds were in such jobs).

Hence, while the majority of economic class immigrants hold a higher skilled job, a significant proportion contribute to lower skilled employment, even among longer-term economic immigrants. In particular, provincial nominees have a relatively high likelihood of filling lower skilled jobs. As expected, lower skilled employment is more prevalent among refugees and family class.

Formal educational attainment and the skill level of the job held

The correlation between educational attainment and holding a lower or higher skilled job was not as high as one might expect. Some postsecondary educated individuals, whether Canadian-born or immigrants, hold lower skilled jobs. Conversely, many high school educated individuals hold what are classified as higher skill level jobs. This is in part because some higher skilled jobs are based on apprenticeship or on-the-job training. For example, in 2016, among the employed Canadian-born aged 20 to 64 with a high school education or less, about one-half (49%) were in jobs classified as higher skilled and one-half in lower skilled jobs. Most were at either NOC B (higher skilled) or C (lower skilled). NOC B occupations includes, among other occupations, sales and service supervisors, manufacturing supervisors, bakers and other skilled trades (refer to the Appendix), many of which require high school education and at least two years of apprenticeship/on-the-job training.

Less educated immigrants – those with a high school education or less – were slightly more likely to hold a lower skilled job than their Canadian-born counterparts, at 59% compared to 51%.

Among individuals with some postsecondary education, which includes college/trade school completion or some uncompleted postsecondary education, the majority held a higher skilled job, as would be expected, but about one-third of the Canadian-born held a lower skilled job. Among immigrants, this number was 41%. While a significant proportion of university educated individuals held professional jobs at the NOC A level (53% of the Canadian-born and 41% of immigrants), a significant number still held lower skill jobs (12% of Canadian-born and 24% of immigrants were employed in NOC C and D occupations). Possible reasons for this outcome are discussed in the conclusion.

Recent immigrants were more likely to hold lower skilled jobs at any educational level than immigrants as a whole. In particular, almost one-half (48%) of university educated recent immigrants held a lower skilled job in 2016, compared with one-quarter of all university educated immigrants (Table 5, Table 6).

Country of education is one of the best predictors of the outcomes of more highly educated immigrants (Fortin et al 2016; Li and Sweetman 2014; Bratsberg and Terrell 2002; Friedberg 2000). The likelihood of holding a higher or lower skilled job, conditional on educational level, varies significantly depending on country of education. Immigrants whose highest level of education was received in Canada or in developed English-speaking/Northern/Western European countries^{Footnote 12} had patterns of lower and higher skilled employment very similar to Canadian-born individuals. Most of the difference between immigrants and the Canadian-born was concentrated among those immigrants whose highest level of education was received in countries other than developed English-speaking/Northern/Western European countries.

~Includes immigrants granted PR status in another category such as public policy and humanitarian and compassionate cases.

Sources: Statistics Canada, 2016 Census of Population and Longitudinal Immigration Database

~Includes immigrants granted PR status in another category such as public policy and humanitarian and compassionate cases.

Sources: Statistics Canada, 2016 Census of Population and Longitudinal Immigration Database

~Includes immigrants granted PR status in another category such as public policy and humanitarian and compassionate cases.

Sources: Statistics Canada, 2016 Census of Population and Longitudinal Immigration Database

~Includes immigrants granted PR status in another category such as public policy and humanitarian and compassionate cases.

Sources: Statistics Canada, 2016 Census of Population and Longitudinal Immigration Database

~Includes immigrants granted PR status in another category such as public policy and humanitarian and compassionate cases.

Sources: Statistics Canada, 2016 Census of Population and Longitudinal Immigration Database

~Includes immigrants granted PR status in another category such as public policy and humanitarian and compassionate cases.

Sources: Statistics Canada, 2016 Census of Population and Longitudinal Immigration Database

~Includes immigrants granted PR status in another category such as public policy and humanitarian and compassionate cases.

Sources: Statistics Canada, 2016 Census of Population and Longitudinal Immigration Database

~Includes immigrants granted PR status in another category such as public policy and humanitarian and compassionate cases.

Sources: Statistics Canada, 2016 Census of Population and Longitudinal Immigration Database

For example, 88% of employed Canadian-born individuals with a university degree held a higher skilled job in 2016. Among immigrants whose highest level of education was obtained in Canada, 83% were in a higher skilled occupation, and among those educated in a developed English-speaking/Northern/Western European country this share was 88%. In comparison, 65% of immigrants who received their university education in other nations held a higher skilled job. Even among recent immigrants, the difference between those educated in Canada or a developed nation and the Canadian-born is relatively small. However, there is a large difference between Canadian-born and recent immigrants educated in a developing nation^{Footnote 13} (Table 8).

A similar pattern holds for individuals with some postsecondary education (which includes college/trade school completion or some uncompleted postsecondary education). The difference with the Canadian-born for immigrants receiving such education in Canada or a developed English-speaking/Northern/Western European country is relatively small, while the difference is quite large for immigrants educated in other countries.^{Footnote 14} This result holds regardless of the immigrant class - economic, family or refugee.

~Includes immigrants granted PR status in another category such as public policy and humanitarian and compassionate cases.

Sources: Statistics Canada, 2016 Census of Population and Longitudinal Immigration Database

~Includes immigrants granted PR status in another category such as public policy and humanitarian and compassionate cases.

Sources: Statistics Canada, 2016 Census of Population and Longitudinal Immigration Database

~Includes immigrants granted PR status in another category such as public policy and humanitarian and compassionate cases.

Sources: Statistics Canada, 2016 Census of Population and Longitudinal Immigration Database

~Includes immigrants granted PR status in another category such as public policy and humanitarian and compassionate cases.

Sources: Statistics Canada, 2016 Census of Population and Longitudinal Immigration Database

~Includes immigrants granted PR status in another category such as public policy and humanitarian and compassionate cases.

Sources: Statistics Canada, 2016 Census of Population and Longitudinal Immigration Database

~Includes immigrants granted PR status in another category such as public policy and humanitarian and compassionate cases.

Sources: Statistics Canada, 2016 Census of Population and Longitudinal Immigration Database

~Includes immigrants granted PR status in another category such as public policy and humanitarian and compassionate cases.

Sources: Statistics Canada, 2016 Census of Population and Longitudinal Immigration Database

~Includes immigrants granted PR status in another category such as public policy and humanitarian and compassionate cases.

Sources: Statistics Canada, 2016 Census of Population and Longitudinal Immigration Database

~Includes immigrants granted PR status in another category such as public policy and humanitarian and compassionate cases.

Sources: Statistics Canada, 2016 Census of Population and Longitudinal Immigration Database

~Includes immigrants granted PR status in another category such as public policy and humanitarian and compassionate cases.

Sources: Statistics Canada, 2016 Census of Population and Longitudinal Immigration Database

~Includes immigrants granted PR status in another category such as public policy and humanitarian and compassionate cases.

Sources: Statistics Canada, 2016 Census of Population and Longitudinal Immigration Database

~Includes immigrants granted PR status in another category such as public policy and humanitarian and compassionate cases.

Sources: Statistics Canada, 2016 Census of Population and Longitudinal Immigration Database

~Includes immigrants granted PR status in another category such as public policy and humanitarian and compassionate cases.

Sources: Statistics Canada, 2016 Census of Population and Longitudinal Immigration Database

~Includes immigrants granted PR status in another category such as public policy and humanitarian and compassionate cases.

Sources: Statistics Canada, 2016 Census of Population and Longitudinal Immigration Database

~Includes immigrants granted PR status in another category such as public policy and humanitarian and compassionate cases.

Sources: Statistics Canada, 2016 Census of Population and Longitudinal Immigration Database

~Includes immigrants granted PR status in another category such as public policy and humanitarian and compassionate cases.

Sources: Statistics Canada, 2016 Census of Population and Longitudinal Immigration Database

Immigrant groups that provide the most lower or higher skilled labour to the labour market

To this point, the focus has been mainly on the likelihood of some particular group – immigrant or Canadian-born – occupying a higher or lower skilled job. But some groups are relatively large, while others are relatively small. The extent to which any particular group provides lower or higher skilled labour to the labour market depends both on its size and the likelihood of the group members holding a particular type of job. Three major points are made below.

First, formal educational attainment should not necessarily be equated with the provision of lower or higher skilled labour. A notable share of the lower skilled labour in the Canadian labour market is provided by individuals with a postsecondary education, and a notable share of the higher skilled labour by individuals with only a high school formal education. More specifically, among the adult population as a whole (e.g., immigrants and Canadian-born) in 2016, employed individuals with a postsecondary education (college certificate, university degree, or “some” postsecondary education) accounted for well over one-third (38%) of the lower skilled jobs held in the Canadian labour market. Conversely, fully one-third of those in higher skilled jobs had a high school education or less (given the skill definitions described earlier, this is likely attributable to those with two years or more of post-high school industry-specific apprenticeship or on-the-job training). The immigrant population displayed similar patterns. Almost one-half of the lower skilled jobs held by immigrants were accounted for by those with a postsecondary education. In contrast, about one-quarter of the higher skilled jobs held by immigrants were held by individuals with a formal high school education or less.

Second, as noted earlier, country of highest level of education plays a role in the provision of lower and higher skilled labour. Here, the observations are focused on recent immigrants in order to account for more current trends among immigrants by country of highest level of education. Of the lower skilled labour provided by recent immigrants with a postsecondary education, fully 75% was accounted for by individuals whose highest level of postsecondary education was received in a country other than developed English speaking/Northern/Western European countries.^{Footnote 15} Very little (25%) lower skilled labour was associated with recent immigrants whose highest level of education was obtained in Canada or a developed country.

Third, staying with recent immigrants, perhaps surprisingly, the economic class plays by far the largest role in providing lower skilled labour to the Canadian economy. While the likelihood of a refugee or family class immigrant filling a lower skill job is highest, as noted earlier in the paper, the economic class spouses and dependants are not far behind on this measure, as are provincial nominees. Furthermore, the economic class is the largest single class; 68% of employed 20 to 64 year old recent immigrants were in the economic class in 2016. The result is that the economic class accounted for 60% of the lower skilled labour provided to the Canadian labour market by recent immigrants aged 20 to 64. Very little of this share is accounted for by FSWP (6%) or CEC (2%) principal applicant immigrants. Provincial nominee principal applicants accounted for 10%, “other” principal applicants (including those under the QSWP), 15%, and economic class spouses and dependants accounted for 27% (Table 9). Refugees accounted for only 10% of the lower skilled labour provided to the Canadian economy by recent immigrants because they are the relatively smaller group. Family class accounted for 29% of the lower skilled labour provided by recent immigrants in 2016.

As noted, recent immigrants are more likely than more established immigrants to fill lower skilled jobs. However, of the lower skilled labour provided by all immigrants as a whole, 46% was accounted for by those in the economic class, with roughly an equal amount provided by both the principal applicants and the spouses and dependants.

~Includes immigrants granted PR status in another category such as public policy and humanitarian and compassionate cases.

Sources: Statistics Canada, 2016 Census of Population and Longitudinal Immigration Database

~Includes immigrants granted PR status in another category such as public policy and humanitarian and compassionate cases.

Sources: Statistics Canada, 2016 Census of Population and Longitudinal Immigration Database

Sources: Statistics Canada, 2016 Census of Population and Longitudinal Immigration Database

Sources: Statistics Canada, 2016 Census of Population and Longitudinal Immigration Database

Sources: Statistics Canada, 2016 Census of Population and Longitudinal Immigration Database

Sources: Statistics Canada, 2016 Census of Population and Longitudinal Immigration Database

~Includes immigrants granted PR status in another category such as public policy and humanitarian and compassionate cases.

Sources: Statistics Canada, 2016 Census of Population and Longitudinal Immigration Database

~Includes immigrants granted PR status in another category such as public policy and humanitarian and compassionate cases.

Sources: Statistics Canada, 2016 Census of Population and Longitudinal Immigration Database

Summary and Discussion

Summary of findings

The educational attainment of immigrants is well known.^{Footnote 16} However, much less is known regarding the types of jobs immigrants hold, notably their contribution to lower skilled labour. This paper addresses that shortcoming by using census data on the actual occupations held by individuals aged 20 to 64 in 2016. The goal of this statistical portrait is to provide background information for the discussion of the selection of lower and higher skilled immigrants. Higher skilled occupations refer to those classified as NOC O, A or B, while lower skilled jobs are those classified as NOC C or D.

In 2016, immigrants were roughly as likely as the Canadian-born to fill lower skilled and higher skilled jobs in the Canadian economy. The difference was slight, as 40% of immigrants filled lower skilled jobs, compared to 36% of the Canadian-born. In terms of the types of jobs filled, immigrants were marginally more likely than the Canadian-born to be filling professional jobs (NOC A) and less skilled jobs at both the NOC C and D levels. Recent immigrants (in Canada for five years or less) were more likely to be filling a lower skilled job than immigrants as a whole. This is likely in part because it takes some time for many immigrants to establish themselves in a higher skilled occupation after arriving in Canada.

When generalizing, it is often assumed that economic immigrants tend to fill higher skilled jobs. However, almost one-third (31%) of economic principal applicants and 37% of economic spouses and dependants^{Footnote 17} contributed to lower skilled employment in 2016. Banerjee and Hiebert (2021) recommended that 10% to 20% of economic principal applicants should be lower skilled to help meet the current demand for lower skilled workers in Canada. However, almost one-third of economic principal applicants already occupy lower skilled jobs. This tendency towards lower skilled employment is particularly strong among provincial nominee immigrants.

Among all adult employed immigrants who landed as refugees or family class, roughly 50% were in lower skilled jobs and 50% were in higher skilled jobs, mainly NOC B trades and technical jobs. Higher skilled jobs held by economic class immigrants were more likely to be NOC A professional jobs.

Country of education is one of the best predictors of the economic outcomes of more highly educated immigrants (Friedberg 2000; Fortin et al 2016; Boyd and Tian 2018; Picot and Hou 2019). Immigrant university graduates educated in a developed English speaking or Northern/Western European country were highly likely to hold a higher skilled job (87% did so), as were the Canadian-born (87%). Degree-holding immigrants educated in other countries were less likely to be in a higher skilled job (65%); around one-third held lower skilled employment. The possible reasons for this difference are outlined below.

The observations above relate to the likelihood of an individual in an immigrant class holding a particular type of job. But any class’s (e.g. economic, family, or refugee) contribution to the lower or higher skilled labour pool depends not only on the likelihood of holding such a job, but also on the size of the class. The economic class is a major provider of lower skilled labour. It accounted for 53% of all adult immigrants, and provided almost half (46%^{Footnote 18}) of all lower skilled labour provided by immigrants aged 20 to 64^{Footnote 19} in 2016. Although economic immigrants were slightly less likely than those in other classes to be in a lower skilled job, they provided the most lower skilled labour because they constituted the largest class. The family class, accounting for 31% of adult immigrants, provided a little over one-third (36%) of lower skilled labour. Refugees accounted for 15% of adult immigrants and 18% of the lower skilled labour provided by immigrants.

There is considerable discussion regarding the possibility of increasing lower skilled immigration by altering the economic class selection system. Following are a few points related to this topic.

Discussion

Many observers believe that in its current design, the immigration system and its largest component, the “human capital” driven economic class, is primarily intended to provide higher skilled labour to the Canadian economy. However, the data presented in this study suggest that at an aggregate level, immigrants are filling lower skilled jobs at about the same rate as the Canadian-born. Moreover, there is only a small difference between economic immigrants and the Canadian-born in this regard.

These results raise two significant issues. First, the observations described above outline the current situation, but tell us nothing about what the balance between lower skilled and higher skilled immigrant labour “should” be, based on labour market and other considerations. Notably, should the share of lower skilled labour increase? Relevant considerations, notably labour market conditions and other labour market impacts, are discussed below. Second, the relatively high number of immigrants in lower skill jobs is due in part to some higher educated immigrants filling such jobs. A discussion regarding why this is happening is found below.

Labour market issues

There is some tension in Canadian immigration policy between using immigration to meet short-term demand and using it for longer term structural goals such as building the overall skill level of the workforce. At different times in Canadian immigration policy history, one or the other of these goals has dominated—though both are typically at play to some extent (Green and Worswick 2017). In the current environment, one concern is that addressing short-term needs may come at the cost of longer-term labour market requirements. The selection of new immigrants to prioritize short-term demand, currently concentrated in lower skilled industries, may weaken longer-term competitiveness and human capital development. Analyses of longer-term structural labour market shortages tend to focus on higher skilled jobs (e.g. COPS^{Footnote 20}). Current labour market conditions are putting pressure on the short-term demand function of the immigration system. This issue is discussed here, as are some of the associated considerations.

Many employers in accommodation and food services, retail trade, and other industries, are currently facing hiring difficulties, thus fuelling the discussion of the need to increase lower skilled immigration. However, it is important to recognize that employers’ serious hiring challenges may be temporary. The labour market is at a unique time, having gone from a business cycle peak (2019) directly into the Covid-19 pandemic and the associated negative impact on the supply of “essential” workers (2020 and 2021). It appears as if the pre-pandemic labour market peak strength is continuing in 2022, as the unemployment rate has fallen to historical lows (5.3% as of March). Labour shortages are most evident at business cycle peaks when the economy is the strongest. For example, longer-term job vacancies doubled between 2015 and 2019^{Footnote 21}, indicating that hiring difficulties that employers face became more severe as the economy reached its peak, as one would expect. This is a shorter-term cyclical rather than a longer-term structural shift in hiring issues. Typically cyclical labour market tightness is temporary and does not persist beyond a few years at most. There have been other unique periods. Recall the high-tech business cycle peak “boom” of the late 1990s when STEM immigration was increased considerably, only to be followed by the high-tech “bust” during which time the new STEM immigrants had very poor economic outcomes. A similar pattern was evident during the oil boom in Alberta, when high levels of immigrants and temporary foreign workers were encouraged. This cyclical peak also did not last.

The pandemic has also led to hiring difficulties for many firms, particularly those employing “essential workers.” The reasons behind these difficulties are mostly distinctive to the pandemic. They include: worker fatigue of re-occurring layoffs and uncertainty in work hours and schedules; restrictions in place to protect public health; concerns among workers about Covid-19 infection; strong government financial support to individuals; the decline in immigration levels in 2020; and a possible desire to change jobs. Most of these factors will resolve themselves when the pandemic abates. With inflation rising, central banks are raising interest rates throughout 2022 to slow consumer demand and economic activity. This may bring the business cycle peak, and the associated extraordinarily high demand for essential workers to a halt. If the pandemic were to abate simultaneously (hopefully), along with its negative effects on labour supply essential workers, the situation regarding the labour shortages of those workers could change (improve) substantially.

Given that most of these drivers - both cyclical and pandemic related – are expected to be relatively short-term, temporary foreign worker programs may be a more reasonable means of meeting such potentially temporary demand. It is also useful to remember that a shortage of lower skilled labour is like a double-edged sword. The wage increases and improvements in working conditions that often occur in order to attract workers lead to higher employer costs and hence higher consumer prices, but they also reduce poverty and inequality.

In response to the current reports of labour shortages, some analysts are turning to an aging population and slower labour force growth as an explanation of current outcomes. However, this possibility is highly unlikely because the age distribution of the population and the resulting impacts to the labour supply occur very slowly. It takes many years, if not decades, for significant change to occur. The current concern regarding labour shortages came upon us very quickly. As noted, the number of job vacancies associated with potential labour shortages doubled between 2015 and 2018/2019. Furthermore, many of the industries reporting labour shortages – notably food and accommodation services, retail sales, etc. – have relatively young workforces. It is unlikely that labour force aging is a driving force for current labour shortages in these industries. Finally, the Canadian Occupational Projection System (COPS) projected longer-term structural shortages to 2028. The projections resulted in the conclusion that there may be some labour shortages in some higher skill occupations (e.g. computer related professions, mechanical/aeronautical engineering). However, most occupations are not expected to have longer-term structural labour shortages, notably lower skill occupations. The projections did not predict widespread longer-term labour shortages in most occupations.

Recent research has also altered somewhat our understanding of how the immigration system is currently functioning regarding lower skilled labour. As noted above, immigrants are at least as likely to fill lower skilled jobs as are Canadian-born individuals. There has also been a significant change in the way permanent residents are selected; many are now previous temporary foreign workers. There are concerns that pathways to permanent residency for lower skilled temporary foreign workers are extremely limited relative to those for higher skilled workers, thus reducing the number of lower skilled immigrants available to the labour market (e.g., Alboim, Cohl, and Pham 2021; Banerjee and Hiebert 2021; Esses, McRae, et al. 2021; Alboim and Cohl 2020). However, recent STC-IRCC research indicates that lower skilled temporary foreign workers are at least as likely to become permanent residents as the higher skilled, and often more likely.^{Footnote 22} At least half of temporary foreign workers who become permanent residents were lower skilled. This results in a significant contribution to the provision of lower skilled labour in Canada.

Longer run considerations

There are other possible longer-run issues to be considered when contemplating an increase in lower skilled immigration. Technological change will eliminate a number of jobs, and recent research indicates that lower skilled jobs are most at risk (Frenette and Frank 2019; Chernoff and Warman 2020). This could reduce the demand for lower skilled workers, and raises concerns regarding their employment and economic outcomes. Papademetriou, Benton, and Hooper (2019) caution that governments should avoid selecting workers for sectors or occupations likely to be negatively affected by technological change. Lower skilled Canadian workers already experience unemployment rates that are roughly double that of higher skilled workers.^{Footnote 23} Perhaps a precondition to permanently admitting large numbers of lower skilled immigrants could be determining why less educated Canadians are unemployed at relatively high levels. Moreover, less educated immigrants have a poverty rate 1.7 times that of the higher educated.^{Footnote 24} In the medium- and longer-run, more highly educated immigrants do better economically than the less educated.

A significant and long-term shift towards lower skilled immigrants could have an impact on the characteristics of the Canadian labour market. All Western countries seek a highly educated labour market for reasons related to innovation and productivity. Canada has been very successful, more than most, at achieving high levels of educational attainment among the children of immigrants. This is in part because highly educated immigrant parents (with degrees) are roughly twice as likely to have university-educated children compared to high school educated immigrant parents.^{Footnote 25} Switzerland learned first-hand that the educational attainment of immigrants significantly affected the educational outcomes of the children.^{Footnote 26} A significant move away from highly educated immigrants would weaken the tendency for the children of immigrants to attain high education levels, a major success for Canada compared to other countries.

In addition, a long-term move to higher shares of lower skilled workers can affect the wage structure of the economy. The United States, with a significant pool of lower skilled immigrant labour, has the lowest wage economy in the Western world, with the highest level of wage inequality. The Scandinavian countries have high wage economies and as a result much less income inequality. These countries rely more on technology to carry out many lower skilled labour market functions, and pay higher wages. Canada, as is often the case, is between these two poles.^{Footnote 27} Some discussion of which direction Canada should move (i.e. increase the low-wage labour pool or move more towards the Scandinavian model) might be useful.

Finally, the perception of immigrants by the Canadian-born may shift if there is a significant and long-run change in the characteristics of immigrants. In many countries the population generally has a more positive attitude towards highly skilled immigrants than the lower skilled.^{Footnote 28} Any change that negatively affects Canadians’ perception of immigration could put a damper on its success.

The human capital immigrant selection model has to-date provided Canada with successful immigrant integration compared to most countries (OECD 2019). If there is to be a move towards more lower skilled immigration, a discussion about the resulting trade-offs would be helpful. A movement away from the human capital immigrant selection model would provide more lower skilled labour to the low-wage sectors of the economy, as many are suggesting, and reduce some of the near-term labour market tightness. However, responding to unpredictable and likely short-term hiring challenges is perhaps best addressed with the flexibility inherent in the temporary foreign worker programs. There are many possible longer-term consequences to a major shift towards higher shares of lower skilled immigration, including possibly poorer outcomes for the lower skilled immigrants themselves, in the medium and longer-run.

Why do some university-educated immigrants hold lower skill jobs?

Why are some lower skill jobs filled by university-educated immigrants? This is the second issue raised by the data presented in the paper. This issue has been around for decades, characterized by the proverbial PhD graduate immigrant driving taxi. How big an issue is this type of phenomenon? The vast majority (80%) of lower skilled jobs (NOC C or D) filled by immigrants^{Footnote 29}in 2016 were occupied by those with lower levels of education. However, 20% of these jobs were held by those with a university degree. Among the Canadian-born, this figure was 10%. Why is this figure 10 percentage points higher among immigrants than among the Canadian-born?

An alternative perspective is gained by focusing on the share of highly educated individuals in lower skill jobs, a slightly different statistic. Existing research shows there will always be some share of university graduates working in lower skilled jobs (e.g., Uppal and LaRochelle-Côté 2014). Using the results for the Canadian-born as an “expected” level, one can ask why the share of immigrant degree holders in lower skill jobs is 12 percentage points higher than that of Canadian-born degree holders.^{Footnote 30} Unfortunately, there appears to be no definitive answer to why this occurs.

There are number of potential reasons outlined in the research, including:

• foreign credential recognition issues (e.g., Damelang and Ebensperger 2020; Banerjee et al 2021),
• discrimination (e.g., Oreopoulos 2011),
• poorer quality of education, particularly among immigrants educated in some developing nations (e.g., Friedberg 2000; Fortin et al 2016; Li and Sweetman 2014; Banerjee et al 2021),
• lower ability levels in English or French, which may be particularly important in higher skill jobs (e.g., Ferrer et al 2005; Warman et al 2015),
• a potential oversupply of highly educated immigrants in Canada (field of study matters) (e.g., Lu and Hou 2020),
• the inability of employers to assess foreign qualification levels, even if qualifications are at or above the Canadian level,
• the tendency of employers to hire individuals with familiar rather than unfamiliar backgrounds (in the face of no overall shortage of highly skilled workers), and
• a lack of the knowledge among immigrants of the networks or job search strategies that lead to higher skill employment (particularly during the first few years in Canada).

The research suggests that each of these factors contribute somewhat to the increased tendency of highly educated immigrants to hold lower skill jobs compared to their Canadian-born counterparts, but unfortunately none of them provides a complete explanation. There appears to be no single explanation, and the research does not allow an assessment of the relative contribution of each factor.

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Appendix A: List of the occupational major groups included at each skill level

Level O: Management

• Senior management occupations
• Specialized middle management occupations
• Middle management occupations in retail and wholesale trade and customer services
• Middle management occupations in trades, transportation, production and utilities

Level A: Professional, occupations usually require university education

• Professional occupations in business and finance
• Professional occupations in natural and applied sciences
• Professional occupations in nursing
• Professional occupations in health (except nursing)
• Professional occupations in education services
• Professional occupations in law and social, community and government services
• Professional occupations in art and culture

Level B: occupations usually require college education or apprenticeship training

• Administrative and financial supervisors and administrative occupations
• Finance, insurance and related business administrative occupations
• Technical occupations related to natural and applied sciences
• Technical occupations in health
• Paraprofessional occupations in legal, social, community and education services
• Occupations in front-line public protection services
• Technical occupations in art, culture, recreation and sport
• Retail sales supervisors and specialized sales occupations
• Service supervisors and specialized service occupations
• Industrial, electrical and construction trades
• Maintenance and equipment operation trades
• Supervisors and technical occupations in natural resources, agriculture and related production
• Processing, manufacturing and utilities supervisors and central control operators

Level C: occupations usually require secondary school and/or occupation-specific training

• Office support occupations
• Distribution, tracking and scheduling co-ordination occupations
• Assisting occupations in support of health services
• Care providers and educational, legal and public protection support occupations
• Sales representatives and salespersons - wholesale and retail trade
• Service representatives and other customer and personal services occupations
• Other installers, repairers and servicers and material handlers
• Transport and heavy equipment operation and related maintenance occupations
• Workers in natural resources, agriculture and related production
• Processing and manufacturing machine operators and related production workers
• Assemblers in manufacturing

Level D: on-the-job training is usually provided for these occupations

• Sales support occupations
• Service support and other service occupations, n.e.c.
• Trades helpers, construction labourers and related occupations
• Harvesting, landscaping and natural resources labourers
• Labourers in processing, manufacturing and utilities

Source: Statistics Canada, Variant of NOC 2016 Version 1.0 - Analysis by skill level