4. Who will fill the job openings?

As discussed earlier, approximately 6.4 million jobs will be available over the coming decade –through both job creation due to economic expansion and the replacement of existing jobs due to retirement. These jobs will be filled by Canadian-born labour-market participants (both new entrants and those re-entering the job market), new immigrants and foreign nationals in Canada working on a temporary basis. Population ageing will have a significant impact on the labour supply in Canada as larger numbers of older people leave the labour force. The proportion of older people (aged 55 and over) in the population will increase and this age group has traditionally displayed the lowest participation rates. As a result, the labour force is projected to increase by an average of 0.8% per year during the next ten years, representing half of the growth rate (1.6%) observed during the first decade of the 2000s.

Students coming out of Canada’s education system (i.e. school leavers), with educational attainment ranging from an incomplete high school certificate to a PhD, will remain the primary source of new labour supply, representing approximately 4.7 million new labour-market entrants over the next decade. These school leavers will account for four fifths of the projected total new labour supply. Overall, close to 70% of school leavers over the next ten years will have a college or university education, up from 65% in the previous ten years. It is important to note that the number of new immigrants joining Canada’s labour force will be much smaller than the inflow of school leavers, representing roughly 1.1 million entrants over the same time period.

The number of immigrants entering the labour market is dependent on several immigration related factors including: changes to immigration levels as well as the age composition, source country, and category mix of new immigrants. In addition, the overall performance of the Canadian economy, especially relative to other immigrant-receiving countries, can lead to movements in labour supply.

4.1. Future expectations – putting the role of immigration in perspective

Immigrants have been an important part of labour supply over the past two decades and they will continue to be an important source of new labour supply. One must, however, put the immigrant contribution into context. It comes as no surprise that immigrants are making up a larger proportion of population and labour force growth given the changes in demographics evolving in Canada. However, the role of the Canadian-born population must not be discounted. Historical data from the Census show that gains in the labour force originating from the Canadian-born population far outweigh gains attributed to immigration and this trend is expected to continue in the future.Footnote 9

Some researchers estimate that sometime during this decade immigrants will account for 100% of net labour force growth. This estimate is sometimes misinterpreted to mean that young Canadian-born individuals will make no contribution to the labour force. While recent immigrants will continue to comprise a significant portion (and perhaps an increasing proportion) of new entrants, the majority of new entrants will be made up of school leavers for the foreseeable future – at roughly four Canadian school leavers to one immigrant. Figure 6 gives an historical perspective and a forecast of the number of new labour-market entrants – school leavers and immigrants – based on COPS projections. Note that the number for school leavers shown in Figure 6 includes students coming out of the education system with educational attainment ranging from an incomplete high school certificate to a PhD. The number also includes landed immigrants who are exiting the educational system but does not include foreign students.

Figure 6: New labour-market entrants: school leavers and immigrants, 1996-2020

Figure 6: New labour-market entrants: school leavers and immigrants, 1996-2020

Text version: New labour-market entrants

Although it is difficult to pinpoint the exact year, it is also expected that at some point during the next decade or so, the number of retirements will exceed the number of new Canadian labour market entrants from the educational system. The precise timing is hard to predict particularly given fluctuations in retirement rates attributable to factors such as labour-market behaviour linked to overall economic growth and the wealth of potential retirees.

4.2. Permanent residents entering the labour force

Over the past ten years, the immigration rate (gross immigration as a share of total Canadian population) has remained in the range of 0.7% to 0.8%. Accordingly, the number of immigrants has ranged between 220,000 and 280,000 people. For the purposes of this analysis, the immigration rate is projected to remain relatively stable over the next ten years – which will result in roughly 2.5 million immigrants arriving in Canada.

However, not all of these immigrants will be destined to the labour force. Firstly, some immigrants do not remain in Canada after landing. Return and onward migration rates of new immigrants, which depend on a number of factors including economic conditions at time of landing in Canada and economic and geopolitical conditions in their home country, have varied between 13% and 19% for different landing cohorts. Secondly, a share of the new immigrants arriving in Canada are children who are not expected to enter the workforce for a number of years, or are of retirement age and will not participate in the Canadian labour market at all. Lastly, the labour force participation rate of immigrants, especially for females, is lower than that of the Canadian-born population. Given the projected inflow of new permanent residents and the realities of historical trends in participation, it is expected that the projected labour supply coming from new permanent residents will be roughly 1 million over the next decade.

Figure 7 illustrates an historical perspective of the number of new immigrants intending to work at time of landing by occupational skill level. Data from the Permanent Resident Data System (PRDS) indicate that over the past 10 years, an annual average of roughly 130,000 permanent residents have been destined for the job market in a wide range of occupational skill levels.Footnote 10 Roughly half of the permanent residents identify an intended occupational skill level of which the majority (80%-90%) are occupations within the higher skill levels (Management, Skill Level A, and B). Also of note is the large share of permanent residents who state that they intend to work but do not identify a specific occupation/skill level (roughly 50% of the total). Generally, these immigrants have recently completed school and are new to the labour market, or have landed under the family class or as refugees – classes which do not require occupational coding.

New permanent residents who identify an intended occupation can be classified into the different skill levels discussed above. It becomes quite apparent from the recent trends of intended skill levels that new permanent residents are well positioned (at least in terms of occupational match) to fill jobs in higher skilled occupations (Skill Level A) which is expected to be the fastest growing segment of the Canadian labour market in the coming decade.

Figure 7: Landings of permanent residents intending to work by skill level, 1980-2011

Figure 7: Landings of permanent residents intending to work by skill level, 1980-2011

Text version: Landings of permanent residents intending to work by skill level, 1980-2011

Irrespective of the primary reason for coming to Canada, a large share of permanent residents from every immigration category are destined to the workforce; however, the propensity to enter the labour market can vary greatly by category, time spent in Canada after landing, family choices and other socio-economic characteristics. Not surprisingly, points-selected permanent residents (Federal Skilled Worker principal applicants) have traditionally had the highest propensity to enter the job market. These permanent residents are assessed on various human capital characteristics which facilitate participation in the labour market and lay the foundation for becoming economically established in Canada.Footnote 11 However, more recent data also suggest very high labour-market attachment for Provincial Nominee principal applicants.Footnote 12 Other admission categories (especially those related to family reunification and humanitarian efforts) have weaker labour-market attachment reflecting the different motivations for coming to Canada.

It is important to note, as is the case with overall economic conditions, labour supply (and demand) will vary across all regions of the country. This is the result of many factors including; the demographic profile of a region, the presence of educational/training facilities and the ability of different regions to attract and retain new workers. Within this context, there is a significant role for immigration now and in the future.Footnote 13 Labour mobility within different geographical regions for immigrant-born and Canadian-born workers is also a key issue to investigate.Footnote 14 Further, the willingness of immigrants and Canadian-born relocate to regions which their specific skills are required will likely become a more important issue to consider of the baby boomers retire and localized labour-market pressures become more common.

4.3. Recent policy improvements/programs tied to the Canadian labour market

Since the implementation of IRPA (Immigration and Refugee Protection Act) in 2002, some key programs and policies have been developed and refined in order to be more flexible and responsive to changing labour needs in Canada. The improvements are designed to attract new immigrants, help them integrate more quickly into Canada’s labour market and ensure that they succeed once they arrive and are highlighted below.

The Provincial Nominee Program (PNP)

The Provincial Nominee Program is designed to facilitate immigration of foreign nationals to specific provinces/territories in Canada in order to target explicit economic needs. Individuals who immigrate to Canada under the PNP have the skills, education and work experience needed to make an immediate economic contribution to the province or territory which nominates them. Since the inception of this program, the focus has been on immediate occupational needs indentified by the participating provinces. The provincial nominee rules recognize that provincial governments are best positioned to determine their specific economic needs with respect to immigration.

Labour-market needs vary over time due to a number of factors such as general economic cycles, rates of growth in particular sectors, and demographics within particular occupations. Generally the PNP is viewed as being more responsive to more immediate needs in the labour market as compared to the Federal Skilled Worker (FSW) program. PNP applicants receive priority processing while most FSW applicants do notFootnote 15 and the PNP is broader based in terms of the occupational labour-market spectrum.

Since the inception of the PNP, comparisons regarding the labour-market outcomes of the FSW program are often made. However, one must remember important differences between these two economic streams of immigration. The FSW program addresses knowledge-based and longer-term needs for skilled professionals, whereas the PNP tends to focus on shorter-term, occupational and specific labour needs identified by a province.

Ministerial Instructions (MI) – Bill C50

On June 18, 2008, the Immigration and Refugee Protection Act was amended to give the Minister of Citizenship and Immigration authority to issue instructions which would ensure the processing of applications and requests be conducted in a manner that, in the opinion of the Minister, would best support the attainment of immigration goals set by the Government of Canada.Footnote 16 With this authority the Minister may issue “Ministerial Instructions” to immigration officers on which, and how, applications are to be processed. With the exception of some types of applications (such as refugees), MI can accelerate certain kinds of applications for processing, limit the number of applications or determine that applications which do not meet the eligibility criteria set out in the MI need not be processed.

In November 2008, the Action Plan for Faster Immigration was launched to help make the Federal Skilled Worker (FSW) Program more responsive to the Canadian labour market. The central component of the Action Plan was a first set of MI that expedited the processing of select FSW applications to ensure that skilled immigrants can get to Canada quickly when their skills are in demand. Meanwhile, applications received by CIC that did not meet the eligibility criteria set out by the MI were not processed. Specifically, these first Ministerial Instructions initiated the priority processing of 3 groups of applicants within the FSW category:

  • Foreign nationals who submit an application with an Arranged Employment Offer (AEO),Footnote 17 or
  • Foreign nationals in Canada as international students or temporary foreign workers, or
  • Foreign nationals who submitted an application consistent with evidence of experience in the last 10 years under one or more of the priority occupations.

Since 2008 the MI authority has been used on an ongoing basis to address processing pressures in a number of categories. However, the MI authority continues to refine FSW application processing in order to be as responsive to the labour market as possible.Footnote 18

The development of the priority occupations list is based primarily on the labour market projections of Human Resources and Skills Development Canada and provinces and territories, plus input from employers and partners. All occupations included in the priority list follow the National Occupation Classification (NOC) coding system.

A significant number of the occupations on the current priority list are in the medical field (including general practitioners, specialist physicians, dentists, pharmacists, nurses, etc.). However, other occupational fields are also common including food hospitality (restaurant managers, chefs and cooks) and construction trades and related occupations. Not surprisingly, many of these occupations have also been identified by HRSDC as being occupations that will endure “pressures” or shortages in the coming years due to increased retirements and higher than average job growth.

Canadian Experience Class (CEC)

Although the number of permanent landings in the Canadian Experience Class (CEC) are still at relatively low numbers (6,027 or 2.4% of overall permanent resident entries in 2011), this category is designed to attract and retain skilled and talented individuals who have already demonstrated their ability to successfully integrate into the Canadian labour market and society. The CEC allows certain temporary foreign workers and certain foreign student graduates, such as those with work experience in the managerial, professional, and technical or trade fields, to apply for permanent residence and eventually Canadian citizenship without having to leave Canada.Footnote 19 Unlike other existing programs, this new avenue for immigration allows an applicant’s Canadian experience to be considered as a key selection factor when immigrating to Canada.

Research done on the economic performance of new immigrants to Canada suggests that those who spend time in Canada prior to landing (especially as temporary foreign workers) have a superior economic outcomes as compared to those who do not spend time in Canada prior to landing and this bodes well for immigrants who are eligible to come to Canada under this category.Footnote 20 While some of the early results of these improvements and changes in policies and programs are encouraging and point to improved outcomes, some integration challenges persist. Given that immigration is expected to play an increasingly important role within the labour supply equation, difficulties related to immigrant labour-market integration (foreign credential recognition, language training, etc.) are key factors which must be improved for better economic performance.

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