5. Trends in economic performance of immigrants in Canada
At an annual rate of about 0.8% of its population, Canada has one of the higher inflows of permanent residents among OECD countries. Despite the relatively high rate of immigration, Canada shows the most equality in employment rates between the Canadian-born and immigrant-born populations. In terms of labour force participation, the disparity in rates between Canadian-born and immigrant-born females is the lowest among OECD countries and the difference among males is negligible. Nevertheless immigrants do face challenges integrating into the Canadian labour market.
Results from the 2006 Census show that earnings disparities between recent immigrants and Canadian-born workers continued to increase into the first decade of the 2000s. In 1980, recent immigrant men with employment income earned 85 cents for each dollar received by Canadian-born men. By 2000, the ratio had dropped to 67 cents, and by 2005 to 63 cents. The corresponding ratios for recent immigrant women were 85, 65 and 56 cents, respectively.
Looking at annual employment earnings data from the Longitudinal Immigration Database (IMDB), two trends have persisted over time for all entry cohorts. First, earnings increase with time in Canada. Second, earnings of economic class immigrants (principal applicants) exceed those of all other immigrant categories – both initially and over time, on average (Figure 8). This group is selected for its labour-market attributes and generally has higher participation rates and attachment to the labour market than others.
Despite this long term trend, the economic performance of immigrants has been uneven since the early 1990s. Those who entered Canada at the beginning of the 1990s faced very poor economic conditions, and their employment earnings reflect this. On average, earnings of later cohorts improved, with strong growth exhibited in the IT sector. Among skilled immigrants, there is a disproportionately high concentration of occupations in the IT sector – specifically engineering and computer-related occupations.Footnote 21 As a result, they were also disproportionately impacted by the collapse of that sector at the beginning of this decade and their earnings profile during 2000-08 reflects this reality.Footnote 22
Figure 8: Average entry employment earnings ($2008) by immigration category and tax year
5.1. Trends in low income
The incidence of low-income among recent immigrants (i.e. those who immigrated in the previous five years) almost doubled between 1980 and 1995, that is from 25% in 1980 to 47% in 1995, and then fell to below 36% in 2000. In contrast, low-income rates among the Canadian-born population dropped from 17% in 1980 to 14% in 2000. Results from the 2006 Census indicate that the low-income rate for recent immigrants continued to be well above that of the Canadian-born population during 2005.Footnote 23 Low-income rates for immigrants who have been in Canada for longer periods of time are significantly lower. Declines are noted for every additional year an immigrant has lived in Canada.
Previous research has identified a number of groups among the non-elderly population as being particularly at risk of persistent low income and poverty – these groups include lone parents, Canadians of Aboriginal origin, recent immigrants, persons suffering from work-limiting medical conditions and unattached individuals aged 45-64.Footnote 24 In addition, many of those in low-income situations have been hindered by the fact that hourly wages for all newly hired employees have fallen substantially relative to those of other workers.Footnote 25 However, with respect to recent immigrants specifically, little is known about the causes of poverty, where it occurs and its various social ramifications.
5.2. Factors at play
Research examining the reasons behind the less than desired economic outcomes suggests that there are a number of factors at play:
- Labour-market conditions accounted for about 40% of the decline witnessed over the past two decades. Most recently the IT bust in the early 2000s resulted in lower employment and earnings in that sector of the economy.
- Lower returns to foreign education due to changes in source country. While the returns to education from different countries have not declined over time, the share of immigrants coming from countries with lower returns has increased.
- Foreign work experience is not as valued as domestic work experience.
- Inadequate official language ability. While it has been difficult to accurately measure the impact of knowledge of official languages on economic outcomes, all evidence points to this as being a significant barrier to immigrant economic success.Footnote 26
- More competition from an increasingly highly educated Canadian-born population.
5.3. Economic performance by province/region
The relative provincial performance of immigrants varies. This is consistent with the situation of the Canadian-born population across provinces. Variations in employment earnings may arise due to a number of factors (e.g. local labour-market conditions, minimum wage laws, etc.) but what is a key factor among these factors is the variation in industrial and occupational concentrations across regions.
The decline in average annual employment earnings for recent immigrants during the early part of this decade was also seen at the provincial level for British Columbia, Ontario, and Quebec, albeit to different degrees. Earnings in Ontario were particularly hard hit by the decline in employment in the IT and manufacturing sectors which had a negative impact on earnings of recent immigrants going to that province. Rising low-income rates within the recent immigrant population particularly in Toronto and Vancouver from 1990 and into this decade is increasingly worrisome given that the Canadian-born populations within these cities have experienced declines in their low-income rates over this same period.
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