Immigrants get fewer jobs, earn less

Despite having generally higher levels of education, new Canadians earn less than their native-born peers and are less likely to have a job.

Despite having generally higher levels of education, new Canadians earn less than their native-born peers and are less likely to have a job.

Simply paying Canadian immigrants as much as their Canadian peers with similar education levels could be worth as much as $30.7 billion to Canada's economy, the Royal Bank of Canada said in a report Monday morning. "While Canada has done a great job of attracting foreign talent, integrating newcomers effectively has proven to be more of a challenge," the report states.

More than 40 per cent of those who come to Canada today have a bachelor's degree or better. That's risen from under 14 per cent in 1981, and it compares to 17 per cent among the Canadian-born population today.

Wage gap

In 2005, the entire population of immigrants working full time in Canada earned about $45,000 on average yearly. For recent immigrants, the average salary drops to just $28,700.

If all things were equal, immigrants employed full-time should have earned $57,000 on average, in 2006, RBC said. That implies their actual salaries were 21 per cent below where they should have been. For those who came to Canada very recently, the gap jumps to 56 per cent or about $37,200 per working person.

Working to rectify that gap could result in a shot in the arm of about 2.1 per cent of GDP that could be added to the economy in the form of increased wages. 

"Underutilizing skilled labour is a gap we need to fill and immigrants represent more than 20 per cent of our population," the bank's senior economist Dawn Desjardins said. "Even small improvements in immigrant outcomes could contribute positively to the Canadian economy."

In addition to wage discrepancies, the report highlights a growing disparity in who's even able to get a job.

In 1981, the unemployment rate for immigrants and Canadians as a whole was about the same, at a little under 8 per cent. But by 2006, the rate for immigrants was 6.9 per cent, compared to 6.4 per cent for native Canadians. If typical factors such as education, age, gender, region, and experience were considered, the immigrant unemployment rate should actually be lower than that of Canadian-born people. The "potential" rate should be as low as 5.4 per cent in 2006, the bank says.

Among those who had come to Canada in the past five years, the rate jumped even higher, to 12 per cent.

By gender, male immigrants had a higher earnings gap than female immigrants (24 per cent compared to 17 per cent). In dollar terms, this is about $16,500 for men and $7,000 for women. Conversely, the excess in the unemployment rate for women was larger than that for men, at 2.5 percentage points, compared to a 0.7 percentage point difference for men.

Interestingly, the gap in both cases appears to be worse in Canada's three largest cities of Toronto, Montreal and Vancouver. Immigrants in these cities had a wage gap of nearly $15,000 or more than 26 per cent; in the rest of Canada, the gap was nearly $3,300 or 6 per cent.

A similar story holds for unemployment, with excess unemployment of 2.8 per cent for immigrants in the largest cities, versus 1.3 per cent elsewhere in Canada.

"This report shows that we are still not recognizing the skill level and talent that newcomers bring to Canada — and it’s as much the country’s loss as it is our immigrants," the bank's director of Newcomer and Multicultural Markets Cameron Mak said.

"Canada was built on immigration, and that’s just as true today."