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The wage gap between immigrants and Canadian-born workers has more than doubled in the last 30 years, according to a new report by the Royal Bank of Canada (RBC) — despite the federal government placing more emphasis on economic class immigration. 

Immigrants are earning about 10 per cent less on average than Canadians, RBC reports, up from four per cent in 1986.

The difference is costing Canada an estimated $50 billion per year in GDP, which is the approximate overall cost of immigrants who cannot find work in their field, or who never reach wage parity even if they do.

This challenge has persisted for more than 50 years. Consider, for instance, the federal government’s 1966 White Paper on Immigration, which noted:

… some immigrants are not able to follow their own occupation on arrival here and must accept alternative employment at least until they are able to meet the applicable Canadian standards … It must be hoped that this problem will be overcome as the leaders of public opinion come to recognize the economic advantage of more mobility …”

Credential recognition improvement is a common election promise and this year’s federal campaign is no exception. Of the parties who have released their platforms, the Conservatives, Green Party, and NDP have listed credential recognition as a priority.

However, given that credential recognition falls under provincial jurisdiction, the federal government can only do so much on this matter.

Diagnosing the $50-Billion Challenge

The main barrier immigrants face in the labour market is that Canadian employers and regulatory bodies struggle to assess the extent to which foreign work experience and credentials compare with Canadian standards. With Canada now welcoming newcomers from some 175 countries each year, this task has become even more difficult.

Discrimination is another challenge that has been substantiated by research. A field experiment whereby University of Toronto academic Philip Oreopoulos sent 13,000 resumes to employers in the Greater Toronto Area found that Canadian-born applicants with English-sounding names were more likely to receive a call-back for a job interview.

When recruiters were asked about their call-back practices, they reported concerns that applicants with Chinese, Indian, Pakistani or Greek-sounding names “may lack critical language skills for performing well on the job.”

Federal Government Efforts

The federal government does have some influence and has already made significant changes to immigrant selection in recent decades.

Since its launch in January 2015, the ranks prospective immigrants based on their human capital including their age, education, language skills, and work experience.

Ottawa selects the highest-ranking candidates — those who have the best chance of integrating into the labour market.

The launch of Canada’s (PNP) in 1999 has also had an influence by allowing employers and provinces and territories a greater role in selecting immigrants, the rationale being that these important stakeholders are well-placed to identify newcomers who can fill local labour market needs.

Ottawa has also increased its settlement funding five-fold over the past 20 years to $1.5 billion today, with much of the funds going towards strengthening the human capital of newcomers so they can find work commensurate with their skills.

What else can be done?

Four provinces — Nova Scotia, Quebec, Ontario, and Manitoba — have implemented “fairness legislation,” which has led to the creation of fairness offices that aim to ensure more objective credentialing processes for immigrants by auditing regulatory bodies and providing suggestions for improvement.

The adoption of similar laws in every province and territory can further promote better credentialing practices across Canada.

More regulatory bodies can help by educating newcomers who are still overseas on the credential recognition process — or, even better, enable them to begin the process prior to their arrival to Canada.

It is also crucial for stakeholders such as immigrant-serving organizations to educate employers on the benefits of hiring immigrants.

Placing employers face-to-face with immigrant job-seekers can be an effective means of alleviating common concerns such as the belief that many newcomers lack the requisite soft skills needed to integrate into the Canadian workplace.

While federal parties are pledging to fix the credential recognition process, addressing this matter requires multi-faceted solutions that also involve stakeholders such as provinces and territories, regulatory bodies, employers, immigrant-serving organizations, and educational institutions.

To paraphrase the federal government’s White Paper from 1966, this $50-billion problem will be overcome as the leaders of public opinion come to recognize the economic advantage of more mobility.

Fortunately, recent evidence such as the employment and wage outcomes of newcomers suggests that this challenge may diminish over the next 50 years as Canada’s economy becomes even more reliant on immigrant talent.

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