State of the labour Market

January Labour Force Survey Preview: Rising Employment Rates of Recent Skilled Immigrants

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Outcomes for university-educated newcomers have improved

One standout from the 2018 Labour Force Survey data was the continued improving job market situation of recent immigrants to Canada. Commentators noted that for the first time, the share of adults with a job was higher among recent immigrants (in Canada for five years or less) than those born in Canada. And while the higher employment rate reflects the greater share of recent immigrants in their prime working years, employment gains of skilled newcomers have still been impressive. This improvement likely reflects both broader strength in the labour market, as well as the impacts of recent immigration policy changes.   

Looking closer at prime-age Canadians (age 25-54), employment rates of recent immigrants remain below both those born in Canada, as well as immigrants who have been in Canada for more than 5 years. A significant share of this difference reflects lower labour force participation among recent female immigrants. Still, it’s clear the gap is narrowing. Employment rates of recent prime-age immigrants rose 5.2 percentage points between 2014 and 2018, including a 1.5 point increase last year. This outpaced a 2.6 point gain among longer tenured immigrants and a 1.4 point increase among those born in Canada.

Gains driven by improving job market, reforms to skilled immigration process

The broad-based improvement of the Canadian labour market has likely been an important driver of rising employment rates among new immigrants. However other factors, including policy changes like the 2015 introduction of the Global Express Entry program for skilled workers, could have also played a role. In particular, a key plank of the program was to place greater emphasis on whether candidates have received a job offer from a Canadian employer when assessing their permanent residency application.

Employment gains of recent immigrants over this period have been strongest among those with university degrees — presumably those most likely to use Global Express — while job growth has been more mixed among those at other education levels. Moreover, the timing of improvement relative to university-educated Canadian-born and long-tenured immigrants also suggests a potential impact of the policy reform. After little change over the several previous years, the employment rate gap for recent prime-age immigrants with degrees is down 5.9 and 7.8 percentage points from 2014 relative to longer-tenured immigrants and those born in Canada respectively.

Not only is immigration the driving force of Canadian population growth, but the rising employment rates of recent newcomers have further compounded its boost to employment growth. However, while employment gaps are closing, there’s still room for improvement. This, along with ongoing relatively fast growth in sectors like tech — where immigrants are well represented — suggests convergence could continue. This would provide scope for further improvement in the already elevated Canadian prime-age employment rate, helping stem the population aging’s drag on employment growth in the year ahead, and more importantly, improve conditions for those starting a new life in Canada.

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