Research to Insights: Immigration as a Source of Labour Supply

About Research to Insights

The Research to Insights series of presentations features a broad range of findings on selected topics of research. Each presentation will draw from and integrate evidence from many different studies that use innovative and high-quality data and methods to better understand relevant and complex policy issues.

Based on applied research of valuable data, the series is intended to provide decision makers, and Canadians more broadly, a comprehensive and horizontal view of the current social, economic and health issues we face in a changing world.

Context: Short-term pressures on the labour supply as businesses emerge from the COVID-19 pandemic

• Canada’s labour market has tightened substantially as restrictions related to the COVID-19 pandemic ease and economic activity continues to strengthen.
  • Employment rates among core-aged men and women (25 to 54 years) are well above their pre-pandemic baselines. Employment rates among youth have also fully recovered.
  • The national unemployment rate fell to a record low 5.2% in April. Among core-aged workers, the rate was 4.3%.
  • More recent core-aged immigrants are working now than before the pandemic.
• Almost 4 in 10 businesses anticipated worker shortages in early 2022, while a similar percentage expect challenges in recruiting skilled employees. Job vacancies in late 2021 were 80% above pre-pandemic levels.
• High levels of immigration over the near term will be critical in addressing current labour market imbalances.

Context: Structural trends point to persistent labour supply challenges over the longer term

• Canada’s working-age population (15 to 64 years) has never been older. More than one in five working-age Canadians are approaching retirement age.
• Currently, working-age Canadians make up 64.8% of the population; in three decades, it could fall below 60%.
• Immigration has been the driving force behind Canada’s labour supply for many years. During the 2010s, over four-fifths of the growth in Canada’s labour force came from immigration.
• Modest, sustained increases in immigration levels will not fully offset the longer-term impacts of an aging population, but are critical for alleviating the effects of aging on the labour market over time.

Recent years had the highest annual admission levels of the past century

• After the interruption caused by the pandemic in 2020, 405,800 immigrants were admitted in 2021, the highest level in the history.
• Since 2010, 60% of immigrants were in the economic class, 26% were in the family class and 13% were refugees.
• There has been an increased share of refugees since 2016.

Data table



Annual level of immigration, by class
Table summary
This table displays the results of Annual level of immigration. The information is grouped by Year (appearing as row headers), Economic class, Family class, Refugees , Others and Total (appearing as column headers).

Year	Economic class	Family class	Refugees	Others	Total
1990	97,717	73,917	40,204	3,593	215,431
1991	86,835	86,755	54,001	4,227	231,818
1992	95,650	100,437	52,309	5,538	253,934
1993	105,417	111,951	30,566	7,741	255,675
1994	102,176	93,557	20,437	7,425	223,595
1995	106,560	76,754	28,112	727	212,153
1996	125,066	67,974	28,857	3,465	225,362
1997	128,095	59,669	24,616	3,078	215,458
1998	97,672	50,631	23,060	2,320	173,683
1999	109,000	54,973	24,552	841	189,366
2000	135,958	60,252	30,240	297	226,747
2001	155,306	66,361	27,978	124	249,769
2002	138,052	64,895	25,173	89	228,209
2003	122,350	70,705	26,010	1,463	220,528
2004	134,093	63,698	32,721	4,835	235,347
2005	156,153	64,413	35,784	5,429	261,779
2006	138,145	74,827	32,505	5,631	251,108
2007	131,017	71,828	27,970	5,363	236,178
2008	148,806	71,603	21,857	4,348	246,614
2009	153,316	71,629	22,849	3,791	251,585
2010	186,664	65,229	24,695	3,483	280,071
2011	155,849	61,036	27,874	3,362	248,121
2012	160,643	69,476	23,094	4,028	257,241
2013	148,167	82,963	24,138	3,235	258,503
2014	164,888	67,210	24,053	3,356	259,507
2015	170,420	65,485	31,540	4,395	271,840
2016	156,030	78,005	58,490	3,845	296,370
2017	159,285	82,465	41,075	3,685	286,510
2018	186,375	85,165	45,465	4,050	321,055
2019	196,655	91,300	48,500	4,720	341,175
2020	106,395	49,305	25,490	3,395	184,585
2021	253,080	81,300	59,790	11,625	405,795
2022	241,850	105,000	76,545	8,250	431,645
2023	253,000	109,500	74,055	10,500	447,055
2024	267,750	113,000	62,500	7,750	451,000
Sources: Longitudinal Immigration Database and Immigration, Refugees and Citizenship Canada monthly updates.

In the 2010s, immigrant workers accounted for 84% of the growth in the total labour force, 55% of the growth in high- and medium-skilled jobs and offset decline in low-skilled jobs among Canadian-born workers

• While employment in low-skilled jobs fell among Canadian-born workers and grew among immigrant workers in the 2010s, the share of low-skilled jobs fell for both Canadian-born and immigrant workers.
• Between 2019 and 2021, growth in high-skilled jobs offset the decline in other jobs.

Data table



Change in employment by occupational skill level and immigration status, 2010 to 2019
Table summary
This table displays the results of Change in employment by occupational skill level and immigration status Total, Canadian-born, New immigrants, Recent immigrants, Long-term immigrants and Temporary residents, calculated using change in employment in 1000s units of measure (appearing as column headers).

	Total	Canadian-born	New immigrants	Recent immigrants	Long-term immigrants	Temporary residents
	change in employment in 1000s
Managerial	-7.1	-94.6	7.4	14.0	55.4	10.7
High-skilled	743.6	323.4	53.6	57.7	259.8	49.0
Medium-skilled	1009.1	470.5	61.9	98.5	304.9	73.4
Low-skilled	99.8	-399.7	63.4	106.3	236.7	93.2
Source: Statistics Canada, Labour Force Survey.

Data table



Change in employment by occupational skill level and immigration status, 2019 to 2021
Table summary
This table displays the results of Change in employment by occupational skill level and immigration status Total, Canadian-born, New immigrants, Recent immigrants, Long-term immigrants and Temporary residents, calculated using change in employment in 1000s units of measure (appearing as column headers).

	Total	Canadian-born	New immigrants	Recent immigrants	Long-term immigrants	Temporary residents
	change in employment in 1000s
Managerial	-55.8	-48.3	0.4	-0.9	-4.1	-2.9
High-skilled	472.9	227.0	57.8	29.1	137.7	21.2
Medium-skilled	-99.1	-198.7	9.6	-1.2	73.4	17.8
Low-skilled	-341.8	-298.7	-34.0	1.2	-12.1	1.7
Source: Statistics Canada, Labour Force Survey.

Since 2010, the share of new and recent immigrant workers grew the fastest in transportation and warehousing, professional services and accommodation and food services

• In 2021, the share of new and recent immigrant workers reached 13% in the accommodation and food services sector, 11% in the professional services sector, and 10% in the manufacturing and transportation sector.
• Between 2010 and 2021, the labour force in the manufacturing sector fell by 159,000 among Canadian-born workers and was partly replenished by new and recent immigrants (+46,000).
• Between  2019 and 2021, there was a large drop in the accommodation and food services sector among Canadian-born workers (-21%) and new immigrant workers (-31%) as well as in the agriculture sector among temporary foreign workers (TFWs) (-29%).

Data table



Percentage of new and recent immigrant workers, by industrial sector
Table summary
This table displays the results of Percentage of new and recent immigrant workers 2010, 2019 and 2021, calculated using percent units of measure (appearing as column headers).

	2010	2019	2021
	percent
Agriculture, mining	3.16	3.75	3.57
Utilities and construction	4.16	5.78	5.15
Manufacturing	7.59	9.45	10.28
Wholesale and retail trade	6.10	7.52	8.29
Transportation and warehousing	6.03	10.01	9.82
Professional services	7.29	9.80	10.58
Educational services	4.58	5.50	5.73
Other services	7.22	7.93	8.54
Accommodation and food services	9.96	13.02	12.93
Public administration	3.03	3.09	2.93
Health services	5.69	7.87	8.23
Source: Statistics Canada, Labour Force Survey.

Skill utilization stable among young Canadian-born workers, but decreased among recent immigrant workers

• Over the 2001 to 2016 period, the percentage of workers in jobs requiring a university degree stayed close to 60% among young Canadian-born workers with at least a bachelor’s degree.
• Over this period, the percentage of university-educated immigrants in high-skill jobs decreased from 46% to 38% among recent immigrants with a degree.
• Employment growth among young Canadian-born workers was concentrated in jobs requiring a university education, while the growth among recent immigrants with a degree was in jobs not requiring a university education.

Data table



Percentage of workers with at least a bachelor's degree working in jobs requiring a university degree
Table summary
This table displays the results of Percentage of workers with at least a bachelor's degree working in jobs requiring a university degree. The information is grouped by Year (appearing as row headers), Immigrants in Canada for 10 years or less and Canadian-born workers aged 25 to 34, calculated using percent units of measure (appearing as column headers).

Year	Immigrants in Canada for 10 years or less	Canadian-born workers aged 25 to 34
	percent
2001	45.7	58.6
2006	41.7	60.1
2011	41.1	60.9
2016	37.7	59.0
Source: Statistics Canada, Census of Population.

For more information: Hou et al. (2019). Recent trends in over-education by immigration status.

The employment gap between new immigrants and Canadian-born workers smallest in a decade

• Since the early 2010s, recent immigrants experienced faster growth in the employment rate than Canadian-born workers—an 8-percentage-point increase from 2010 to 2021, compared with a 2-percentage-point increase among Canadian-born workers.
• The employment rate gap between recent immigrant workers and Canadian-born workers decreased from 13 percentage points in 2010 to 7 percentage points in 2021.
• The COVID-19 pandemic had a similar impact on the employment rate by immigration status.

Data table



Employment rate by immigration status among individuals aged 25 to 54, 2006 to 2021
Table summary
This table displays the results of Employment rate by immigration status among individuals aged 25 to 54. The information is grouped by Year (appearing as row headers), Immigrants in Canada for 10 years or less, Immigrants in Canada for more than 10 years and Canadian-born, calculated using percent units of measure (appearing as column headers).

Year	Immigrants in Canada for 10 years or less	Immigrants in Canada for more than 10 years	Canadian-born
	percent
2006	70.3	82.0	83.1
2007	70.5	82.2	83.8
2008	70.6	81.7	84.1
2009	68.1	79.3	82.1
2010	68.6	79.4	82.4
2011	68.9	79.8	82.9
2012	70.9	80.4	83.2
2013	71.6	80.6	83.3
2014	70.9	79.9	83.1
2015	70.9	80.9	83.3
2016	72.4	80.7	83.2
2017	73.6	82.0	84.0
2018	75.5	82.1	84.5
2019	75.6	83.1	85.2
2020	71.8	77.8	81.7
2021	76.6	80.7	83.9
Source: Statistics Canada, Labour Force Survey.

Steady increase in the initial earnings of new economic immigrants

• Earnings in the first full year rose 39% among economic immigrants between the 2010 and 2018 entry cohorts, driving the trend for all new immigrants.
• Earnings growth was also large among family class immigrants—27%.
• Growth among refugees was 9%.

Data table



First full-year earnings of new immigrants, aged 20 to 54 at landing, by landing year and class
Table summary
This table displays the results of First full-year earnings of new immigrants. The information is grouped by Landing year (appearing as row headers), All immigrants, Economic immigrants, Family immigrants and Refugees, calculated using in 2019 $ units of measure (appearing as column headers).

Landing year	All immigrants	Economic immigrants	Family immigrants	Refugees
	in 2019 $
2000	29,701	33,869	23,798	19,870
2001	26,691	29,041	23,184	20,065
2002	25,468	27,752	22,215	19,913
2003	25,207	27,637	22,579	21,123
2004	27,127	30,605	23,002	21,681
2005	27,449	30,240	24,038	23,305
2006	29,496	33,949	24,949	22,827
2007	31,251	36,275	25,942	22,914
2008	30,876	35,538	24,673	21,284
2009	30,450	34,643	24,282	21,197
2010	30,878	34,156	24,555	22,372
2011	31,806	35,731	25,636	22,244
2012	33,385	37,242	26,277	23,792
2013	34,106	38,430	27,105	23,761
2014	36,963	41,669	26,888	23,426
2015	36,047	40,573	27,014	21,317
2016	36,995	43,489	28,405	21,142
2017	40,372	46,266	30,846	23,584
2018	41,563	47,571	31,285	24,415
Source: Statistics Canada, Longitudinal Immigration Database.

The recent improvement in labour market outcomes is partly related to the two-step selection of economic immigrants

• Among economic principal applicants who landed in 2020, about 67% worked in Canada before immigration, an increase from 12% in 2000 and 33% in 2010.
• This increase was related to the expansion of provincial programs that relied more on TFWs and the introduction of the Canadian Experience Class.
• The increased reliance on TFWs tended to improve the economic outcomes of immigrants.

Data table



Percentage of economic principal applicants with pre-landing Canadian work experience
Table summary
This table displays the results of Percentage of economic principal applicants with pre-landing Canadian work experience . The information is grouped by Year (appearing as row headers), All, Federal skilled workers, Canadian experience, Other federal programs and Provincial programs, calculated using percent units of measure (appearing as column headers).

Year	All	Federal skilled workers	Canadian experience	Other federal programs	Provincial programs
	percent
2000	11.62	8.86	Note ...: not applicable	38.19	11.29
2001	11.22	8.33	Note ...: not applicable	41.13	11.42
2002	11.57	8.41	Note ...: not applicable	41.45	13.21
2003	13.20	8.05	Note ...: not applicable	59.06	13.87
2004	15.90	11.54	Note ...: not applicable	57.65	14.23
2005	15.06	9.82	Note ...: not applicable	57.60	13.88
2006	22.77	17.07	Note ...: not applicable	56.11	20.95
2007	25.95	21.14	Note ...: not applicable	59.16	22.98
2008	31.18	24.53	Note ...: not applicable	63.71	26.09
2009	34.60	24.37	97.07	60.89	29.95
2010	33.06	19.01	97.00	64.49	29.79
2011	32.86	14.37	97.37	55.96	30.03
2012	39.70	16.75	97.22	74.84	38.51
2013	45.08	16.01	97.64	63.50	49.28
2014	57.86	24.59	98.18	78.32	46.47
2015	58.74	14.47	98.34	83.33	59.25
2016	58.57	33.15	97.74	85.13	53.46
2017	67.00	22.30	97.12	94.52	56.23
2018	58.01	10.86	95.51	94.40	60.97
2019	56.48	8.60	97.06	88.30	65.95
2020	66.72	13.68	97.19	84.76	72.41
... not applicable Source: Statistics Canada, Longitudinal Immigration Database.

For more information: Hou et al. (2020). Two-step immigration selection: Recent trends in immigrant labour market outcomes.

Temporary foreign workers account for a rising share of the employed labour force

• In 2019, TFWs accounted for 4.1% of the total T4 earners in Canada, a large increase from 1.9% in 2010.
• The reliance on TFWs is particularly high in the agriculture (15%), the accommodation and food services (10%) and the administrative and support, waste remediation management services (10%) sectors.
• TFWs are also overrepresented in the professional, scientific, and technical services sector and in the  information and cultural industries.

Data table



The share of temporary foreign workers among all T4 earners, by industry, 2010 and 2019
Table summary
This table displays the results of The share of temporary foreign workers among all T4 earners. The information is grouped by Class title (appearing as row headers), 2010 and 2019, calculated using percent units of measure (appearing as column headers).

Class title	2010	2019
	percent
Agriculture, forestry, fishing and hunting	7.8	14.7
Mining, quarrying, and oil and gas extraction	0.9	1.0
Utilities	0.5	0.7
Construction	1.1	2.0
Manufacturing	1.2	3.4
Wholesale trade	1.2	3.2
Retail trade	1.3	5.0
Transportation and warehousing	0.9	3.4
Information and cultural industries	1.4	4.7
Finance and insurance	0.8	2.2
Real estate and rental and leasing	2.2	3.2
Professional, scientific and technical services	2.5	5.5
Management of companies and enterprises	1.6	3.4
Administrative and support, waste management and remediation services	2.9	9.7
Educational services	2.4	3.6
Health care and social assistance	0.8	1.3
Arts, entertainment and recreation	3.7	5.0
Accommodation and food services	4.6	9.9
Other services (except public administration)	4.2	2.7
Public administration	0.1	0.2
Overall	1.9	4.1
Source: Statistics Canada, 2021 Longitudinal Immigration Database, the T4 file and National Accounts Longitudinal Microdata File.

For more information: Lu & Hou (2019). Temporary foreign workers in the Canadian labour force: Open versus employer-specific work permits.

Higher rate of transition to permanent residency among temporary foreign workers with lower occupational skills

• From the early 2000s to early 2010s, the share of higher-skilled TFWs decreased from 58% to 44%, while the share of lower-skilled TFWs increased from 32% to 39%.
• Higher-skilled TFWs have more pathways to apply for permanent residency but have a lower transition rate than lower-skilled TFWs.

• Opportunities and motivations jointly determine the transition rate.

Data table



Rate of transition to permanent residency by fifth year after receiving the first work permit among temporary foreign workers
Table summary
This table displays the results of Rate of transition to permanent residency by fifth year after receiving the first work permit among temporary foreign workers Period of obtaining the first work permit, 2000 to 2004, 2005 to 2009 and 2010 to 2014 , calculated using percent units of measure (appearing as column headers).

	Period of obtaining the first work permit
	2000 to 2004	2005 to 2009	2010 to 2014
	percent
Higher-skilled	11.34	21.99	26.69
Lower-skilled	29.63	29.90	29.65
Skill level undetermined	23.11	17.79	13.40
Source: Statistics Canada, Longitudinal Immigration Database and the T4 file.

For more information: Picot et al. (2022). Transition to permanent residency by lower- and higher-skilled temporary foreign workers.

International students have become an important source of labour supply

• Between 2000 and 2019, the number of international students with T4 earnings increased from 22,000 to 354,000.
• This was a result of the increasing number of international students and their rising labour force participation rate (from 18% to 50%).
• The increases were particularly large at the non-university postsecondary level where the labour force participation rate rose from 7% to 58%, and the number of participants rose from 3,000 to 173,000.
• The largest increased occurred after 2015.

Data table



Number of international students at the postsecondary education level with T4 earnings, by level of education
Table summary
This table displays the results of Number of international students at the postsecondary education level with T4 earnings. The information is grouped by Year (appearing as row headers), Non-university postsecondary, Undergraduate, Graduate, Other and Total, calculated using person units of measure (appearing as column headers).

Year	Non-university postsecondary	Undergraduate	Graduate	Other	Total
	person
2000	2,710	6,340	8,130	4,650	21,830
2001	3,480	7,970	8,930	4,740	25,120
2002	4,040	9,130	10,030	5,110	28,310
2003	4,950	10,460	11,680	5,680	32,770
2004	5,740	11,780	12,700	5,120	35,340
2005	6,470	14,540	13,780	5,100	39,890
2006	7,890	18,290	14,810	5,100	46,090
2007	9,660	22,070	15,480	5,740	52,950
2008	10,610	23,260	16,140	6,800	56,810
2009	11,630	21,700	17,360	7,520	58,210
2010	14,250	21,200	18,990	7,920	62,360
2011	19,010	22,240	21,320	8,270	70,840
2012	24,190	24,040	24,320	10,020	82,570
2013	28,280	26,360	27,640	12,190	94,470
2014	33,420	31,080	29,460	12,590	106,550
2015	30,310	32,400	26,340	9,190	98,240
2016	50,050	37,800	28,770	13,090	129,710
2017	98,900	49,690	41,160	23,690	213,440
2018	146,120	61,960	51,630	36,420	296,130
2019	173,790	75,150	60,570	43,980	353,490
Source: Statistics Canada, Longitudinal Immigration Database and T4 file.

For more information: Crossman et al. (2022). International students as a source of labour supply: Engagement in the labour market during the period of study.

Many international students transition to permanent residency

• One-third of international students who arrived in the late 2000s and early 2010s became permanent residents within 10 years of being in Canada.
• A declining share is moving directly from study to permanent residency, and an increasing share is obtaining a postgraduate work permit before the transition.
• The transition rate reached 50% for students at the graduate level and 60% for those with Canadian work experience.

Data table



Cumulative rates of transition to permanent residency among international students
Table summary
This table displays the results of Cumulative rates of transition to permanent residency among international students . The information is grouped by Years since first study permit obtained (appearing as row headers), 2000-to-2004 cohort, 2005-to-2009 cohort, 2010-to-2014 cohort and 2015-to-2019 cohort, calculated using percent units of measure (appearing as column headers).

Years since first study permit obtained	2000-to-2004 cohort	2005-to-2009 cohort	2010-to-2014 cohort	2015-to-2019 cohort
	percent
1	4.3	3.5	2.0	1.4
2	8.4	7.3	4.2	2.8
3	13.1	11.4	8.3	4.7
4	17.1	15.4	14.5	6.7
5	20.5	19.2	21.4	Note ...: not applicable
6	23.3	22.4	26.8	Note ...: not applicable
7	25.7	25.4	30.3	Note ...: not applicable
8	27.8	28.2	32.1	Note ...: not applicable
9	29.4	30.5	32.9	Note ...: not applicable
10	30.5	32.1	33.1	Note ...: not applicable
11	31.3	33.1	Note ...: not applicable	Note ...: not applicable
12	31.9	33.7	Note ...: not applicable	Note ...: not applicable
13	32.3	33.9	Note ...: not applicable	Note ...: not applicable
14	32.7	34.0	Note ...: not applicable	Note ...: not applicable
15	32.9	34.0	Note ...: not applicable	Note ...: not applicable
... not applicable Source: Statistics Canada, Longitudinal Immigration Database.

For more information: Choi et al. (2021). International students as a source of labour supply: Transition to permanent residency.

Takeaways

• As businesses emerge from the COVID-19 pandemic, healthy immigration flows are essential to addressing the unmet demand for both high- and low-skilled workers in many sectors. Over the longer term, higher immigration flows will be critical for (partly) mitigating the impacts of Canada’s aging population on the labour market.  
• The labour market outcomes of recent immigrants improved substantially in the years leading up to the pandemic. TFWs and international students, both of whom are transitioning to permanent residency in greater numbers, have become increasingly important sources of labour supply. 
• While economic outcomes of recent immigrants have improved, substantial challenges related to their skill utilization continue to persist (including barriers related to credential recognition). Addressing these challenges will be key to improving social and economic mobility among newcomers while enhancing the skills and competitiveness of our workforce.