Economic and Social Reports
The improvement in the labour market outcomes of recent immigrants since the mid-2010s

Several factors may have contributed to the improved labour market outcomes for recent immigrants since the mid-2010s.

The first factor is the expansion of the two-step immigration selection process, where an increasing number of economic immigrants are chosen from the pool of temporary foreign workers (TFWs) (Hou, Crossman, & Picot, 2020). In 2022, 36% of all new immigrants had work permits in Canada before immigration, a significant rise from 19% in 2010 and 33% in 2019.^Note  Former TFWs, especially those with high-skilled jobs, experience better labour market outcomes after immigration, compared with immigrants admitted directly from overseas (Hou, Crossman, & Picot, 2020).

The second factor is linked to various changes in immigration selection since the early 2010s, notably the introduction of the Express Entry system in 2015. This system places a strong emphasis on Canadian work experience, enhances language proficiency and evaluates foreign education rigorously (Crossman, Hou, & Picot, 2021).

The third factor is the presence of a robust national labour market, particularly in the late 2010s and in 2022. The national unemployment rate decreased from 8.2% in 2010 to 5.7% in 2019 and further dropped to 5.3% in 2022 and 5.4% in 2023 after a temporary increase during the COVID-19 pandemic (Statistics Canada, nd). In addition, the growth in managerial, professional and technical occupations has accelerated in the late 2010s (Frenette, 2023). This increase in demand for high-skilled workers would benefit recent immigrants with a university education.

The sociodemographic characteristics of recent immigrants continue to evolve. Their educational attainment has risen, while a decreasing percentage are immigrating from Europe and Eastern Asia and an increasing share are immigrating from Southern Asia and Africa. Moreover, a higher proportion has chosen to settle outside the three major gateway metropolitan areas. Nevertheless, these shifts in sociodemographic characteristics have had a relatively small effect on recent trends in the labour market outcomes of new immigrants (Crossman, Hou, & Picot, 2021).

This article presents updated analyses regarding the employment and earnings outcomes of recent immigrants. It also discusses factors that might influence these outcomes in the near term. In this article, recent immigrants refer to foreign-born individuals who became permanent residents in Canada within the past 10 years.

Narrowing employment gap between recent immigrants and the Canadian-born population

Since the early 2010s, recent immigrants in the 25 to 54 age group have seen a faster growth in employment rates, compared with their Canadian-born counterparts. There was a significant increase of 10.7 percentage points in the employment rate among recent immigrants from 2010 to 2023, in contrast to a 4.1 percentage point increase among the Canadian-born population (Chart 1). Consequently, the employment rate gap between the two groups narrowed from 13.1 percentage points in 2010 to 6.5 percentage points in 2023. The improvement in the employment rate among recent immigrants was largely unaffected by changes in their sociodemographic characteristics.^Note 

In line with the rise in employment rates, the unemployment rate also declined among recent immigrants in the 25 to 54 age group, from 12.1% in 2010 to 6.2% in 2022 and 6.6% in 2023. The gap in the unemployment rate between recent immigrants and Canadian-born workers narrowed from 5.7 percentage points in 2010 to 2.6 percentage points in 2023.

The overall progress in the employment outcomes of recent immigrants since 2010 faced intermittent disruptions during the COVID-19 pandemic. From 2019 to 2020, recent immigrants experienced a slightly larger decline in the employment rate and a larger increase in the unemployment rate compared with the Canadian-born population.^Note  This difference was largely because recent immigrants, especially women, were disproportionately employed in sectors that were severely affected by the pandemic, such as the accommodation and food services sector and the retail trade sector (Hou & Picot, 2022). However, recent immigrants exhibited a swifter recovery from 2020 to 2022 than the Canadian-born population.^Note  In 2023, the gap between the two groups in employment rates was smaller than the pre-pandemic level recorded in 2019, and the gap in unemployment rates was the same as the 2019 level.

Data table for Chart 1



Data table for Chart 1
Table summary
This table displays the results of Data table for Chart 1 Immigrants, in Canada for 10 years or less, Immigrants, in Canada over 10 years and Canadian-born population, calculated using percent units of measure (appearing as column headers).

	Immigrants, in Canada for 10 years or less	Immigrants, in Canada over 10 years	Canadian-born population
	percent
2010	69.1	79.4	82.2
2011	69.0	80.1	82.7
2012	71.4	80.5	83.1
2013	72.1	80.7	83.3
2014	71.5	80.1	83.1
2015	71.8	80.9	83.3
2016	72.5	80.8	83.2
2017	73.8	82.1	84.0
2018	76.3	82.4	84.5
2019	76.2	83.2	85.2
2020	71.9	77.9	81.9
2021	76.9	80.8	84.1
2022	80.0	83.8	86.3
2023	79.8	84.5	86.3
Source: Statistics Canada, Labour Force Survey.

Larger increases in earnings among recent immigrants than among Canadian-born workers

Besides the improvements in employment outcomes, employed recent immigrants have also experienced faster earnings growth compared with Canadian-born workers since the mid-2010s. Census data indicate that the gap in weekly earnings between recent immigrants and Canadian-born workers decreased from 19.9% in 2015 to 13.4% in 2020 among men and from 20.4% to 15.5% among women (Table 1). This trend persisted even after the analysis adjusted for differences in socioeconomic characteristics between recent immigrants and Canadian-born workers, including factors such as age, education, language proficiency, ethnocultural composition and geographic location.^Note  A similar trend is also observed with data from the Labour Force Survey.^Note 

While recent immigrants continued to earn significantly less than Canadian-born workers, the recent trend marks a departure from the long-standing pattern of stagnation in the relative earnings of recent immigrant men and the worsening trend in the relative earnings of recent immigrant women from 2000 to 2015. With similar socioeconomic characteristics, recent immigrant men earned 16.7% less than their Canadian-born counterparts in 2000 and 17.3% less in 2015. Likewise, recent immigrant women earned 22.1% less than Canadian-born women in 2000 and 25.4% less in 2015 (Table 1). Thanks to the recent improvements, the earnings gap for recent immigrants in 2020 was the narrowest in the past two decades.^Note 

The increase in the earnings of recent immigrants since the mid-2010s also aligns with improvements in their skill utilization. Among recent immigrant workers holding a bachelor’s degree or higher, the proportion of those working in low-skilled occupations decreased from 31.1% in 2016 to 26.7% in 2021, while the proportion working in high-skilled occupations rose from 40.0% to 44.4%.^Note  However, despite these improvements, the proportion in high-skilled occupations remained lower than it was two decades earlier. In contrast, this proportion increased among young (ages 25 to 34) Canadian-born workers with a degree (Schimmele & Hou, forthcoming).

In sum, recent immigrants have experienced considerable improvements in employment, earnings and skill utilization since the mid-2010s. These improvements are likely related to the increased selection of economic immigrants from the pool of TFWs, the implementation of the Express Entry system for immigration selection and favourable macroeconomic conditions.



Looking ahead, some of these conditions might undergo changes in the near term. While the ongoing rise in the number of TFWs and international students could expand the pool for selecting economic immigrants, there has been a proportional shift in the employment of TFWs and international students toward low-skilled industrial sectors, such as the accommodation and food services sector and the retail trade sector (Lu & Hou, 2023a). These shifts could potentially result in a higher proportion of low-skilled TFWs among new immigrants. Studies have indicated that low-skilled TFWs often experience low earnings and slow earnings growth after becoming landed immigrants (Hou & Bonikowska, 2018).

Furthermore, the dynamics of labour supply and demand are poised to change. From 2010 to 2019, Canada admitted an average of 276,000 new immigrants annually, adding a minimum of 148,000 people to the labour supply each year.^Note  The estimated yearly net increase in the number of employed temporary residents likely rose from 14,000 in 2011 to 108,000 in 2019.^Note  On the demand side, Canada’s annual employment increased by an average of 234,000 from 2010 to 2019. Hence, the annual rise in labour supply from new immigrants and temporary residents generally remained below the total employment growth in the economy throughout the 2010s. The residual growth was absorbed by the Canadian-born population and longer-term immigrants.

However, the trend is expected to differ in the coming years. The planned level of immigration increases from 465,000 in 2023 to 500,000 in 2025, an increase of about 80% compared with the average level in the 2010s. Additionally, the admission of TFWs and international students has also increased considerably in recent years. It remains uncertain whether the national economy will generate sufficient employment opportunities to accommodate the expected increase in labour supply from new immigrants and TFWs. Another layer of uncertainty is how artificial intelligence will affect net job creation in the years to come.

Author

Feng Hou is with the Social Analysis and Modelling Division, Analytical Studies and Modelling Branch, at Statistics Canada.

Acknowledgments

The author thanks René Morissette, Elizabeth Richards and Li Xue for their suggestions for improvement on an earlier draft of this study.

References

Crossman, E., Hou, F., & Picot, G. (2021). Are the gaps in labour market outcomes between immigrants and their Canadian-born counterparts starting to close? Economic and Social Reports 1(4): 1-19.

Frenette, M. (2023). The changing nature of work since the onset of the COVID-19 pandemic. Economic and Social Reports, 3(7), 1–11.

Hou, F., & Bonikowska, A. 2018. Selections before the selection: Earnings advantages of immigrants who were former skilled temporary foreign workers in Canada. International Migration Review 52(3), 695-723.

Hou, F., Crossman, E., & Picot, G. (2020). Two-step Immigration Selection: Recent Trends in Immigrant Labour Market Outcomes. Statistics Canada: Economic Insights, Catalogue no. 11-626-X — 2020009 - No. 113.

Hou, F., & Picot, G. (2022). Immigrant labour market outcomes during recessions: Comparing the early 1990s, late 2000s and COVID-19 recessions. Statistics Canada, Economic and Social Reports 2(2):1-11.

Lu, Y., & Hou, F. (2023a). Foreign workers in Canada: Distribution of paid employment by industry. Statistics Canada, Economic and Social Reports 3(12), 1-7.

Lu, Y., & Hou, F. (2023b). Foreign workers in Canada: Work permit holders versus employment income records, 2010 to 2022. Statistics Canada, Economic and Social Reports 3(10), 1-8.

Schimmele, C., & Hou, F. (forthcoming). Trends in education-occupation mismatch among recent immigrants with a bachelor’s degree or higher, 2001 to 2021. Statistics Canada, Economic and Social Reports.

Statistics Canada. (n.d.). Table 14-10-0327-01 Labour force characteristics by sex and detailed age group, annual. Accessed September 29, 2023.