Characteristics and Labour Market Outcomes of Internationally-educated Immigrants

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by Johanne Plante

Executive summary

Immigration is an increasingly important component of population growth in Canada, with over 200,000 immigrants arriving in Canada each year. According to a report from Statistics Canada, immigrants were responsible for more than two-thirds (69%) of the population growth that occurred between 2001 and 2006 (Statistics Canada 2007a).

The successful integration of immigrants into the Canadian labour market is of interest to the Canadian public policy and to current and potential immigrants, alike. The purpose of this report is thus to develop a better understanding of the integration of internationally-educated immigrants into the Canadian labour market compared to immigrants who completed their education in Canada and the Canadian-born with a postsecondary education.

Unlike the waves of immigrants who arrived in the 1950s and 1960s, those arriving in Canada since the 1970s have possessed relatively high educational levels. Data from the 2006 Census show that, of the 'very-recent' immigrants – those who immigrated between 2001 and 2006 – slightly more than half (51%) had a university degree. This was more than twice the proportion of degree holders among the Canadian-born population (20%) and much higher than was the case for immigrants who arrived in Canada before 2001 (28%).

Upon their arrival however, internationally-educated immigrants face an adjustment process both in terms of integrating into society at large and finding work related to their field of study. As shown by the 2006 Census, internationally-educated immigrants come from various backgrounds and their labour market outcomes differ from that of their Canada-educated counterparts and the Canadian-born with a postsecondary education. In 2006, about three-quarters of internationally-educated immigrants in the core working-age group of 25 to 64 years old reported being employed, which was lower than the employment rates recorded by their counterparts educated in Canada and the Canadian-born with a postsecondary education, both at about 82%.

As reported in different studies, one important reason for this relative disadvantage is that the skills immigrants have acquired in their home country often are not directly transferable to the host economy. Recognition of foreign credentials, level of educational attainment, extent of experience abroad and within Canada, differences in quality of education across countries, language barriers and related difficulties, varying strength of social networks, knowledge of and information about the Canadian labour market and potential discrimination may also represent some of the factors influencing the labour market outcomes of immigrants compared to those of the Canadian-born with a postsecondary education.

As they integrate into the Canadian labour market, many immigrants initially face difficulties finding employment as well as locating jobs that pay relatively high wages. Many internationally-educated immigrants, especially recent immigrants, engage in further education in order to increase their Canadian education and experience. In 2006, slightly more than one in five (22%) very-recent internationally-educated immigrants reported attending school. In comparison, about 12% of recent immigrants and 7% of established immigrants aged 25 to 64 who had received their education abroad reported attending school in 2006.

Even when working the same number of hours for the same number of weeks, internationally-educated immigrants generally earned less than their counterparts educated in Canada and Canadian-born workers with a postsecondary education. In fact, internationally-educated immigrants who worked on a full-time full-year basis in 2005 had median earnings of $40,800, lower than the median earnings of $49,000 reported by their immigrant counterparts educated in Canada and the $49,300 reported by full-time full-year Canadian-born workers.

As observed by Boudarbat and Chernoff (2009), if one of the main functions of education, obtained either inside or outside the country, is to provide skills that will be used in subsequent employment, then it would be an inefficient use of resources, for both individuals and for society as a whole, not to use these education skills efficiently in the Canadian labour market.

Results from the Census show low education-job match rates among internationally-educated immigrants in 2006. In fact, among the 881,600 internationally-educated immigrants who reported a postsecondary credential in a field of study that would normally lead to work in one of the targeted occupations identified by the Foreign Credential Recognition (FCR) Program at Human Resources and Skills Development Canada (HRSDC), only about one in five reported working in the best corresponding occupation. This proportion increased to 41% when considering occupations requiring similar or higher skill levels.

The likelihood of working in a corresponding field of study or in an equivalent occupation varies according to period of immigration. About 45% of internationally-educated immigrants established in Canada for more than ten years reported working in the best corresponding occupation or in an equivalent occupation in 2006, compared to about 42% for recent and 34% for very-recent immigrants. However, even after ten years in Canada, internationally-educated immigrants still trailed the education-job match rate of their Canada-educated counterparts and the Canadian-born by more than 15 percentage points.

The analysis finds that the likelihood of having a good education-job match varies by country from which internationally-educated immigrants reported receiving their highest level of education. Overall, more than 60% of internationally-educated immigrants with credentials from Ireland (70%), New Zealand (66%), Israel (64%) and Australia (63%) reported working in their field of study or in an occupation requiring similar or higher skill levels. On the other hand, internationally-educated immigrants with credentials from countries other than Europe, Oceania, North America, and South Africa had education-job match rates below 45% in 2006.

Not all internationally-educated immigrants faced the same barriers and, depending on the particular occupation they had studied for, some were more likely than others to be working in an associated occupation in 2006. Not surprisingly, immigrants who studied in programs where there was a clear relationship between educational credentials and the ability to meet the requirements to work — such as for most regulated occupations and trades — generally had higher education-job match rates than those who had studied in a field of study for which this relationship was not as direct.

There is also a relationship between country of education and field of study. More than 90% of immigrants with credentials in medicine from New Zealand, Sweden, Australia, the United States and the United Kingdom reported working as a physician or in an occupation requiring similar or higher skill levels. However, this was the case for less than one-quarter of those with similar credentials from Japan and South Korea. The country of education played a less important role in the case of internationally-educated immigrants with credentials leading to the occupations of chef, cook, hairstylist and barber.

Even with the same educational background and when working on a full-time full-year basis in occupations requiring similar or higher skill levels, internationally-educated immigrants, with earnings of $56,300 in 2005, generally earned slightly less than their Canada-educated counterparts ($59,500) and the Canadian-born with a postsecondary education ($57,200). Not surprisingly, median earnings of full-time full-year internationally-educated immigrants who reported working in the best corresponding occupation or in equivalent occupations were much higher than for those with a poor education-job match rate ($56,300 vs. $34,300).

Among the characteristics associated with an easier transition of internationally-educated immigrants into the Canadian labour market, men were more likely than women to report working in the best corresponding occupation or in equivalent occupations (49% vs. 33%). Differences are also apparent by age, with internationally-educated individuals aged 35 to 44 and 45 to 54 finding higher match rates than their counterparts in the younger and older age groups (25 to 34 and 55 to 64).

Phase 2 of this research, which will follow later in 2010, will explore in more detail the characteristics and determinants that are associated with an easier transition of internationally-educated immigrants into the Canadian labour market.