Making ends meet

A new immigrant's overall financial situation is determined by several factors including savings brought to Canada, personal and family income sources (e.g., employment earnings, government transfers) and assets. Within this chapter, savings brought to Canada, personal and family income, loans, and the newcomers' self-assessment of their financial situation after six months in Canada are briefly explored.

Three-quarters of immigrants brought savings to Canada

Until immigrants are able to secure employment in Canada , they must rely on their savings and support networks to meet their consumption needs. Some also receive financial assistance from government transfers to support them during the initial settlement phase. In total, three-quarters (74%) or about 121,000 immigrants from the Longitudinal Survey of Immigrants to Canada (LSIC) reported bringing savings to Canada.

Immigrants in the family category and refugees had the lowest proportions bringing savings to Canada, at 40% and 16% respectively, whereas skilled workers and other economic immigrants had the highest proportions bringing savings to Canada, at 93% and 90% respectively. These differences across immigration categories largely reflect distinct circumstances of arrival, including financial entry requirements for those landing as principal applicants in the economic immigration category (see Text Box 9.1).

The average amount of savings brought to Canada was $38,580, ranging from $4,680 for refugees to $165,110 for the economic immigrants other than skilled workers.

As the calculation of average savings is sensitive to extreme values, the median savings amount is also reported in Table 9.2. The median savings amount designates the level of savings for which one-half of the population bringing savings brought more savings and for which the other half of the population bringing savings brought fewer savings. The median savings amount brought by all LSIC immigrants was $15,000. It ranges from $1,000 for refugees to $100,000 for those landed in the economic stream other than skilled workers – amounts that are considerably less than the average saving amounts for these two groups, at $4,680 and $165,110 respectively.

For many immigrants, savings brought to Canada are used to finance shelter, clothing, food and other basic needs during the initial settlement period in the country. After six months, immigrants who brought savings had an average of $17,940 remaining. The average amount of savings remaining ranged from $1,540 for the 16% of refugees bringing savings to $76,760 for the 90% economic immigrants other than skilled workers bringing savings.

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Skilled worker principal applicants report high level of personal income relative to other immigrants

Over the first six months in Canada , nearly two thirds (63%) of all LSIC immigrants received personal income. On average this income was $1,280 per month^{1 2}. The amount ranged from $770 (see Table 9.3) for refugees to $1,630 (see Table 9.4) for skilled worker principal applicants and $1,750 (see Table 9.3) for economic immigrants other than skilled workers. For half of all immigrants with personal income, the amount received did not exceed $730 per month (i.e., the median income). Skilled worker principal applicants were the ones with the highest median personal income at $930 per month (see Table 9.4).

To understand an immigrant's overall financial situation, one must also consider income received by other family members. Of all LSIC immigrants, 14% were living in families that received no income during the first six months after landing (see lower panel of Table 9.3)³. This was true for about 3% of refugees, 12% of immigrants in the family category, 14% of skilled workers and 34% of economic immigrants other than skilled workers. The low proportion of refugees reporting no family income reflects the high receipt of social assistance⁴ among this group – 62% versus 11% for all LSIC immigrants with family income (see second panel of Table 9.5). The high proportion of economic immigrants other than skilled workers reporting no family income does not necessarily reflect immigrants living in dire circumstances. For example, most of these immigrants arrived in Canada with considerable savings, and they had on average $76,760 remaining from these savings after six months in the country.

The average family income of all LSIC immigrants with family income was $2,620 per month. Immigrants in the family category, who had the second lowest individual incomes, are those with the highest average family income, at $3,750 per month. The higher family income of immigrants in the family category results from the fact that these immigrants come to Canada to join established relatives. These relatives, as a condition of their sponsorship, must demonstrate their financial viability and commit to be financially responsible for the person they sponsor for up to ten years⁵. Skilled workers had the second lowest average family income at $2,180 per month, about 36% higher than that of refugees ($1,600) and 35% lower than that of other economic immigrants ($3,350).

To show the importance of the family size, the average per member monthly family income is also shown in Table 9.3. Average per member family income is highest for immigrants in the family category ($1,100) and lowest for refugees ($440), with an average of $910 for all immigrants. After taking family size into account, skilled workers have considerably higher per member income ($870) than refugees ($440). This change in relative income level for skilled workers – from 36% higher than the overall average family income of refugees to 97% higher when the per member family income measure is considered – results from the larger size of refugee families relative to skilled worker families.

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Employment earnings constitute three-quarters of immigrants' family income

More than eight in ten (84%) immigrants living in a family with income reported family earnings from employment during their first six months in Canada (see second panel of Table 9.5)⁶. On average, immigrants stated that employment earnings accounted for almost three-quarters (74%) of all family income over this period (see lower panel of Table 9.5). Generally, the higher the incidence of family earnings from employment in a group of immigrants is, the higher the proportion of this source of earnings in total family income for the same group of immigrants.

Almost all immigrants in the family category (95%) and more than eight in ten (85%) skilled workers reported employment earnings by at least one member of their family, accounting for 89% and 74% of their respective total family incomes. The incidence of family income from employment was much lower among refugees and economic class immigrants other than the skilled workers⁷. About two-thirds of these other economic immigrants (67%) and four in ten refugees (40%) reported family income from employment sources, accounting for 56% and 28% of their respective family income.

As immigrants in the family category come to join established family members in Canada, it is not surprising that they have the highest incidence of family income from employment, and that these employment earnings account, on average, for more of total family income than for any other immigrants. On the other hand, the relatively lower presence of employment earnings for economic immigrants other than the skilled workers is expected to be related to investment and entrepreneurial efforts.

For refugees, the relatively lower receipt of family income from employment can be linked to this group's initial challenges of coming from traumatic situations, of not having planned for the trip to Canada and of the official language needs of this group of newcomers.

By world region, immigrants born in South Asia , Southeast Asia , South Africa and Oceania had the highest proportions reporting family income from jobs or self-employment, ranging from 94% to 99%⁸. In contrast, immigrants from Southern Europe, North Africa, West Central Asia and Middle East had the lowest proportions ranging from 52% to 67%. Refugees, who are less likely to declare family income from employment, account for a greater than average share of all immigrants from these three world areas.

Economic immigrants other than those landed as skilled workers were four times more likely than all immigrants to report family income from investment during the first six months in Canada (17% versus 4%). The incidence of family income from private sources other than employment and investment for this group was also more than twice the incidence observed for all immigrants (25% versus 11%)⁹. These two sources of income accounted for 8% and 19% respectively of the other economic immigrants' family income, compared to 1% and 6% for all immigrants. Immigrants born in the United States had by far the highest proportion reporting receipt of family income from private sources other than employment, at 49%. This type of income accounted for more than a quarter of their family income. Immigrants born in the Western and Northern Europe and United Kingdom world area as well as those from North Africa also reported a higher proportion, with family income from private sources other than employment relative to all immigrants at 26% and 20% respectively.

In Table 9.5, transfers from a government in Canada have been sorted into four groups: employment insurance, social assistance¹⁰, child tax benefits or credits and other government transfers. Child tax benefits or credits were the most reported source of family income from government transfers by all immigrants (37%), accounting for 9% of all income received.¹¹ While child tax benefits or credits accounted for about 11% of all refugees or economic immigrants' family income, it represented only 3% of immigrants' income in the family category, reflecting higher incomes in this immigrant group as well as a lower than average proportion living with dependent children.

Whereas one-tenth (11%) of all LSIC immigrants reported receiving income from social assistance during their first six months in Canada , three-fifths (62%) of refugees reported this income source. These payments accounted for 8% of total family income for all LSIC immigrants and 52% of income for refugee families. Much of the high proportion of refugees reporting social assistance can be attributed to the receipt, by government-assisted refugees (57% of all refugees in the LSIC population), of financial assistance under the Resettlement Assistance Program administered by Citizenship and Immigration Canada (CIC).

Newcomers residing in Montreal show high proportions reporting social assistance (33%). By country of birth, immigrants showing higher proportions of social assistance are those born in Africa (41%), Southern Europe (28%), West Central Asia and Middle East (26%). For immigrants born in these countries, the explanation for the high take-up rates may lie in the relatively higher proportion of newcomers that are refugees.

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Business immigrants and refugees are the most likely to report loans

One in ten, or approximately 16,500, immigrants reported having received a loan during their first six months in Canada. Loans received include, for example, bank loans, student loans or loans from a friend or relative. By immigration category, economic immigrants other than the skilled workers and refugees had the highest proportions reporting receipt of a loan, at 16% and 13% respectively. Although there is no information available as to what type of loans are taken by each immigrant, it is expected that these economic immigrants – of whom Business immigrants account for 90% – are in possession of bank loans and that refugees have loans through Citizenship and Immigration Canada's Immigration Loans Program. Skilled workers were reporting loans at 11% while immigrants in the family category had the lowest proportion reporting loans (7%). The lower proportion of immigrants in the family category reporting loans is likely due to the support provided to these immigrants by their sponsors.

For those immigrants with loans, the average loan amount reported was $52,720, ranging from $4,520 for refugees to $171,480 for economic immigrants other than the skilled workers. For half of the 16,500 immigrants who reported having received a loan, the amount of money borrowed is less than $10,000.

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One-third of immigrants report not having enough money

When asked to describe their overall financial situation after six months in Canada, more than one-half (56%) of LSIC immigrants reported having just enough money, about one-third (34%) reported not having enough money and almost one-tenth (9%) reported having more than enough money to meet their basic needs.

Satisfaction with one's financial situation differed substantially by immigration category. Refugees had the highest proportion of respondents reporting that they did not have enough money (58%). Economic immigrants other than the skilled workers had the lowest proportion reporting not having enough money and the highest proportion reporting "more than enough money", 16% and 23% respectively. Skilled workers have the second highest proportion reporting "not enough money" (37% of principal applicants and 40% of spouses and dependants) after refugees.

Immigrants with similar income positions may also report different levels of satisfaction with their financial situation. This could be due to, for example, different circumstances of arrival, different expectations, the existence of support networks as well as different situations in their country of origin.

Table 9.7 expands on the previous analysis by comparing reported level of financial satisfaction with monthly average per member family income. After six months in Canada , almost one-third (29%) of immigrants with no family income reported that they did not have enough money to meet their basic needs. One might expect this group of immigrants to have the highest proportion reporting that they did not have enough money to meet their basic needs, however, about one-half of immigrants with per member family incomes between $1 and $250 per month and those with per member family incomes between $251 and $500 were reported to not be financially satisfied (53% and 47% respectively). The fact that immigrants with no family income are not the group with the highest proportion reporting "not enough money" implies the presence of other sources of financial support (e.g., savings, assets)¹².

If one considers the proportions reporting "more than enough money", the same conclusion regarding other support sources – such as savings, assets and family or friends – emerges. To expand, immigrants with the highest average per member family income have the highest proportion reporting "more than enough money" (22%). The group with the second highest proportion reporting this level of financial satisfaction is immigrants with no family income (13%). For this to be true, factors other than income must also figure into the assessment of their financial situation in regard to meeting basic needs.

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One in seven immigrants already sending money abroad to relatives or friends

Already after six months in Canada, almost one in seven, or approximately 22,000, immigrants (14%) reported sending money abroad to relatives or friends¹³. With time, remittances may increase for those immigrants who find gainful employment and remittances may decrease for those individuals who successfully bring their relatives to Canada.

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Conclusion

In total, about one-third of LSIC immigrants report that they do not have enough money to meet their basic needs. Like much of the analysis presented in this chapter, immigrants' assessment of their ability to meet their own basic needs differs by category of immigration. These differences consistently reflect the particular migration and settlement circumstances of refugees, family category and economic immigrants. For example, refugees, who experienced traumatic situations overseas, have the highest proportion reporting that they do not have enough money to meet their basic needs. They are also those most likely to be reporting income from social assistance, and least likely from employment. Immigrants in the family category, who come to Canada to join established relatives, have the highest average family incomes and most report they have enough, or more than enough, money to meet their basic needs. Skilled worker principal applicants, who are selected for their potential contribution to the Canadian labour market, are among those with the highest personal income levels.

As information becomes available from the second wave of interviews (i.e. two years after arrival), it is expected that the proportion of LSIC immigrants reporting income from employment earnings will increase, which may lead to increased individual and family incomes, and hopefully more immigrants reporting that they have enough money to meet their financial needs. Also, the needs and expectations of immigrants may change once they settle.

Notes

1. Total income is converted to monthly income as the exact length of time in Canada at time of interview was most commonly 6 months (mode) but did vary such that the average length of residence was 6.7 months.
2. All income figures are in gross amounts and rounded to the nearest ten.
3. For family income questions, the person most knowledgeable (PMK) about family income was interviewed (if available). For 73% of all interviews the longitudinal respondent (LR) was the PMK, while the PMK other than the LR answered the questions for an additional 14% of all interviews and the remaining interviews about family income (13%) were answered by the LR who was not the PMK. Family income includes income received by relatives (spouse, a brother, grandfather, cousin, etc.) living with the LR.
4. Including other temporary financial assistance from governmental programs such as the Resettlement Assistance Program.
5. Potential sponsors must meet some minimum income requirements for the twelve-month period before the sponsorship application is submitted.
6. Family earnings from employment in this analysis refer to earnings from employment and self-employment in Canada of any members of the immigrants' families and excludes earnings from employment outside Canada.
7. Business immigrants account for approximately 90% of all economic immigrants other than skilled workers.
8. Immigrants from these four world regions account for approximately one-third of all LSIC immigrants.
9. Family income from other private sources includes: income from employment outside Canada, from a foreign government, private retirement income from inside or outside Canada, income from a private sponsor and income from sources other than governmental sources inside and outside Canada not specified elsewhere.
10. Including other temporary financial assistance from governmental programs such as the Resettlement Assistance Program.
11. The child tax benefit is an income supplement designed to provide support to children living in poverty. Eligibility for this benefit, and the value of this benefit, are determined on the basis of net family income, as calculated from income tax returns.
12. This analysis was also completed by immigration category. Results for each category were closely linked to those for all immigrants.
13. Information on the dollar value of remittances was not collected for this survey.