Labour market outcomes of internationally-educated immigrants aged 25 to 64

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• Employment rates
• Working conditions and earnings
• Summary

This section provides an overview of the labour market outcomes of internationally-educated immigrants compared to immigrants who completed their education in Canada and the Canadian-born with a postsecondary education. For the purpose of this study, labour market outcomes are measured in terms of employment status, hours of work and earnings.

Employment rates

According to the 2006 Census, about three-quarters of internationally-educated immigrants in the core working-age group of 25 to 64 reported being employed in 2006 (Chart 1.4). This rate was lower than that of their counterparts educated in Canada and the Canadian-born with a postsecondary education, both at about 82%.

Chart 1.4 Employment rates of individuals aged 25 to 64 with postsecondary education by immigrant status, period of landing and location of study, Canada, 2006

As noted in different studies, one important reason for the relative disadvantage of immigrants in the labour market is that the skills immigrants have acquired in their home country often are not directly transferable to the host economy. Most studies show that Canadian employers place little value on foreign work experience. While some regard this as a discriminatory practice, many argue that employers have no way of assessing the value of that foreign work experience and so discount it altogether. In other words, the transferability of foreign experience may be regarded as one factor affecting the integration of immigrants into the Canadian labour market, just as the transferability of foreign education may be treated as another factor (Reitz 2007).

Other factors influencing the labour market outcomes of immigrants include recognition of foreign credentials; level of educational attainment; extent of work experience both 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 both real and perceived discrimination (Gilmore and Le Petit 2008).

Employment rates appear to vary according to the period of immigration. As shown in Chart 1.4, very-recent internationally-educated immigrants were less likely than their counterparts established in the country for a longer period to report being employed in 2006. As mentioned by Gilmore and Le Petit in a recent study on labour market integration of immigrants, one factor that may play a role in this lower employment rate is the general lack of Canadian work experience among very recent immigrants, relative to the possibly longer experience of internationally-educated immigrants established in the country for a longer period. This relatively limited experience is in part reflected in their age — 38% of very-recent immigrants were aged 25 to 34 in 2006 compared to about 17% for recent and 3% for established internationally-educated immigrants.

On the other hand, both recent (79%) and established immigrants (77%) who received their education outside Canada had employment rates similar to that of their counterparts educated in Canada and the Canadian-born with a postsecondary education (both at about 82%) (Chart 1.4). On average, these immigrants were much closer in age to the Canadian-born with a postsecondary education, which, along with their time since landing, likely provided them with some tools and work experiences within Canada to improve their chances of securing employment (Gilmore and Le Petit 2008).

It may also be expected that the longer an immigrant is unable to practice in his or her field of expertise, the more likely he or she will experience "skills atrophy," reducing their chances of finding work in their field of expertise (Lochhead 2002). Economic factors, such as the state of the economy during a particular period of landing, will also play a role in this regard.

It was noted earlier that slightly less than one-quarter of very-recent internationally-educated immigrants were attending school, either on a full-time or part-time basis in 2006. Employment outcomes in term of earnings, type and quality of work may differ substantially for students compared to other labour market participants. As a result, the analysis of labour market outcomes treats these two groups separately.

Perhaps not surprisingly, employment rates were lower for core working-age individuals who reported attending school in 2006. This was especially the case for internationally-educated immigrants who reported being in the country for five years or less. As shown in Table 12, 58% of internationally-educated immigrants in the core working-age group of 25 to 64 who were attending school in 2006 reported being employed, compared to 71% of their counterparts who were not attending school.

Table 12 Employment rates of individuals aged 25 to 64 with postsecondary education by immigration type, period of landing, location of study and attendance at school status, Canada, 2006

Working conditions and earnings

Considerable research effort has been devoted to understanding the earnings differences between immigrant and Canadian-born workers. As they integrate into the Canadian labour market, many immigrants initially face difficulties finding full-time full-year employment as well as locating jobs that pay relatively high wages (Statistics Canada 2008b).

Earnings differences can arise if individuals work either part-time or part-year. In order to take account of these factors, the analysis reported in this section focuses on full-time full-year workers in the core working-age group of 25 to 64 year-olds, who worked 49 to 52 weeks during 2005, for 30 hours or more per week.

Full-time, full-year employment

According to the 2006 Census, 1.1 million immigrants in the core working-age group of 25 to 64 who reported completing their highest level of education outside Canada were employed in 2005 and had employment earnings above 0. Of these, about 53% (or 594,100) reported doing so on a full-time full-year basis (Chart 1.5).

Chart 1.5 Percentage of full-time full-year individuals aged 25 to 64 with postsecondary education by sex, immigrant status, period of landing and location of study, Canada, 2005

Men were generally more likely than their female counterparts to report working full-time for the full year in 2005 — about 60% of internationally-educated male immigrants reported full-time, full-year employment in 2005, compared to about 46% of women.

Results from the 2006 Census show that the longer an immigrant has been in Canada, the more likely he or she is to report being employed full-time, for the full year. As illustrated in Chart 1.5, while about 40% of very-recent internationally-educated immigrants reported full-time, full-year employment in 2005, this was the case for 57% of recent immigrants. At 60%, immigrants established in the country for more than ten years were as likely as their Canada-educated counterparts (60%) and the Canadian-born with a postsecondary education (63%) to report being employed full-time, for the full year in 2005. As noted previously, having spent a longer period of time in Canada has likely provided established immigrants with the tools and Canadian work experience that assist in improving their chances of securing employment.

One should note that the likelihood of being employed full-time for the full year may not be entirely attributable to the effect of "time elapsed since landing" since compositional change of immigrants who landed during different periods, labour market conditions as well as other factors may also contribute to differences across groups.

Full-time, full-year earnings

However, even when working the same number of hours for the same number of weeks, internationally-educated male and female immigrants generally earned less than their counterparts educated in Canada and Canadian-born workers with a postsecondary education. Overall, as illustrated in Chart 1.6, full-time full-year internationally-educated immigrants in the core working-age group of 25 to 64 had median earnings of $40,800, compared to median earnings of $49,000 reported by their immigrant counterparts educated in Canada and $49,300 reported by full-time full-year Canadian-born workers with a postsecondary education.

These results seem to support the argument that "the low earnings of immigrants are often attributed to the specificity of human capital to the country from which it originates, the argument being that skills generated through education or work experience in the source country cannot be directly transferred to the host country, resulting in apparently well-qualified immigrants holding low-paying jobs" (Statistics Canada 2008b).

Language barriers and both real and perceived discrimination, either statistical¹ or preference/taste-based,² may also represent some of the factors influencing the earnings of immigrants compared to those of the Canadian-born with a postsecondary education (Picot and Hou 2009). Oreopoulos (2008) found, for example, that job applicants with English-sounding names and Canadian experience were much more likely to be called for an interview (all other job and personal characteristics identical) than those with Asian-sounding names and foreign experience. But whether this points to discrimination or to employers' concerns regarding language ability among immigrants and other traits is not known (Picot and Hou 2009).

Chart 1.6 Median earnings of full-time full-year workers aged 25 to 64 with postsecondary education by sex, immigrant status, period of landing and location of study, Canada, 2005

As observed previously, there is an association between the length of time spent in Canada and earnings of immigrants. Analysis of the International Adult Literacy Survey data by Bonikowska, Green and Riddell in 2008 indicates that returns in the Canadian labour market to foreign work experience are very low, and quite possibly, zero. It is work experience in Canada that counts toward earnings growth. When only their Canadian work experience is taken into account, immigrants' earnings are more similar to those of the Canadian-born with the same years of experience. In fact, as shown in Table 13, earning gaps between internationally-educated immigrants and Canadian-born workers decreased with time elapsed since landing in Canada. Results from the 2006 Census show that very-recent immigrants aged 25 to 64 earned, on average, 67 cents for each dollar received by Canadian-born workers with a postsecondary education in 2005. This compares to about 81 cents on the dollar for recent immigrants and to 91 cents on the dollar for immigrants established in the country for more than ten years.

Again, as noted earlier, the decrease in the size of these earning gaps may not be entirely attributable to the effect of "time elapsed since landing" since compositional change of immigrants who landed during different periods, labour market conditions as well as other factors may also contribute to differences across groups.

Another part of the explanation lies in differences in skill levels, especially between foreign-educated immigrants and those who received some or all of their education in Canada (Bonikowska, Green and Riddell 2008). In fact, at $50,100, the median earnings of Canada-educated established immigrants were substantially higher than the median earnings of their counterparts educated abroad ($44,900). At this level, median earnings of Canada-educated established immigrants were even slightly higher than those earned in 2005 by Canadian-born workers with a postsecondary education ($49,300) (Table 13).

Table 13 Median earnings of full-time full-year individuals aged 25 to 64 with postsecondary education by immigrant status, period of landing, location of study and attendance at school status, Canada, 2005

Results from the 2006 Census also showed that internationally-educated immigrants aged 25 to 64 who reported not attending school in 2006 were more likely than their counterparts attending school to have secured employment on a full-time full-year basis (57% and 43%, respectively) and to report higher earnings ($41,200 and $37,500, respectively) (Table 13).

Summary

As shown by the 2006 Census, about three-quarters of internationally-educated immigrants in the core working-age group of 25 to 64 reported being employed in 2006, 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 are often not directly transferable to the host economy. Recognition of foreign credentials, level of education attainment, degree and length of experience abroad and within Canada, differences in quality of education in some countries, language barriers and related difficulties, varying strength of social networks, knowledge of and information about the Canadian labour market and both real and perceived 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 newcomers 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.

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Notes

1. Where information on the productivity or language ability of the individual is difficult to obtain, and hence decisions regarding hiring, for example, are made based on the employer's notion (real or perceived, correct or incorrect) of the characteristics, such as language proficiency or productivity levels of the group to which the individual belongs, rather those of the individual (Picot and Hou 2009).
2. Where employers, customers or colleagues prefer people of one group over that of another, independent of any considerations regarding productivity, work ethic, etc (Picot and Hou 2009).