Canada’s economic future depends on skilled immigrants

For much of its history, Canada’s economic growth has been linked to the arrival of newcomers from abroad.

A Newcomer's Journey,Settlement and Life in Canada

June 16, 2022

For much of its history, Canada’s economic growth has been linked to the arrival of newcomers from abroad.

This was true in the country’s first years after confederation, in 1867, and reflected federal government policy from the 1970s onward.

In 2019, the Conference Board of Canada researched the economic impact of immigration. Its researchers discovered immigration remains key to maintaining Canada’s living standards. They analyzed four scenarios, and even when they included Canadian populations that typically struggle to participate fully in the labour market – like women, Indigenous Peoples and people who have disabilities – Canada could not grow its economy without new immigrants. 

You do not need an economics degree to see the problem. Canada’s low birth rate matched with an aging baby boomer generation, approaching or already in retirement means the country will not have enough workers to produce and deliver goods and services at the same rate it has been. A smaller workforce also means there is reduced purchasing power for goods, housing and transportation, and businesses will need to export their products to stay in business.

Canada must maintain and grow its labour pool to avoid these economic pressures. Immigration is the solution, the Conference Board report says emphatically. There is no scenario where Canada can move forward without a strong immigration plan. Immigrants will account for one-third of economic growth over the next two decades.

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Unfortunately, the full economic potential of immigrants is not yet realized. Even though Canada has a successful immigration program focused heavily on attracting highly skilled and educated immigrants to fill gaps in the labour market, immigrants are often short-changed on the pay scale. University-educated immigrant earnings are on average 20% lower than those of Canadian-born workers, according to a 2017 Conference Board Report about the Immigrant wage gap.

RBC called this earnings gap “untapped potential” in a 2019 report. It pointed out immigrants are working in lower-paid occupations than their education levels predict. Only 38% of university-educated immigrants, aged 25 to 54, are working in jobs that require a university degree. In an eye-opening statement, RBC concludes that $50 billion can be added to Canada’s Gross Domestic Product (GDP), if this earnings gap is addressed.

Canadian-born workers cannot ignore this issue. They have a stake in it. All employees in Canada pay into our health care and social services systems – like the Canada Pension Plan – and as they grow older, they depend on those services more often. Canada needs a large, healthy workforce to make contributions to these supports, through employment taxes, so they remain available in the future.

More than 80% of the immigrants admitted to Canada in recent years are under 45 years old. They have many years ahead of them to contribute to the workforce, and to the taxpayer-funded support systems Canadians value and use.

The wage gap can be addressed with government policy and leadership. Employers also can make a commitment, within their workplaces, to recognize the value of newcomer experience and qualifications, with pay rates equal to Canadian-born workers.

An inclusive economy is better for all Canadians. When the skills and experience of immigrants are recognized, Canada’s potential for economic growth becomes prosperity we can all enjoy.

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