May 30, 2023

Recent Immigrants Outshine Canadians Born Abroad in Employment

Canada is a land of opportunities and has long been a favored destination for immigrants. The Canadian government has announced ambitious plans to welcome approximately 1.45 million immigrants in the next three years, with 60% expected to be admitted through economic class programs. The influx of new immigrants is expected to have a positive impact on the Canadian economy and society. One of the most interesting findings from a recent study conducted by Desjardins is that new immigrants are more likely to be employed than Canadians born abroad. This blog explores this phenomenon and its implications for Canada.


New immigrants have a higher employment rate than their Canadian-born peers

The Desjardins study shows that new immigrants have a higher employment rate than their Canadian-born peers. This is a recent phenomenon that can be attributed to two trends. Firstly, there has been an increase in the employment rate of new immigrants since 2016. Secondly, there has been a gradual decline in the employment rate of people born in Canada.

This trend is linked to the demographic makeup of each group. New immigrants are disproportionate to the core working age (25-54 years) and are often selected for human capital factors that make them ideal participants in Canada’s labor force. In contrast, Canadians have an aging population, with a consistent group of retirees exiting the workforce every year. This creates a demand for new immigrants to replace the aging workforce.


New immigrants will change the demographic of Canada

Immigration is at the heart of population growth in Canada. The bulk of new immigrants are economic and of the core-working age. With the huge influx expected in the coming years, Canada’s population is estimated to grow much younger. Currently, the median age of Canadians is 41 years, with retirees exiting the labor force every year.

The arrival of new immigrants is expected to bring a host of economic advantages to the country. They are more likely to be employed and contribute to the workforce, which in turn will increase Canada’s GDP (Gross Domestic Product) per capita. This will be a sign of a healthy economy and can lead to further benefits like increases in hiring and wage growth.


Can Canada handle this wave of newcomers?

The Desjardins study has highlighted the cyclical outcomes for immigrants in the labor market. Roughly every ten years, there is a spike in newcomer unemployment, before once again diminishing (although after 10 years in Canada, the unemployment rates for immigrants and Canadians were largely indistinguishable).

Newly landed immigrants can also have a harder time gaining initial footing in the Canadian labor market as they begin to establish themselves in Canada. These findings have raised questions on whether Canada is prepared for the massive wave of immigrants it plans to welcome in the next three years.


The future of Canada’s economy with new immigrants

Despite the challenges, the future looks promising. Job vacancies are currently at record highs - double what they were during the pandemic. The labor market remains tight, which is one of the key reasons behind historic immigration targets. In addition to an aging population exiting the workforce every year, newcomers with in-demand skills and desirable human capital factors are more likely to have favorable outcomes in the Canadian labor market.


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