January 22, 2024

Recent Newcomers Thriving in Ontario’s Labor Market: A Deep Dive into Integration and Challenges

Ontario, Canada's economic engine, is witnessing a surge in its newcomer population. In 2022 alone, the province welcomed a record 227,424 permanent residents, and this trend is projected to continue. This influx of skilled individuals is not just bolstering Ontario's demographics but also playing a crucial role in the province's economic growth and labor market dynamics.

A New Wave of Skilled Workers

The Financial Accountability Office of Ontario's recent report, "Labour Market Outcomes of Permanent Residents in Ontario and its Major Cities," sheds light on the positive impact of newcomers. It highlights that immigrants have contributed to nearly two-thirds of the workforce increase since the mid-2010s. This is largely driven by the strategic selection of skilled workers through federal and provincial immigration programs.

Ontario's Provincial Nominee Program (PNP) plays a key role in attracting talent aligned with the province's economic needs. In 2023, Ontario received the highest number of PNP allocations (16,500), nearly double the previous year's allocation, indicating a focused effort to attract skilled immigrants.

Highly Educated and Workforce Ready

The report paints a picture of a highly educated and workforce-ready newcomer population. A staggering 92% of newcomers are within core working age (under 54), and 80% of those possess post-secondary education credentials. This is significantly higher compared to established immigrants (those in Canada for over five years), where only 66.7% have post-secondary education.

Furthermore, over half of Ontario's newcomers are classified as economic immigrants, reflecting a deliberate focus on attracting skilled workers. This shift from family-class sponsorship towards skilled immigration signifies a strategic approach to align immigration with the province's labor market needs.

Wage Trends and Challenges

While newcomers are contributing significantly to the workforce, their wage trajectory reveals both promising trends and challenges. Those arriving with a bachelor's degree or higher tend to earn a median wage ($61,200) closer to non-immigrants with similar qualifications. Notably, newcomers admitted through the Canadian Experience Class (CEC) experience the smallest wage gap, with an average median wage of $60,100 just one year after arrival.

However, there are disparities within the newcomer population. Those admitted through the Federal Skilled Worker Program (FSWP), Federal Skilled Trades Program (FSTP), or PNP tend to earn below the median wage, with data showing a median wage of less than $43,000 one year after arrival.

Labor Participation and Underemployment

Newcomers are actively integrating into the labor market, with the participation gap narrowing significantly compared to the past. In 2006, the participation rate for newcomers was 13% lower than non-immigrants, but this gap has shrunk to a mere 3.5%.

Despite the encouraging participation rate, underemployment remains a concern. Nearly 16% of newcomers with a university degree were underemployed in 2021, working in positions not requiring their educational qualifications. Foreign credential recognition remains a significant barrier, particularly in licensed professions like healthcare, where a major labor shortage exists.

Industry Distribution and Geographic Trends

The report reveals interesting insights into the industries where newcomers are concentrated. Approximately 83% of working-age immigrants in Ontario are employed in the services sector, followed by professional, scientific, and technical services (4.2%), transportation and warehousing (3.5%), and finance and insurance (3%).

Interestingly, the report also shows a higher proportion of recent immigrants compared to established immigrants holding professional occupations. This suggests that newer arrivals are entering more specialized roles, potentially due to their alignment with Ontario's economic priorities.

Geographically, Toronto remains the preferred destination for newcomers, with 67% choosing the city as their new home in 2021. However, there are signs of diversification, with Ottawa-Gatineau, Kitchener-Cambridge-Waterloo, London, and Hamilton experiencing an influx of newcomers.

Looking Ahead: Challenges and Opportunities

While Ontario is witnessing a positive integration of newcomers, challenges remain. Addressing foreign credential recognition, bridging the wage gap for certain groups, and tackling underemployment are crucial for maximizing the potential of this skilled workforce. Additionally, fostering a welcoming environment and promoting interprovincial mobility can help retain newcomers and distribute talent across Ontario's diverse regions.

Ready to Join Ontario's Thriving Economy?

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