Report finds immigrant wage gap costing Canada $50 billion a year in GDP

The gap in median earnings is nothing new but has risen over the past three decades

The growing wage gap between immigrants and Canadian-born workers has hit a new high, with new Canadians earning 10 per cent less on average, says a new report.

The gulf, which spans age, gender, region and occupation, is costing the country $50 billion each year, according to an RBC Economics study set for release Wednesday.

The problem stems from a failure to adequately recognize credentials and work experience abroad, said Dawn Desjardins, deputy chief economist at RBC Economics.

About 38 per cent of university-educated immigrants aged 25 to 54 work at a job that fits their education level, compared with more than half of their Canadian-born counterparts.

“That means we’re not really maximizing that education, but as well we’re not necessarily maximizing the experience that some of these workers have,” Desjardins said in a phone interview.

“We’re not really correctly valuing their contribution to Canada’s economy, to the labour market. And therefore we’re leaving on the table, I would say, some of this excess return we could be accruing to the economy overall.”

More than half of the earnings gap — the shortfall is 18 per cent for immigrants aged 45 to 54 with a bachelor’s degree or higher — can be attributed to employers discounting work experience gained in other countries, she said.

The gap in median earnings is nothing new but has risen over the past three decades, climbing to 10.3 per cent in 2016 from 3.8 per cent in 1986.

The report notes that Canada remains popular among — and reliant upon — immigrants. A recent Gallup poll found that the country came second only to the U.S. as a desired destination.

“Pretty good for a country of 37 million with a long winter,” the RBC study states.

ALSO READ: With so many Irish immigrants, B.C. now home to 2nd Irish consulate

ALSO READ: Excluding non-permanent families from Canada Child Benefit unfair: report

Immigrants make up one-fifth of Canada’s population, a number that’s expected to rise to 28 per cent by 2036, according to the report, titled “Untapped Potential.”

“Canada needs to close its immigrant wage gap,” it states, arguing that doing so would boost the country’s annual GDP by as much as 2.5 per cent, or about $50 billion.

Desjardins said the federal government should upgrade its credentials assessments — a “longstanding problem” — to help employers recognize foreign work experience and devote more resources to aiding immigrants’ transition into the workforce.

The report gives a nod to government efforts to fill labour gaps with skilled immigrant workers, including the Express Entry program introduced by the federal Conservatives in 2015, expanded Provincial Nominee programs and beefed-up pre- and post-settlement services.

The earnings gap is particularly stark in manufacturing — about 23 per cent— and agriculture — roughly 16 per cent — and sits at between 10 and 15 per cent in education, law and trades.

The divide is greatest in the Prairies, with hourly wages hovering at about 20 per cent less for immigrants. It is narrowest in the Atlantic provinces, possibly due to efforts to attract a younger workforce, the report says.

In March, Ottawa announced a two-year extension of the Atlantic Immigration Pilot to facilitate hiring of skilled labour and recent graduates. “Programs like this one, that link employment to immigration from the beginning, may be a path towards faster integration and helping immigrants attain greater wage parity,” the study says.

Of 10 sectors profiled, natural and applied sciences is the only one where new Canadians made more on average than those with deeper roots in the country.

Immigrants who arrived before their 16th birthday earn five per cent more on average than workers who were born citizens.

Christopher Reynolds, The Canadian Press

Like us on Facebook and follow us on Twitter.

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

Racism wasn’t dealt with properly by school, says Chilliwack graduate

Woman tells story of being verbally assaulted at school for being black

COVID-19 case confirmed at Highstreet Walmart in Abbotsford

Fraser Health sends out letter to those who might have had contact with individual

Mission Mayor releases statement condemning racism and discrimination

‘We have a duty to be accountable to each other’ and celebrate diversity

Call for support of Black Lives Matter movement in Mission

Over 200 signs hung around city showing solidarity with victims of police brutality

Stray dog with duct tape around muzzle spotted in Abbotsford

Pooch has been spotted over two days, but has escaped capture so far

March dental conference key to many of B.C.’s COVID-19 cases

Early infections from China, Iran were quickly contained

Facing changes together: Your community, your journalists

The importance of accurate, ethical reporting is critical – perhaps as never before

MAP: Dr. Henry reveals which B.C. regions have seen most COVID-19 cases

B.C. health officials release a first look at how the novel coronavirus has reached all corners of the province

Tla-o-qui-aht First Nation woman, 26, fatally shot by police in Edmundston, N.B.

Police were conducting a well-being check at the time of the incident

Seniors to receive up to $500 in promised COVID-19 emergency aid in early July

The Liberal government first promised the extra help in mid-May, but had to create a new system to deliver the aid

VIDEO: Revelstoke bear wanders into Animal House pet store

Staff got ready to chase it out with a broom

New study is first full list of species that only exist in Canada

Almost 40 per cent of them are critically imperilled or imperilled and eight are already extinct

White Rock council considers allowing alcohol in waterfront park

Council mulls business-boosting measures, including picnic benches

Most Read