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.

Just Posted

CityWest and IBEW Local 213 consolidate unions

Prince Rupert’s telecommunications company moves forward under one banner

Granisle wins award for biomass heat system

The Village of Granisle has won an award for its ecologically-friendly efforts… Continue reading

Trudeau has won the most seats — but not a majority. What happens next?

Trudeau will have to deal with some of the implications of Monday’s result

LIVE MAP: Results in Canada’s 2019 federal election

Polls are now closed across the country

ELECTION 2019: Here are the results from our 12 B.C. races to watch

Incumbents mostly won our 12 key races, but there were a few upsets too

Scheer says Canada more divided than ever, as NDP and Bloc hold cards close

While Liberals were shut out of two key prairie provinces, they took two-thirds of the seats in Ontario

Horvat’s hat trick lifts Canucks to 5-2 win over Red Wings

First career three-goal game for Vancouver captain

Saanich Gulf-Islands’s Elizabeth May coy about leadership plans

The federal Green party leader talks possibility of running as MP without being leader

Feds finally decriminalizing drugs possible – but it’s up to Jagmeet Singh, expert says

National pharmacare was one of Singh’s most highly-touted platform policies

Estheticians can’t be forced to wax male genitals, B.C. tribunal rules

Langley transgender woman Jessica Yaniv was ordered to pay three salon owners $2,000 each

Two youth arrested in UBC carjacking at gunpoint, after being spotted in stolen Kia

‘A great deal of credit is due the alert person who called us,’ said North Vancouver Sgt. Peter DeVries

People’s Party of Canada’s anti-immigration views ‘didn’t resonate’ with voters: prof

Party was formed on anti-immigration, climate denying views in 2018

Investor alert: ‘Split games’ pyramid scheme circulating in B.C.

British Columbia Securities Commission issues warning about scheme selling virtual shares

Federal NDP may support B.C. with major projects, Carole James says

SkyTrain Surrey extension, Massey Tunnel need Ottawa’s help

Most Read