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

Driver charged in Central Saanich pedestrian’s death appears in court

Victim Kim Ward, 51, died on scene at the August 2018 crash

Central Saanich hosts NEAT program to help seniors connect with each other

Health promotion program aims to reduce social isolation among seniors

Head of Vancouver Island Regional Library system calls Sidney’s claims ‘problematic’

Rosemary Bonanno says the Library Act gives Sidney an ‘exit strategy’

Esquimalt arson trial hears of feud with tenant before the fire

Wei Li charged with intentionally setting fire to a duplex he owned on Oct. 3, 2017

Langford homeowner helps West Shore RCMP catch car thief

The homeowner grabbed the suspect until the police arrived moments later

VIDEO: B.C. man’s yard comes alive with grizzlies at night

Malakwa man has captured images of 12 different grizzlies on video

POLL: Do you think the day of the federal election should be a statutory holiday?

Increasing voter turnout has long been a goal of officials across the… Continue reading

Two RCMP vehicles vandalized in Duncan over long weekend

Local Mounties asking for help in finding culprits

Fire response at Trans Mountain Burnaby tank farm could take six hours: audit

Site doesn’t have mutual aid response agreement with Burnaby fire department

A year after pot legalization in Canada, it’s a slow roll

It’s one year into Canada’s experiment in legal marijuana, and hundreds of legal pot shops have opened

ELECTION 2019: Climate strikes push environment to top of mind for federal leaders

Black Press Media presents a three-part series on three big election issues

Tickets available for Greater Victoria Sports Hall of Fame dinner and induction

Ryan Cochrane, Mike Piechnick and Rob Short among the inductees

Suspect hits woman with pipe, jumps into waiting truck in downtown Nanaimo

Police say victim believes ‘vicious assault’ was an attempted purse-snatching

Most Read