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

One woman arrested after pair of armed robberies in Campbell River

Police still looking to speak with anyone who was around downtown Chevron Sunday night

VIDEO: Convoy of forest industry supporters on its way to Victoria

Rally at the B.C. legislature begins with participants setting off from Campbell River

PHOTOS: Campbell River Storm fall to down-Island rival Victoria Cougars

Cougars win 6-2 and continue to lead the VIJHL as playoffs approach

VIDEO: 7 things you need to know about the 2020 B.C. budget

Surplus of $227 million with big spending on infrastructure and capital projects

Trees Cannabis director fined $1.5M for selling marijuana

Fine follows provincial crackdown on popular dispensary

World Cup skier from Okanagan dies suddenly at 19

Kuroda, who made his World Cup debut earlier this year, passed away suddenly Monday night.

Coastal GasLink pipeline investor committed to closing deal despite protests

Developer TC Energy Corp. — formerly TransCanada Corp. — is to remain the operator of the $6.6-billion pipeline

New highway proposed between Alberta and B.C.

The route would connect Red Deer to Kamloops

What’s in a name? The story of Revelstoke’s Mt. Begbie

It’s likely the iconic peak had several Indigenous peoples’ names before settlers arrived

Budget 2020: B.C. Liberals blast ‘Netflix tax,’ lack of economic plan

ICBC rates still go up, except in election year, Shirley Bond says

Teen snowmobiler from Kelowna found after air force’s overnight search

The teen had been missing since just after 6 p.m. on Monday

Two law enforcement trucks ‘deliberately’ set on fire in northern B.C., RCMP say

Police say they have video evidence of a person in the area of the truck fires

Most Read