- The hourly wages of university-educated landed immigrants living in Canada are, on average, one-fifth lower than those of their Canadian-born peers.
- The immigrant wage gap varies among provinces, from a low of 2.8 per cent in Nova Scotia to a high of 39.4 per cent in Manitoba.
- The gap between the median hourly wages of university-educated landed immigrants and Canadian-born citizens has increased steadily since 2006 in all but three Canadian provinces—Ontario, B.C., and Quebec.
Putting the immigrant wage gap in context
Canada has a high proportion of immigrants relative to other OECD countries. In 2013, 20 per cent of the Canadian population was foreign-born, compared with 13.1 per cent in the U.S. and 12.3 per cent in the United Kingdom.1
Canada welcomed over 155,000 working-age (15–64 year olds) immigrants in 2015.2 While the population of working-age immigrants in Canada has continued to grow “over the past 30 years, economic outcomes for new immigrants have deteriorated substantially relative to those of the Canadian born.”3
It is now widely recognized that, despite their high levels of education, Canadian immigrants have higher unemployment rates and lower wages than Canadian-born workers. This is troubling because immigrants are important drivers of labour force growth and productivity.
As Canada increasingly faces the reality of an aging population and associated labour and skills shortages, finding ways to ensure immigrants’ full and equal participation in the labour market is one way to boost Canada’s productivity and economic growth. Policies that help create better jobs for immigrants and increase their earnings help them become more productive, active, and integrated within society.4
How is the immigrant wage gap calculated?
The immigrant wage gap is the percentage difference in median hourly wages between university-educated landed immigrants and Canadian-born citizens. We compute the wage gap for university-educated individuals to ensure that we are comparing data for those with similar educational attainment levels.
While we focus our analysis on the wage gap between university-educated landed immigrants and Canadian-born citizens, there are also patterns of income inequality between immigrants with high school education, or below, and their Canadian peers. However, this gap tends not to be as pronounced over time as the gap between highly educated landed immigrants and Canadian-born individuals.5
How do the provinces and Canada rank relative to each other?
In Canada, the overall difference in median hourly wages between university-educated landed immigrants and Canadian-born citizens was 20.6 per cent in 2014. Based on Canadians’ median total income of $32,790 per person that year, this gap translates to a difference of $6,738.6
Six Canadian provinces do better than the national average. Nova Scotia is the province with the smallest immigrant wage gap, at 2.8 per cent, earning the province an “A” grade. Newfoundland and Labrador also earns an “A” with a 10.8 per cent immigrant wage gap.
Ontario, New Brunswick, P.E.I., and B.C. all get “B” grades. In Ontario, there is a 14.3 per cent difference in median hourly wages between university-educated landed immigrants and Canadian-born citizens. In New Brunswick and P.E.I., the wage gaps are 15.2 per cent and 16.7 per cent, respectively. B.C. does slightly better than the national average with an immigrant wage gap of 20.1 per cent.
Alberta, Quebec, Saskatchewan, and Manitoba all do worse than the national average. Alberta (25.9 per cent) and Quebec (26.5 per cent) both get “C” grades on the immigrant wage gap indicator, while Saskatchewan (37.1) and Manitoba (39.4) get “D”s.
How has the immigrant wage gap in the provinces changed over time?
The gap between the median hourly wages of university-educated landed immigrants and Canadian-born citizens has increased overall since 2006, peaking at 23.1 per cent in 2014 before dropping to 20.6 per cent in 2015.
Since 2006, the immigrant wage gap has increased steadily in all but three Canadian provinces.
Some provinces saw an exponential increase in the difference in median hourly wages between immigrants and Canadian-born citizens between 2006 and 2015. The immigrant wage gap in Saskatchewan increased by nearly 30 percentage points (from 8 to 37.1 per cent). Similarly, the gap increased by over 20 percentage points in Manitoba (from 19.3 to 39.4) and by 19 percentage points in New Brunswick (from –3.8 to 15.2).
In Newfoundland and Labrador, the immigrant wage gap went from –20.1 per cent in 2006, when the median hourly wages of immigrants were substantially higher than those of Canadian-born citizens, to 10.8 per cent in 2015.
Although the immigrant wage gap was lower in 2015 than in 2006 for Canada’s three most populous provinces, there has not been much improvement over the decade. The wage gap decreased slightly in B.C. (from 21 to 20.1 per cent) and Quebec (from 26.6 to 26.5 per cent). Ontario’s wage gap was at 20 per cent or above for most of the 2006 to 2015 period, although there was a big drop between 2014 and 2015, with the wage gap falling from 20.2 to 14.3 per cent.
Does the immigrant wage gap vary by gender?
Yes. In Canada, the immigrant wage gap for women (i.e., the difference in median hourly wages for immigrant women and Canadian-born women) is higher than for men (23.2 per cent for women versus 19.2 per cent for men, in 2015). The immigrant wage gap was higher for women in seven provinces in 2015: Newfoundland and Labrador, Nova Scotia, Ontario, Manitoba, Saskatchewan, Alberta, and British Columbia. The three remaining provinces—P.E.I., New Brunswick, and Quebec—had larger wage gaps for the median hourly wages of immigrant males than immigrant women.
What factors affect the immigrant wage gap?
The OECD has identified key challenges that need to be addressed to reduce the income earnings gap between immigrant and native-born working-age populations: language skills, foreign qualification and skill recognition, and discrimination.7
These factors are relevant in Canada because the primary source countries for immigrants to Canada have become countries where English is less likely to be spoken, individuals are more likely to be visible minorities, and professional and academic credentials are less likely to be analogous to those in Canada.
Do insufficient language skills affect working-age immigrants in Canada?
There is a strong correlation between insufficient language skills and negative labour market outcomes for immigrant populations in many OECD countries, regardless of level and country of foreign qualification.8
In Canada, “differences in language skills explain a considerable portion of the earnings gap between immigrants and the Canadian-born.”9 Significantly, insufficient language skills have been shown to explain lower earnings and higher unemployment among university-educated immigrant women in Canada.10
Indeed, research has shown that if university-educated immigrants had the same literacy skills as their Canadian-born peers, the wage gap among males would be reduced by half and the wage gap among females would be eliminated.11
Is there an issue with foreign credential recognition in Canada?
In 2009, Canada introduced its Pan-Canadian Framework for the Assessment and Recognition of Foreign Qualifications, which sets out guidelines and standards that apply across provinces for improving the consistency, transparency, fairness, and timeliness of assessing foreign professional and educational qualifications.12
Despite this, the process of foreign qualification recognition—that is, “verifying that the knowledge, skills, work experience and education obtained in another country is comparable to the standards established for Canadian professionals and tradespersons”13—continues to pose challenges for immigrants to Canada.
For example, immigrants often face obstacles to “obtaining reliable information on regulatory requirements, registration processes and workplace expectations prior to emigrating.”14 Then once landed in Canada, they are faced with a complex and often insufficiently flexible system to allow them to demonstrate their qualifications.
Also, regulatory authorities may not have the requisite financial or human resources “to address the complexities posed by assessment and recognition of foreign qualifications.”15
Because many immigrants face barriers to the recognition of their education, skills, and experience, they often end up settling into work that is beneath their capabilities and/or misaligned to their qualifications.16
Furthermore, there are limited opportunities to gain the balance of requisite skills and licensing requirements in cases where immigrants do not fully meet the requirements of a given occupation.
Do immigrants experience employment discrimination?
Discrimination at work or when applying for a job or promotion is a barrier to income equality for immigrant working-age adults.
Nine per cent of respondents who self-identified as a landed immigrant reported facing discrimination at work or when applying for a job or promotion, according to the 2014 General Social Survey.17 Immigrants’ perceived employment discrimination ranged from a low of 2.9 per cent in P.E.I. to a high of 11 per cent in Alberta.
Having an ethnic-sounding name can also work against job applicants. In a 2011 study, resumés with the same content but different applicant names were used to examine differences in callback rates after applying to a group of job postings based in Toronto, Montréal, and Vancouver.
The resumés were created to “plausibly represent typical immigrants that arrived recently… from China and India (top source countries for immigrants in all three cities), as well as non-immigrants with and without international sounding names.”18
The study found that resumés with English-sounding names were 35 per cent more likely to get callbacks than those with Indian or Chinese names.19
What can Canada and the provinces do to decrease the immigrant wage gap?
University-educated immigrants living in Canada earn, on average, one-fifth less than their Canadian-born peers.
Programs and policies have been introduced to reduce the gap in earnings between university-educated immigrants and Canadian-born citizens.
Examples of federal initiatives include the Canadian Information Centre for International Credentials,20 which provides comprehensive information on the recognition of occupational and educational credentials to individuals and organizations, and the government’s Express Entry21 program, which selects skilled immigrants as permanent residents based on their ability to take part in the Canadian economy.
Examples of provincial initiatives include the Bridge Training programs22 offered by the Ontario government, which help qualified, internationally trained immigrants move quickly into the Ontario labour market, and the Skills Connect for Immigrants Program23 in B.C., which helps immigrants obtain employment that matches their experience and background.
While these programs are a step in the right direction, there are opportunities to do more in the following areas:
- Ensure that immigrants in Canada have sufficient access to opportunities to strengthen their English and/or French language skills to improve their labour market participation and wages.
- Revisit and redesign foreign qualification assessment and recognition policies and targeted bridging programs—e.g., vocational education, apprenticeship opportunities, training—which can help immigrants gain the necessary licensing and certification requirements for a given occupation.
- Take concrete steps to create objective, transparent processes for hiring, giving feedback to, and promoting immigrant employees, which can help them benefit from fair employment, compensation, and advancement opportunities.