Immigrants Account for Most of the Growth in Ontario’s Labour Force, Report Reveals

Ontario’s labour force growth is increasingly driven by newcomers to the province, a report by the Financial Accountability Office of Ontario (FAO) on long-term trends of international immigrants shows.

The analysis, titled Labor Market Outcomes of Immigrants in Ontario and its Major Cities (and based on data from Statistics Canada’s 2021 Census, Demographic Estimates, Labour Force Survey, and Longitudinal Immigration Database), does not include interprovincial migrants and non-permanent residents such as temporary foreign workers and international students.

Instead, to count as an international immigrant as per the report’s parameters, one needs to hold permanent residence (PR) status in Canada – a definition which applies to economic immigrants, family sponsorship immigrants, refugees, and other immigrants.

With immigration from these groups reaching 227,424 in 2022 and set to remain high in the near term, the employment outcomes for new PRs were claimed by the report to play a “significant role” in Ontario’s economic growth.

Labor Force Characteristics of Immigrants Coming to Ontario 

• Ontario’s labor force growth is increasingly because of immigrants

FAO found that immigration to Ontario is reliant on Ottawa’s federally-set annual immigration levels, policy changes in admission programs, and Ontario’s economic performance in relation to other regions of Canada.

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Although their numbers declined in 2020 and 2021 because of COVID-19’s grip on international movement of workers, Ontario welcomed 227,424 newcomers in 2022. This was a reflection of eased border restrictions, efforts to lessen the immigration backlogs, and bolstered immigration targets introduced by the federal government.

The province’s share of immigrants to Canada had also declined over the years (going from a peak 59.6 percent in 2002 to 36.1 percent in 2017), but has since bounced back to 42.5 percent this year.

Despite the aforementioned fluctuations, immigrants are accounting for a growing share of the province’s labor force growth. From 2007 to 2014, they made up 39 percent of Ontario’s growth in that regard, while from 2015 to 2022, they made up 63 percent of labor force increase in the province.

• The composition of international immigration in Ontario has shifted towards “core working age immigrants”

The age composition of international immigrants settling in Ontario every year has changed significantly over the last four decades.

The share of working-age individuals out of all landed immigrants, for one, has gone up from 43.7 percent in the 1980s to 62.3 percent in 2016-2022. On the other hand, the share of the older working age groups went down from 6.6 percent in the 1980s to 4.0 percent in 2016-2022.

Currently, the age composition of the recent immigrant group in Canada is significantly younger than that of the total Ontario population.

“As Ontario’s population continues to age,” wrote the report, “immigration is expected to only partially offset the projected decline in the province’s working-age population.”

• A growing share of recent newcomers to Canada are university-educated and possess Canadian pre-admission work and/or study experience

Of the “core working age immigrants” who came to Canada between 2016 and 2021, 64.2 percent possessed a bachelor’s degree or higher in 2021, when compared to 55.7 percent of immigrants who landed in 2011-2015 and 33.8 percent of all non-immigrants.

When the report further dissected the group with post-secondary education, 30.2 percent of all core working age immigrants were found to be degree, diploma, or certificate-holders in a STEM field.

This number outperforms the non-immigrant STEM percentage (16) by close to a two-fold margin.

The following were the more popular study areas for immigrants:

• Business and administration
• Engineering
• Healthcare

The following, meanwhile, were the most popular areas of study for non-immigrants:

• Trades, services, natural resources, and conservation
• Business and administration
• Social and behavioral sciences

Before getting a Canada PR, more of these immigrants have higher rates of Canada pre-admission work experience and/or study experience than immigrants from previous years.

Of the core working age group from 2016-2021, for example 38.5 percent possessed a work permit, study permit, or both before becoming a PR, compared to 27.4 percent who came in 2011-2015 and 13.8 percent who came in the 2000s.

• Economic immigrants make up more than half of recent immigrants in Ontario 

Immigration categories in Canada are as follows:

• Economic immigrants and their dependents
• Immigrants sponsored by family
• Refugees

While the share of immigrants from the economic category increased over the years, the share of those from the family category declined over the same period. This hints an increase in immigration based on newcomers’ abilities to meet labor market demands through employment, investment, or entrepreneurship.

Within the economic class of immigrants, those coming in through the provincial nominee program and Canada experience class increased, and those coming via the skilled worker, skilled trades, and business programs declined.

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Labor Market Participation of Immigrants

Recent immigrants to Canada have lower workforce participation and higher unemployment rates compared to non-immigrants.

However, their performance in the labor market has increased in the last decade or so, which is reflexive of policy changes that are letting in more educated immigrants with previous Canadian work experience.

The following facts have been gathered from the report about immigrants’ performance and participation in the Canada labor market:

• The labor force participation rate of immigrants in Ontario has been lower than non-immigrants when considering historical averages. However, this has been subject to fluctuations.
• Recent immigrants have lower participation rates than established immigrants (10 or more years in Canada), who have a participation rate close to that of non-immigrants.
• Immigrants have a consistently higher unemployment rate (7.4 percent) than non-immigrants (5.2 percent). However, those with more time in Canada boasted a far lower unemployment rate.
• The core working age immigrant unemployment rate fell in the 2010s till COVID-19 hit, going from 5.3 percent in 2019 to 9.6 percent in 2020. It has since declined to 5.5 percent in 2022. For recent immigrants, it declined from 12.6 percent in 2020 to 8.3 percent in 2021, but then again increased to 8.8 percent in 2022 because of sharp increase in new immigrant entrants into the labor force.
• More immigrants are over-qualified for their job than non-immigrants. The share of those core working age immigrants with a university degree working in a job that requires no more than high school education is even higher for recent immigrants (19.6 percent) than established immigrants, who had a rate similar to non-immigrants (9.6 percent).
• Overqualification is an indicator of underutilization and overrepresentation in some sectors.
• More immigrants are working in service sectors and professional occupations. The following sectors had more immigrants than non-immigrants:

• Professional, scientific, and technical services
• Transportation and warehousing
• Finance and insurance

• 83 percent of immigrants who landed in 2016-2021 worked in service, which is higher than the 79 percent who landed in the 1980s.

New Immigrants in Ontario Are Seeing Improved Wages in Recent Years

Between 1982 and 2020, the real median wage of new immigrants increased at an average annual rate of 0.8 percent, which is faster than the 0.4 percent for the total population.

This narrowed the difference in median wages between immigrants and the total population from $10,700 in 1982 (in 2020 constant dollars) to a low of $6,200 in 2019 before “widening modestly after.”

The median wage of established immigrants (15 years after admission) was similar to that of the total population from 1996 to 2016.

Established immigrants, however, earned higher median wages than non-immigrants. For example, immigrants aged 25-34 years in 2021 (and who landed in the 1980s, arriving as children and receiving Canadian education) earned a median wage of $59,200 in 2020, compared to non-immigrants ($43,600) in the same group.

Among all established immigrants, only those between 45-54 in 2020 had lower income levels than non-immigrants of the same age.

However, the median wage of female immigrants was lower than male immigrants in all core working age groups and periods of settlement.

This was the most significant for females in the 35-44 age group who landed in 2016-2019 and earned 41.9 percent less than the median wage of immigrant male counterparts. This could be due to the motherhood penalty women in their 30s experience, a part-time employment and occupational differences, and poorer outcomes from recessions.

Immigrants with higher education and Canadian education also earn better wages, while among economic immigrants, those who came under the Canadian experience class earned the highest median wage among economic immigrants (at $60,100 one year after admission in 2020).

The gap in earnings across admission categories widened after a longer period of settlement. The median wage of Canadian experience class immigrants five years after admission was $82,500 in 2020, which was higher than for skilled workers/trades workers ($66,700), provincial nominees ($60,000) and caregivers ($35,300).

How Do Immigrants Fare in Ontario’s Major Cities?

A disproportionate number of immigrants come to settle in Toronto, the most populous Ontario Census Metropolitan Area (CSMA), and where the share of immigrants is larger than even the Canadian-born population. In fact, 67 percent of immigrants arriving in Ontario between 2016 and 2021 settled there.

This is far larger than the 32.1 percent share of Ontario’s total non-immigrant population residing in the area.

The share of immigrants residing in Toronto was lower among recent immigrants compared to established immigrants. Of the established immigrants who came in the 1990s, 74.4 percent resided in Toronto in 2021, 7.4 percent points higher than the share of recent immigrants who landed in 2016-2021.

Core working-age immigrants in all of Ontario’s major cities also earned lower median wages than non-immigrants.

The highest median wage in 2020 was earned by core working age immigrants in Ottawa-Gatineau ($55,600 in comparison to $67,000 for non-immigrants), Oshawa ($54,000 vs. $57,600 for non-immigrants) and Greater Sudbury ($51,600 compared to $57,600 for non-immigrants).