Is Canada taking the wrong approach to the labour shortage?

Good discussion of high vs low wage market needs. However, a discussion of productivity and per capita GDP missing, and the current immigration policies are working against increasing productivity as Skuterud and others have argued:

Does Canada need more immigrants with less education to do low-paying work, when many of their highly educated peers are already toiling in such jobs?

As employers struggle to find workers, a new report is calling into question Canada’s efforts to use immigration to deal with labour shortages.

“The labour shortages we’re seeing are mostly concentrated on the lower-skilled jobs, but we know that there’s already a very large proportion of immigrants with university education working in these jobs,” Statistics Canada researcher Feng Hou, co-author of the joint StatsCan and immigration department report, told the Star.

“It’s important for policymakers and the public to decide if we want to continue to select highly educated new immigrants to work in lower-skilled occupations or increase (the number of) immigrants with lower education levels.

“It’s a choice we have to make.”

The stakes are high and could have a lasting impact on the Canadian labour market — changing the calibre of the future workforce, suppressing wages or discouraging employers from investing in innovation and improving work conditions.

There could also be unexpected societal consequences.

“A significant move away from highly educated immigrants would weaken the tendency for the children of immigrants to attain high education levels, a major success for Canada compared to other countries,” cautions the report.

“In many countries the population generally has a more positive attitude toward highly-skilled immigrants than the lower-skilled. Any change that negatively affects Canadians’ perception of immigration could put a damper on its success.”

Canada raises immigration intake

As of March, Canada’s unemployment rate was at five per cent. Meanwhile, job vacancies have trended down 731,570 across all sectors since last June, despite a slight increase earlier this year.

The growth in unfilled jobs was in transportation and warehousing (+14,500) as well as health care and social assistance (+12,400), while the numbers dropped for professional, scientific and technical services (-6,200; -10.9 per cent), manufacturing (-4,200; -6.0 per cent) and educational services (-3,800; -14.1 per cent).

To tame the tight labour market, the federal government has raised the annual intake of new immigrants, with a goal of bringing in 500,000 a year by 2025, relaxed the rules to usher in foreign workers and passed a new law to prioritize potential immigrants in targeted sectors, including those in lower-skilled jobs previously ineligible for permanent residence.

A one-time program was also launched to grant permanent residence to 90,000 international students and foreign workers in essential jobs in Canada — many in the low-skilled spectrum of the caregiving and food production and distribution sectors — to ease the crunch.

Concerns have been raised regarding the extent to which immigration should be geared toward filling higher or lower-skilled jobs, and whether the country is on the right track.

How are newcomers to Canada faring?

Based on census and the government’s immigration database, the new study examined how newcomers who came under different programs fared and if they were employed in jobs at par with their education and skill levels. Although the analysis was based on 2016 data, Hou believes the findings would be similar today.

Among all immigrants aged 20 to 64, 60 per cent were in higher-skilled jobs and 40 per cent in lower-skilled positions, comparable to the ratio among their Canadian-born peers, at 64 per cent and 36 per cent, respectively.

(Higher-skilled jobs are defined as requiring a minimum of two years of post-secondary education and above; lower-skilled jobs only require some high school education and on-the-job training.)

Although immigrants played a key role in the labour market at all skill levels, accounting for 24 per cent of all employment, they also are more likely than their Canadian-born peers to be at the bottom of the ladder. 

According to the 47-page report, 34 per cent of immigrants selected via the economic category (including principal applicants, spouses and dependants, and in Canada since 1980) were employed in lower-skilled jobs.

Even among longer-term economic immigrants who have been in Canada for more than a decade, 31 per cent were in lower-skilled positions. 

This group of immigrants, selected for their higher education and skills, is a major provider of lower-skilled labour. It accounted for 53 per cent of all adult immigrants, and almost half (46 per cent) of the immigrant labour force in lower-skilled jobs.

Economic immigrants who were chosen under the Provincial Nomination Program, which allows provinces to select their own permanent residents, had the largest share in lower-skilled jobs, at 40 per cent. That compared to 28 per cent among those in the federal skilled worker program and 15 per cent in the Canadian Experience Class.

“Traditionally, economic immigrants in particular have been selected based on a ‘human capital model,’ which orients immigration towards higher educated individuals,” said the report. “However, not all economic immigrants occupy higher-skilled jobs.”

Cyclical factors are driving labour market conditions

The study referred to the many factors contributing to the pandemic-induced labour market conditions: worker fatigue; concerns among workers about COVID-19 infection; strong government financial support to individuals; the decline in immigration levels; and a possible desire to change jobs.

Given most of these drivers were cyclical, it recommended the temporary foreign workers program may be a more reasonable solution to the labour crisis amid current economic uncertainty.

However, critics say the solution is not about bringing in fewer low-skilled immigrants but focusing more on credential recognition in order to make the best use of all immigrants’ skills.

“The business cycle has not led to fewer temporary foreign workers. The use of temporary foreign workers through different immigration streams continues to go up,” said Naomi Alboim, who served senior federal and provincial government roles in immigration and labour.

“They say they hope it will resolve itself when the pandemic abates. But the pandemic is still with us. It’s not necessarily good for our economy just to continue to bring in temporary foreign workers, nor is it good for the temporary foreign workers.”

The report cited the boom and bust of the higher-skilled tech and oil sectors as examples of the temporariness of cyclical labour market, but Alboim said it failed to recognize the “ongoing needs” for lower-skilled workers in areas such as skilled trades and health care that can’t be easily replaced by automation and technology. 

“Even if the high interest rates result in a reduction of economic growth and perhaps less people being required, we know that there are sectors at the lower end where we are going to continue to need people,” said Alboim.

“I’m not saying the majority of people coming into the country should be selected on the basis of lower skills. We should just have a little bit more of a balance so we don’t have a bifurcated immigration system that says, ‘Higher-skilled. Permanent. Lower-skilled. Temporary.’”

‘We do need … a mix’

The success of the economic immigration program comes down to the match between newcomers’ skills and the jobs that need to be filled, said Rupa Banerjee, Canada Research Chair of economic inclusion, employment and entrepreneurship of Canada’s immigrants.

It’s an irony that low-skilled immigrants in many ways actually have employment appropriate to their education and skill levels while their highly educated and skilled peers struggle to get compatible jobs and become disillusioned with the decision to come to Canada.

“What’s really important is to look at this through a more nuanced viewpoint. It’s not as cut and dry or black and white as simply we don’t need as many low-skilled immigrants,” said Banerjee.

“We do need to have a mix of different skill levels coming into Canada, but we still have this problem of job skill mismatch and that continues to be a major challenge that we need to continue to work on.”

Source: Is Canada taking the wrong approach to the labour shortage?