Canada is underutilizing its immigrant talent, and it’s a loss for all

Overeducation and involuntary part-time work are the biggest skill utilization challenges. Image credit: Muhammad Hicham on Unsplash.

In a report published by Signal 49, formerly Conference Board of Canada, Bronwen Perley-Robertson and Stein Monteiro measured how well Canadian municipalities leverage the skills of immigrants, benchmarking their performance against Canadian-born citizens.

Excerpts from the report:

Overeducation and involuntary part-time work are the biggest skill utilization challenges for both groups, but immigrants fare significantly worse, with skill mismatch at 1.8 times the rate seen for their Canadian-born counterparts.

Involuntary part-time work is the second most pronounced type of skill underutilization in Canada, but immigrants fare worse again: They are 1.7 times more likely to experience this type of skill wastage than their Canadian-born counterparts.

While temporary employment is not a common type of skill underutilization in Canada, groups experience it differently. Immigrants are more likely to work in term and contract jobs, while Canadian-born citizens are more likely to work in seasonal jobs.

From 2022 to 2024, municipal progress in immigrant skill utilization was mixed. Most municipalities remain mid-range performers, with improvements in some and declines in others. Increasing immigrant skill utilization across Canada will require targeted interventions in lower-scoring municipalities.

Canada has long prioritized selecting highly skilled and educated immigrants for permanent residency. Yet once they arrive, many find themselves unemployed or working below their qualification level. Immigrant skill underutilization contributes substantially to the $11 billion in economic losses that Canada will accrue by 2040, based on 2015– 2019 vacancy levels.

The researchers developed the Immigrant Skill Utilization Scorecard in partnership with Canada’s Future Skills Centre, focusing on three sectors: healthcare, construction, and hospitality.

Skill underutilization takes two forms: mismatch and wastage.

People experience skill mismatch when they’re employed below their education level, such as a mechanical engineer working as a taxi driver.

People experience skill wastage when they can’t find employment, when they’re in precarious jobs, or when they work fewer hours than they want to.

Using Statistics Canada’s Labour Force Survey, they examined these problems separately for immigrants and Canadian-born citizens to see how each group fares in the labour market.

Policy changes occurred during the study period, but their impact is not yet known. For example, category-based selection was introduced to improve access to permanent residency for immigrants with experience in healthcare, STEM, trades, and transportation. Ontario also passed legislation prohibiting regulated professions from requiring Canadian work experience in licensing for more than 30 occupations. Both of these policy interventions may have helped immigrants find jobs that better matched their qualifications.

In 2024, most municipalities achieved mid-range performance: 36 per cent of those with data received B grades and 54 per cent received C grades. Only Vaughan (ON) achieved an A grade, while Regina (SK) and Moncton (NB) received D grades. In 2022 and 2023, there was roughly an even split between B and C grades across municipalities, with none receiving an A or D.

Grades varied by province. Ontario was the only province with an A-grade municipality. Saskatchewan and New Brunswick each had municipalities that received D grades. British Columbia and Manitoba had mostly or only B-grade municipalities, while Quebec had a mix of B and C grades. Alberta and the Atlantic provinces had municipalities that earned primarily C grades.

Municipality size appeared to influence immigrant skill utilization. Large municipalities showed mid-range performance – one-third received Bs and the rest received Cs. Medium-sized municipalities showed the widest range in performance, having the only A-grade municipality, a roughly even split of B and C grades, and one with a D grade. Small municipalities had the worst performance, with two receiving a C grade and one a D grade.

Two areas of focus for efforts to increase immigrant skill utilization are improving the transferability of foreign-earned qualifications and helping immigrants find full-time work.

Analysis on immigrant skill underutilization included involuntary part-time employment. Involuntary part-time workers are those who work fewer than 30 hours per week due to poor business conditions or because they couldn’t find full-time work. Data also captured people who chose to work part time – either because they wanted to or because they had other commitments (e.g., academic or caregiving responsibilities). While this “voluntary” part-time employment indicator doesn’t factor into the scorecard results, it reveals interesting differences in what drives people’s decisions to work part time. Understanding these differences can help improve employment outcomes for all immigrants, not just those experiencing skill underutilization.

Comparing groups on their reasons for part-time employment, immigrants were more likely to cite caregiving or personal responsibilities, whereas Canadian-born citizens were more likely to cite schooling.

Immigrants are essential to Canada’s workforce. In 2024, they made up 20 per cent of full-time workers in construction, 30 per cent in healthcare, and 38 per cent in hospitality.

Yet many faced underutilization in these sectors. Compared to Canadian-born citizens, immigrants were far more likely to be overeducated for their roles – 2.6 times in construction, 2.2 times in healthcare, and 1.4 times in hospitality. They also faced higher rates of involuntary part-time employment – 1.8 times higher in construction and 1.6 times higher in healthcare.