Canada’s high job vacancy rate means immigration will be even more critical to the labour market in the future

As Canada rebounds from the COVID-19 pandemic, it is increasingly reliant on immigration to fill large gaps in the labour force. (File Photo: Israel Andrade/Unsplash)

Canada’s unemployment rate is at a record low of 5.1%, resulting in significant worker shortages. Job vacancies are more than 80% higher than they were pre-pandemic.

These vacancies are in large part due to Canada’s aging population. More than one in five working age Canadians are approaching retirement age. This impact is compounded by Canada’s low birth rate of only 1.4 children per woman. This birth rate is not high enough to replace those who are retiring

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Increased immigration is key

A recent study from Statistics Canada says that in 2021, new immigrants (those who have been in Canada for 10 years or less) accounted for 8% of the total employed labour force but make up 13% of workers in the food services and hospitality industry as well as 11% in the professional services sector, and 10% in the manufacturing and transportation sectors.

The study also showed that job vacancies are continuing on an upward trend in the manufacturing and retail trade sectors. Vacancies in manufacturing peaked at 87,400 last quarter, and retail trade employers vacancies were as high as 114,600.

Improvement in labour market for new immigrants

In the years leading up to the pandemic, immigrants saw a rapid increase in their employment rate. In 2021, 77% of recent immigrants were employed and long-term immigrants (those who have been in Canada more than 10 years) had an employment rate of 84%.

Between 2010 and 2018, there was also an increase in initial earnings among new economic immigrants. During this timeframe, earnings in the first full year rose 39%. Family class immigrants saw a 27% increase in earnings and refugee’s earnings increased by 9% leading to an average increase in wages of 35% for all new immigrants.

Work permit holders are becoming permanent residents more often

Over the past decade, the number of work permit holders in Canada jumped from 111,000 to 770,000. These workers are often in what are categorized as low-skilled sectors such as agriculture, accommodation and food services, and administrative and support among others.

In 2020, 67% of new economic immigrants to Canada were former work permit holders or international students. There has been a marked increase in international students obtaining permanent resident status within 10 years of arriving in Canada. Many choose to obtain a post-graduation work permit (PGWP) as a first step once they complete their studies.

Immigrants continue to face labour market barriers

The study also found that many work permit holders and permanent residents continue to see their skills under-utilized by employers due to the difficulty of getting the necessary accreditation in Canada. The number of university educated immigrants working in positions that require university degrees has decreased from 46% to only 38% between 2001 to 2016. This is a trend that could eventually lead to shortages in high skilled employment sectors.

Takeaway

Over the long term, Canada must continue to increase the flow of skilled labour to mitigate the impacts caused to the labour market by Canada’s aging population. Canada recognizes that immigrants are vital to maintaining a strong economy and offers over 100 economic immigration pathways.

Express Entry is the leading federal pathway to permanent residence. Express Entry draws have been on hold in recent months however Canada’s immigration minister, Sean Fraser, has said that Express Entry draws are tentatively set to return to normal on July 6.

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