Business leaders in Canada consider skills gaps a key impediment to economic growth and innovation. Canada faces labour shortages linked to a declining birth rate and aging population. But at the same time, many racialized people and internationally educated immigrants are underemployed relative to their levels of education and professional competencies.

While Canadian policy-makers, employers and community organizations have committed to promoting diversity and inclusion in workplaces, efforts remain uneven and solutions are fragmented. Barriers to employment and advancement continue to adversely affect Canada’s racialized populations. Full economic participation by racialized Canadians continues to lag behind that of their nonracialized counterparts. Racialized minorities and immigrants experience greater unemployment and underemployment, with racialized and immigrant women especially affected.

In a new report, Employment Gaps and Underemployment for Racialized Groups and Immigrants in Canada: Current Findings and Future Directions, we aim to shed light on this situation by reviewing what is known and what is not known about the labour market situation faced by these groups. We examine current data on their economic participation as measured by employment outcomes, barriers to employment and challenges in accessing skills training programs. We also review research that examines these gaps, and we analyze policy and program studies that suggest how these gaps may be closed, including in the areas of settlement and bridging.

What does the research say?

Analysis of recent census data provides important insight into the labour market experiences of racialized Canadians and newcomers. Racialized Canadians have higher labour market participation than nonracialized Canadians, indicating they are more likely to be working or seeking work. Despite this, they also report greater unemployment. Racialized women experience the poorest labour market outcomes among Canadians, with higher unemployment than both racialized men and nonracialized women, suggesting that they are doubly disadvantaged. Racialized persons are also less likely to be found in management positions, and they earn less than their nonracialized counterparts across all occupational groups.

Newcomers to Canada, especially those who are racialized, experience labour market outcomes that vary by their countries of origin. Overall, data indicate that immigrants are overrepresented in lower-paying sectors and occupations. A number of studies have identified a variety of factors behind the labour market challenges newcomers face in the Canadian labour market. The barriers are myriad and include language and communication obstacles; unfamiliarity with “unspoken rules” and Canadian culture; lack of access to networks and social capital; and lack of recognition and/or devaluation of foreign credentials. These and other factors have an especially negative impact on immigrants who are racialized.

Among recent immigrants to Canada, even individuals whose skills are in demand by Canadian employers face obstacles to obtaining employment, most acutely in regulated professions. For example, in spite of the emphasis that is placed on highly skilled workers in Canada’s immigration selection system and the ongoing complaints by employers that they cannot find enough workers with technical skills, one recent study shows that in Ontario, only 29.7 percent of individuals with engineering degrees worked as engineers or engineering managers, a figure that decreased to 20 percent for internationally trained engineers. Most concerning of all, 50 percent of women who obtained their engineering degrees outside of Canada not only were not working as engineers but were unemployed. These are some of the barriers responsible for this situation:

  • the high cost of skills upgrading and lengthy credential recognition processes;
  • a lack of bridging programs;
  • challenges navigating the labour market and obtaining accurate information;
  • difficulty obtaining Canadian work experience;
  • lack of professional networks and social capital; and
  • employer discrimination and bias.

While much of the focus of bridging programs has been on “fixing” the immigrant job seeker, mounting evidence suggests that more work is needed to modernize employment practices to address systemic bias and the continued reliance on exclusionary informal networks and processes. One study showed, for example, that among job applicants with identical qualifications, those with “foreign-sounding” last names were 28 percent less likely to be selected for interviews.

Unfortunately, there is much that we still do not know about the experiences of both racialized Canadians and immigrants in the labour market. It is critical that we continue to conduct research to deepen our understanding of these obstacles and formulate policies to promote full labour market participation by racialized minorities and immigrants. It is particularly important to locate effective solutions for employers facing a shortage of skilled labour.

Potential solutions

Significant opportunities exist for Canadian employers who actively seek out and employ underemployed newcomers and racialized Canadians. But relatively little evidence exists that employers are doing the things they need to do, such as supporting services that facilitate newcomer settlement and employment, in order to take advantage of these opportunities. For their part, policy-makers can work to improve the alignment of key immigration policies, such as the point system, with the changing needs of the Canadian labour market. The persisting narrative that blames skilled immigrants for failing to adapt to meet Canadian employers’ needs is inaccurate — and it hurts both the affected individuals and Canada’s economy.

Entrepreneurship is one path to economic participation that is receiving increased attention, for both newcomers and racialized Canadians. For instance, while newcomers often face additional barriers and lack supports and tools available to their Canadian-born counterparts, they also often possess stronger-than-average credentials, entrepreneurial intent and aptitude, as well as greater knowledge of global markets. Indeed, while levels of business ownership by immigrants are low initially, the rate quickly increases to one that exceeds that of Canadian-born individuals. Stronger programs designed to help immigrants overcome barriers such as discrimination and knowledge gaps as well as greater efforts to raise awareness of existing programs could go a long way to optimizing newcomer entrepreneurs’ success.

Next steps

To improve understanding and pathways for progress, researchers should continue and expand work in several areas, including the following:

  • more disaggregated data to allow us to better understand the experience of different populations within the categories of “visible minority” or “immigrant”;
  • greater focus on the impact of bias, discrimination and systemic barriers in the employment system rather than focusing solely on how job seekers can be better “adjusted” for the labour market;
  • a better understanding of who does what in areas like language training, bridging and other occupational programs, so that we can develop better data on what works for whom;
  • greater examination of how policies in the selection of immigrants, in settlement support and in training programs affect newcomers’ opportunities, and of how these policies can be aligned with employers’ needs; and
  • more examination of ways to promote innovative employer practices to recruit, advance and create inclusive environments for newcomers and racialized Canadians.

The great number of underemployed newcomers and racialized Canadians represents a significant opportunity for Canada’s employers and for the economy more generally. By further investigating these questions, we can help to ensure that all Canadians are able to seize, and benefit from, the opportunities presented by a future of work that is more diverse and inclusive.

This article is part of Skills Next, a series of eight reports released in January 2020 by the Future Skills Centre, Ryerson University’s Diversity Institute and the Public Policy Forum. Skills Next seeks to identify the most important issues currently impacting the skills ecosystem in Canada and build a strong foundation intended to help support further research and strengthen policy-making.

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Eddy Ng is the James and Elizabeth Freeman Professor of Management at Bucknell University. He is the editor-in-chief of Equality, Diversity and Inclusion and an associate editor of Personnel Review.
Suzanne Gagnon is associate professor of leadership and organization and holds the Canada Life Chair in Leadership Education at the Asper Business School, University of Manitoba. She is also inaugural director of the James W. Burns Leadership Institute.

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