Employment Gaps and Underemployment for Racialized Groups and Immigrants in Canada

Key Takeaways

1. The power and earning penalty is highest for racialized women. One study showed that in corporate leadership roles in the GTA white women outnumber racialized women 17:1. Overall racialized women represent only 6.4 per cent of the management workforce, despite representing 10.5 per cent of the overall workforce.
2. The Canadian government is increasingly accepting highly skilled immigrants. Yet some research suggests that in Canada, many employers are looking for less skilled workers, and the policy emphasis on skilled and experienced immigrants itself has resulted in the underutilization of skills for highly educated immigrants.
3. Entrepreneurship seems to be an occupation immigrants are attracted to and in which they succeed at a higher rate – yet that isn’t a solution for everyone.

Executive Summary

While Canada faces labour shortages due to a declining birthrate and aging population, many Canadians experience obstacles to employment and are underemployed relative to their educational and professional backgrounds. This report summarizes current data on employment outcomes for racialized Canadians and for recent immigrants to Canada, reviews the literature that seeks to explain these gaps and analyzes studies of programming and policy designed to close these gaps — including in the areas of settlement and bridging. While much is known about the problem itself, solutions to date have been fragmented.

Despite years of policy initiatives and programming by governments and other service providers, employment outcomes for racialized Canadians, including racialized immigrant men and women, continue to lag those for non-racialized workers. Using data from the 2016 Census and Legislated Employment Equity Program (LEEP), we find that racialized minorities and immigrants experience greater unemployment and underemployment collectively, and that immigrant women experience poorer outcomes than immigrant men.

Generally, racialized workers and immigrants are employed in lower paying sectors and occupations. Immigrants from Asia, Africa, Latin America and the Middle East fare worse than Canadian-born workers, while immigrants from Europe fare better than non-European immigrants. Foreign credential devaluation, language skills, and perceived fit with the Canadian workplace continue to be barriers for immigrant labour-market integration.

The barriers faced by immigrants are compounded when the work influences of disruptive technologies are considered. Automation is expected to transform many of the industries with a high concentration of racialized minority and immigrant workers. As a result, they are more vulnerable to displacement in the future. Further, persistent underemployment suggests an important potential disconnection: employers are incorrectly evaluating foreign credentials and/or there is a need to upgrade skills to better align with those required by Canadian employers.

While immigrants and racialized minorities are likely to continue to face barriers, factors associated with the changing nature of work will magnify the need to address the skills mismatch between members of these population groups and the occupations in which they work. Our review shows that more and better evaluation, as well as renewed attention and concerted action among stakeholders, is needed to remedy the qualifications mismatch, to enhance awareness of existing supports and to avoid displacement and further inequities amongst these groups. Self-employment and entrepreneurship, for example, represent alternative pathways to increased socio-economic mobility for immigrants and racialized minorities. However, increased awareness among immigrants around the existence of entrepreneurship supports is needed. Similarly, employment-equity policies are currently too limited to drive broader systems change, though they have been helpful in raising awareness and aiding in the removal of barriers for women and racialized minorities in some regulated sectors. Expanding the collection and sharing of disaggregated data will be essential to enabling more granular analysis of how gender, country of origin, and other factors interface with racialized identities and immigration status to influence the experiences of individuals in the Canadian workforce.

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