Declining Income of Skilled Immigrants: A Problem That Might Already Be Fixed

A recent study released by Statistics Canada, entitled “Chronic Low Income and Low-income Dynamics Among Recent Immigrants”, was well reported by the Canadian media and got the attention of several political commentators. What it found was that even though Canada adjusted its immigration selection system in 1993 to give greater emphasis to the educational attainment of skilled immigrants and altered the mix of family class versus skilled immigrants to give priority to the latter, since then the proportion of immigrants experiencing periods of low income and chronic low income has increased.

Somewhat shockingly, what the Stats Canada study found is that “by the early 2000s, skilled class entering immigrants were actually more likely to [earn] low income[s] and be in chronic low income [i.e., earn low incomes in at least 4 of their first five years in Canada] than their family class counterparts.”

As well, the study found that the increased emphasis on education that was put in place in 1993 did virtually nothing to improve the economic performance of immigrants entering in the years since. The changes in selection have been quite dramatic: Only 17% of immigrants entering in 1992 had a university degree compared to 45% in 2004. This increase in the educational achievement of immigrants was a consequence of the fact that the skilled immigrant or “economic class” portion of all immigrants rose from 29% in 1992 to 56% in 2003.

But despite these changes, the study found that immigrants entering after 2000 had higher low-income rates during their early years in Canada than those who entered around or before 2000.

Some commentators have interpreted these results – which have come on the heels of similar studies pointing to the same problem – as reason to scale back our immigration policy and reduce the number of immigrants we admit each year. However, as someone who observed the system up close in the late 1990’s and early 2000’s, I am not so sure such dramatic action is required.

One of the things that has gone largely un-observed in this debate thus far is the fact that the skilled worker (or “independent category” as it was known until 2002) selection grid operated with reference to an “Occupations List” in those years. The list was last revised in the early 1990s and remained in place without amendment until 2002. As a result, virtually all of the immigrants whose income data have been studied until now entered by virtue of this archaic measurement of occupational demand.

The Occupations List worked by assigning points to all the occupations that appeared on it in relation to two factors: occupational demand and something called the “education and training factor (ETF)”. The first factor was supposed to measure the current demand in the Canadian labour market for each occupation on the list by assigning a score of 1 to 10. The second factor measured the level of education and training required to do the job in Canada.

As noted, one problem with this list is that it was used for about a decade without once being updated. So it continued to send the message to skilled immigrants in fields such as engineering and IT that their skills and experience were in high demand for years after this was no longer the reality in Canada. Another problem with it is that it led to the exclusion from the skilled immigrant class of whole groups of professionals and skilled workers who simply didn’t appear on the list at all. For example, physicians, nurses, teachers and lawyers, to name only a few, were no where to be seen on this list and therefore had almost no chance of qualifying under the economic class in these years.

Yet another problem with this list was the fact that it stressed education and training to such an extent that it made it very difficult for workers with a low “ETF” to qualify at all. Therefore, a civil engineer who had never been to Canada, had minimal English ability and had few if any immediate employment prospects upon arrival in Canada found it easier to qualify for immigration pre-2002 than a skilled tradesperson who was actually in much greater demand in the labour market and had worked in Canada already or had a job waiting for him once he arrived.

Essentially, the Occupations List acted to wave through the doors tens of thousands of engineers, technicians and IT professionals in the years between 1993 and 2002 and beyond. The granting of permanent residence to these immigrants was done with little or no examination of what existing connections they had to Canada or their realistic prospects for employment in their field. The system was dramatically revised with the passage of the Immigration and Refugee Protection Act (IRPA) in 2002. The Occupations List was abolished after being recognized as a futile effort to micromanage the labour market. A more balanced “human capital” approach to selecting skilled immigrants was adopted that placed much greater emphasis on attachments to Canada like offers of employment and previous work or study in Canada.

As a consultant working through the years when the Occupations List was in place, I could see this approach made little sense at the time. It was too heavily weighed in favour of high tech professionals, technicians and engineers and it did little to measure their true economic prospects once in Canada. I would submit that the latest Stats Canada study and those that have come before it showing similar findings are simply reflecting the poor job we did of selecting skilled immigrants based on an Occupations List in the 1990s and early years of this century. In direct opposition to family class immigrants, who are selected solely based on their attachments to Canada, we selected skilled immigrants in this period without a full and proper accounting of how their education, skills and experience would be utilized in Canada.

Before we decide we need to limit the numbers of immigrants entering Canada based on the findings of these studies we should first measure the performance of those that have come here since the system was “fixed” in 2002. Under the new selection system for economic class immigrants, which because of the backlog in processing has only in the last few years begun to admit large numbers of immigrants (and which, importantly, incorporates a greater role for the provinces through Provincial Nominee Programs) my guess is that we will begin to see an improved economic performance by skilled immigrants as compared both to family class immigrants and the skilled immigrants that were admitted in the decade before 2002.