Canada 'wasting' talents of skilled immigrants: report

'The economic costs of immigrant overqualification is staggering,' says expert

BY Sarah Dobson 18 Dec. 2024

A new report by the C.D. Howe Institute highlights persistent overqualification among skilled immigrants in Canada, which undermines their economic potential and hinders the country’s labor market productivity.

Barriers such as foreign credential recognition, language proficiency gaps, and limited Canadian work experience prevent many immigrants from securing jobs that align with their qualifications.

The study finds that university-educated immigrants, particularly recent arrivals, face significantly higher rates of overqualification than their Canadian-born counterparts. Family-class immigrants and refugees are disproportionately affected, with overqualification rates of 22% and 19%, respectively, compared to 16% for economic immigrants.

Overqualification reduces earnings, limits career growth, and affects job satisfaction, potentially influencing immigrants’ decision to remain in Canada. Economically, it represents a misallocation of skilled labor, stifling productivity and innovation.

Contributing factors to disconnect

In Harnessing Immigrant Talent: Reducing Overqualification and Strengthening the Immigration System, Parisa Mahboubi and Tingting Zhang reveal that 26.7 percent of recent immigrants – those who arrived in Canada within the last five years – with a Bachelor’s degree or higher are employed in positions requiring only a high school diploma or less. This is three times higher than the rate for Canadian-born workers with similar education levels.

The report highlights difficulties faced by immigrants in healthcare and STEM fields. Despite their high demand, only 36.5% of foreign-educated nurses and 41.1% of foreign-trained doctors work in their fields in Canada. Similarly, immigrants with engineering degrees face challenges related to licensing and Canadian experience requirements.

“The economic costs of immigrant overqualification is staggering,” says Mahboubi. “Overqualified immigrants experience the largest earnings gap, earning on average 46 percent less than non-immigrants with matching education and skills, even after controlling for other factors.”

According to CD Howe, key obstacles to job alignment for immigrants include:

Credential recognition: Complex licensing processes and skepticism toward foreign qualifications prevent many immigrants from practicing in their trained professions.
Language barriers: Limited proficiency in English or French hinders effective job performance and career advancement.
Canadian work experience: A lack of familiarity with local workplace norms and employer preferences for Canadian experience exacerbate employment challenges.
Industry trends: Immigrants are increasingly employed in sectors such as retail and transportation, where overqualification is prevalent.

Addressing barriers for skilled immigrants

The authors propose several measures to address these issues:

Refine the Express Entry System: Introduce stricter language requirements and align selection criteria with labor market needs to better match immigrants’ skills with job opportunities.
Streamline credential recognition: Simplify the processes for assessing and validating foreign credentials to facilitate quicker integration into regulated professions.
Enhance language training: Expand access to high-quality, workplace-oriented language programs to improve immigrants’ communication skills.
Increase employer awareness: Promote the value of foreign credentials and support job-matching initiatives to connect skilled immigrants with suitable employers.
Address discrimination: Encourage competency-based assessments to mitigate hiring biases and improve access to jobs requiring specific qualifications.

“Highly educated immigrants in Canada are not being given opportunities to fully utilize their skills and qualifications,” says Mahboubi. “By tackling challenges and removing integration barriers, Canada can ensure that these talented individuals contribute more effectively to the economy while also enjoying fulfilling careers.”