By Mata Press Service

Canada is attracting highly educated immigrants but failing to make full use of their qualifications, leaving many newcomers earning less and working below their skill levels, according to a new study that raises troubling questions about the country's immigration system.

The C.D. Howe Institute report, found that immigrants are more likely than Canadian-born residents to hold university degrees, yet face persistent barriers to securing jobs and earnings that reflect their education and experience.

The findings come as Prime Minister Mark Carney's government prepares to reset immigration targets amid mounting concerns about labour shortages, slowing economic growth and Canada's ability to attract the workers needed to support its economic ambitions.

The report, A Matter of Degrees: Understanding Immigrant Skills and Labour-Market Outcomes, exposes a troubling disconnect between Canada's success in attracting educated newcomers and its ability to help them succeed in the workforce.

Using national data collected in 2023, researcher Parisa Mahboubi found that immigrants scored lower on average than Canadian-born adults in literacy, numeracy and problem-solving assessments, despite their higher educational qualifications.

The largest gap was in literacy, where immigrants scored an average of 20 points lower. The gaps were 16 points in adaptive problem-solving and seven points in numeracy.

Among university graduates, half of immigrants scored at the two lowest measured literacy proficiency levels, compared with just 15 per cent of Canadian-born graduates.

The study also found that university-educated immigrants recorded an average literacy score of 273 points, roughly comparable to the 268 points scored by Canadian-born adults with only a high school diploma.

Those results reflect performance on assessments conducted in English or French and do not necessarily capture immigrants' professional expertise or abilities in other languages.

“Canada has a highly educated immigrant population, but educational credentials alone don’t tell us enough about newcomers’ measured skills or how their qualifications translate into labour-market outcomes,” said Mahboubi, associate director of research at the institute.

“We need to look beyond who we select to how we recognize immigrants’ qualifications and support their success after arrival.”

The study found that language background was strongly associated with the differences in measured skills.

Among adults who spoke English or French at home, immigrants and Canadian-born respondents recorded similar results.

The findings suggest that stronger official-language proficiency could improve economic outcomes for newcomers, although the study cautions that its data cannot establish whether changes to immigration selection rules would directly produce better results.

But the research also identifies another significant problem that language proficiency alone cannot solve.

Immigrants with foreign educational credentials continue to earn less and face greater difficulty securing skilled employment than comparable Canadian-born workers, even after differences in education, measured skills and other characteristics are taken into account.

Foreign-educated immigrants were approximately six percentage points less likely to work in high-skill occupations than comparable Canadian-born workers.

By contrast, immigrants who obtained their highest qualifications in Canada generally achieved employment and earnings outcomes similar to their Canadian-born counterparts.

The findings point to continuing problems with recognizing foreign qualifications and experience, including employers' difficulties assessing overseas credentials and possible discrimination.

The report notes that the assessments measured basic skills rather than occupation-specific abilities, meaning they could not determine whether a foreign-trained professional possessed the technical expertise required for a particular job.

Another finding challenges assumptions about immigrants' participation in Canada's workforce.

Among adults aged 25 to 65, immigrants had an employment rate of 81 per cent, slightly higher than the 79 per cent recorded among Canadian-born adults.

Immigrant employees were also more likely to report being overqualified for their jobs, at 34 per cent compared with 28 per cent.

Those differences largely disappeared after researchers accounted for education, measured skills and other characteristics.

The study suggests that Canada's economic challenge extends beyond getting immigrants into jobs. It includes ensuring their qualifications and experience are properly recognized.

Earnings data revealed further disparities.

Among workers with the lowest literacy scores, only three per cent of immigrants were in the highest earnings bracket, compared with 10 per cent of Canadian-born employees.

At the highest literacy levels, the pattern reversed, with 47 per cent of immigrants reaching the top earnings bracket compared with 36 per cent of Canadian-born workers.

The findings indicate that immigrants' earnings are more closely linked to their measured skills, particularly literacy, than those of Canadian-born workers.

The report calls on Ottawa to consider raising minimum English and French language requirements under its Express Entry immigration selection system, with greater weight given to advanced proficiency.

It also urges governments to speed up and standardize foreign credential recognition while encouraging employers to better assess overseas qualifications and professional experience.

Employment-focused language training should receive greater attention, the report says, with stronger evaluations to determine which settlement programs actually improve newcomers' employment prospects and earnings.

These recommendations carry particular significance as Ottawa weighs the future direction of immigration against pressure from employers seeking skilled workers and growing concerns about Canada's productivity.

The report warns that the findings are based on 2023 data collected during an unusually tight labour market. Conditions have since weakened, potentially increasing the difficulties faced by workers with lower measured skills.

It also acknowledges limitations in the data, which do not identify immigrants' admission categories or provinces of residence and therefore cannot establish whether the same patterns apply specifically to newcomers selected through Express Entry.

The research was supported by the Future Skills Centre through the federal government's Future Skills program.

“Immigration is central to Canada’s workforce and economic growth, but attracting educated newcomers is only part of the equation,” Mahboubi said.

“Helping immigrants put their skills and qualifications to work is an important opportunity to strengthen productivity and improve economic outcomes for newcomers and Canada alike.”