TORONTO — Canada’s economy is becoming increasingly dependent on low-wage migrant workers: according to a new Bank of Canada report – quoted by the National Post – the share of “native-born” Canadians in the workforce has fallen by nearly 10 percentage points since 2006. 

The study, titled “The Shift in Canadian Immigration Composition and its Effect on Wages”, finds that, largely due to a surge in temporary migration from certain countries, the average Canadian immigrant has become younger, less skilled and more likely to come from poorer regions such as India, sub-Saharan Africa or the Middle East. And these new workers are paid less.

In particular, among Canada’s growing ranks of temporary migrant workers, wages have “shrunk significantly relative to Canadian-born workers” the study says. Since 2015, “the average nominal wage gap between temporary workers and Canadian-born workers has more than doubled…”. The authors of the study – Julien Champagne, Antoine Poulin-Moore and Mallory Long – have in fact calculated that the average migrant worker in Canada is now paid more than a fifth (22.6%) less than a Canadian worker of the same level. Before 2014, this gap was only 9.5%.

As we were saying, the origin of migrant workers has also changed totally: between 2006 and 2014, the area with the highest level of non-permanent emigration to Canada was Northern/Western Europe, today it is India. And all this has happened at the same time as the collapse of Canadian “net births”, that is, the number of births minus the number of deaths: net births were the main driver of population growth in Canada until the early 1990s, but as we approached 2024 they have become progressively “negligible”. In other words, the number of Canadian children born in that year was practically equivalent to the number of Canadian deaths. A “perfect storm”, in short, favored by certain immigration policies that in recent years have favored a certain type of immigration, from certain countries (Asian ones), to the detriment of another, from other areas (Europe first and foremost).

The article then documents a marked decline in the share of Canadian-born workers in the workforce, which – as we said at the beginning of this article – has fallen by almost ten percentage points in about twenty years: in 2006, the share of “native” Canadians in the workforce was 77.6%, by 2024 that share had fallen to 68.1%.

The surge in migrant workers in Canada since the pandemic has corresponded with a sharp increase in youth unemployment: retail and restaurants in particular – two sectors that traditionally relied on entry-level part-time workers – are increasingly being employed on temporary work visas. A recent report by King’s Trust Canada found that between 2016 and 2023, the rate of temporary foreign workers in Canadian restaurants increased by a whopping 634%. 

In short, there has been a sharp increase in temporary, low-cost, low-skilled labor in Canada. After all, in 2023, former Bank of Canada Governor David Dodge warned that a “large and growing influx of lower-skilled workers” was contributing to depress wages and support “uncompetitive” businesses.

The influx of workers into Canada is regulated by the immigration policies established by the federal government and implemented by IRCC (Immigration, Refugees and Citizenship Canada): it is therefore conceivable, as this study notes, that “changes in Canadian immigration policies – in the last twenty years in general and, in particular, in the post-pandemic period, ed. – could have affected the type of immigrants that decided to migrate from all regions…”. With the inevitable negative economic consequences that the study itself highlights.

To download and/or consult the whole original report, click here

Photo by Barrett Baker from Unsplash