Canada’s attempt to use immigration as stimulus might be backfiring. That was the message from a new BMO report, looking at the unusually high unemployment rate for recent immigrants. The labor market for recent immigrants is eroding much faster than it is for the rest of Canada—at a rate rarely seen outside of recession. The problem is this isn’t a recession, the aggressive population growth just isn’t doing anyone a favors.
The Unemployment Rate For Recent Immigrants In Canada Surged
Immigrants are being sold on an opportunity in Canada, but they can’t even see where it begins. Those that arrived within the past five years face an unemployment rate that hit 13% in July. Just over 1 in 7 are struggling to find a job, despite fitting the criteria of being ready, willing, and able. Those who are full-time students seeking work aren’t included in those numbers.
A bad job market is a bad job market, right? That’s the problem—it’s not that bad. The bank highlights that recent immigrants face an unemployment rate 7 points higher than the general population.
“That’s the widest spread in over a decade,” explains Robert Kavcic, a senior economist at BMO.
He charted the unemployment rate gap between immigrants over time and those born in Canada. What he found is that the current scenario is far from normal.
Canadian Unemployment Is Rising Much Faster For Recent Immigrants
The gap between the unemployment rate for immigrants by length of arrival and the rest of Canada’s population.
Source: BMO Capital Markets.
“As the [above] chart shows, absorption into the job market takes time— immigrants that landed more than 10 years ago have no discernable difference in unemployment versus those born in Canada,” explains Kavcic.
While that may lead some to believe that means everything will be fine in 10-years, it may not be so easy this time. Notice how steep the recent climb is? It was more steep than the 2020-recession, and the kind of ascend only seen during recessions. That’s a problem, since this isn’t a recession. The job market is fairly strong when recent immigrants and young adults are excluded.
Yes, young adults. They tend to compete for similar entry-level roles as both demographics seek more Canadian experience. As a result, young adults in the country are experiencing a similar elevated unemployment rate as recent immigrants.
“The reality right now is that the current rate of inflow is not getting readily absorbed, which is doing no favor to the domestic job market (see youth unemployment), and no favor to those coming to Canada,” he says.
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