Parisa Mahboubi is a senior policy analyst at the C. D. Howe Institute, where Tingting Zhang is a junior policy analyst.

Canada consistently fails to fully utilize immigrants’ skills, limiting its efforts to address labour-market needs and imposing a loss on the economy.

Economic immigration is Canada’s largest and most popular admission category. To make such immigration more responsive to labour-market needs, Canada recently launched category-based selection that prioritizes in-demand occupations facing shortages, such as those in health care and science, technology, engineering and mathematics (STEM) fields.

However, once they get to Canada, foreign-educated immigrants, particularly recent immigrants, often encounter difficulties finding employment that aligns with their qualifications, and experience persistent skills underutilization. This phenomenon exists even among immigrants in targeted occupations in category-based selection, limiting the benefit of immigrants’ influx in those occupations.

According to Statistics Canada, more than 25 per cent of all immigrants (aged 25-64) with a foreign bachelor’s degree or higher worked in occupations requiring only a high-school diploma or less in 2021.

Earlier evidence from 2016 also shows that only two in five economic immigrants with a health-related degree worked in health-related occupations. The mismatch rate is also high among immigrants with a degree in the STEM fields (more than 50 per cent).

While admitting more immigrants in targeted occupations can help combat some chronic labour shortages, addressing underutilization issues is far more critical.

Obstacles that prevent economic immigrants from fully utilizing their skills include regulatory, language and cultural barriers, nonrecognition of foreign credentials and work experience, lack of Canadian experience, and discrimination.

To better integrate economic immigrants, provincial governments need to work with regulatory bodies to streamline foreign-credential and work-experience recognition. Some provinces are already moving in the right direction. For example, eight provinces offer practice-ready assessment programs for internationally trained family physicians.

But although this program can help speed up the credential recognition process, it is not open to all physicians and the number of assessments seems to be low, failing to keep pace with demand: Only 50 applicants will be accepted this year in Ontario. Provinces should expand this program based on the outcome evaluation and consider a similar program for other regulatory professions.

Provinces can also learn best practices from abroad. For example, Australia offers four assessment pathways for international medical graduates to register to practice. It has also taken several actions to reduce red tape and to streamline and expedite the assessment and registration process. The changes include increasing senior staff and cutting the processing time for initial risk assessments, fast-tracking admission of practitioners from trusted countries, and reviewing standards and requirements.

Professional Engineers Ontario recently removed the requirement of Canadian work experience for qualified foreign engineers. This change is a welcome strategy for other regulatory professions and other provinces to follow.

In addition, investing more in bridging programs such as Canada Work Experience that connects immigrants with experienced professionals in their respective fields through experiential learning, internship, or unlicensed opportunities helps immigrants understand the local job market. It also allows them to learn the workplace culture and gain Canadian experiences and new skills.

Governments need to support programs focusing on employability skills and develop targeted job-matching programs to facilitate connections between employers seeking skilled workers and immigrants looking for opportunities. They also need to educate employers on the benefits of hiring immigrants and encourage employers to hire recent immigrants.

A McKinsey report found that organizations with more ethnic and cultural diversity are 36 per cent more likely to outperform their competitors in profitability. According to a Toronto Region Immigrant Employment Council’s survey, 80 per cent of GTA employers who intentionally hire immigrants noticed a positive impact on their organization.

Raising awareness of, enhancing access to, and encouraging participation in employment services, language learning resources and bridging programs help provide better and faster labour-market integration of newcomers. Between 2016 and 2020, only 8.5 per cent of economic principle applicants accessed federally funded employment and community connection programs, far less than other immigrant groups.

According to a survey in 2021, only 8 to 9 per cent of skilled newcomers who used employment services learned firsthand about the available services from government offices (e.g., upon arrival at the border). The federal government needs to actively reach out to newcomers, educate them about employment assistance services and improve the usage of prearrival employment services.

As Canada plans to attract more skilled immigrants to fill gaps in the labour force and support the economy, better use of their skills and integration of this talent are becoming more crucial. Their prosperity means generations of benefits to come.