2010 allies learning exchange: don drummond - changing face of the canadian workplace

THE RISING IMPORTANCE OF IMMIGRANTSDon Drummond, Economic Advisor

May 6, 2010

2

www.td.com/economics

TD Economics provides analysis of economic performance and the implications for investors. The analysis covers the globe, with emphasis on Canada, the United States, Europe and Asia.

Contact InformationPhone: 416 982 8065

Email: [email protected]

3


LABOUR FORCE GROWTH TO SLOWLABOUR FORCE GROWTH TO SLOW

0

1

2

3

4

1970's 1980's 1990's 2000's 2010's 2020's

Forecast

Canadian labour force growth, average % change

*Under medium-growth, medium migration trends and 2008 participation rates by age cohort; Source: Statistics Canada, TD Economics

4


PRODUCTIVITY GROWTH IN CANADA HAS BEEN ABYSMAL IN THE LAST HALF DECADE

PRODUCTIVITY GROWTH IN CANADA HAS BEEN ABYSMAL IN THE LAST HALF DECADE

-1

0

1

2

3

4

97 98 99 00 01 02 03 04 05 06 07 08 09

Canadian labour productivity growth, Y/Y % change

*Ratio of real value-added (GDP) to hours worked; Source: Statistics Canada

5


POTENTIAL GDP IS IN LONG RUN DECLINEPOTENTIAL GDP IS IN LONG RUN DECLINE

-4%

-2%

0%

2%

4%

6%

8%

1967 1971 1975 1979 1983 1987 1991 1995 1999 2003 2007 2011 2015 2019

Average Annual GDP Growth

forecast

Source: Statistics Canada; Forecast by TD Economics

Potential GDP

Real GDP Growth

6


DIRE PREDICTIONS OF SKILLED LABOUR SHORTAGESDIRE PREDICTIONS OF SKILLED LABOUR SHORTAGES

NO: demand and supply will adjust

But: takes time and money

Wages will rise

Capital substituted for labour

Production shifted to other markets

Recruitment from non-traditional pools (more training)

Retention of older workers

Better use of under-represented workers

If all else fails, growth will be slower

7


IMMIGRATION BECOMING INCREASINGLY IMPORTANTIMMIGRATION BECOMING INCREASINGLY IMPORTANTIM

MIG

RA

TIO

N

0

20

40

60

80

100

120

72 76 80 84 88 92 96 00 04 08 12 16 20 24

0

20

40

60

80

100

120Immigration share of total population increase, %

Source: Statistics Canada

Forecast

8


CONCENTRATING IN URBAN CENTERSCONCENTRATING IN URBAN CENTERSIM

MIG

RA

TIO

N

CANADIAN IMMIGRANTS BY DESTINATION, 2008

Ottawa-Gatineau2.6%

Toronto37.3%

Other Non-CMA6.6%

Winnipeg3.4%

Edmonton2.8%

Other CMA11.2%

Calgary5.1%

Vancouver15.2%

Montreal15.9%


9


BUT LABOUR MARKET OUTCOMES ARE VERY POORBUT LABOUR MARKET OUTCOMES ARE VERY POORIM

MIG

RA

TIO

N

87.484.1

7.5

81.5

74.9

11.0

73.9

66.6

4.6

0

10

20

30

40

50

60

70

80

90

100

unemployment rate participation rate ^ employment rate

Labour force statistics by immigrant status (2008), %

Very Recent Immigrants* Recent Immigrants** Canadian Born

Data for those aged 25-55; *arrived in Canada for 5 years or less; ** 5-10 years; Source: Statistics Canada; ^ (2007)

10


MORE IMMIGRANTS WORK PART-TIME INVOLUNTARILYMORE IMMIGRANTS WORK PART-TIME INVOLUNTARILYIM

MIG

RA

TIO

N

0

5

10

15

20

25

30

35

40

45

CanadianBorn

TotalImmigrants

< 5 Yrs 5-10 Yrs > 10 Yrs

% of employed working part-time involuntarily (2008)


11


…OR ARE HIRED ON A TEMPORARY BASIS…OR ARE HIRED ON A TEMPORARY BASISIM

MIG

RA

TIO

N

0

2

4

6

8

10

12

14

16

18

CanadianBorn

TotalImmigrants

< 5 Yrs 5-10 Yrs > 10 Yrs

Temporary Positions (%)


12


AND THE EARNINGS GAP HAS BEEN GROWINGAND THE EARNINGS GAP HAS BEEN GROWINGIM

MIG

RA

TIO

N

3052633101 32499

1834720840

18572

0

10,000

20,000

30,000

40,000

50,000

60,000

1995 2000 2005

*Recent immigrants are those who arrived in Canada within the 5 years leading up to the stated year, for those full-time, full-year workers aged 25-54; Source: Statistics Canada

Canadian-born

Recent Immigrants

Real median earnings of workers without a university degree, constant $2005

Difference of $13927

13


EVEN WORSE FOR THOSE WITH UNIVERSITY DEGREESEVEN WORSE FOR THOSE WITH UNIVERSITY DEGREESIM

MIG

RA

TIO

N

4880550668 51656

24368

30222

24636

0

10,000

20,000

30,000

40,000

50,000

60,000

1995 2000 2005

*Recent immigrants are those who arrived in Canada within the 5 years leading up to the stated year, for those full-time, full-year workers aged 25-54; Source: Statistics Canada

Canadian-born

Recent Immigrants

Difference of $27020

Real median earnings of workers with a university degree, constant $2005

14


IMPORTANT NON-WAGE BENEFITS ARE LOWER FOR IMMIGRANTSIMPORTANT NON-WAGE BENEFITS ARE LOWER FOR IMMIGRANTSIM

MIG

RA

TIO

N

0

10

20

30

40

50

60

70

Canadian Born TotalImmigrants

< 5 Yrs 5-10 Yrs > 10 Yrs

Pension Plan

Life Insurance


Benefits from employer; % with coverage

15


THUS, LOW INCOME RATES AMONG IMMIGRANTS HAVE RISENTHUS, LOW INCOME RATES AMONG IMMIGRANTS HAVE RISENIM

MIG

RA

TIO

N

-20

-10

0

10

20

30

40

1980 1985 1990 1995 2000 2005

Contribution from transfers

Contribution from market based income

Overall incidence of low income

Source: Statistics Canada^Statistics Canada LICOs 1992 baseadjusted for CPI

Low income rate^, %

16


LOW INCOME OUTCOMES RISING SHARPLY RELATIVE TO CANADIAN-BORN CITIZENS

LOW INCOME OUTCOMES RISING SHARPLY RELATIVE TO CANADIAN-BORN CITIZENS

IMM

IGR

AT

ION

0.0

0.5

1.0

1.5

2.0

2.5

3.0

1980 1985 1990 1995 2000 2005

Immigrants

< 5

6-10

11-15

16-20


Low-income rates relative to Canadian borns

17


MANY IMMIGRANTS WELL EDUCATEDMANY IMMIGRANTS WELL EDUCATEDIM

MIG

RA

TIO

N

49

64.3

5651

35.7

44

0

10

20

30

40

50

60

70

80

Canadian Born Recent Immigrants All Immigrants

Post-secondary certificate, diploma, or degree

High school or less

Educational attainment of population by immigrant status, %

Ages 15 and over; Source: Statistics Canada, Census of Population

18


BUT THEIR SKILLS ARE UNDERUTILIZEDBUT THEIR SKILLS ARE UNDERUTILIZEDIM

MIG

RA

TIO

N

0

10

20

30

40

50

60

70

80

Canadian Born TotalImmigrants

< 5 Yrs 5-10 Yrs > 10 Yrs

Overqualified Workers * (%)

Source: Statistics Canada * Non-management occupations

University Degree

No University Degree

19


ESPECIALLY IN SOME HIGH-VALUE PROFESSIONSESPECIALLY IN SOME HIGH-VALUE PROFESSIONSIM

MIG

RA

TIO

N

0

10

20

30

40

50

60

70

80

Source: Statistics Canada, total number of people working in selected occupation divided by the total number of employed people from the fields of study that would typically lead them work in those occupations.

Match Rates^ 2006, %

Canadian-born

Immigrants: Foreign Educated

20


LARGELY A FUNCTION OF HOME COUNTRYLARGELY A FUNCTION OF HOME COUNTRYIM

MIG

RA

TIO

N

0

10

20

30

40

50

60

70Match Rates** 2006, %

Source: Statistics Canada, * Highest rate, ^Lowest rate, **Country where university degree earned

21


EARLIER GENERATIONS COULD HOPE TO CLOSE THE GAP, NEW IMMIGRANTS MAY OR MAY NOT

EARLIER GENERATIONS COULD HOPE TO CLOSE THE GAP, NEW IMMIGRANTS MAY OR MAY NOT

IMM

IGR

AT

ION

0.50

0.60

0.70

0.80

0.90

1.00

1 to 5 6 to 10 11 to 15 16 to 20 21 to 25

Earnings* of male immigrants relative to Canadian-born citizens, log earnings ratio

Years Since Immigration

*Full-time, full-year earners; Source: Statistics Canada, Censuses of Population

1975-79

1980-84

1985-89

1990-94

1995-99

2000-04

22


IMMIGRANT SOURCE COUNTRIES HAVE CHANGED OVER TIMEIMMIGRANT SOURCE COUNTRIES HAVE CHANGED OVER TIMEIM

MIG

RA

TIO

N

0

10

20

30

40

50

60

70

80

90

100

1971 1981 1986 1991 1996 2001 2006

Region of birth of recent immigrants to Canada, %

United States

South/Central America,

Caribbean, and Bermuda

Europe

Africa

Asia (including the Middle East)

Oceania and Other

*Those who landed in Canada 5 years prior to the census; Source: Statistics Canada

23


LANGUAGE APPEARS TO BE A DOMINANT PROBLEMLANGUAGE APPEARS TO BE A DOMINANT PROBLEMIM

MIG

RA

TIO

N

2

3

4

4

6

7

11

11

13

13

16

26

46

0 5 10 15 20 25 30 35 40 45 50

Access to childcare

Access to education/training

Discrimination/racism

Finding good quality housing

Access to professional help

Lack of social interaction

Financial constraints

Recognition of credentials/experience

Missing support from homeland

Adapting to new culture or values

Getting used to the weather

Learning a new language

Finding an adequate job

Greatest difficulties faced by immigrants, % reporting this issue

*Cited 4 years after arrival; Source: Longitudinal Survey of Immigrants to Canada 2005

24


SPECIFICALLY REGARDING ENTRANCE INTO THE WORKFORCESPECIFICALLY REGARDING ENTRANCE INTO THE WORKFORCEIM

MIG

RA

TIO

N

13

19

26

31

34

0 5 10 15 20 25 30 35 40

Racism

Cultural Difficulties

CredentialRecognition

Language

Canadian ExperienceRequirement

% of recent immigrants* who see this as a barrier to entry into the workforce

*In Canada within 2-5 years of the survey, residing in Toronto between 2003-06; Source: Institute for Research on Public Policy

25


EVIDENT IN THE PRESENCE OF NON-OFFICIAL LANGUAGES EVIDENT IN THE PRESENCE OF NON-OFFICIAL LANGUAGES IM

MIG

RA

TIO

N

53

80

0

10

20

30

40

50

60

70

80

90

100

English only French only Multiple languageswith at least oneofficial language

Non-officiallanguage(s) only

Mother tongue of recent immigrants*, %

*Those who landed in Canada 5 years prior to the census; Source: Statistics Canada

1981 1991 2001 2006

26


LITERACY PLAYS A MAJOR ROLE IN ADAPTING TO THE WORKPLACELITERACY PLAYS A MAJOR ROLE IN ADAPTING TO THE WORKPLACEIM

MIG

RA

TIO

N

10.1

27.1

41.1

21.7

30.5 29.332.1

8.1

32.6

27.6 28.0

11.7

0

10

20

30

40

50

Poor Weak Adequate Strong

Canadian-born Recent Immigrants* Established Immigrants

Prose literacy of immigrants and native-born Canadians, % of population

*Recent and established immigrants are those who have been in Canada less and more than 10 years; Source: Statistics Canada

27


…AND IS STRONGLY CORRELATED WITH PERSONAL INCOME…AND IS STRONGLY CORRELATED WITH PERSONAL INCOMEIM

MIG

RA

TIO

N

20.7

29

36.7

42.2

0 5 10 15 20 25 30 35 40 45

Poor

Weak

Adequate

Strong

Personal income by prose literacy profiency, $ Thousands


28


INCIDENCE OF LOW INCOME IS HIGHEST AMONG IMMIGRANT CHILDREN

INCIDENCE OF LOW INCOME IS HIGHEST AMONG IMMIGRANT CHILDREN

IMM

IGR

AT

ION

0

5

10

15

20

25

30

35

Source: Statistics Canada, National Council of Welfare

Incidence of low income for children under 15 years (2005); %

29


CHILDREN OF IMMIGRANTS HAVE HIGH EDUCATIONAL OUTCOMESCHILDREN OF IMMIGRANTS HAVE HIGH EDUCATIONAL OUTCOMESIM

MIG

RA

TIO

N

94.3

37.6

88.4

27.5

0

10

20

30

40

50

60

70

80

90

100

High School University Degree

Children of Canadian Born Parents

Children of Immigrants

Educational Attainment (%), Aged 25 to 34


30


RECOMMENDATIONS FROM THE AUDITOR GENERALRECOMMENDATIONS FROM THE AUDITOR GENERAL

The composition of immigration targets within the

“Economic Class” should be clearly defined over a multi-

year period to ensure the needs of Canada’s labour market

are satisfied

In an effort to reduce inventories of Federal Skilled Worker

applications, changes were made to the application

process without sufficient policy analysis: J How was the list of 38 eligible occupations compiled?

J It is not clear that these changes to the eligibility criteria have made a

substantive difference in reducing the number of applications.

31


ECONOMIC IMPLICATIONSECONOMIC IMPLICATIONS

Raising employment & incomes among aboriginals and

immigrants is a high priority

Canadian corporations cannot afford to underutilize the

nation’s diverse talent pool

Language and literacy programs will be key, specifically for

employers

Foreign experience/credential recognition is a necessity

32


TD Economics


This report is provided by TD Economics for customers of TD Bank Financial Group. It is for information purposes only and may not be appropriate for other purposes. The report does not provide material information about the business and affairs of TD Bank Financial Group and the members of TD Economics are not spokespersons for TD Bank Financial Group with respect to its business and affairs. The information contained in this report has been drawn from sources believed to be reliable, but is not guaranteed to be accurate or complete. The report contains economic analysis and views, including about future economic and financial markets performance. These are based on certain assumptions and other factors, and are subject to inherent risks and uncertainties. The actual outcome may be materially different. The Toronto-Dominion Bank and its affiliates and related entities that comprise TD Bank Financial Group are not liable for any errors or omissions in the information, analysis or views contained in this report, or for any loss or damage suffered.

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