September 7, 2023 – Policymakers are in the dark when it comes to dealing with the growing number of temporary residents in Canada. The large difference in estimates by Statistics Canada’s Labour Force Survey (LFS) and Immigration, Refugees and Citizenship Canada’s (IRCC) data on Canada’s temporary resident (TR) population demonstrates that more high-quality information on the size and work activity of this group is needed, according to a new C.D. Howe Institute report.
In “Canada’s Missing Workers: Temporary Residents Working in Canada,” Roger Phillips Scholar of Social Policy, Mikal Skuterud finds that there is reason to believe that Statistics Canada’s LFS – its flagship survey on labour market activity – is failing to capture work activity in this group, which encompasses workers, students and asylum claimants that have been authorized to enter Canada for temporary purposes such as work permits, study visas or a temporary resident visas. As reported in The Globe and Mail, Statistics Canada will introduce a revised methodology for estimating the population of non-permanent residents, which include TRs. However, it is unclear whether they will also include better estimates of employment in this population.
“For housing market analysts, accurate estimates of the TR population are critical for gauging housing demand; and for labour economists, the contribution of this group to alleviating labour shortages and possibly also to distorting wage outcomes of workers in the permanent resident (PR) population is equally important,” says Skuterud, who also serves as a member of the Institute’s Human Capital Policy Council. “As this population continues to surge, the significance of this measurement issue is critical.”
Examining LFS and IRCC estimates of TRs share of Canadian employment between 2006 and 2022 to understand the full picture of this population’s impact on Canada, Skuterud says that both data sources point to a significant and persistent increase over time – however, the LFS underestimates employment among TRs, while IRCC’s data overestimate it.
Notably, LFS suggests TR employment share increased nearly fourfold between 2006 and 2022, while the IRCC suggests it increased fivefold – from 1.5 percent to 7.6 percent. The differences are even more striking in absolute numbers with LFS data suggesting there were 503,079 employed TRs in December 2022 from 111,479 in December 2006; and IRCC indicating an increase from 255,260 to 1,585,664 over the same 16-year period.
“There is good reason to believe that the true share of employment of TRs falls between the LFS and IRCC estimates,” says Skuterud. “The problem is that the margin of the difference has become so large, now exceeding 1 million workers – that labour market analysts are increasingly in the dark.”
As employment of TRs in Canada continues to surge with no sign of stopping, the author says that it is imperative and urgent that both Statistics Canada and IRCC revise their data collection to obtain better estimates of employment in this population. According to Skuterud, the critical issue is to determine which TRs to include in the sampling frame for the LFS.
Notably, he says a recent IRCC policy change allowing individuals who hold visitor permits to apply for and receive work permits without leaving the country suggests the “usual place of residence” question intended to distinguish between residents and visitors creates unnecessary ambiguity. A solution to address this might be replacing the wording for the LFS with “usual place of residence in Canada” or the filter with a question asking all individuals whether they hold a TR permit as well as what type (work, study, refugee claimant or visitor).
“Many important research questions require information on how long foreign-born individuals have been living in Canada, therefore, the LFS should also query the year and month in which respondents first arrived in Canada,” says Skuterud. “In fact, as new permanent residents increasingly transition from a TR permit, all foreign-born respondents, whether permanent or temporary residents, should be asked: ‘When did you first arrive in Canada?’”
For more information contact: Mikal Skuterud, Professor of Economics, University of Waterloo; Director, Canadian Labour Economics Forum; Research Fellow, the Institute of Labor Economics; and Fellow-In-Residence, Roger Phillips Scholar of Social Policy, C.D. Howe Institute; or Lauren Malyk, Communications Officer, C.D. Howe Institute, 416-865-1904 Ext. 0247, lmalyk@cdhowe.org
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