December 17, 2024 – Canada’s ambitious efforts to attract highly skilled immigrants are undermined by a widespread mismatch between immigrants’ qualifications and job opportunities, according to a new study from the C.D. Howe Institute. The report highlights key factors, such as language proficiency and education quality, as well as systemic barriers like the lack of recognition for foreign credentials and complex credential assessment processes, which hinder immigrants from fully contributing to Canada’s economy.
In “Harnessing Immigrant Talent: Reducing Overqualification and Strengthening the Immigration System,” Parisa Mahboubi and Tingting Zhang reveal that 26.7 percent of recent immigrants – those who arrived in Canada within the last five years – with a Bachelor’s degree or higher are employed in positions requiring only a high school diploma or less. This is three times higher than the rate for Canadian-born workers with similar education levels.
“The location of study is a key factor driving overqualification,” says Zhang. “For instance, immigrants educated in Southeast and Southern Asia are 2.7 times more likely to experience overqualification than those educated in Canada. These findings show how the perceived quality of foreign education impacts labour market outcomes, along with differences in language fluency and other contributing factors.”
The report also finds that systemic challenges, such as inefficient credential recognition and regulatory hurdles, further contribute to the issue. The complex mix of licensing and certification requirements for regulated professions creates significant barriers, particularly in healthcare, where many immigrants face difficulties despite the high demand for labour in this sector.
“The economic costs of immigrant overqualification is staggering,” says Mahboubi. “Overqualified immigrants experience the largest earnings gap, earning on average 46 percent less than non-immigrants with matching education and skills, even after controlling for other factors.”
The report outlines key recommendations to address these barriers:
- Revise the Express Entry system to align educational and language requirements with labour market demands.
- Expand access to workplace-focused language training programs.
- Streamline foreign credential recognition and establish mutual recognition agreements with source countries.
- Enhance employer awareness of immigrant credentials and provide hiring incentives.
“Highly educated immigrants in Canada are not being given opportunities to fully utilize their skills and qualifications,” says Mahboubi. “By tackling challenges and removing integration barriers, Canada can ensure that these talented individuals contribute more effectively to the economy while also enjoying fulfilling careers.”
For more information, contact: Tingting Zhang, Junior Policy Analyst, C.D. Howe Institute; Parisa Mahboubi, Senior Policy Analyst, C.D. Howe Institute; Percy Sherwood, Communications Officer, C.D. Howe Institute, 416-407-4798, psherwood@cdhowe.org.
The C.D. Howe Institute is an independent not-for-profit research institute whose mission is to raise living standards by fostering economically sound public policies. Widely considered to be Canada’s most influential think tank, the Institute is a trusted source of essential policy intelligence, distinguished by research that is nonpartisan, evidence-based and subject to definitive expert review.