Canada’s skills gap continues to widen, according to study

According to a new study from global recruiting firm Hays PLC, which surveyed the skills gap in 30 developed countries around the world, Canada ranks ninth for the severity of its skills shortage, and its score deteriorated in the past year.

Countries such as Japan, the United States, Germany and Sweden top the list in skilled worker shortage.

Study shows that Canada ranks 9th in the developed world in shortage of skilled workers

The report highlights two key findings

First, the state and the efficiency of a labour market in any particular country is not necessarily driven by the state of the economy in that point in time. Rather, the data suggests through the index that the efficiency of the labour market is driven by more structural factors. That said, the governments can introduce reforms to improve those structural factors, regardless of where they are in the economic cycle.

The second key finding that the index illustrates is that there is a very strong link between the efficiency of an educational system and the ability of that economy to produce the talent that the nation’s industries require both today and in the future. Making sure that business and the educational systems are in sync to produce sufficient numbers of the right quality graduates in the right areas for future talent. That’s the fundamental part of what drives the efficiency in any particular market.

As the global economy recovers and as the Canadian work force continues to age, without a change in policy, the situation in Canada and other developed countries will likely get worse. Canada is falling behind in implementing enough changes to meet the demand for highly skilled migration.

How to improve the skilled worker shortage and avoid disaster in the future

As according to Alistair Cox, the chief executive of Hays PLC, there are three areas where business and the governments can work together to strengthen these labour markets and reduce these inefficiencies that we see in some of these economies:

The first is for the government to foster a business environment of flexibilities, where businesses can build the work force they need for the future. This can be achieved through flexible working arrangements and skilled immigration.

The second method is to make sure that the educational system in an economy are really tuned into what businesses are going to need in the future in terms of the number of right skills.

The third is for businesses to look at their own policy in terms of attracting and retaining staff. Not just younger staff but also retaining and retraining older staff within their own work force.

Immigration Canada making changes

It’s not yet known how effective it will be, however, Canada is working on some changes in the system that are expected to be implemented in late 2014. Last year, Immigration Canada and the provinces, reached an agreement on the future of Canadian immigration system. The system will give the provinces a central role in immigrant selection. This new system will be based on a model called Expression of Interest (EOI).

The EOI model is an immigrant selection process which requires those seeking to immigrate to first file a simplified application, with immigration authorities. From that pool of applicants, the most promising candidates, based on the immigration department’s selection criteria, are then selected, and invited to submit a full application which includes documentation to prove their claimed qualifications.

Canadian Economist Calls for Employment-Based Immigration Selection Process

A new report by SFU Professor of Economics (Emeritus) and Fraser Institute senior fellow Herbert Grubel calls for a total overhaul of Canada’s immigration selection process (Simon Fraser University)

A new report by Canadian economist and former Member of Parliament Herbert Grubel calls for Canada’s point-based immigration selection process to be completely replaced with one based on employment.

Grubel, who is a Fraser Institute senior fellow and a professor emeritus of economics with Simon Fraser University has been a longtime proponent of placing more limits on immigration, a position which he views as an extension of his fiscal conservatism.

The report contends that immigration costs Canadians $20 billion annually, as a result of immigrants paying less in taxes while using up just as much in government services as the native-born population.

While welcoming some of the recent changes made to the immigration selection process by former Immigration Minister Jason Kenney, Grubel argues that they do not go far enough, and proposes two major changes to Canadian immigration to make it more economically beneficial to native-born Canadians:

  • Elimination of parent and grandparent (PGP) sponsorship for new immigrants. The report notes that following the initial 10-year period when sponsors are financially responsibility for the costs of the social benefits received by their sponsored PGP, the percentage within this cohort that receives social assistance immediately increased from 3 percent to 20 percent.

    While welcoming the new 20-year sponsorship period that is to come into effect for the PGP sponsorship program, Grubel says that the enforcement of the sponsor’s responsibilities will be difficult, and it would be simpler to simply eliminate PGP sponsorship as a permanent residency program.

    Grubel proposes a transition period whereby all immigrants who became permanent residents before his proposed rule change maintain their right to sponsor their PGPs for permanent residency, while immigrants who arrive after lose this privilege. In this way, Grubel argues the elimination of the program can be done fairly, by allowing those who immigrated to Canada under the assumption that they would be able to sponsor their PGPs to retain this ability.

  • Replace point-based assessment method of selection with employment-based selection. Grubel suggests only skilled workers with pre-arranged employment should be admitted under the skilled worker program. He argues that employer decisions on who to hire provide better information on who has the skills to succeed in Canada than a bureaucratic process created by civil servants.

    He proposes however to keep the federal government involved in setting minimum standards and wages, to prevent employers from using immigration to secure low wage labourers that cost taxpayers more in the provision of social services than they pay in taxes.

    An employment-driven skilled worker program, the report suggests, would adjust the number of immigrants admitted according to economic conditions, where immigration would decline when jobs are scarce, and increase when jobs are plentiful. The number admitted per year would therefore match the needs of the Canadian economy better than a number selected through the political process.

Critique of report by the Broadbent Institute

The report’s proposal to dramatically overhaul the Canadian immigration selection process has, predictably, found critics. A recent article from Broadbent Institute fellow Patti Tamara Lenard challenges several of its claims.

Lenard argues that the report’s conclusion that immigrants impose a fiscal burden on other Canadians, which it draws from statistics showing recent immigrants have a lower average income and pay less in taxes than the average native-born Canadian, neglects the fact that immigrants are younger than the average Canadian when they arrive in Canada, and therefore is faulty.

The report’s analysis of immigrant income does not include only immigrants who just arrived in Canada however. The immigrant cohort used by Grubel’s comparison is individuals who arrived in Canada between 1986 and 2004, and the length of time they were in Canada ranged from 1 to 18 years.

While Lenard’s suggestion that the analysis compares younger immigrants to older native-born Canadians is not supported by the composition of the dataset used by the report, it is true that Grubel does not make an effort to control for age in his analysis, and therefore it could be an unaccounted factor in the income gap.

Lenard also disputes the report’s assumption that immigrants are as likely to use social programs as the rest of the Canadian population, citing a Swedish study that finds that Canadian immigrants use fewer social services than the general population. The report’s estimation on the cost of the social services used by Canadian immigrants is therefore too high she argues.

Lenard’s article in places makes some hasty and inaccurate criticisms of Grubel’s report. She claims for instance that the report states that “in 2011 over 50,000 [Parent and Grandparent] immigrants entered Canada”, but that the actual number was 14,000.

In actuality, the report cites Citizenship and Immigration Canada’s (CIC) own data projecting that over 50,000 PGPs will become permanent residents over 2012 AND 2013, a two year period, not in a single year, 2011.

Lenard also claims that the report “implies .. we should expect [PGP's] health care costs to mimic those of Canadians aged over 65″, and that this is misleading, due to the fact that PGPs’ health care costs are covered by their sponsors for the first 10 years after their arrival. The content of the report does not support Lenard’s claim, as it clearly conveys the same point Lenard claims it neglected, and instead focuses on indications of high social assistance costs for PGPs once they turn 75 and are no longer the financial responsibility of their sponsors.

Gaps in data

While the Broadbent Institute’s review of Grubel’s report falls short in providing an informed critique of the report’s proposals and arguments, it does touch on the gaps in the data on the economic impact of Canadian immigration, and the heavy reliance on conjecture – which is more subject to the influence of ideology – in discussions on the optimal immigration selection process for Canada.

As a result of the many unknowns surrounding immigration and its impact, it will likely remain a contentious issue in Canada for years to come, until more data on the economic outcomes of Canadian immigrants is generated, and Canadians have a clearer picture of what programs work and which ones don’t.

Montreal Tops List of Best Cities for International Students

Cultural attractions like the iconic Montreal Museum of Fine Arts helped give Montreal the top spot in the ‘social experience’ sub-index of the Sea Turtle Index

An index commissioned by the Bank of Communications (BoCom), one of the largest banks in China, places Montreal, Canada as the best city in the world for international students.

Other Canadian cities that ranked well include Toronto (4th) and Vancouver (15th).

Created by the Economist Intelligence Unit (EIU) with design input from BoCom management, the Sea Turtle Index (a name referring to Chinese students who study abroad only to return, like sea turtles, to their country of origin) ranks foreign student destinations according to five sub-indices:

  • Educational returns: the international value of the education provided in the city relative to its cost
  • Financial returns: the openness of the investment environment to foreign nationals and the amount of volatility risk that could effect investment returns
  • Real estate returns: the return on investment in the local real estate market
  • Work experience: the local job market for foreign students and graduates in terms of availability of jobs, wages and low-taxes
  • Social experience: the city’s level of culture, worldliness and multi-culturalism

Of the 80 cities included in the index, Montreal came in 6th place in the ‘educational returns’ sub-index, behind only Cambridge (1st), Oxford (2nd), London (3rd), Seoul (4th), and Beijing (5th).

Montreal benefited from having comparatively affordable universities and cost of living while providing high quality tertiary education. Vancouver and Toronto also had their score helped by their low cost of living, although not as much as Montreal which was found to be a more affordable place to live.

None of the American cities included in the study made the top 10 in the educational returns category, despite several being home to some of the best educational institutions in the world. The poor showing was largely due to the high cost of tuition for their undergraduate programs.

Some cities, including Singapore, Hong Kong and New York, saw their educational returns ranking pushed down due to a high cost of living.

The EIU included a ‘financial returns’ sub-index owing to the fact that the parents of international students and often international students themselves like to make investments in the city where the students live.

None of the North American cities included in the study made the top 30 in this sub-index, due in Canada to relatively high taxes and in the United States to excessive “money laundering regulations and terrorism legislation” stifling financial freedom.

Hong Kong placed first in this ranking, followed by Auckland, New Zealand (2nd) and Santiago, Chile (3rd), which benefited from having comparatively few regulations on finance and banking that restrict international capital flows.

Three Canadian cities made the top 30 in the ‘real-estate returns’ sub-index: Toronto (4th), Montreal (12th), and Vancouver (13th), while Hong Kong took the top spot thanks to its hot real estate market.

Canadian cities did well due to a combination of well-performing real-estate markets and avoidance of the boom-busts that affected many other world cities in the period leading up to and following the global mortgage crisis.

Canada’s openness to foreign investment also helped push its cities above those in countries with real-estate markets that have seen substantial gains in recent years but which have more restrictions on foreign property ownership, like Shanghai, Bangkok, Mumbai and Seoul.

Immigration rules benefit Canada

Canadian cities took the top five spots in the work experience sub-index due to immigration laws that allow foreign students, upon completion of their study programs, to obtain post-graduate work permits that are valid for durations equaling the length of their study in Canada.

This contrasts with the U.S. where international students have few options to stay and work in the United States upon completing their studies.

Edmonton’s combination of a hot labour market and low provincial taxes gave it an edge over its Canadian counterparts and earned it the top spot in the ranking, followed by Hamilton (2nd), Toronto (3rd), Vancouver (4th) and Montreal (5th).

Montreal managed to also share the top spot in the ‘social experience’ sub-index with London, England, thanks to its low rates of violent crime, high cultural diversity and its world renowned cultural attractions.

Canada’s high levels of multiculturalism and low crime rates helped three other Canadian cities: Toronto, Vancouver and Edmonton, make the top 30 in this ranking.

As incomes in China rapidly grow, parents in the country’s large and education-minded population are increasingly able to afford a foreign university education for their children.

Therefore the good showing of Canadian cities in the Sea Turtle Index, which caters mostly to Chinese students seeking to study abroad, portends well for Canadian efforts to make the country a top destination for international students.

With the federal government having committed itself to making it easier for international students to stay and work in Canada and become permanent residents through programs like the Canadian Experience Class, Canada’s appeal to international students could increase even more in coming years.

Men Outnumber Women 2-1 Among Temporary Foreign Workers in Canada

Many temporary foreign workers are employed by immigrant-run businesses like the above, and data from Citizenship and Immigration Canada shows that the majority are men (CICS News)

The gender makeup of Canada’s foreign worker population is like that of foreign workers around the world, with men outnumbering women by a large margin.

The data, collected by Citizenship and Immigration Canada (CIC), shows that over 143,000 men entered the country in 2012 as temporary foreign workers (TFWs), over double the approximately 70,000 TFWs who were women.

Men, who are the primary breadwinner in most households around the world, are often driven to work abroad by pressure to provide for their families, when wages in their own country are inadequate.

A recent MacLean’s story on outgoing foreign remittance from individuals in Canada reports that the country has the highest foreign remittance rate in the world, at $667.57 per capita, suggesting that many of these TFWs are in fact sending the money they earn in Canada to family living in their country of origin.

Differences between genders in temporary foreign worker occupations

The CIC data also points to male and female TFWs tending to work in different types of occupations. While 75 percent of male TFWs worked in occupations that have well defined skill levels (e.g. managerial, professional, skilled and technical), only 40 percent of female TFWs did the same.

Six out of ten female TFWs were categorized as working in occupations where the skill level was not stated, which usually either means an individual is a family member of a foreign worker, or they are working in an unskilled occupation.

More women becoming permanent residents than men

Despite men outnumbering women in the Temporary Foreign Worker Program (TFWP), slightly more women become permanent residents in Canada than men every year.

TFWs with skilled work experience in Canada can qualify for permanent residence through economic class immigration programs like the Federal Skilled Worker Program (FSWP) and Canadian Experience Class (CEC), however the number of men who become permanent residents through economic class programs is only slightly higher than the number of women.

This could suggest that more women apply for permanent residency from outside the country than men, making up for the larger number of men whose path to permanent residency was through the TFWP.

What puts women over the top in the total permanent residency numbers is the family class immigration programs, which grant 37 percent more women permanent residency than men, mostly as a result of more foreign women being sponsored for immigration by their Canadian spouse than foreign men.

Ontario Government Objects to New Federal Job Grant Program

The new Canada Job Program will provide up to $15,000 per person for the training needed to qualify for a job. The Ontario government says the funding cuts required pay for the new program threaten other programs that vulnerable workers rely on (Tomas Castelazo)

The provincial government of Ontario says the diversion of federal funds from existing employment and training programs to the new Canada Job Grant program would threaten vulnerable workers including youth and new immigrants.

The Canada Job Grant program will spend $300 million in federal funds per year and will require matching funds from provinces and territories.

The program will provide grants of up to $15,000 per eligible individual to upgrade their skills for a new job. Employers will apply for the grants on behalf of unemployed and underemployed Canadians that they seek to hire for a job, and will contribute one-third of the grant money.

The Ontario government says that the $194 million in federal funding it currently receives supports many of its employment and training initiatives, including literacy and apprenticeship programs, and a reduction of this transfer to pay for the Canada Job Grant would hurt vulnerable Ontarians.

The federal government says that the new grants program will help 130,000 Canadians become trained for jobs every year, and that paying for it by reducing federal funding for other employment and training programs is necessary for its goal of controlling spending and balancing the budget.

The government is currently seeking the input of the provinces on ways to improve the job grants program.

Vancouver Sun: Immigration Costs Canada $20 Billion a Year

Protesters in the U.S. calling for amnesty for undocumented workers. Simon Fraser University Professor Herbert Grubel says immigrants reduce wages for the native-born population while increasing employer incomes

In a special to the Vancouver Sun on Tuesday, a Simon Fraser University professor of economics, Herbert Grubel, argues that immigration costs Canadians up to $20 billion a year when all the costs and benefits are tallied.

Grubel, who is also a senior research fellow at the Fraser Institute, goes through some of recent findings on the economic effects of immigration from studies in various countries to come to his estimate.

The first is an American study which found that immigrants have increased the annual national income of the U.S. by $1.6 trillion, while receiving $1.565 trillion in labour compensation, with the remaining $35 billion going to natural-born Americans.

Extrapolating these findings to Canada, Grubel estimates the “immigration effect” results in $3.5 billion in increased income in Canada.

Another conclusion of the American study, says Grubel, is that immigration has resulted in a shift in income from workers to employers, with employer earnings seeing a $43.5 billion increase and worker earnings decreasing by $40 billion.

This redistribution of income, argues Grubel, results in calls on the government to increase taxes on employers and increase subsidies for workers, which harms incentives that promote productivity, which could cost the Canadian economy more than the $3.5 billion worth of benefits that the immigration effect provides.

In addition to the costs linked to the effects of immigration on employer-employee income shares, Grubel cites a study he helped conduct at the Fraser Institute that found that recent immigrants also increase the annual fiscal burden by $20 billion, because they pay half as much in taxes as native-born Canadians, while receiving the same government benefits.

Grubel says a recent French study has similar findings, with both studies assessing a per recent-immigrant fiscal burden that amounts to approximately 1 percent of GDP for Canada’s immigration population size.

Other supposed benefits of immigration are non-existent or negative according to Grubel. For example he says that the boost immigration gives to tax funds available for education and Social Security is offset by the increased costs it burdens these programs with.

Grubel concludes that Canada should reduce immigration and only admit those with a high enough income earning and tax paying potential to increase the average income of native-born Canadians.

Canadian Construction Industry Recovering

A house under construction in Vancouver, British Columbia. Vancouver saw the biggest increase in the value of building permits issued in April among large Canadian cities

New data shows the value of building permits issued in Canada increasing for a fourth consecutive month, signalling a recovery in the country’s construction sector after a decline in late 2012.

A Statistics Canada report released this week shows that permits worth $7.0 billion were issued in April, 10.5 percent more than in March.

Much of the increase came from an increase in the value of multi-family dwelling residential permits issued, which at $2.1 billion in April, was a staggering 51.9 percent more than in March.

The development is welcome news to the Canadian construction sector, particularly condo builders, which saw a sharp decline in issued permit values, from a peak of $7.5 billion in October 2012 to a low of $5.7 billion in December 2012.

Among the provinces, British Columbia saw the biggest increase in the value of permits issued, reaching $978.3 million in April, 40.4 percent more than in March.

Canada’s Oil Production to Double By 2030 Thanks to Oil Sands -Report

The Irving Oil refinery, Canada’s largest, in Saint John, New Brunswick. New pipelines from Western Canada to refineries in the East could increase Canada’s oil revenues while reducing energy costs to Canadian consumers and businesses (Wikipedia)

A new report by Canada’s largest association of petroleum companies projects that the country’s oil production will double to 6.7 million barrels per day (bpd) by 2030 as a result of increased production in Northern Alberta’s oil sands region.

The outlook, published by the Canadian Association of Petroleum Producers, estimates that production in the oil sands will increase from 1.8 million bpd in 2012 to 5.2 million bpd by 2030, which would constitute over three-quarters of Canada’s total oil production.

The largest market opportunities that will emerge from this increase in production will be in North America according to the report, by providing an alternative to foreign imports.

One of the major challenges for the country’s petroleum industry, says the report, is transportation of the crude oil to where it’s needed in other parts of North America, as well as to the country’s coasts where it can be exported to overseas markets.

Rail transport is quickly becoming a more common way to meet these transportation needs. The report notes that 12,989 rail cars transported oil in February 2013, a 60 percent increase from February 2012.

The increasing reliance on rail has been a reaction to new political obstacles hampering transportation infrastructure development. As cultural attitudes toward pipelines in Canada have deteriorated, two major political parties in Canada, the NDP and the Liberal Party, to different degrees, have come out against planned pipeline projects.

With Canada’s oil pipelines reaching capacity and this new resistance to their expansion, the more expensive rail transport method is being seen as the next-best option.

Economic impact

The rise in oil production is expected to have major consequences for Canada’s future fiscal health. While most of the developed world is expected to face economic difficulties over the next several decades, due to increased government expenditures on social welfare programs for their ageing populations, revenue from the new oil production is projected to compensate for this economic burden in Canada.

The Western provinces of Canada, where most of the new oil production as well as other natural resource extraction growth is taking place, are already becoming the bright spots of the Canadian economy, with lower unemployment rates and faster economic growth than the rest of the country.

Alberta, at the epicenter of the resource boom, currently has the highest per capita GDP in the country. Neighboring Saskatchewan, another resource-rich province, meanwhile has the lowest unemployment rate in the country, and the second higher per capita GDP.

The disparity in job opportunities between Western and Eastern Canada has led to the migration of tens of thousands of Canadians to the western prairie provinces, as well as thousands of immigrants, who are willing to brave the cold of the prairies for better job prospects.

Capital City Ottawa Voted as Canada’s Most Boring City

Downtown Ottawa. Canada’s capital city was voted as the country’s most boring in last week’s “Boring Awards”

(Via Global BC) Canada’s capital city, Ottawa, beat out five other nominees to be voted as the country’s most boring city in the annual “Boring Awards” ceremony held last Tuesday.

Other cities nominated for the most boring title were: Laval (Quebec), Lethbridge (Alberta), Abbotsford (British Columbia), and Brampton (Ontario).

Despite being the most boring, Ottawa is also the “richest” large city in Canada according to a 2010 study by Statistics Canada, which found that it had the highest median gross family income of the major metropolitan areas in the country.

Lucrative jobs in and close to government provide the city with a steady source of consumer spending that supports a range of industries and helps it maintain an unemployment rate of 6.1 percent – below the 7.2 percent national average.

Combined with relatively affordable housing, the city was found to provide the best quality of life by the Money Sense ‘Canada’s Best Places to Live – 2012′ index.

More New Immigrants Moving to Smaller Cities- Calgary, Edmonton, Winnipeg Among Most Popular

A downtown Vancouver sidewalk. The portion of new Canadian immigrants that settled in Vancouver declined from 13.7 percent in 2006 to 13.3 percent in 2011 as Canada’s smaller cities, particularly in the prairies, attracted newcomers with their strong labour markets (CICS News)

A Vancouver Sun report published Wednesday, titled Canada’s ‘Big Three’ metro areas lose lustre as newcomers opt for smaller cities, examines the phenomenon of immigrants choosing the Big Three Canadian cities less in favour of Canada’s smaller cities:

Released Wednesday by Statistics Canada, the 2011 numbers reveal that Toronto’s share of newcomers fell to 32.8 per cent, down from 40.4 per cent in 2006, while Vancouver’s share dropped to 13.3 per cent from 13.7 per cent. Montreal was the only “Big Three” immigration city to post a gain: 16.3 per cent of newcomers, versus 14.9 per cent in 2006.

Excluding the Big Three, the cities drawing the most newcomers were those with the most promising job markets: Calgary, at 6.1 percent of all new immigrants, Edmonton (4.3 percent), and Winnipeg (3.9 percent).

The oil wealth of Alberta has contributed to the province having the lowest unemployment rate and the highest per capita GDP in the country, making the immigration shift to that province’s cities unsurprising.

Another factor contributing to the shift to cities other than the Big Three is the Provincial Nominee Programs (PNPs), which provide those hoping to immigrate to Canada with new routes to immigrate if they are able to acquire eligible work experience in a province.

Some PNPs, like the Manitoba Provincial Nominee Program (MPNP), have a lower work experience threshold for eligibility and are granted a higher quota by the federal government for the number of foreign nationals they can nominate for permanent residence annually, and this has resulted in a boost in the number of immigrants settling in their corresponding provinces.