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NEWCOMER WAGES GROWING FASTER THAN CANADIAN WAGES

Immigration law

28 Jan

Real wages are adjusted for inflation, so any wage increase caused by inflation doesn’t count as real growth-basically, it’s like getting a “raise” from your coffee shop for the same price, but it’s just the cost of your latte going up.

According to a December 9, 2024, article from Statistics Canada, newcomer entry wages saw significant growth, while Canadian real wages actually took a bit of a dip. Looks like newcomers are getting a bigger boost, while the rest of us are trying to keep up….

It is known that Newcomers' median wages grew by 6.7%, while overall real median wages for Canadians fell by 1.6%. The real median entry wage for newcomers rose from $40,200 in 2021 to $42,900 in 2022. (The median wage reflects the typical wage for each occupation, sitting at the middle of the wage range when all wages are arranged in order.)

The median wage differs among immigration pathways. The overall median wage for newcomers one year after admission rose from 2021 to 2022 across all economic immigration pathways combined. However, when analyzed by specific pathways, notable differences emerged:

  • Newcomers admitted through the Canadian Experience Class (CEC) and business programs saw a decrease in median wages.
  • Caregivers and provincial/territorial nominees experienced a slight increase.
  • Significant wage growth was observed among those admitted through the Federal Skilled Worker Program (FSWP) and the Federal Skilled Trades Program (FSTP).

The drop in median wages for CEC immigrants is thanks to a huge spike in admissions, from 25,000 in 2020 to 130,000 in 2021. It’s like inviting more people to a party and suddenly realizing there’s less cake to go around-more newcomers, but the wages didn't quite keep up with the guest list.

With less competitive Express Entry draws, candidates with lower CRS scores received invitations to apply. Since CRS scores depend on education and work experience, those with lower scores are likely to earn less than those with higher scores.

The common question that comes up is: Why are median wages important?

It is noted that Newcomers' median wages are often a good indicator of their future financial success. For many workers, wages tend to grow over time, so a higher starting wage can lead to much higher earnings throughout their careers.

Canada’s immigration programs aim to bring in skilled workers who are likely to secure jobs and help the economy by:

  • Providing labor to Canadian businesses
  • Purchasing goods and services as consumers
  • Paying taxes to federal, provincial, and municipal governments

Higher median wages for newcomers suggest better economic prosperity now and in the future, making these wage increases a sign of success for Canada's immigration programs.

Immigrants in Canada generally see their earnings rise over time.

For example, newcomers admitted in 2016 had median employment earnings of $58,400 in 2017, which grew to $76,800 in 2021, according to the latest IRCC Express Entry report.

The report shows that while median earnings can vary depending on the year of admission, the overall trend is clear: median wages steadily rise each year after admission for all groups. It's like starting with a small raise and watching it grow bigger year after year-So, good news for newcomers.

The wage gap between women and men has been getting smaller over time, according to Statistics Canada. In 2022, the gap was much lower than in previous years. In 2012, women earned 36.7% less than men, but by 2022, the gap had decreased to 24.4%.

A 2020 study by Statistics Canada found that the following factors are linked to higher earnings for newcomers:

  • More Canadian work experience before arriving
  • Strong proficiency in official languages
  • A higher level of education
  • A younger age at arrival

More Canadian work experience before arriving Among these factors, Canadian work experience before landing was the strongest predictor of higher earnings. Plus, arriving at a younger age had a big impact on earnings, not just 5–6 years after landing, but even 10–11 years down the road. It's like the earlier you start, the bigger the payoff.

Foreign nationals can work legally in Canada before landing through various programs, including:

Study permits, International Mobility Program (IMP) work permits, Temporary Foreign Worker Program (TFWP) work permits. Additionally, several Provincial Nominee Programs (PNPs) help nominees obtain work permits, and the Atlantic Immigration Program (AIP) offers nominees a two-year work permit.

In conclusion, newcomer entry wages in Canada are growing at a faster pace than those of Canadian workers. This trend highlights the positive economic impact newcomers are having, with higher wages driven by factors such as Canadian work experience, language proficiency, and education.

As a result, newcomers are making a bigger impact on Canada’s economy, benefiting not just themselves but the country as well. It’s a win-win situation: newcomers thrive, and Canada prospers.

RRM Law can assist newcomers by providing expert legal guidance throughout their immigration journey, ensuring they understand their rights and opportunities. Whether helping with immigration applications, work permits, or residency processes, RRM Law can support clients in navigating complex legal requirements and securing the best possible outcome. Additionally, the firm can offer services related to employment law, contracts, and any other legal matters newcomers may encounter as they settle and grow their careers in Canada.