Immigrant Income Levels Depend on Canadian Immigration Program

Data from the Statistics Canada report on the income of immigrants, released in December, shows large differences in the economic performance of immigrants depending on which immigration program they were admitted through (Moxy)

In the second part of our series on the recently released Statistics Canada report on the income of immigrants, we delve deeper into the data and look at how various economic class immigration programs compare for immigrants who arrived between 1986 and 2010. The first part can be found here.

Among the most important immigration-related issues for the federal government every year is picking the right mix of immigration programs to make up the annual quota that it sets aside for new permanent residents.

The major priorities that the federal government seeks to meet in selecting the allocation are:

  • meeting the humanitarian commitments it has set for itself to re-settle a certain portion of the world’s refugees
  • accommodating Canadians whose family members live abroad and who they would like to re-unite with through family class immigration sponsorship
  • admitting immigrants that will contribute to Canada’s economy and meet its investment and labour needs

To meet the last objective, the federal government currently allocates 60 percent of the permanent residence quota to economic class immigration programs, which consist of the Federal Skilled Worker Class (FSWC), the Canadian Experience Class (CEC), the business class programs, and the provincial nominee class programs.

Historically, the skilled worker program (FSWC) has contributed the largest portion of Canada’s economic class immigrants, but there have been calls to increase the proportion admitted through programs in the business and provincial nominee classes.

The provincial governments in particular have frequently called on the federal government to allow them to pick a greater share of Canada’s immigrants through their respective provincial nominee programs (PNPs), which has resulted in their quotas being increased from 2,500 in 1999, to over 30,000 in 2009.

Whether the FSWC should remain the mainstay of Canadian economic-class immigration or whether the PNPs, or perhaps business class programs, should continue to see their role expanded, is a question that the StatCan report can help answer.

The 30 year longitudinal study (we have only reproduced 24 years of it, as we assessed the data from 1980-1986 to be too limited to be useful) has a few surprising findings.

Income of immigrants by immigration program. Skilled worker class immigrants see the most wage growth over the 24 year period.

Early success for PNP immigrants, long-term success of the skilled worker class immigrants

Immigrants admitted through the FSWC earn significantly more than those admitted through the business classes, and after seven years in Canada, more than PNP class immigrants.

Average income in 2010 for skilled worker class immigrants. The graph shows rapid income gains in the first few years following immigration, followed by more gradual income growth

PNP-class immigrants earn nearly double what other immigrants earn in the first year of their permanent residence. This is most likely due to the fact that a person needs to already be in Canada and working to qualify for most provincial nominee programs, whereas immigrants who become permanent residents through the FSWC or business class programs arrive in Canada for the first time on the day they receive their permanent residency.

The data shows that the PNPs’ lead in income quickly closes, as FSWC immigrants see rapid income gains in their first few years in Canada.

Average income in 2010 for provincial nominee (PNP) class immigrants. PNP-class immigrants start out with much higher incomes than other economic-class immigrants

It should be taken into account however that the data on PNP-class immigrants that arrived in the early 2000s is quite limited, given the provincial nominee programs admitted fewer than 10,000 immigrants for most of the first of half of the 2000s, so the long term income growth statistics for the PNP class could change over-time.

Poor performance of business class immigrants

The business class immigrants, despite having met demanding minimum net worth requirements to qualify for immigration to Canada, have lower income levels than skilled worker and provincial nominee class immigrants, especially in the first few years after they arrive.

Over the long run, their income gradually converges with the skilled worker class, but this takes nearly 24 years and it never meets the level of their skilled worker counterparts.

One partial exception to this is immigrants from the Africa and Middle East region. Business class immigrants in this group see their income surpass skilled worker class-immigrants from the same region after 24 years.

Average income in 2010 for business class immigrants. Business class immigrants from the Africa and Middle East region see significant income growth over a 24 year period

Cause of business class under-performance

Ideally, business class immigrants, with their substantial capital and business experience, would be the biggest contributors to the Canadian economy among the country’s immigrant population.

One possible explanation for their lower than expected incomes is that they keep their investments abroad.

Canada, which has relatively high average personal income tax rates, is out-matched in investment opportunities by many regions in the world, like the rapidly developing Asian country of South Korea, which has average personal income tax rates and government expenditure levels that are one third lower than Canada.

While business-class immigrants could choose to remain invested abroad, skilled worker class immigrants likely benefit from working in Canada, since it is a high-income country that provides better wages than the vast majority of the world, and in any case they have few options other than working and earning their salary in Canada, since labour is not mobile like capital.

If investment opportunities in Canada being comparatively poor is in fact the cause of lower than expected income performance of business class immigrants, this is not a problem that the federal government can fix by changing immigration selection rules.

Provincial Government in Canada Criticizes Remarks About Immigrant Investor Program

A river walkway in Winnipeg, Manitoba’s largest city

The provincial government of Manitoba on Tuesday shot back at critics who have said the NDP government’s management of the Manitoba Provincial Nominee Program (MPNP) for Business has been a failure.

Among the critics are Manitoba Progressive Conservative immigration critic Bonnie Mitchelson and the former program manager for the MPNP for Business, Randy Boldt, who say that a report showing that only 20 percent of foreign investors nominated for permanent residence by the Manitoba provincial government have made their required investment points to a total program failure.

The government criticized those statistics as misleading and inaccurate, stating that immigration through the MPNP for Business is a two-step process, with the province first nominating individuals, and the federal government then admitting the individual, and that investor applicants only make their investment after the second step is complete.

The government says that the 20 percent figure is for all applicants who have completed the first step and been nominated by the Manitoba government, and includes many who have yet to complete the second step. Figures that only account for those who have completed both steps shows 60 percent of applicants end up making their investment.

The program requires all immigrant investor applicants to provide a $75,000 deposit, which they forfeit if they do not meet the program’s requirements of investing $150,000 into a Manitoba-based business within two years of arriving in Canada.

The Manitoba government says that $200 million has been invested into the provincial economy through the program since it began in 2000.

Government Report Recommends Increasing Immigration Levels in 2014

The internal government review finds that Australia’s experience suggests that basing immigration admittance on employment offers does not produce better results

The seven year freeze on increases in immigration levels beyond 253,000 should be lifted in 2014, according to an internal government review obtained by Postmedia News:

The study, dubbed a “Literature review and expert advice to inform Canada’s immigration levels planning,” suggests immigration levels should begin increasing six per cent a year to approximately 337,000 in 2018, after which levels should plateau until 2021, the end of the review period.

The report says that labour needs, based on economic projections, necessitate the increase.

Immigration levels as a percentage of Canada’s population have steadily fallen over the last seven years as the country has experienced population growth without a corresponding increase in the number of immigrants admitted.

Recent public opinion polls have indicated that the majority of Canadians oppose an increase in immigration levels, and this, along with recent studies showing a growing income gap between recent immigrants and native born Canadians, have encouraged the federal government to resist calls to increase immigration levels.

According to the Postmedia News report, the internal review calls for greater research into factors hampering the economic integration of immigrants and into comparisons between the economic performance of immigrants who enter through the federal skilled worker program and that of immigrants who enter through provincial nominee programs (PNPs).

The review also recommends against increasing the proportion of immigrants admitted through the PNPs, which clashes with calls from provincial governments to give them greater control over selecting the immigrants that enter Canada.

Provincial Premiers Call For Greater Say in Canadian Immigration

Nova Scotia Premier Darrell Dexter and Bank of Canada Governor Mark Carney at the two day economic forum (Province of Nova Scotia)

The premiers of Canada’s provincial and territorial governments concluded a forum on economic development in Halifax today with a joint-call on the federal government to give them greater control over immigration.

“We want to become masters of our own destiny when it comes to the immigration file. Nobody better understands our needs and our capacity to accommodate and our capacity to develop new Canadians so they can develop to their fullest,” said Ontario Premier Dalton McGuinty at today’s news conference.

British Columbia Premier Christy Clark added: “We want more space to be able to make our decisions about which immigrants will come to our provinces, where they will be settled and how many we’ll get.”

Quebec has had an independent immigration program since the 1970s, but the other provinces only started being delegated immigration selection powers over the last decade with the signing of several federal-provincial agreements creating Provincial Nominee Programs (PNPs).

While the number of provincial nominees has grown seven fold since 2004, with 42,000 to 45,000 individuals expected to immigrate under a PNP in 2012, the pace of change is not fast enough for the provinces, who want to select a greater share of the approximately 250,000 individuals who are admitted into Canada as permanent residents each year.

The provincial premiers say that being able to select their own immigrants gives them more power to control the direction of their economic development by selecting those individuals that have the skills to meet their regional labour shortages, which they say their governments are best positioned to assess.

The two-day economic forum was hosted by the Council of the Federation, an institution created by the provincial and territorial governments to facilitate collaboration between their respective governments.

The forum saw presentations from Bank of Canada Governor Mark Carney and Professor of Economics at George Mason University, Tyler Cowen, author of The Great Stagnation.

Court Forces Canadian Province to Reveal Names of Companies Involved in Immigrant Investor Program

Immigrants invested an estimated $120 million into PEI-based businesses through the PEI PNP Investor Program in 2007 and 2008 before it was shut down in 2009

A Provincial Crown Corporation responsible for managing Prince Edward Island’s (PEI) Provincial Nominee Program (PNP) was ordered by a court this month to release a list of 1,423 businesses that were approved to receive funding from immigrant investors.

The Crown Corporation, Island Investment Development Inc (IIDI), was initially successful in blocking requests under the Freedom of Information and Protection of Privacy Act (FOIPPA), by applicants that included the CBC, Canada’s largest news broadcaster, for it to release the names of the businesses that it approved to receive investments through a now defunct “Immigrant partner” stream of the PEI PNP.

Under the Immigrant partner component of the PNP, the government of PEI would grant nominations for Canadian permanent residence to immigrants who made a $200,000 investment into a qualified PEI business and who had a net worth of at least $400,000.

PEI’s privacy commissioner ruled that disclosure of the names of the businesses and the number of PNP investment units that each received through the program would violate the FOIPPA by revealing financial information about the companies that they had a reasonable expectation of remaining confidential when they applied for the program.

The CBC subsequently appealed to the PEI Supreme Court to over-turn the privacy commissioner’s decision, and on November 2nd, the court did just that for one portion of the CBC’s request: the release of the names of the businesses.

The privacy commission’s decision to uphold IIDI’s refusal to release the number of investment units it approved for each company was upheld by the presiding judge, Justice Wayne Cheverie, as he argued that the minimum net worth of the concerned companies could be deduced from this information, given it was a criteria for eligibility under the program.

The list of companies was posted online by the CBC, and can be found here.

PEI currently has an active immigrant investor program, but unlike the Immigrant partner program which allowed for an unlimited number of nominations, the current program is capped at 400 applications per year.

Federal Gov of Canada Increases Nova Scotia’s Immigration Nominee Quota

Nova Scotia will be able to nominate 700 applicants and their families for immigration to Canada in 2012 after the cap for its Provincial Nominee Program was increased by 200

Nova Scotia’s provincial government announced yesterday that the federal government has increased the province’s immigrant nominee cap by 200, to 700 nominations in 2012.

“It will help us address existing and expected labour shortages,” said Marilyn More, the provincial minister responsible for Nova Scotia’s Office of Immigration. She said that the province would push for further increases of its Provincial Nominee Program (PNP) quota.

PNPs allow Canadian provinces and territories to nominate individuals who they deem as likely to contribute to their economy for immigration to Canada. The first PNP was created for Manitoba in 1998, and quickly expanded to all other provinces.

The federal government, which has jurisdiction over immigration in Canada, caps the number of individuals each province can nominate for Canadian permanent residence each year, but that number has steadily increased, amid repeated appeals by provincial premiers for expansions of their PNPs, which they say allow them to select the immigrants that best meet their provinces’ unique economic needs.

While the federal government has indicated it would continue to expand the PNPs, it has also expressed concern about the standards some provincial government use when nominating individuals. In July, it instituted minimum language requirements for PNP applicants in low/semi-skilled occupations.

Under the new language rules, applicants in occupations that are classified as NOC Skill Level C or D must prove English or French proficiency of at least Canadian Language Benchmarks (CLB)/Niveaux de compétence linguistique canadiens (NCLC) 4, in all categories: listening, speaking, reading and writing.

The required International English Language Test System (IELTS) test scores to meet CLB 4 are 4.0, 4.5, 3.5, and 4.0 for listening, speaking, reading and writing, respectively.

Largest Canadian Province, Ontario, Announces New Immigration Strategy

Arnon Melo, far right, is the type of immigrant Ontario wants more of. A native of Brazil, the entrepreneur founded a logistics company that now employs 10 people (Ontario Ministry of Citizenship and Immigration)

The provincial government of Ontario announced a new immigration strategy on Monday which primarily focuses on attracting more economic class immigrants, meaning those who immigrate through skilled worker and investor programs, to Ontario.

The strategy is shaped by recommendations submitted to the Ontario government by an expert roundtable last month which the government commissioned as a response to years of decreasing immigration to the province.

The final strategy adopted by the provincial government sets as its objectives to increase the province’s total immigration numbers and the proportion of economic immigrants, to boost the economic success of immigrants in order to bring their incomes and employment rates up to that of the Ontario average, and to help the province take greater advantage of the international links immigrants bring.

Some of the specific targets included in the strategy are:

  • Bringing the proportion of economic immigrants up to 70 percent from the
    current 52 percent.
  • Requesting that the federal government double the province’s Provincial Nominee Program (PNP) quota from its current 1,000, to 5,000 by 2014.
  • Encouraging employers to develop and expand mentorship, internship and on-the-job training programs.
  • Increasing the number of immigrants licensed in their field.
  • Increasing Francophone immigration to five percent.

The strategy sets out to persuade the federal government to change some of the immigration rules that the Ontario provincial government blames for contributing to the province’s underperformance, relative to other provinces, in attracting economic immigrants.

While 52 percent of immigrants to Ontario are economic immigrants, the average rate for other Canadian provinces is 70 percent, a disparity that the Ontario government attributes primarily to the low number of economic immigrants, as a percentage of the total number of economic immigrants to the province, that the federal government permits Ontario to select relative to other, less populated, provinces.

Monday’s announcement will likely put pressure on the federal Department of Citizenship and Immigration to increase the number of immigrants it allows Ontario to select through the Ontario PNP.

Expert Roundtable Submits Report on Immigration to Ontario Government

Julia Deans, chair of the 13-member roundtable on immigration strategy, presenting the panel's report to Ontario Minister of Citizenship and Immigration Charles Sousa (Government of Ontario)

A 13-member expert roundtable, appointed seven months ago by the government of Ontario to advise the province on the development of a provincial immigration strategy, submitted its report yesterday, and it includes 32 recommendations for the province.

The key recommendations of the report are:

    • Aiming to increase the proportion of economic class immigrants, meaning those who immigrate through skilled worker and business immigration programs, to 65-70 percent. The report notes that the percentage of economic class immigrants has fallen from over 64 percent in 2001, to 52 percent today, while the proportion of family and refugee class immigrants has increased. Immigrants in the latter categories are more likely to face problems integrating into Ontario’s labour market than economic class immigrants.
    • Increasing Ontario’s total immigration levels to 135,000 people a year, or one percent of Ontario’s population, to alleviate the decline in the province’s working-age population, which the roundtable expects will put pressure on the provincial government’s budget.
    • Shifting the focus of immigration selection to human capital and away from immediate labour needs, due to evidence showing that an immigrant’s level of human capital, meaning their skills, education and language proficiency, is the best predictor of earnings growth and employability.
    • Ontario continuing to rely on the Federal Skilled Worker Program (FSWP) as the main source of economic immigration to the province, and recommending that the federal government eliminate the Federal Skilled Worker Class’ priority occupations list.
    • Recommending that the federal government delegate immigration selection for the purposes of responding to specific occupational shortages to Provincial Nominee Programs (PNP) run by provinces. In line with this recommendation, encouraging the federal government to increase the quota for Ontario’s PNP from current 1,000 to 5,000 people per year.
    • Reducing the amount of low-skilled temporary foreign workers that it allows in the province for extended periods, as it depresses wages by giving Canadian employers a below-market wage alternative to hiring Canadians.
    • Shifting the focus of the temporary foreign worker program to bringing in high skilled and skilled trades workers on a temporary basis to fill immediate skills and labour shortages, rather than to provide low-wage labour to businesses for extended periods.
    • The province working with the federal government in designing the Expression of Interest (EOI) model of immigration which the federal government has recently announced that it intends to implement. This model, which is currently in use in New Zealand, adds a preliminary application phase whereby those seeking to immigrate to Canada submit an EOI that contains their personal information to the Canadian government, and immigration authorities invite the most promising EOI applicants to submit a full application along with proof of qualifications.
    • To enable the government of Ontario to play a bigger role in immigration selection, codifying the province’s immigration strategy and regulations through legislation. The report suggests that a provincial governing framework for immigration might become a prerequisite for the the federal government agreeing to allow provinces to have a bigger role in the immigration selection process.

The report is likely to be influential because of Ontario’s importance to Canada, as the country’s most populous province and the destination of over 35 percent of Canada’s immigrants.

Regina Chamber and Federal Immigration Minister Back Stricter Saskatchewan Immigration Laws

The Leader Post, Saskatchewan’s largest newspaper, reports that the influential Regina Chamber of Commerce has backed tighter rules recently introduced for the family sponsorship category of the Saskatchewan Immigrant Nominee Program (SINP):

The Regina & District Chamber of Commerce said it “empathizes” with individuals and families affected by changes in the program, but added that federal immigration rule changes permitting SINP were intended not as a family reunification vehicle, but as “an economic program that allowed provinces, including Saskatchewan, to access skilled workers”.

Chamber CEO John Hopkins said there’s another factor at work: with the number of people allowed sponsorship into Saskatchewan capped at only 4,000 per year, employers “need each and every nomination they can get”.

Saskatoon, Saskatchewan's largest city. Changes to the province's nominee program have been widely criticized by those who had pinned their hopes of bringing family members to Canada on it. The Regina Chamber said the new rules were necessary to leave space in Saskatchewan's immigration quota for skilled workers. (Government of Saskatchewan)

Earlier this month, Saskatchewan’s Immigration Minister, Rob Norris, announced that new rules for SINP would limit the number of family members a household could nominate at a time to one, and require that the nominee have a job offer to be eligible under the program.

Mr. Norris said at the time that the federal government had urged the Saskatchewan government to tighten rules for SINP, which had been considered one of the easiest provincial nominee programs for those looking to get sponsored for immigration by a family member living in Canada.

Federal Immigration Minister Defends Changes to Province’s Family Sponsorship Rules

The changes to SINP have been criticized by many of those who had been planning to nominate their family members to immigrate to Canada under the program, with several protests being held in Saskatchewan against the changes in May.

Federal Immigration Minister Jason Kenney defended the new provincial rules, arguing that immigrants who want to live with their extended families can do so in their own country, and that the changes aren’t unfair to immigrants as those who have immigrated to Canada didn’t do so expecting to be able to nominate other family members later on.

Low-skill Provincial Nominee Program Applicants to Face Language Requirements

Low-skilled applicants for Provincial Nominee Programs (PNPs) will be required to pass language tests to immigrate to Canada according to an announcement by the Immigration Ministry on Wednesday in Saskatoon.

Until now, provinces have been relatively free to determine their own criteria for nominating foreigners for immigration to Canada, but Immigration Minister Jason Kenney said this has allowed a large number of people without sufficient English or French language proficiency to immigrate to Canada.

He stated that there is a “correlation” between lack of language skills and immigration fraud, and that language testing for PNP applicants are being made mandatory as part of an effort to reduce fraud.