Impact of Immigration on Canada s Digital Economy
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1 Impact of Immigration on Canada s Digital Economy Regional Outlook:
2 This study is an ICTC initiative to analyze the labour market outcomes of immigrants in the ICT labour force in Canada, with particular emphasis on Internationally Educated Professionals (IEPs) in ICT occupations. 1 ICT is an ever evolving sector, perhaps more so than any other sector, and as a result, the ICT workforce is employed throughout the economy. The growth of the ICT sector and the continually increasing levels of skills required, as well as demanded, by the sector created a shift toward a digital economy. 2 A detailed discussion on what this new economy entails is presented in ICTC s full report entitled, Impact of Immigration on Canada s Digital Economy: A Situational Analysis Consequent shortages in ICT are estimated to be multifaceted and the combination of these shortages is expected to impact Canadian regions differently, with overall trends predicting significant shortages over the next five years: A labour shortage in ICT implies that there is an insufficient supply of qualified applicants with the credentials needed to apply for a job in an ICT field. A skills shortage occurs when employers are unable to recruit a sufficient number of workers with the right blend of skills and experience. ATLANTIC CANADA SNAPSHOT Population: 2,344,207 Total share of ICT employment in Canada: 5% Major hubs of ICT employment: Halifax, St. John s, Charlottetown, Moncton, Saint John. s ICT labour market relies on a significant outsourcing infrastructure and user support industry. The region is an important centre for providing technical support in the telecommunications and wireless industries. As seen in Figure 1, technicians as an occupational group represent one-third of Atlantic Canada s ICT workforce. Immigration is much less a factor in Atlantic Canada than in other regions. In 2010, less than three percent of Canada s new immigrants settled in. However, recent studies have shown that immigrants are more likely to stay in than previously, likely due to strong employment and earnings outcomes. Although many applicants possess the qualifications needed for relevant jobs, they, however, lack the specific set of skills sought by employers. In today s digital economy, ICT occupations are increasingly demanding employees with a blend of technical skills, business knowledge and soft competencies. 1 See Notes at the end of this report for the definition of Internationally Educated Professionals (IEPs). 2 See Notes at the end of this report for further details on the digital economy. 01
3 Figure 1: ICT Workforce in 3 by Occupation Group (2010) Managers Engineers Analysts Programmers Technicians Other In Canada, labour markets are regional, not national. Although there is mobility across regions, it is usually insufficient to alter basic supply and demand conditions. However, the rankings of Excess of Supply over Demand or Excess of Demand over Supply indicate that some supply and demand trends may be consistent across different regions. This is especially the case for the ICT workforce, where key demographic and technology factors impact labour market conditions. For example, the projected shortage of Information Systems Analysts and Consultants is indicative of a national trend, as shortages in this occupation are expected in every region. The only difference is the time in which the shortage is expected to become acute. accounts for approximately 5% of all workers in ICT occupations, with a large outsourcing and user support infrastructure. The region is an important hub for domestic outsourcing operations and near-shoring (i.e., outsourced ICT operations to the United States). In addition to its significant outsourcing base, Atlantic Canada is also an important centre for in-house technical support in the telecommunications and wireless industries. The distribution of ICT occupations reflects the region s outsourcing and user support infrastructures, with three occupations (computer programmers, computer network technicians and user support technicians) representing 41% of ICT employment. 3 Includes Newfoundland, Nova Scotia, Prince Edward Island and New Brunswick. 02
4 In, skills shortages will be more acute in four occupations (as seen in Figure 2): Computer and Information Systems Managers; Information Systems Analysts and Consultants; Electrical and Electronics Engineering Technologists and Technicians; and Broadcast Technicians. Technology trends such as the adoption of Cloud Computing and off-shoring will weaken demand for two occupations: Many types of Computer Programmers; Computer Network Technicians; and User Support Technicians (especially those without industry certifications). Figure 2: Outlook in the 14 Core ICT Occupations (across all industries) Computer and information systems managers Telecommunication carriers managers Electrical and electronics engineers Computer engineers (except software engineers) Information systems analysts and consultants Database analysts and data administrators Software engineers and designers Computer programmers and interactive media developers Web designers and developers Electrical & electronics engineering technologists & technicians Computer network technicians User support technicians Systems testing technicians Broadcast technicians Colour Legend for the Figure above: Acute Excess of Supply over Demand Excess of Supply over Demand Skills Shortages in Many Fields Excess of Demand over Supply: Pervasive Shortages Acute Excess of Demand over Supply: Absolute Supply Constraints RECRUITMENT The growth of ICT occupations that require a combination of technical skills, business knowledge and soft competencies reflects the evolution of the ICT labour force and the diversity of skills required to perform ICT jobs. Soft competencies refer to written communication skills, the ability to communicate with non-technical coworkers and domain knowledge, which arise from understanding the business context in which ICT is being applied. For employers, soft skills are equally as important as the technical competencies that have traditionally been associated with ICT occupations. In fact, finding workers with sufficient technical skills is not the biggest challenge that employers face; rather, recruiting ICT professionals who have the necessary complementary skills poses a much more significant challenge. 03
5 ICT employers in will experience significant challenges recruiting for jobs that require five or more years of experience and/or leading edge skills. These challenges will be exacerbated by the small size of the experienced labour pool and the challenges associated with recruiting workers from other regions. Smaller companies in particular will find it especially difficult to compete for talent with public sector employers. Although recent graduates of co-op programs can expect to find work in their fields, graduates from traditional programs will likely experience longer search periods, with a greater likelihood of filling ICT jobs for which they are over-qualified. This is especially the case for IEPs, who will need Canadian experience to find an ICT job in their field. This means that, unless they have Canadian experience and excellent English language skills, IEPs will be obliged to take positions for which they are over-qualified. IMPACT OF IMMIGRATION ON ICT IN ATLANTIC CANADA Unlike other regions such as Ontario and British Columbia, s labour market is not heavily influenced by immigration. However, the Provincial Nominee Programs (PNPs) have enjoyed moderate success over the past ten years. Between 1999 and 2008, approximately 66% of Prince Edward Island s (PEI) total immigrants were Nominees. During this period, New Brunswick recruited 3,868 immigrants through the PNP, while Nova Scotia recruited 3,030. FIGURE 3: IEP Share of Total ICT Employment by Region (2006 Census) Ontario 19.3% Manitoba-Saskatchewan Quebec 8.0% 2.4% Alberta 10.3% British Columbia 18.7% 4.4% 04
6 Information Technology Workers Program and Temporary Foreign Worker Program In the past, the Government of Canada developed programs to expedite the entry of international workers whose skills were in high demand. A notable example is the Software Developers Program, later renamed the Information Technology Workers Program, which fast-tracked the entry of thousands of ICT workers into Canada. This program was designed to meet the growing skills shortages in the ICT labour market. Through this program, the immigration system was able to fast track the entry of high demand technology workers in seven ICT job categories, including: Senior animation effects editor Embedded systems software designer MIS software designer Multimedia software developer Software developer-services Software products developer Telecommunications software designer The program was very attractive for employers because it enabled companies to recruit and obtain high demand workers without having to acquire a Labour Market Opinion (LMO) from Human Resources and Skills Development Canada (HRSDC). Candidates were typically screened on the basis of their education, language and work experience. Candidates were required to possess at least a Bachelor s degree or twoyear diploma, as well as two-years of related work experience, in order to be considered. In 2009, Canada admitted 5,466 workers under this program, with 166 going to the Atlantic provinces. The facilitation process for ICT workers came to an end on September 30, 2010 in all provinces except Quebec and British Columbia, where the programs will be gradually phased out. Employers in need of temporary foreign workers (TFWs) in the seven high demand occupations are required to apply for a Labour Market Opinion, which grants a work permit for up to six months from the date of issuance. The facilitation process of ICT workers also coincided with a steep rise in the number of TFWs being admitted into Canada to meet short term labour demand. Between 2004 and 2008, Canada s Temporary Foreign Worker Program more than doubled, from 125,367 in 2004 to 251,235 in The number of TFWs living in increased from 3,493 in 2004 to 6,094 in
7 NEW IMMIGRANTS IN ICT Figure 4: IEPs identifying core ICT occupations as their intended occupation in Canada, ,000 10,000 8,000 6,000 4,000 2,000 0 Year of Arrival According to ICTC s 2011 Outlook report, 900 new IEPs that arrived in 2009 intended to work as Information Systems Analysts and Consultants. This occupation will experience significant skills shortages over the 2011 to 2016 period. More IEPs identified Database Analysts and Consultants (1,160) as their intended occupation than any other occupation in In total, 6,610 IEPs identified an ICT occupation as their intended occupation in 2009; based on January to June 2010 data, it is estimated that approximately 7,090 IEPs identified an ICT occupation in EARNINGS OF IMMIGRANTS According to the 2009 Labour Force Survey, recent immigrants in between the ages of 25 and 54 reported the second highest earnings in Canada at $38,806, behind only recent immigrants in Alberta ($44,261). Non-immigrants in reported the lowest average earnings in Canada ($41,016). Non-immigrants in Alberta reported the highest average at $55, estimated based on January to June data. 06
8 Figure 5: Average Employment Income 5 in 2005 for Immigrant 6 Arrival Cohorts, ages 25 to 54 (2006 Census), New Brunswick 2001 to 2006 (less than 5 years experience) 1996 to 2000 (between 5 and 9 years experience) 1991 to 1995 (between 10 and 14 years experience) $31,310 $25,471 $31,244 $33,934 $33,631 $35,021 Before 1991 (minimum of 14 years experience) $37,843 $45, ,000 20,000 30,000 40,000 50,000 60,000 Canada New Brunswick Figure 6: Average Employment Income in 2005 for Immigrant Arrival Cohorts, ages 25 to 54 (2006 Census), Newfoundland and Labrador 2001 to 2006 (less than 5 years experience) $25,471 $50, to 2000 (between 5 and 9 years experience) $33,934 $58, to 1995 (between 10 and 14 years experience) $35,021 $49,979 Before 1991 (minimum of 14 years experience) $45,486 $56, ,000 20,000 30,000 40,000 50,000 60,000 Canada Newfoundland and Labrador 5 Includes full-time and part-time workers for the 2005 tax year. 6 Refers to permanent immigrants only. 07
9 Figure 7: Average Employment Income in 2005 for Immigrant Arrival Cohorts, ages 25 to 54 (2006 Census), Nova Scotia 2001 to 2006 (less than 5 years experience) $28,436 $25, to 2000 (between 5 and 9 years experience) $34,802 $33, to 1995 (between 10 and 14 years experience) $37,652 $35,021 Before 1991 (minimum of 14 years experience) $43,444 $45, ,000 20,000 30,000 40,000 50,000 60,000 Canada Nova Scotia Figure 8: Average Employment Income in 2005 for Immigrant Arrival Cohorts, ages 25 to 54 (2006 Census), Prince Edward Island 2001 to 2006 (less than 5 years experience) $22,566 $25, to 2000 (between 5 and 9 years experience) N/A $33, to 1995 (between 10 and 14 years experience) N/A $35,021 Before 1991 (minimum of 14 years experience) $30,498 $45, ,000 20,000 30,000 40,000 50,000 60,000 Canada Prince Edward Island 08
10 EMPLOYMENT OUTCOMES AND UNEMPLOYMENT RATES OF IMMIGRANTS In 2011, had an average employment rate of 78%, which was below the Canadian average (81%). The average unemployment rate in (8.3%) was higher than the national average (6.2%). Among s recent immigrants, the unemployment rate was significantly higher than the regional average, as 8.6% of the region s recent immigrants were unemployed. However, established immigrants (those who have been in Canada for more than ten years) performed considerably better with an unemployment rate of 5.1%, significantly lower than the regional average. Based on 2006 census, internationally educated ICT professionals working in the core ICT occupations had considerably lower unemployment rates when compared to the rest of the immigrant population. In 2006, the unemployment rate for IEPs in core ICT occupations was 3.7%, compared to 11.5% for recent immigrants (those who immigrated to Canada between 2001 and 2006) and 7.3% for immigrants who arrived in Canada between 1996 and CONCLUSIONS In order to meet evolving industry demands, the ICT labour pool must be equipped with the blend of skills and competencies that the majority of ICT employers require. Providing IEPs with clearly defined expectations is crucial to retaining their longterm services. Knowledge of industry requirements will allow internationally educated ICT professionals to strategize against the skills shortage by seeking out real world experience, including integrated work placement and networking programs that develop their inter-personal skills, business knowledge and communication skills. has a small but important ICT labour market, with a strong presence of domestic outsourcing and user support infrastructure. This means that occupations such Computer Programmers, Computer Network Technicians and User Support Technicians are critical to the regional ICT labour market. Although immigration plays a limited role in the regional labour market when compared to regions such as Ontario or British Columbia, Atlantic Canada could build on its recent successes with the PNPs and retention of international talent. These strategies would be beneficial, given that some types of shortages may arise earlier due to the small size of the labour force. Some employers may benefit from programs such as the PNP and TFW if they are unable to recruit workers from other regions. 09
11 NOTES 1) Internationally Educated Professionals (IEPs) are defined by ICTC as professionals who possess the following attributes: 1) they were born outside of Canada; 2) they were 25 years of age or older at the time of immigration; and 3) their highest educational degree, certificate or diploma was obtained outside of Canada. Immigrants who have not completed a certificate, diploma or degree above the secondary school level are not considered IEPs. Specific reference to IEPs excludes all other immigrants who do not possess the attributes listed above; general reference to immigrants includes IEPs and non-ieps, but excludes temporary foreign workers, citizens born outside of Canada and those with student or working visas. 2) The digital economy refers to knowledge occupations in the economy, which are occupations that require skilled workers with post-secondary education. Knowledge occupations are normally found in natural science and engineering, ICT, finance, healthcare, education and public administration. Knowledge occupations are also found in other industries that require highly-skilled professionals. The digital economy refers specifically to these professionals 7. Digital industries, like the ones mentioned, are industries with a high proportion of knowledge workers and where investment in research and development is most significant. However, the digital economy does not refer specifically to digital industries; instead, it is a general term used to describe any highly skilled (i.e., knowledge) occupation across all industries. 7 includes full-time and part-time workers for the 2005 tax year. 10
12 The Information and Communications Technology Council (ICTC) is a centre of expertise in Information and Communications Technology (ICT) research, policy development and workforce solutions. ICTC enables industries to maintain a competitive advantage in a global market and develop Canada s future skilled and innovative talent. Funded by the Government of Canada s Foreign Credential Recognition Program. The opinions and interpretations in this publication are those of the author and do not necessarily reflect those of the Government of Canada.
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