paper series Missing the Point(s) The declining fortunes of Canada s economic immigration program Edwina O Shea Bosch Fellow, Transatlantic Academy

paper series Missing the Point(s) The declining fortunes of Canada s economic immigration program Edwina O Shea Bosch Fellow, Transatlantic Academy

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Missing the Point(s) The declining fortunes of Canada s economic immigration program Transatlantic Academy Paper Series April 2009 Edwina O Shea * Bosch Fellow, Transatlantic Academy Introduction 3 Origins of the Points-based Selection System 4 Immigration in the 1980s and 1990s: Emerging Discontents 8 Preparing for a New Century 12 Economic Immigration Post IRPA: Continuing Malaise 15 Ad Hoc Responses 18 Back to the Future: Bill C-50 and a Return to Labor Market Driven Criteria 22 Conclusion 24 * Edwina O Shea is a senior policy analyst with the Department of Citizenship and Immigration Canada, most recently working on asylum and refugee issues. She has conducted comparative analyses of Canadian and U.S. asylum polices and practices, as well as research into decision-making in the Canadian refugee resettlement program. Ms. O Shea has also worked in Canadian diplomatic missions abroad conducting refugee, immigrant, and non-immigrant selection in Thailand, Nepal, Singapore, and Kenya. She holds a bachelor s degree in political studies from Queen s University and a master s degree in political science from the University of Toronto, Canada. The opinions expressed in this paper are those of the author alone, and do not represent the views of Citizenship and Immmigration Canada.

1 Introduction Finding the right model to manage an economic immigration program is certainly a topical challenge. In Europe, several countries are in the process of moving from traditional familydominated immigration to systems based on selection for economic potential. France, for example, has set the goal of selecting half of its immigrants on economic criteria. Canada has a long tradition of managing an economic immigration program, but despite 40 years of experience the Canadian system is today in a state of flux. Change is nothing new within the Canadian system: since its beginning in the 1960s, there has been a consistent tension between pressures to respond to the demands of the labor market and a sense of how immigration might meet the longer-term needs of the country. There can be no doubt that the current system is facing severe pressures. More than 800,000 people have applications pending a decision, by far the largest number. Of that number roughly 600,000 are economic migrants. As a result of this backlog, processing times have lengthened to the point that applications wait three to five years for a decision. At the same time there is evidence that recent immigrants earn considerably less than Canadians and that the gap is larger than was the case for previous cohorts of immigrants. The Canadian public is well aware that many immigrants selected for their skills and education are underemployed. In the past two years a series of measures have been implemented, some administrative and others legal. Most dramatically, in 2008, legislative amendments brought the promise of far-reaching change. But what really can these measures achieve? Do they really address the causes of the present dilemmas? What can new immigrants expect as a result of the recent changes? And does this mean that the Canadian model for selecting economic immigrants the human capital model has been proven a failure? Canada has a long tradition of managing an economic immigration program, but despite 40 years of experience the Canadian system is today in a state of flux. Missing the Point(s): The declining fortunes of Canada s economic immigration program 3

Origins of the Points-based 2 Selection System Henceforth, economic immigrants would be assessed against a set of selection factors that measured the potential of the individual to successfully establish herself in Canada. Contrary to popular belief, the Canadian points system for selecting economic immigrants predates the 1976 Immigration Act. In fact, it dates back to the mid 1960s, when the Canadian immigration system was at a crossroad. Despite initial reforms in 1962, vestiges of national preferences that favored migrants from Europe and the Americas remained embedded in the system. These preferences had brought the immigration program into visible conflict with the Canadian Bill of Rights, which came into force in 1960 prohibiting discrimination on the basis of criteria such as race, national origin, or religion. At the same time, the immigration program was seen as disconnected from the economy, with sponsored migrants dominating admissions, regardless of their skills or experience. Sponsored immigration had been uncontroversial in the decade of economic growth following the end of World War II, but became controversial in the 1960s as the demand for skilled labor increased even as unemployment among lower skilled workers grew. In 1966, the Liberal government released a White Paper 1 on immigration policy that laid out proposals for reform. 2 The White Paper recognized the role of immigration in supporting both economic and population growth. While it affirmed the importance of family reunification as a component of the immigration program, the White Paper announced the government s intention to better align the immigration program with the needs of the labor market and complete the work of removing the last vestiges of national or racial preferences from the program. The means of achieving this goal would be universal selection 1 Department of Manpower and Immigration. White Paper on Immigration. Ottawa: Queen s Printer, 1966. 2 In Canada a White Paper is a statement of settled government policy that is usually followed by legislative or other initiatives. criteria based on objective factors that assessed the skills and experience of individual migrants. The proposals set out in the 1966 White Paper were implemented in 1967 through two main initiatives. First, with the creation of the Department of Manpower and Immigration, responsibility for both labor market and immigration policy was combined within the same organization. This administrative structure was seen as essential to realizing the vision of an immigration program that was responsive to the needs of the Canadian labor market. Next, regulations were enacted establishing what came to be known as the points system 3 for the assessment of independent immigrants (that is, immigrants not sponsored by a Canadian family member). Henceforth, economic immigrants would be assessed against a set of selection factors that measured the potential of the individual to successfully establish him or herself in Canada. The factors addressed two broad sets of attributes: first, what today would be called the applicant s human capital for example, his or her education and language ability. The second element of the selection factors sought to align the immigration process with the needs of the labor market. The primary link between the selection factors and the labor market was a factor coined occupational demand. Tracking the demand for specific occupations within the national labor market was the responsibility of the manpower side of the new department, which maintained a list of occupations in demand as a tool for immigration officers. The factor identified as specific vocational preparation is a measure of the amount of training and education required to work in a particular occupation. It overlaps both with education, a 3 CIC. Forging Our Legacy: Canadian Citizenship and Immigration. http://www.cic.gc.ca/english/resources/ publications/legacy/chap-6.asp#chap6-7 4 Transatlantic Academy

Table 1. Selection Factors in the 1967 Immigration Regulations Factor Maximum Units Notes Age 10 Education 20 Language Ability 10 Occupational Demand 15 Specific Vocational Preparation (SVP) 10 Personal Suitability 15 Bonus Factors Arranged Employment/ Ten units awarded for an approved job offer; or if 10 Designated occupation listed on the Designated Occupation List Employment Assisted Relative 35 to 50 Depending on the nature of the relationship Pass Mark 50 While the 1967 regulations laid the basis for a selection system that would be familiar to Canadian immigration practitioners in 2009, it remained embedded in legislation dating back to 1952. Source: Green and Green, 1999 4 human capital factor, and with occupation, a labor-market factor, but because of its alignment with the applicant s ability to work in the Canadian labor market can be considered as primarily a labor market factor. Labor market factors made up a potential maximum of 35 points, with 50 points required to pass. These factors were, therefore, not sufficient in themselves to determine the success of an application. In addition to education (20 points) and language ability (10 points), the applicant s age was also assessed, with up to 10 points awarded. A total of 40 points were potentially at stake based on the 4 Green, Alan G. and Green, David A., The Economic Goals of Canada s Immigration Policy: Past and Present Canadian Public Policy, Vol. XXV, No. 4 1999. assessment of human capital factors. In addition, however, an immigration officer s subjective assessment of the applicant s personal suitability (not anywhere defined) was worth up to 15 points. Finally, reflecting the long-standing connection between family links and immigration criteria, the presence of family members in Canada could win the applicant between 35 and 50 bonus points, clearly enough to make the difference between success and failure. While the 1967 regulations laid the basis for a selection system that would be familiar to Canadian immigration practitioners in 2009, it remained embedded in legislation dating back to 1952. In the early 1970s, a new Liberal government, headed by Pierre Trudeau, undertook the task of more Missing the Point(s): The declining fortunes of Canada s economic immigration program 5

comprehensive immigration reform, followed by a process of public consultation centered around a Green Paper 5 published in 1975. The Green Paper was the basis for national consultations, led by a joint committee of the House of Commons and Senate; hearings were held across Canada in 21 cities, and the committee received more than 1,400 written briefs. On the basis of the committee s report, 6 legislation was enacted in 1976. Two years later, new regulations were enacted that brought the act into force. 7 As part of the 1978 regulations, a revised set of selection factors were established. As Table 2 shows, only modest changes were made to the selection factors first established in 1967. Based on recommendations made by the joint parliamentary committee, an effort was made to strengthen the labor-market relevance of the selection criteria. This was reflected in the introduction of a new factor that awarded points based on the number of years of experience in a particular occupation. The number of points 5 In Canada a Green Paper is a tool used to support public debate on a particular issue; it lays out possible options, without committing the government to action. 6 Special Joint Committee of the Senate and the House of Commons on Immigration Policy, Report to Parliament. Ottawa: Queen s Printer, 1975. 7 CIC. Forging Our Legacy: Canadian Citizenship and Immigration. http://www.cic.gc.ca/english/resources/ publications/legacy/chap-6.asp#chap6-7 available for education was reduced, from 20 to 12 (with the maximum points awarded to high school graduates). The weight of the immigration officer s subjective assessment of personal suitability was reduced, but the value of family links to Canada remained important. Overall, up to 48 points were potentially at stake based on labor market factors, while human capital elements amounted to only 32 points; these changes made by the new regulations represented a clear shift toward greater alignment with labor market needs. In addition to the revised selection factors, two other innovations in the 1976 Immigration Act are worth noting. Annual planning of immigration levels was now required, with the government obliged to report to the House of Commons on its plans for the following year. The act also recognized that the Constitution makes immigration a shared jurisdiction between the federal government and provinces, and required regular consultation between the two levels of government in the annual planning exercise. As part of the evolving dynamic of relations between Quebec and the Federal government that marked the 1970s, this shared jurisdiction was given real force in 1978 through an agreement that devolved authority for the selection of economic immigrants to the government of Quebec. 6 Transatlantic Academy

Table 2. Selection Factors in the 1978 Immigration Regulations Factor Maximum Units Notes Age 10 Education 12 Language Ability 10 Occupational Demand 15 Specific Vocational Preparation (SVP) 15 Experience 8 Personal Suitability 10 Bonus Factors Arranged Employment/ Ten units awarded for an approved job offer; or if 10 Designated occupation listed on the Designated Occupation List Employment Assisted Relative 35 to 50 Depending on the nature of the relationship Pass Mark 50 Source: Green and Green, 1999 Missing the Point(s): The declining fortunes of Canada s economic immigration program 7

Immigration in the 1980s and 1990s: 3 Emerging Discontents The economic downturn that hit Canada in the early 1980s with accompanying high unemployment led to measures to reduce immigration. The economic downturn that hit Canada in the early 1980s with accompanying high unemployment led to measures to reduce immigration, and in particular measures were taken to limit independent immigrants. The result can be seen in Table 3. Thanks to measures that effectively restricted access to economic immigrants who had an approved job offer, the economic component of total immigration scarcely exceeded 30 percent until 1986, when the arranged employment penalty was lifted. Table 3. Economic Immigrants as Component of Total Immigration, 1983 to 1992 Year Economic Immigrants With the lifting of restrictions on independent immigration that accompanied economic recovery in the mid 1980s came renewed attention to the effectiveness of the selection criteria, with concerns evident that immigrants were being selected who might not have the personal attributes necessary to successfully integrate in Canada. As Table 4 shows, the selection criteria was amended to rebalance the human capital/labor market factors, with points being transferred from occupational demand to the language factor. Several other changes were made to enhance the government s ability to manage the selection system. Total Immigrants Percentage 1983 24,187 89,192 27.1 1984 26,079 88,276 29.5 1985 26,112 84,345 31.0 1986 35,839 99,353 36.1 1987 74,103 152,069 48.7 1988 80,220 161,574 49.6 1989 90,145 191,550 47.1 1990 97,930 216,445 45.2 1991 86,507 232,803 37.2 1992 95,803 254,818 37.6 Source: Green and Green, 1999 8 Transatlantic Academy

Table 4. Selection Factors, as Revised in 1986 Factor Maximum Units Notes Age 10 Education 12 Language Ability 15 Raised from ten Occupational Demand 10 Reduced from 15 Specific Vocational Preparation (SVP) 15 Experience 8 Personal Suitability 10 Demographic Factor 10 New tool designed to managed levels; set at five points initially Bonus Factors Arranged Employment/ Designated 10 Employment Assisted Relative 10 Substantially reduced With the lifting of restrictions on independent immigration that accompanied economic recovery in the mid 1980s came renewed attention to the effectiveness of the selection criteria. Pass Mark 70 Raised from 50 Source: Green and Green, 1999 Missing the Point(s): The declining fortunes of Canada s economic immigration program 9

The early 1990s saw increased interest in adjusting the balance between economic and noneconomic immigrants. The years following 1986 saw continued debate over both immigration levels, in particular the balance between economic and other immigrants, and the effectiveness of the selection factors. Again, the balance between human capital and labor market relevance was at play, with particular attention given to the need for better educated workers in the rapidly evolving economy. In 1993, as part of a package of amendments to the act and regulations, the selection factors were amended, again to reinforce the human capital component in the form of the education factor. Taken together with the 1986 measures, the effect was by 1993 to move a considerable distance away from the original vision of the 1978 regulations, with increasing emphasis placed on core human capital factors language and education and less weight given to the role of the labor market. In addition to the amendments to the selection criteria, the early 1990s saw increased interest in adjusting the balance between economic and noneconomic immigrants. Provinces, employers, and academics were increasingly making the argument that the modern Canadian economy needed not only better educated immigrants, it needed more of them. Despite the increase in total immigration post-1986, the share of economic Table 5. Selection Factors, as Amended in 1993 Factor Maximum Units Notes Age 10 Education 16 Raised from 12; university or other postsecondary credential required to exceed ten units Language Ability 15 Occupational Demand 10 Specific Vocational Preparation (SVP) 18 Raised from 15 Experience 8 Personal Suitability 10 Demographic Factor 10 Bonus Factors Arranged Employment/ Designated 10 Employment Assisted Relative 5 Reduced from ten Pass Mark 70 Raised from 50 Source: Green and Green, 1999 10 Transatlantic Academy

immigrants had not reached 50 percent by 1992. The result was a policy decision in 1996 to strive for what came to be known as the 60/40 split in which immigration levels planning would reflect the goal of 60 percent of immigrant admissions coming from the economic categories, with the remaining 40 percent drawn from family reunification and refugee categories. While not a legal requirement, this policy goal was largely achieved in subsequent years, as is shown in Table 6. Table 6. Economic Immigrants as Component of Total Immigration, 1993 to 2003 Year Economic Immigrants Total Immigrants Proportion 1993 105,662 256,703 41.2 1994 102,312 224,397 45.6 1995 106,632 212,872 50.1 1996 125,370 226,073 55.5 1997 128,351 216,038 59.4 1998 97,911 174,197 56.2 1999 109,251 189,955 57.5 2000 136,292 227,458 59.9 2001 155,718 250,638 62.1 2002 137,864 229,049 60.2 2003 121,045 221,349 54.7 The result was a policy decision in 1996 to strive for what came to be known as the 60/40 split in which immigration levels planning would reflect the goal of 60 percent of immigrant admissions coming from the economic categories, with the remaining 40 percent drawn from family reunification and refugee categories. Source: Citizenship and Immigration Canada (Facts and Figures 2007) 8 8 CIC 2007. Facts and Figures 2007 Immigration Overview: Permanent and Temporary Residents. Citizenship and Immigration Canada. Retrieved at http://www.cic.gc.ca/english/ resources/statistics /facts2007/index.asp Missing the Point(s): The declining fortunes of Canada s economic immigration program 11

4 Preparing for a New Century During the 1990s research by both academics and officials began to point to evidence that recent economic immigrants were experiencing more difficulty integrating into the Canadian economy than had been the case in the 1970s. By the mid 1990s, and despite modest legislative and policy reforms earlier in the decade, there was a sense within the government that more fundamental reform was necessary. The Immigration Act was now 20 years old and had gone through numerous ad hoc revisions. In November 1996, an independent Legislative Advisory Group (LRAG) made up of three independent experts was appointed to undertake a comprehensive study of the act and regulations. In December 1997, it delivered its report, entitled Not Just Numbers: A Canadian Framework for Future Immigration. The report called for an ambitious program of legislative reform: in place of amendments to specific sections of the existing law, an entirely new legal framework was proposed. During the 1990s, research by both academics and officials began to point to evidence that recent economic immigrants were experiencing more difficulty integrating into the Canadian economy than had been the case in the 1970s. Academic studies in the previous two decades had recognized that new immigrants experienced lower earnings than Canadian-born workers, but that the gap narrowed and eventually disappeared. Beginning in the 1990s, research started to point to a widening gap that narrowed more slowly than in the past. 9 Although immigrants in the1980s and early 1990s were better educated and more highly qualified than previous cohorts, their economic situation had actually deteriorated in comparison to the earlier groups. Despite these findings, which raised concerns about the value accorded by Canadian employers to education and training outside of Canada, the LRAG report recommended a new system for selecting economic immigrants that made no 9 Picot, Garnett & Sweetman, Arthur, 2005. The Deteriorating Economic Welfare of Immigrants and Possible Causes: Update 2005. Analytical Studies Branch Research Paper Series 2005262e, Statistics Canada, Analytical Studies Branch. reference at all to labor market demand. Instead, the focus was entirely on what the report referred to as core competencies, defined as education, language ability, and experience in any skilled occupation. Other recommendations included a proposal that provinces take on greater responsibility for the selection of immigrants whose admission would meet specific social or economic needs, as determined by each province. Often overlooked at the time, this concept would take on increasing importance in later years. The government responded to the LRAG report following a process of public consultations with the publication in 1998 of a White Paper, entitled Building on a Strong Foundation for the 21st Century. 10 In the White Paper, the government laid out its vision for a reformed economic immigration selection system. The government noted the evidence that immigrants were experiencing deteriorating earnings, and pointed to a selection system, with occupation demand at its core, that had first been conceived in the 1960s. In fact, the government argued, the effort to micro-manage immigration based on demand for specific occupations in the national labor market was ineffective and created unrealistic expectations among new immigrants. Instead, and building on the LRAG recommendations, the White Paper proposed a selection system based on the concept of human capital. Immigrants would be assessed against selection factors that addressed the skills and competencies needed for success in the rapidly changing, knowledge-based economy. Central to the human capital model were language ability, education, and experience in any skilled occupation. No assessment of labor market demand would be included, although immigrants with an approved job offer would receive bonus points. Instead of a high 10 CIC. Building a Strong Foundation for the 21st Century: New Directions for Immigration and Refugee Policy and Legislation, 1998. 12 Transatlantic Academy

subjective assessment of an immigrant s personal suitability, immigration officers would award points based on objective indicators of potential to adapt, such as previous work or study in Canada by either the applicant or his or her spouse. This vision was realized in 2002 with the implementation of the Immigration and Refugee Protection Act (IRPA). Table 7 lays out the human capital selection factors that included a pass mark set at 67 points. IRPA assigns relatively little weight to an applicant s ability to work in a specific occupation. While a substantial number of points are awarded for experience in a skilled occupation (defined as an occupation at the National Occupational Classification level 0, A, or B), it matters little which occupation. There is no longer any concept of jobs in demand or designated occupations. In place of the focus on an applicant s training and experience in a specific job, under IRPA visa, officers focus more on the applicant s education and language ability. The education factor, which is worth up to 25 points, is heavily weighted in favor of university qualifications: only five points are awarded to high school graduates and no points for less than high school. Language is also heavily weighted and is worth up to 24 points. Under IRPA applicants may be required to submit proof of language ability, normally based on an assessment of a third-party language test such as the British Council ILETS. Adaptability, which replaces the former personal suitability factor, is based on a limited number of specified attributes, such as the presence of relatives in Canada or previous work or study in Canada, is worth up to ten points. Applicants between the ages of 21 and 49 receive a full ten points against the age factor, which represents a slightly wider range than was the case previously when applicants older than 44 began to lose points. As can be seen in Table 7, the IRPA selection factors represent an almost complete realization of a human capital model for managing economic immigration. The only nod in the direction of responding to labor market requirements is in the retention of ten bonus points for applicants with an approved job offer. The critical factors are clearly The IRPA selection factors represent an almost complete realization of a human capital model for managing economic immigration. Table 7. Selection Factors in the 2002 Immigration and Refugee Protection Regulations Factor Maximum Units Notes Age 10 Applicants between 21 and 49 receive full points Education 25 Language Ability 24 Adaptability 10 Based on objective criteria; includes five units for presence of relative in Canada Bonus Factors Arranged Employment 10 Pass Mark 67 Source: Immigration and Refugee Protection Regulations, 2002 Missing the Point(s): The declining fortunes of Canada s economic immigration program 13

education and language ability, worth a possible 49 points between them. The emphasis on these two factors, and in particular the weight assigned to university education, was somewhat controversial at the time, as trade unions and employers warned that skilled trades persons would be disadvantaged in favor of white-collar workers. Although consistent with the direction of amendments in 1986 and 1993, this emphasis was also at odds with emerging research on the economic integration of immigrants in Canada. In addition to changes to the selection criteria for skilled workers (formerly known as independent immigrants), IRPA affirmed the role of provincial governments. In the years following the implementation of IRPA, all ten provinces began to expand the size and scope of what were known as provincial nominee programs. Established through individual agreements between the federal government and each province, the provincial nominee program provides flexibility to respond to specific local needs that may not be well addressed by the IRPA selection criteria. Initially, the number of applications that each province could nominate in a given year was limited, but the numerical caps contained in the federal-provincial agreements were gradually eliminated, and provincial nominee numbers grew each year following IRPA implementation. 14 Transatlantic Academy

Economic Immigration Post IRPA: 5 Continuing Malaise In the years following the introduction of IRPA, public and stakeholder discontent with the state of the immigration program, and in particular with the economic immigration program, focused on two main concerns: long and growing processing times, linked to a massive inventory of unprocessed applications, and the perception that skilled immigrants were wasting their potential after arriving in Canada (the apocryphal immigrant taxi driver with a Ph.D.). Both of these concerns were real and pressing. For example, in 2007, over half of the applications finalized had been in the inventory for more than three years. A substantial number (20 percent) had been waiting for a decision for more than 68 months almost five years! 11 These processing times certainly make Canada a less attractive destination for potential immigrants; the long lag time between application and arrival also means that immigrants selected under IRPA only started to arrive in Canada several years after IRPA came into force. At the same time, academic research continued to show that immigrants were earning less compared to native born Canadians, and that their education and professional credentials did not bring them the same reward that a Canadian would expect. Less well known, but of great concern to practitioners and immigration experts in Canada, were several trends, outlined below, that contributed to both the backlog and declining immigrant outcomes. Processing times and the backlog While inventories, or backlogs, were nothing new in the world of Canadian immigration, by 2006 the scale of the problem was reaching mammoth proportions. By that year 12 some 800,000 people had applications pending a decision; more than 500,000 of the applications were in the traditional skilled worker category. The cause was quite simply a situation in which demand out-paced both the government s desired level of intake and the system s operational capacity. IRPA had maintained the statutory requirement for annual levels planning through the requirement that the minster of immigration present an immigration plan to parliament each year. The total number of planned admissions remained remarkably consistent in the post-irpa period, in a range between 220 and 260,000 immigrants in all categories. 13 As more applications were received than were finalized, the backlog grew and processing times lengthened. Or, more accurately, more skilled worker applications were received than could be finalized, the backlog of skilled worker applications grew, and processing times for skilled workers grew longer, as is shown in Table 8. What is common to the categories that boast relatively quick processing is that applications are processed as they are received, and because there is no limit on output, applications do not have to wait in a backlog for their turn. The federalskilled worker category does have a limit, albeit an administrative one that is simply a function of the relationship between overall immigration levels and the priority economic categories. As will be shown, the priority economic categories have grown, and in turn the number of federal-skilled worker admissions has shrunk, meaning that applications wait longer for a decision. By 2006 some 800,000 people had applications pending a decision; more than 500,000 of the applications were in the traditional skilled worker category. 11 Source: application processing times as posted on CICs public web-site. Note that these figures are global; applications in some offices were finalized more quickly while others took even longer to finalize. 12 See remarks by the Honorable Monte Solberg, minister of citizenship and immigration, before the House of Commons Standing Committee on Citizenship and Immigration, May 10, 2006. 13 See the Annual Report to Parliament, 2003 to 2008. Available at: http://www.cic.gc.ca/english/resources/publications/index. asp Missing the Point(s): The declining fortunes of Canada s economic immigration program 15

Between 1980 and 2000, the earnings of immigrant men fell by 13 percent, while the earnings of Canadianborn men rose by 10 percent. Table 8. Processing Times in Selected Immigrant Categories, 2007 Immigrant Category All Applications 12/37 Federal-Skilled 36/68 Workers Quebec-Skilled 8/15 Workers Provincial 7/11 Nominees Family Class (spouses and 5/8 partners) Family Class (parents and 11/21 grandparents) Processing time (months) for 50 percent/80 percent of cases Source: Citizenship and Immigration Canada 14 But the limited room to finalize skilled worker applications is only part of the explanation for the backlog of federal-skilled worker applications. Prior to IRPA, applicants who did not have experience in an occupation listed on the General Occupations List an occupation in demand in the Canadian labor market were barred from applying. Post- IRPA, any applicant with at least one year of experience in any skilled occupation may submit an application. Without the control previously afforded by the occupational demand factor, intake of skilled worker applications ballooned. The combination of rising intake and falling output (finalizations) created a perfect storm that led to the situation in which more than half a million applicants must wait years for a decision, a major blow to Canada s ability to compete with other major immigrant-receiving countries. Deteriorating immigrant outcomes By the middle of the present decade, academic studies were confirming the trend of declining immigrant earnings, in comparison with both native-born Canadians and earlier immigrant cohorts. These findings, which drew on a longitudinal immigrant database maintained by Citizenship and Immigration Canada, as well as census and tax-filing data, showed that earnings remained well below Canadian norms despite the increasing weight in the late 1990s of immigrants selected for their economic characteristics and despite reforms in the late 1980s and early 1990s that were intended to make the selection criteria for economic immigrants more in tune with the modern economy. This finding is of particular concern because the late 1990s were also years of strong economic growth, with strong employment growth. Between 1980 and 2000, the earnings of immigrant men fell by 13 percent, while the earnings of Canadian-born men rose by 10 percent. Earnings for immigrant women did rise by 6 percent during the same period, but this was still well behind earnings growth for Canadian-born women. 15 Immigrants in the 1990s were also less able to close the earnings gap over time than had been the case for earlier immigrant cohorts. By the early years of the present decade, immigrants who arrived in the 1970s were earning more than Canadian-born workers while immigrants who arrived in the 1980s were earning 85 percent of Canadian salaries. Immigrants who arrived in the 14 See http://www.cic.gc.ca/english/information/times/ international/index.asp 15 Picot, Garnett & Sweetman, Arthur, 2005. The Deteriorating Economic Welfare of Immigrants and Possible Causes: Update 2005. Analytical Studies Branch Research Paper Series 2005262e, Statistics Canada, Analytical Studies Branch. 16 Transatlantic Academy

1990s were earning roughly 70 percent of Canadian salaries, though this figure in part reflects the shorter period of time spent in the workforce. 16 Along with findings of declining earnings, even over time, came evidence that immigrants with university education and professional qualifications were unable to benefit from those qualifications in the job market. While immigrant degree holders, for example, did report higher earnings than less qualified immigrants, they remained well behind their Canadian counterparts. Immigrants from nontraditional source countries in Asia, Africa, and South America, were worse off than immigrants from Western Europe. A more important tendency can be observed with respect to foreign work experience, where experience in nontraditional countries provides fewer returns than does experience in the United States or Europe. Taken together these findings suggest that the decline in the economic performance of recent immigrants can be explained in large part as the result of the changing composition of immigrant intake. As immigration from nontraditional source countries increased, fewer immigrants arrived in Canada speaking English or French at the same level as native-born Canadians, and their experience and credentials are less valued by the labor market. 17 These findings suggest that the decline in the economic performance of recent immigrants can be explained in large part as the result of the changing composition of immigrant intake. 16 Ibid. 17 Aydemir, Abdurrahman & Skuterud, Mikal, 2004. Explaining the Deteriorating Entry Earnings of Canada s Immigrant Cohorts: 1966-2000. Analytical Studies Branch Research Paper Series 2004225e, Statistics Canada, Analytical Studies Branch. Missing the Point(s): The declining fortunes of Canada s economic immigration program 17

6 Ad Hoc Responses Foreign credential recognition As the declining economic fortunes of recent immigrants became better known both within governments and in the broader public, the issue of foreign credential recognition became a matter of considerable controversy. Although academic research, as described above, suggested that the most important factor affecting immigrant earnings was the lack of recognition by Canadian employers of overseas experience in nontraditional source countries, this was not the aspect of the problem that resonated with the public. Instead, driven largely by stories of immigrant professionals unable to work in their field due to obscure or unfair licensing procedures by Canadian authorities, the federal government sought to find ways to help immigrants gain recognition for their education and qualifications. Very quickly this effort ran into legal complications: provinces have constitutional jurisdiction over the many independent licensing bodies, and given the fractitious state of relations between the two levels of government, federal prescriptions were unwelcome. After considerable intergovernmental discussions, the federal government established in early 2007 a new Foreign Credential Referral Office (FCRO) with a mandate to assist immigrants in navigating the complexities of the licensing process. No substantive legal or regulatory changes in the credential assessment process resulted from this initiative, but at least immigrants would now have easily accessible resources available to help them make sense of the various requirements to be licensed to work in Canada. Growing numbers of provincial nominees As was noted earlier, following the recommendation of the LRAG report, the federal government began in the late 1990s to negotiate agreements with provinces, delegating authority to provincial authorities to nominate economic immigrants. The federal government retained responsibility for admission, including ensuring that applicants met health, security, and public safety criteria, but the economic assessment was made by the nominating province. These applicants were not assessed against the federal selection factors. While the number of provincial nominees admitted each year was initially very small, by 2005, the year in which backlogs and processing times for skilled workers began to receive real attention, the number of provincial nominees was becoming more significant. As is shown in Table 9, the annual admission of provincial nominees grew quickly from less than 500 in 1999, the first year of the program, to more than 17,000 in 2007. While the program had originally been conceived as a way to provide flexibility to respond to specific local needs that were not well addressed by IRPA s human capital model, it quickly became attractive to applicants and their legal representatives as an alternative to the long processing times affecting the skilled worker Table 9. Provincial Nominee Admissions, 1999 to 2007 Year 1999 2000 2001 2002 2003 2004 2005 2006 2007 Admissions (including dependents) 477 1,252 1,274 2,127 4,418 6,288 8,047 13,336 17,095 Source: Citizenship and Immigration Canada (Facts and Figures 2007) 18 Transatlantic Academy

category. This is because, as described above, provincial nominee applications are processed as a priority category, with no numerical limit. With admissions nearing 20,000 in 2007, this priority processing was beginning to have an impact on the number of skilled worker applications that could be finalized. Expansion of the Temporary Foreign Worker program Parallel to the permanent immigration stream, Canada has for many years allowed foreign nationals to work on a temporary basis, filling short-term or specialized needs in the labor market. With the exception of agricultural laborers who come to Canada under the auspices of bilateral agreements with Mexico and several Commonwealth Caribbean countries, most of these temporary foreign workers filled jobs that were highly skilled. Generally employers wishing to hire a temporary foreign worker are required to show they have been unable to locate a qualified Canadian. There are exceptions, for example, under the North American Free Trade Agreement (NAFTA), professionals and certain other skilled workers may work temporarily in Canada (as may Canadians in the United States). The number of temporary foreign workers admitted to Canada, as well as the total population of foreign nationals working in Canada with temporary status, began to grow dramatically in 2005 (see Table 10). The trend continued on through 2007, and while the economic downturn in late 2008 may reduce demand for foreign labor, there will likely be some lag time before numbers fall significantly. Two factors drove the recent increase in temporary foreign worker arrivals. The first, a new openness to lower-skilled workers to meet demand in certain regions of the country was largely unconnected to the permanent immigration program. A second factor, though, was directly linked to backlogs and processing times for skilled workers. Frustrated with delays in the permanent immigration system, employers began to seek to bring prospective immigrants into the country using temporary work permits (usually issued in a matter of weeks rather than the year needed for a skilled worker application to be processed) and at the same time began to lobby for a new approach to selecting economic immigrants that would emulate the two step process in the United States and other developed countries. While workers in Canada with temporary status had always had the option of submitting an immigration application at a Canadian consulate in the United States (a process known as the Buffalo Shuffle ), in early 2007, the government announced a new immigration category that would provide a streamlined path to permanent residence for workers who had spent at least two years in Canada, as well as foreign students who had completed their studies in Canada. This trend toward a two-step process helped drive temporary foreign worker volumes to record levels, and forced the government to reallocate resources from permanent immigrant This trend toward a two-step process helped drive temporary foreign worker volumes to record levels, and forced the government to reallocate resources from permanent immigrant processing. Table 10. Temporary Foreign Workers in Canada, 1997 to 2007 Year 1999 2000 2001 2002 2003 2004 2005 2006 2007 Admitted 107,221 116,651 119,775 111,016 103,426 112,720 122,848 139,279 165,198 Total 165,755 178,587 187,561 182,694 180,884 199,867 225,481 257,028 302,307 Source: Citizenship and Immigration Canada (Facts and Figures 2007) Missing the Point(s): The declining fortunes of Canada s economic immigration program 19

Each of these measures sought to respond to one aspect or another of the discontents plaguing the post- IRPA economic immigration program For the most part, though, the solutions addressed only the symptoms, not the causes, of the problems. processing to the handling of temporary visa and work permit files, reducing the operational capacity to finalize skilled workers as a consequence. Canada Experience Class In early 2007 the Canadian government announced plans to amend the IRPA regulations creating a new economic immigration category the Canada Experience Class (CEC). As described above, the new CEC was a response to growing frustrations with lengthy processing times for other economic immigration applications, a problem explicitly acknowledged in the Regulatory Impact Statement that accompanied the publication of the proposed regulations. Interestingly the regulatory package also pointed to other concerns with the existing skilled worker category, noting in particular that: the Federal Skilled Worker Program (FSWP) is facing challenges that are hampering our labor market responsiveness and our ability to compete internationally for skilled workers...the FSWP s emphasis on formal education limits its responsiveness to labor market demand for skilled tradespersons. as a result, employers are increasingly turning to the Temporary Foreign Worker Program to meet their human resource needs 18 Less than six years after the implementation of a comprehensive new act and regulations, which had entirely endorsed the vision of a human capitalbased selection system, the Canadian government announced that the system was broken. Moreover, the principal failings identified in the regulatory package, a lack of responsiveness to the labor market and an overemphasis on formal education were, ironically enough, central to the human capital model concept itself. 18 Canada Gazette, Vol. 142, No. 32 August 9, 2008. The requirements of the new CEC represented a dramatic departure from the IRPA selection criteria. Divided into two streams, one for persons who had been working in Canada as temporary foreign workers for at least two years, the other for persons who had been foreign students in Canada, the CEC moved away from the points system. In introducing the CEC, the government made clear that applications processed under the new category would be given priority in processing that would mean processing times equivalent to Provincial Nominee or Quebec selected cases. This would mean applications would typically be finalized within 12 months or less, as compared to the 36 to 68 months required to finalize a skilled worker. Equally important, the CEC would be implemented within levels, that is, for every CEC immigrant issued a visa, there would be one fewer spot for another applicant in practice one fewer skilled worker. Both these decisions only added to the pressure on the skilled worker category. Impact of the ad hoc responses Each of these measures sought to respond to one aspect or another of the discontents plaguing the post-irpa economic immigration program. For the most part, though, the solutions addressed only the symptoms, not the causes, of the problems. In some cases, the new measures actually exacerbated the difficulties facing the established skilled worker program. For example, the combination of increasing Provincial Nominee volumes and the introduction, within levels, of the CEC as a new priority category meant that there would be progressively less space in the levels plan and fewer resources available to process skilled workers. In the absence of new funding, increased numbers of temporary foreign workers, while responding to employer demands for timely processing, also diverted resources away from the permanent immigration program, again reducing the 20 Transatlantic Academy

operational capacity to deal with skilled workers and other immigrants. The creation of the FCRO was an attempt to respond to concerns about barriers that were causing immigrants to fall behind economically. A worthy initiative, it is by design limited to a modest role in helping immigrants understand the intricacies of the credential recognition process. The federal government, hampered by the constitutional division of powers, was unable to come to grips with the more fundamental problems of a balkanized and often frankly protectionist approach to credential recognition by Canadian authorities. An even greater weakness is the fact that there is clear evidence to suggest that credential recognition is not the most important factor contributing to declining economic outcomes for recent immigrants. No doubt because of the political difficulties that would arise from any discussion of the reasons why Canadian employers fail to recognize experience in many of the major source countries for Canadian immigration, that problem has so far gone unrecognized and unaddressed. In this context, it is important to note that because of the large inventory of applications received before IRPA came into force and slow processing times, none of the evidence about immigrant performance available has any bearing on the effectiveness of the IRPA model. Even as stakeholders raised doubts about the value of the human capital model, the data that prompted their concerns is limited to immigrants who were selected under the pre-irpa criteria. Missing the Point(s): The declining fortunes of Canada s economic immigration program 21