Recent immigration reforms in Canada have cut international student and temporary resident numbers , restricted work permits for them and their spouses and aim to reduce permanent resident admissions by 21 per cent in 2025, with further cuts ahead.
Authors
- Marshia Akbar
Director of the BMO Newcomer Workforce Integration Lab and Research Lead on Labour Migration at the CERC Migration and Integration Program at TMU, Toronto Metropolitan University
- Anna Triandafyllidou
Canada Excellence Research Chair in Migration and Integration, Toronto Metropolitan University
Such changes are aimed to avoid competition with local unemployed Canadians at a time of rising unemployment. However, these changes may eventually intensify dysfunctions in the Canadian labour market.
With an overall unemployment rate of 6.6 per cent and a youth unemployment rate of 13.6 per cent alongside a worsening housing crisis, these policies reflect growing pressures.
However, blaming newcomers - particularly international students and their spouses - for job shortages overlooks deeper structural issues in the labour market. Canada's labour market struggles are not caused by the number of newcomers, but by systemic issues such as underemployment and skills-job mismatches.
Unemployment and underemployment
While rising unemployment is affecting everyone, newcomers have been hit especially hard. In 2024, the unemployment rate for immigrants hit 11 per cent - more than double the 5.6 per cent rate for Canadian-born workers.
Underemployment is also a persistent issue for immigrants. In 2021 , only 44 per cent of immigrants who had arrived in Canada within the previous decade were employed in jobs matching their education level, compared to 64 per cent of Canadian-born workers aged 25 to 34.
The over-education rate - the proportion of university graduates working in jobs for which they are over-qualified despite holding a bachelor's degree or higher - was 26.7 per cent for immigrants, more than double the 10.9 per cent rate for Canadian-born workers in 2021.
Immigrants, particularly those with foreign credentials, are significantly more likely to experience these job-education mismatches compared to Canadian-born workers.
Approximately two thirds of recent immigrants held a degree from a foreign institution. The over-education rate for these immigrants was 24 per cent higher than that of younger Canadian-born workers.
Under-employment experienced by many newcomers is largely driven by employers favouring Canadian experience - despite such preferences being illegal in Ontario - and relying on referral networks, which often disadvantage newcomers.
Hiring managers frequently undervalue international credentials, even when assessed by organizations like World Education Services . Many employers struggle to assess foreign work experience. Some also perceive a lack of familiarity with Canadian workplace norms as a hiring risk.
Ultimately, hiring managers tend to choose the less risky option , as a bad hire can reflect poorly on them. An exceptional hire, on the other hand, doesn't necessarily bring them equivalent rewards.
International experience is undervalued
International graduates with Canadian degrees generally achieve better labour market outcomes than those educated entirely overseas, experiencing higher earnings and improved job matches.
However, many still face significant barriers, primarily due to employers' preference for specific Canadian experience and biases in assessing their skills.
Although many international students ( 277,400 in 2018 ) gain Canadian work experience during their studies and develop soft skills - often in low-paying, customer-facing roles such as accommodation and food services, retail, hospitality or tourism - this experience is often dismissed as irrelevant to professional roles.
This creates a paradox: employers require Canadian experience for entry-level positions in their field, yet without prior experience, graduates struggle to get hired in the first place.
In addition, employers often lack clarity about international graduates' visa statuses, work permit durations and future stays in Canada . Constantly changing policies exacerbate this confusion, deterring employers from hiring.
A path forward
Canada's long-term competitiveness is hindered not by immigration, but by systemic labour market discrimination and inefficiencies that prevent skilled newcomers from fully contributing to the economy.
Eliminating biases related to Canadian work experience and soft skills is key to ensuring newcomers can find fair work. The lack of recognition of foreign talent has a detrimental effect on the Canadian economy by under-utilizing valuable human capital.
To build a more inclusive labour market, a credential recognition system should support employers in assessing transferable skills and experience to mitigate perceived hiring risks related to immigrants.
For international students, enhanced career services at educational institutions are critical. Strengthening partnerships between universities, colleges and employers can expand internships, co-op placements and mentorship programs, providing students with relevant Canadian work experience before graduation.
Such collaboration is also key to implementing employer education initiatives that address misconceptions about hiring international graduates and highlight their contributions to the workforce.
Artificial Intelligence (AI) can also play a role in reducing hiring biases and improving job matching for new immigrants and international graduates. Our recent report , which gathered insight from civil society, the private sector and academia, highlights the following AI-driven solutions:
Tools like Toronto Metropolitan University's AI resume builder, Mogul AI , and Knockri can help match skills to roles, neutralize hiring bias and promote equity.
Wage subsidies and AI tools can encourage equitable hiring, while AI-powered programs can help human resources recognize and reduce biases.
Tools like the Toronto Region Immigrant Employment Council Mentoring Partnership , can connect newcomers with mentors, track their skills and match them to employer needs.
Harnessing AI-driven solutions, alongside policy reforms and stronger employer engagement, can help break down hiring barriers so Canada can fully benefit from the skills and expertise of its immigrant workforce.
Marshia Akbar receives funding from the Social Sciences and Humanities Research Council of Canada (SSHRC).
Anna Triandafyllidou receives funding from the Social Sciences and Humanities Research Council of Canada (SSHRC), the Tri-Agency of Research Councils, Canada and Horizon Europe framework program of the European Commission.
