Temporary residents, new immigrants push up Canada unemployment

Temporary residents and recent immigrants are driving up Canada’s unemployment rate, as record numbers of newcomers welcomed to the country to fill labor shortages are now struggling to find work.

The unemployment rate for temporary residents – including foreign workers, international students and asylum seekers – was 11% in June, according to Bloomberg calculations. Using comparable data, the unemployment rate for all workers was just 6.2% last month.

Immigrants who’ve landed in the last five years are also having a hard time finding a job, with their unemployment rate reaching 12.6% in June.


“The biggest single weighted contribution to the rise in the unemployment rate has been from the temporary residence category,” Derek Holt, an economist at Scotiabank, said on BNN Bloomberg Television earlier this week.

In a recent speech, Bank of Canada Governor Tiff Macklem acknowledged that the loosening of Canada’s labor market has hit young workers and newcomers particularly hard. They’re also more likely to be renters — a group facing higher financial stress.

Prime Minister Justin Trudeau’s government “has some room” to slow the growth of non-permanent residents without causing labor shortages or tightening the market, Macklem said. The government plans to cut this group of residents by 20% over three years.

The contribution of temporary residents and recent immigrants to the overall unemployment rate has more than doubled in less than two years, Bloomberg calculations show. Together, the two groups account for nearly one fifth of all workers sitting on the sidelines, but just one tenth of the labor force.

Statistics Canada does not directly report the unemployment rate for temporary residents, but it can be calculated using other data provided by the agency. It also only provides labor market data by immigrant status on a non-seasonally adjusted, three-month average basis.

That’s why the comparable unemployment rate for all workers in June is 6.2%, rather than the more commonly cited figure of 6.4% — which reflects a single month and is seasonally adjusted.

According to Bloomberg calculations, the unemployment rate for temporary residents hit a record low of 5.7% in November 2021.

That suggests the Trudeau government’s pandemic-era decision to loosen restrictions for foreign students and workers may have backfired. While the additional labor was initially needed to fill job vacancies in 2022, newcomers have increasingly been sidelined as unfilled positions disappear.

As the number of temporary residents decreases, unemployment will too, Holt said. “As we take out that category of immigration and slow it down and reverse it, the unemployment rate may edge back a little bit,” he said.

It can take years for newcomers to fully integrate into Canada’s labor market: the unemployment rate for recent immigrants is more than twice that of a Canadian-born worker. But after a decade or more, immigrants find jobs at virtually the same rate as people born in Canada, the data show.

The labor market is “bifurcating into two camps,” said Brendon Bernard, an economist at Indeed. Canadians in stable careers are doing well as there hasn’t been a rise in layoffs, he said. But for gig workers or new job-seekers, the market is tougher.

“Employer hiring appetite has really cooled, and there’s been a wave of population growth that’s resulted in a lot of job seekers in Canada,” Bernard said.