Use it or lose it: The problem of labour underutilization among immigrant workers in Canada

Abstract Canada is widely recognized as a desirable destination for new immigrants and all levels of governments are generally supportive of ambitious immigration targets set to help meet labour demand. Canada's immigration system is based primarily on human capital, selecting the world's most highly skilled newcomers. However, immigrants to Canada have often faced difficulty in attaining labour market outcomes commensurate with their knowledge and experience. In this analysis, we examine the paradox apparent in the Canadian immigration system—the selection criteria attract highly educated and skilled workers, yet many are not able to find employment opportunities that match their abilities—through the lens of the Labour Utilization Framework. Using data from the Canadian Labour Force Survey for the years 2006–2019 inclusive, we explore five different dimensions of skill underutilization or brain waste: involuntary part‐time work, minimum wage work, unemployment, over‐education (i.e., underemployment), and worker discouragement. Our results suggest that on all dimensions of labour underutilization measured in the study, immigrants are overwhelmingly at a disadvantage relative to their Canadian‐born, non‐Indigenous counterparts. We discuss the ethical implications of immigrant brain waste for both individuals and society and conclude by suggesting some possible policy responses to improve the utilization of immigrant talent in Canada.