As Canada ramps up immigration, newcomers facing inflation shock

A year after hearing “welcome home” for the first time at the Canadian border, Shahzad Gidwani found himself questioning whether he and his wife made the right decision to start a new life here.

The timing wasn’t ideal, arriving in Toronto from India with their son just as the pandemic began sweeping the globe. Yet the 53-year-old held high hopes for his family’s future. He was bringing with him decades of international work experience in sales and marketing, and a master’s degree in business from the U.S.

But as inflation crept toward a 40-year high, eating away at the family’s savings, panic began to set in. Gidwani struggled to secure a permanent job with a living wage because employers didn’t want to hire someone without Canadian experience.

“We hadn’t prepared for inflation,” Gidwani said. He estimated they were spending nearly $6,000 a month on rent, furniture, food and basic necessities when they were first settling in. “We were in a state of shock.”

“We thought about whether we’d made the right decision because we were burning through money. What you spend here in one month would last you nine months back in India,” Gidwani said.

Many newcomers like Gidwani come to Canada dreaming of a better life, but lately they have found themselves pummelled by the highest inflation rate in four decades, unable to afford adequate housing, food and basic necessities. And as the federal government responds to historic labour shortages by ramping up immigration — targeting an unprecedented 1.5 million immigrants over the next three years and issuing work permits to non-Canadians at record highs — newcomers are arriving only to find mostly low-skill, low-paying jobs available to them.

Many Canadians are feeling the strain of exorbitant living costs, but those struggles can be more acute for recent immigrants and those trying to secure permanent residence. Newcomers can face discrimination and precarious work conditions while scrambling to fulfil convoluted immigration requirements. According to a recent RBC report, they earn less than the general population and are more likely to reside in inadequate housing.

“Because of competition and favouritism and racism, the Canadian dream of working your way up after you get here often doesn’t happen,” said Jim Stanford, economist and director of think tank Centre for Future Work.

The situation for newcomers is unlikely to get better, economists warn, as the government’s gambit to help fill nearly one million job vacancies with an aggressive immigration strategy risks creating an underclass of newcomers trapped in low-paying jobs with little hope of advancement or improvement, while often lacking the same basic rights and protections granted to Canadian workers.

Inflation shock

Like Gidwani, Sara, a former chief financial officer, moved to Canada a few years ago hoping her extensive work experience would help her secure employment while she and her family pursued permanent residence.

But hope turned to fear as Sara found her savings evaporating. Rent was “excessive,” Sara said, and for the first year she and her husband shared housing with another family to cut costs.

(Sara’s name has been changed and the Star has granted her anonymity as her immigration status could be compromised by speaking publicly.)

Immigrants are more than twice as likely to live in inadequate housing, with 16 per cent of immigrants living in homes not suitable for the size of their household, compared with seven per cent of non-immigrants, according to a recent RBC report. A full 21 per cent of immigrants spend more than 30 per cent of their income on housing, compared with 13 per cent of non-immigrants.

As she desperately looked for work, Sara found her job applications routinely rejected because she lacked Canadian experience, so she took up work as an Uber driver to stay afloat until she finally landed a job as a personal support worker.

“It was scary,” Sara said. “We needed income. We had savings, but based on how expensive everything was, that was used up quickly.”

Sara made it through COVID-19 lockdowns, job losses and discrimination before eventually getting a job in the financial sector, albeit in a position much lower than expected, given her skill set and experience.

It has also taken Gidwani two years to secure a job with adequate pay, but he remains on contract and feels like he’s constantly “on edge.”

Immigrants in 2021 accounted for more than half of the working-age population who hold a doctorate and master’s degree, or a degree in medicine, dentistry, veterinary medicine or optometry, as well as 39.1 per cent of those with a bachelor’s degree.

But only one in four immigrants with a university degree worked at a job that typically requires less than a high school education, or 2.5 times more than the “overqualification rate” of Canadian-born degree holders.

“You can see the difference is in how you’re treated as an immigrant,” Sara said. “It has brought me to tears to see how I have been treated and how other individuals have been treated, not because of our competency and our experience, but merely because … we weren’t born here.”

Now she and her family have come out the other side, having secured permanent residence, only to find themselves in a city of soaring costs.

“The grocery bill is almost double or triple the amount when we first came here. Not to mention the cost of gas and housing on top of that,” Sara said. “It’s beyond my expectation or understanding. And we’re seeing those costs go up, but we’re not seeing our wages go up.”

The median wage of immigrants admitted to Canada in 2018 was $31,900 one year after arriving, according to Statistics Canada. Despite being the highest wage since 1981, this was still 18 per cent lower than the 2019 median wage of the total Canadian population ($38,000).

Because of the high cost of living, Laura Sanchez, 42, and her husband, Daniel Faura, 42, are considering leaving Toronto after moving here with their children in 2021. Despite sending out hundreds of resumés and getting a Canadian education, Faura said he isn’t hearing back from employers. To be eligible for permanent residence, Faura needs 12 months of Canadian work experience in one of the government’s listed occupations before his work permit expires in a couple of years.

For the time being, Sanchez and Faura, who were journalists in Colombia, have picked up cleaning jobs with long night shifts at a warehouse, making $14 an hour, which barely covers the cost of their $2,100 monthly rent. The low wages mean they frequently have to resort to food and clothing banks to cover basic necessities.

According to Statistics Canada, an estimated 12 per cent of immigrants get trapped in chronic poverty and nearly one-third experience shelter poverty. Because of these conditions, 30 per cent of young new Canadians aged 18-34 and nearly a quarter of university-educated newcomers say they are likely to leave Canada in the next two years, according to a 2022 survey conducted by Leger in partnership with the Institute for Canadian Citizenship.

“That’s why we are thinking about moving to another province, because it’s too difficult to make it work here in Toronto,” Faura said.

Unprecedented expansion

Newcomers like Faura often have the promise of permanent residence — and eventually, citizenship — dangled before them, but the journey to both is becoming increasingly difficult as Canada expands its immigration programs and admits more and more people.

Both of Canada’s two main programs through which work permits are issued — the International Mobility Program and the Temporary Foreign Worker Program — have ballooned in recent years to fill labour gaps in the aftermath of the pandemic.

But the biggest surge in temporary foreign labour has been largely driven by the massive expansion of open work permits under the International Mobility Program. This program allows employers to hire a foreign worker without a labour market assessment, which demonstrates that there is a need for a foreign worker to fill the job and that no Canadian worker or permanent resident is available to do it. Those in Canada on open-work permits include hundreds of thousands of international students.

Immigration, Refugees and Citizenship Canada processed more than half a million more work permits in 2022 than it did the previous year. An estimated 756,000 work permits were processed in 2022, compared with approximately 215,000 in 2021, according to IRCC data. More than 470,000 of these work permit holders were under the International Mobility Program in 2022, up from 253,365 work permit holders in 2018 — a whopping 85 per cent increase.

One of the main reasons for the growth of the International Mobility Program is the “explosion of the international student program,” said Syed Hussan, executive director of Migrant Workers Alliance for Change.

Post-secondary institutions in Canada have ratcheted up their intake of international students, who can work without permits while they study. In 2021 there were 845,930 valid study permit holders in Canada, which increased to 917,445 as of Sept. 30 last year. At the same time, the amount of international students with T4 earnings skyrocketed to 354,000 in 2019, up from 22,000 in 2000, according to Statistics Canada.

The 20-hour weekly work cap on international students was also lifted last year, which experts have cautioned could create yet another tier of temporary foreign workers stuck in low-wage jobs.

While the move was seen as a positive step for students hoping to get work experience in their field, “it could set them up for becoming another form of low-skill, low-wage worker and an underclass that employers can then exploit,” said Toronto Metropolitan University professor Rupa Banerjee, Canada research chair of economic inclusion, employment and entrepreneurship of Canada’s immigrants.

Harshill Dhingra, 23, who is in Canada on a three-year, post-graduate work permit, is feeling the anxiety of having to complete 12 months of work before his visa expires to be eligible for permanent residence.

Dhingra came to Canada from India four years ago and completed his bachelor’s degree in commerce and accounting. He is currently working at a job that pays him $44,000 annually before tax, which makes it extremely difficult for him to keep up with increasing rent and costs of living.

“The job definitely underpays, but since the experience is counting toward my permanent residence I’m too scared to leave it or get fired,” Dhingra said.

While 60 per cent of international students plan to apply for permanent residence, only three in 10 international students who entered the country in 2000 or later ended up getting it within 10 years, according to Statistics Canada.

Amid growing concerns about the treatment of international students, publicly funded colleges in Ontario recently announced they are bringing in a new set of rules to protect those coming from abroad to study, including post-graduation services to assist international students’ settlement.

“I can’t stress the importance of giving newcomers status. It gives us rights and the ability to speak up and make choices,” Dhingra said.

A permanent feature

The federal government’s various policy changes normalize temporary work and make it harder for many newcomers to make a decent living, forcing them into low-skilled jobs while now also facing a housing and affordability crisis, according to economists.

It’s a problem that won’t get better any time soon because the growth in foreign labour is driven by employers’ desire to keep wages low, Banerjee said.

“The desire for cheaper, more flexible wages is really what’s driving the growth in temporary resident permits,” said Banerjee. “It transforms the role of the immigrant from a person who is there to be a future citizen to someone who’s there as an economic unit or a worker.”

Stanford argues that the labour shortage narrative coming from companies and the government is misleading and an excuse for the government to bend to corporate pressure instead of forcing companies to improve working conditions and raise wages.

“It helps employers lock in the situation where those low-wage jobs are a permanent feature of the labour market,” Stanford said. It allows companies to say the solution is to “quickly find desperate workers so that way they don’t have to change the job, which could be insecure with irregular hours and pays minimum wage with no benefits,” he added.

Because of this, many newcomers may arrive in Canada unprepared for the reality, he said.

“They’ll find themselves segmented into insecure, low-wage work and, as we know, with the cost of living crisis for everyone in Canada, it’s particularly acute for people in insecure, low-wage jobs, including most migrant workers,” Stanford said.

And even when newcomers get permanent residence, many have to restart their careers and upward mobility seems impossible.

“Immigrants always have to start at the bottom of the labour market and work their way up. There’s no surprise that new Canadians are disproportionately represented in low-wage jobs. They don’t have the network, the connections or the Canadian experience to have equal access to better jobs, even if they’re skilled,” Stanford said.

Sheila Block, a senior economist with the Canadian Centre for Policy Alternatives, emphasized that foreign labour is not taking jobs away from Canadians. The solution is for employers to increase pay and improve working conditions while also protecting newcomers who bring much-needed skills to Canada and help the country’s economy.

“What we need is a just immigration policy that gives workers rights upon entry, and along with that we need a public sector and collective services, which includes transit, housing and health care that will be adequate for all of us, including newcomers,” Block said.

Gidwani and his family love their new home in Canada, but the road to security was long, expensive and harder than it needed to be.

“I tell people who want to come to Canada that the cost of living is so much higher here than where they’re coming from,” said Gidwani, who along with his wife has found work and now dedicates much of his time to helping newcomers like himself plan for the realities of moving to Canada so they are set up for success.

“They can get a job — but it might not be the job they want for a while and it’ll be minimum wage,” Gidwani said.

“I tell them that it’s not impossible, but it’s not easy.”

With files from Nicholas Keung

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