China and Canada:
Economic linkages, migration
and the Canadian labour market
Canada-China Human Capital Dialogue
Ottawa
November 28, 2012
Outline
 Canada-China economic linkages
 Key global labour market drivers
 Migration and the Canadian labour market
 Chinese migrants to Canada
 Migration flows
 Chinese immigrants: educational attainment
 Chinese immigrants: labour market outcomes
 Looking forward
2
Canada-China economic linkages
3
Growing linkages between Canada and China
 People: 4% of Canadians (1.35M people) are of Chinese birth or ethnic background;
China is the largest source of migrants to Canada.
 Trade: China is now Canada’s 2nd largest trading partner, after only the US.
 Investment: China (PRC) is the 9th largest source of foreign direct investment in Canada.
Canada's trade with China (2002-2011)
60.0
Trade in Billions (CAD)
50.0
40.0
Total Imports
30.0
Total Exports
20.0
10.0
0.0
2002
2003
2004
2005
2006
2007
*Includes both Hong Kong and the People’s Republic of China
Source: Industry Canada, Statistics Canada, Conference Board of Canada
2008
2009
2010
2011
4
Government of Canada has signaled that relations with China are a priority
“Our Government continues to strengthen its ties with China.
Our Government will continue to actively engage with China to explore how to best
enhance our growing bilateral trade and economic relations.
The potential for increased Canadian investment in China is significant given that
China is expected to become the world’s largest economy by 2020.
In February 2012, Canada announced that after 18 years of negotiation Canada and
China had concluded a Foreign Investment Promotion and Protection Agreement. This
landmark agreement will facilitate investment flows between Canada and China by
providing a more stable and secure environment for investors on both sides of the
Pacific.”
Budget 2012
5
Key global labour market drivers
6
Demographic change
 Canada and China have both now passed the peak of their “demographic dividend”
– the rise in working-age share of population that contributed significantly to growth
in living standards in both countries.
 Impending declines in the working-age share of both countries’ populations will exert
downward pressure on their aggregate participation rates, requiring accelerated
productivity growth to sustain living standards.
 In 2010, the working-age (15-64) proportion of the two countries’ populations were:
– 74.5% for China (one of the highest proportions); and 69.4% for Canada.
Ratio of working-age to non-working age population
3
2.5
2
1.5
1
1950
1975
2000
Canada
2025
2050
China
Sources: David Bloom, World Population Prospects 2008; World Bank, World Development Report 2013: Jobs (2012),
7
Globalization and the shift to emerging economies
 Global economic linkages are growing rapidly, including global flows of goods and
services, investment, and people, resulting in a more integrated global labour market.
 The global economic centre of gravity has shifted toward emerging economies, which
now account for almost all global growth; China has led the world in economic growth.
 Growth in emerging market economies has generated upward pressure on commodity
prices, driving a westward shift in the Canadian economy.
Growth of real GDP per capita
Emerging
Markets and
Developing
Economies
Advanced
Economies
Sources: IMF, World Economic Outlook Database
8
Globalization: growing international migration flows
 Globally, there are 214 M international migrants, of whom 90M are workers.
 Canada is one of the largest immigrant-receiving countries in the world; immigrants
represented 21.3% of population in 2010 (versus 21% in Australia, 13.5% in US).
 China receives few immigrants; they represented just 0.1% of the population in 2010.
 Emigrants represent 4.2% of the Canadian population and 0.6% of the Chinese
population; Canada is a net importer of people, China a net exporter.
Immigrants as percentage of labour force
Source: World Bank, World Development Report 2013: Jobs (2012)
9
Technological change and demand for higher skills
 Technological change consistently linked to higher job skill requirements worldwide.
 In advanced economies, employment growth has been strongest in highly-skilled jobs.
 In Canada, job growth in occupations requiring a university degree has far outpaced growth
in other occupations, resulting in a rising labour market share of highly skilled jobs.
Employment share and employment growth by job skill level,
Canada,
1990-2011growth (1991-2011)
Employment share and
employment
40
80
74
70
30
60
25
50
20
40
15
30
30
29
26
10
Employment Growth (%)
Employment Share (%)
35
1991 share
2011 share
% growth
20
20
5
10
0
0
Management
occupations
Occupations
Occupations
requiring a university requiring a college
degree
diploma
Occupations
requiring a high
school certificate
Occupations
requiring on-the-job
training
Source: Labour Force Survey, calculations by HRSDC.
10
Skills supply: global educational attainment has risen rapidly
 Rates of postsecondary education (PSE) attainment have doubled in advanced economies
and more than doubled in developing economies over the past 30 years.
 Worldwide, the supply of working-age people with completed PSE has risen by 500M,
with 60% of this increase coming from developing economies.
 China has prioritized increases in educational attainment, raising average years of
schooling and generating rapid growth in the number of Chinese PSE graduates.
Graduates from postsecondary institutions, China
7
Millions
6
5
4
3
2
1
1980 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010
Source: China Statistics Yearbook (2010)
11
And China is expected to become a leading source of postsecondary graduates
“While China will be eclipsed as the world’s leading source of low-cost labour, it will
assume a new and potentially more important role as the largest supplier of college
educated workers to the global labour force.” (McKinsey 2012)
Projected sources of global supply of new workers with postsecondary education, 2010-30
100%
90%
80%
70%
10%
27%
Young Developing
60%
50%
India
30%
China
40%
Young Middle-Income
30%
Advanced economies
20%
10%
18%
14%
0%
Source: McKinsey Global Institute 2012
12
Canadian postsecondary attainment levels are high and rising
 Canada is a top performer in terms of overall PSE attainment; 51% of the adult population
(25-64 years old) had a postsecondary degree or diploma in 2010.
 Canada’s college
participation is
particularly high.
Percentage of population with tertiary education,
Canada and OECD Average, 1997-2010
 However, while
Canadian university
enrolment rates
continue to rise,
especially among
women, Canada’s
university attainment
ranking has slipped
as other countries’
enrolment rates have
risen even faster.
Source: OECD Education at a Glance, 2012.
13
However, demand for highly skilled workers may be rising faster than supply
 Internationally, one recent projection indicates that the global supply of workers with PSE
will be inadequate and there will be an oversupply of workers without PSE by 2020.
 Canadian and US evidence show rising earnings premia for PSE, suggesting that
domestic growth in demand for highly educated individuals may be exceeding growth in
supply, especially in STEM fields (Science, Technology, Engineering and Mathematics).
Median earnings premia of Canadian-born men with bachelor’s degrees,
ages 25-64, in labour force
Sources: McKinsey 2012; Congressional Budget Office 2011; Census Canada 2006, HRSDC calculations
14
Migration and the
Canadian labour market
15
Immigration represents a significant source of future labour supply
 As the rate of growth of the domestic labour force slows, immigrants represent a rapidly
increasing contribution to net labour force growth.
 Within five years, virtually all of Canada’s net labour force growth will come from immigration;
although school leavers will continue to account for most (82%) new labour market entrants.
New immigrants and Canadians in the labour force (15+, non-student) 1996-2020
Thousands
Projection
Source: HRSDC, 2011 COPS Reference Scenario.
16
Canada is a destination for highly skilled immigrants
 Canada experiences net in-migration of highly skilled immigrants.
 Selection criteria favouring highly educated immigrants have resulted in a very
qualified pool of recent immigrants; Canada’s immigrants are among the most
highly educated immigrants internationally.
 China currently experiences net out-migration of highly skilled migrants.
Highly-skilled immigration, % of highly skilled labour force
Source: World Bank, 2013
17
Recent immigrants are significantly more educated than Canadian-born persons
 Recent immigrants (5 years or less) are more highly educated than Canadian young people,
the comparator group of new labour market entrants:
– 49% of recent immigrants (ages 25-54) in the labour force have a university degree,
compared to just 31% of youth 30-34, and 21% of prime-age Canadian-born persons.
Distribution of labour force groups by educational attainment, 2011
100%
9
19
90%
80%
31%
49%
University: graduate
degree
22
University:
undergraduate degree
70%
30
60%
50%
41
Post-secondary
certificate or diploma
22
40%
HS and some PSE
30%
6
20%
21
Less than HS
22
10%
9
0%
Very recent immigrants, 5 years or less
Source: Labour Force Survey
Youth 30-34
18
… and so they contribute disproportionately to Canada’s human capital
 Immigrants account for 20% of new labour market entrants, but represent:
– 27% of new entrants with undergraduate degrees;
– 36% of new entrants with graduate degrees.
 In certain fields, recent immigrants are even more highly represented. Among
persons with Science, Technology, Engineering and Mathematics (STEM) credentials,
immigrants account for:
– 21% of those with college credentials,
– 44% of university undergraduate degrees, and
– 60% of STEM university graduate level degrees.
 Research indicates that immigrants also contribute disproportionately in the areas of
entrepreneurship and innovation (Conference Board, Kaufman Foundation).
Percentage distribution of new labour market entrants by educational attainment,
and by immigrant / school leaver status (2012)
100%
80%
15
13
85
87
Less than Postsecondary Education
Post-secondary
certificate or diploma
27
36
New
immigrants
73
64
Youth /
school
leavers
Undergraduate degree
Graduate degree
60%
40%
20%
0%
Source: Labour Force Survey
19
But there is a widening earnings gap between immigrants and Canadian-born
 In particular, the premium for immigrants postsecondary education has been falling over
time, whereas the premium for Canadian-born PSE has risen.
 Research points to a range of explanations, including: lack of official language fluency;
negative effects of high unemployment rates at the time of arrival in Canada.
% by which earnings exceed HS graduates
MedianMedian
earnings
premia
of men
with
degrees
by immigration
earnings
premiums
of men
withbachelor’s
bachelor's degrees
by immigration
status, status,
aged25-64,
25-64, in
force
ages
inlabour
labour
force
60%
50%
Canadian-born
40%
Total
30%
Immigrants
20%
10%
0%
1985
Source: Census, HRSDC calculations
1990
1995
2000
2005
20
Foreign credentials are often discounted by the Canadian labour market

Immigrants with Canadian PSE credentials have, in general, labour market
outcomes far superior to those with credentials from outside Canada.
Source: Census 2006.
21
Chinese migrants
to Canada:
Migration flows
22
China is the top country of origin overall for migrants to Canada
 In 2011, migrants from China (PRC) accounted for:
• 22 % of all foreign students (1st among source countries);
• 11 % of all permanent residents (2nd); and
• 1.4 % of all temporary foreign workers(14th).
Migrants to Canada by category and source country, 2011
40000
35000
30000
25000
Permanent
Residents
20000
Students
15000
Temporary
Foreign
Workers
10000
5000
0
53,092
48,148
43,873
43,282
26,712
18,294
China (PRC)
US
India
Philippines
France
UK
Source: CIC Facts and Figures
23
A rising proportion of Chinese migrants to Canada are students
 China accounted for 22,000 of 98,000 foreign students entering Canada in 2011.
 Overall foreign student entries to Canada have risen, from 66,000 in 2004.
Peoples Republic of China Migration to Canada by Category
80000
70000
Foreign Students (Flow)
60000
50000
TFW (Flow)
40000
Permanent Residents
(Flow)
30000
TFW (Stock)
20000
10000
Foreign Students (Stock)
0
2002
2003
2004
Source: CIC Facts and Figures
2005
2006
2007
2008
2009
2010
2011
24
Chinese immigrants:
Educational attainment
25
Chinese immigrants are, on average, highly educated
 Over half (56%) of Chinese-born persons in Canada ages 25-54 have a university degree.
Distribution of Chinese-born by educational attainment, ages 25-54
60.0%
56%
50.0%
42%
40.0%
30.0%
21%
20.0%
12%
19%
17%
11%
11%
8%
10.0%
3%
0.0%
No certificate, diploma High school certificate Apprenticeship or trades College, CEGEP or other University certificate or
or degree
or equivalent
certificate or diploma
non-university
degree
certificate or diploma
Canada
*Chinese Immigrants compared with total population
Source: 2006 Census
Chinese Born
26
Successive cohorts of Chinese immigrants have been increasingly highly educated
 Nearly three quarters of recent immigrants from China (25-54), have a university degree.
Distribution of Chinese-born by educational attainment and period of immigration, ages 25-54
80.0%
70.0%
University certificate or
degree
60.0%
50.0%
College, CEGEP or other
non-university certificate
or diploma
40.0%
Apprenticeship or trades
certificate or diploma
30.0%
High school certificate or
equivalent
20.0%
No certificate, diploma or
degree
10.0%
0.0%
Before 1991
1991 to 1995
1996 to 2000
2001 to 2006
Period of Immigration
Sources: Census 2006
27
Young Chinese immigrants have high levels of PSE participation
 Young Chinese immigrants are much more likely than other young immigrants to
attend university, with attendance rates of 88%.
Participation rate of young immigrants (age 21) in university, by area/country of origin
100
90
Participation Rate (%)
80
70
60
50
40
30
20
10
0
China
Other Asia
Africa
Eastern and
Southern
Europe
Anglosphere Western and
Northern
Europe
Other East
and SouthEast Asia
Americas
(except USA)
Source: Ross Finnie and Richard Mueller , 2010
28
…and 2nd generation Chinese-Canadians also outperform other groups
 2nd generation Chinese-Canadians are significantly more likely to have a university
education than other groups.
Proportion of second generation with a university degree by source country of parents,
individuals ages 25-43
70
60
Proportion (%)
50
40
30
20
10
0
Source: “Making it in Canada “ Sweetman and Picot, Census 2006
29
Chinese immigrants:
Labour market outcomes
30
However, high educational attainment is not always reflected in labour market indicators
Unemployment rate by country/area of birth, ages 25-54
12
Unemployment Rate (%)
10
8
6
4
2
0
Philippines
United
States of
America
Europe
Hong Kong
Canadian
Born
India
South
America
China,
Central Asia
People's
and the
Republic of Middle East
Africa
Source: Census 2006
31
… and high levels of educational attainment do not necessarily result in high skill jobs
Skill level of occupation by location of postsecondary study
Source: Census 2006, StatsCan “Employment outcomes of PSE immigrants”
32
Labour market performance improves with duration of residence in Canada
Labour market indicators for Chinese-born by period of entry, ages 25-54
90
14
Employment rate
Unemployment rate
80
12
70
50
8
40
6
30
4
Unemployment Rate (%)
Employment Rate (%)
10
60
20
2
10
0
0
Chinese
(Total)
Source: Census 2006
Before 1991
1991 to 1995
1996 to 2000
2001 to 2006
33
Looking forward
34
Key issues affecting Canada-China linkages and human capital flows
 Trade
– Agreement to proceed to exploratory discussions on deepening trade and
economic relations; implications for migration
– Temporary entry is a key part of all trade agreements
 Investment
– Foreign Investment Promotion and Protection Agreement (2012)
– Natural resources, manufacturing are key sectors
 Immigration policy
– Articulated Government of Canada goal of better aligning immigration policy with
labour market needs
– Changes to Federal Skilled Worker Program (greater weight for official language
ability, Canadian experience)
– Recent federal-provincial agreement to implement Expression of Interest model
– Canadian Experience Class (expedited, more flexible pathway to permanent
residence is expected to assist international students)
 Other migration policies
– Foreign students (recent Advisory Panel recommendation that foreign student
numbers in Canada be doubled by 2022)
– International youth exchanges
– Temporary foreign workers
35
Human capital investments are key
 Investments in human capital, and ensuring that existing human capital is fully
utilized, are central to growth in productivity and living standards in all countries.
“Advanced economies will succeed on the strength and quality of their human
capital. … In fact, a government could choose to make human capital
central to its economic development strategy, on the theory that where the
best talent resides, innovation will thrive and investment capital will flow to
support all kinds of economic activity.”
McKinsey Global Institute, Help wanted: The future of work in advanced economies, 2012
36