July 10, 2024

We know the one thing we could be doing to select better economic immigrants, so why aren’t we doing it?

Bottom Line:

  • To maintain global competitiveness, Canada should improve its selection of economic immigrants
  • The main problem is that the CRS points system is supposed to be a predictor of immigrant success, but the factors it considers now account for only 16% of the difference in immigrants’ earnings in the short-term. It could be better.
  • The best thing we could do would be to incorporate labor market information, specifically earnings.

The federal government is considering active international recruitment as a way to bring immigrants with valuable skills into Canada. This is a good idea. But like a hockey team looking to attract free agents, Canada should first ensure it’s not overlooking prospects already in the system. 

The recruitment plan was first suggested last fall in Immigration, Refugees and Citizenship Canada’s (IRCC) proposed plan for the future of immigration. In our view, active recruitment could complement the existing system used to select economic immigrants. It can deepen the applicant pool and target those with the skills Canada most needs.

But at the same time, Canada already has around 200,000 applicants waiting to be processed through its Express Entry system for economic immigrants. Only a fraction is ever invited to apply for permanent residency.

What if we’re missing someone right under our nose?

Who ends up getting an invitation to apply is based primarily on how applicants score on Canada’s Comprehensive Ranking System (CRS)—a points-based approach to economic immigrant selection. The beauty of the CRS is that it allows IRCC to easily, and objectively, select the best of the bunch (i.e., those likely to bring the greatest value to the Canadian economy). This approach, first introduced over 50 years ago, has enough positive features that it’s been emulated globally.

But it could be better.

The main problem is that the points system is supposed to be a predictor of immigrant success, but the factors it considers now account for only 16% of the difference in immigrants’ earnings in the short-term. Longer term, it’s even less.  

That means at least one of two things are happening: the factors that get you points under the current approach are not good predictors of immigrant success; and/or other important factors that do predict success are being overlooked.

Turns out, both are true. And either way, it means Canada is likely overlooking excellent candidates.

Candidates receive CRS points for things like language abilities, number of years of schooling, and whether they have a sibling in Canada. But factors like what their degree was in, or where they got it from, is not reflected. Meanwhile, the biggest limitation of the points system is that it ignores labour market information. It therefore tells us little about how valuable someone’s skills are to the Canadian economy.

To go back to hockey analogies, this way of assigning CRS points is like ranking players based on the number of games they have played in the NHL, whether they have a brother in the league, and whether they speak French—while neglecting things like how many points they tend to get every year. The evaluation would not be meaningless, but it’s easy to see how some of the best players wouldn’t be ranked at the top.

To improve the CRS, Canada needs to better capture the value of the skills a candidate brings. As it turns out, the best-known way to do so is pretty simple: have the points system reflect their current earnings.

Why is that? Wages reflect both the needs of the economy (demand) and the relative availability of labour (supply). Generally speaking, if demand for a certain occupation or skillset is strong, or few are willing or able to do this work, wages will be high.

There are other ways to improve the CRS, too.

One is to remove the variables that don’t influence an individual’s economic potential. These factors not only muddy the ranking of candidates but also can unfairly bias certain people or groups. For instance, individuals can earn points for having a sibling in Canada even though the math shows this has no direct impact on economic success. Family in Canada may be legitimate reason to consider someone for immigration, but is not an economic one, and it is being used in the economic stream. At the same time, favouring people who already have family in Canada puts individuals from smaller countries, or those with less immigration to Canada, at a disadvantage.

Another way to improve the CRS is to regularly refine it as new and better information—including the type and quality of skill (e.g., field of study, program of education) most highly valued—becomes available and can be incorporated. The CRS cannot reflect the economy of 50 years ago. It has to be the latest and greatest of today.

The recruitment of skilled talent globally is big, exciting, and holds much potential. But Canada should not lose sight of the power of the points system, nor the talent that is in plain sight. Before marketing the country to individuals around the world, Canada should do more to select the best among those who have already put their name in the hat—to support greater prosperity for all. 

Read this commentary on The Hub here.

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