"Two Step" Immigration

Canada’s new immigration system raises troubling issues
October 1, 2010

Over the last 10 years, the barriers that immigrants to Canada face in integrating economically, socially, and politically have become relatively common knowledge. The taxi driver with a Ph.D. degree is the proverbial example. In reaction to growing labour market shortages and the continuing decline in immigrant labour market outcomes, the federal government has been shifting the structure of the immigration system from a “one-step” process that is largely based on permanent residency and views immigrants as citizens to a “two-step” process. This process is increasingly based on temporary migration and views migrants as workers. Despite the enormous implications of this shift, it has been happening largely without the influence of public debate.

    Immigrants are more highly skilled than Canadian-born individuals, but they experience disproportionate levels of poverty, unemployment, and underemployment, especially in the short term. The 2006 Census found that, in Toronto, 53.1% of immigrants who arrived since 2001 had a university certificate, diploma, or degree at a Bachelor’s level or higher, compared to 33.6% of people born in Canada. Yet their unemployment rate was 11.1% and their average annual income just $20,143.70, compared with an unemployment rate of only 3.8% and an average income of $61,904 for native Canadians.

Lack of recognition of international credentials and lack of Canadian experience are the most commonly cited barriers to immigrants obtaining employment commensurate with their skill level. This puts immigrants in a classic conundrum: unable to gain employment without Canadian experience, but unable to get Canadian experience without employment. As a result, many highly-skilled immigrants spend years trying to break into the labour market, and the longer it takes, the more difficult it becomes to have their skills and experience recognized. Both economically and socially, the waste of human potential is extremely high. The Conference Board of Canada pegs the economic cost at $4.1 to $5.9 billion a year.

Removing these barriers requires substantial changes within Canadian society, from reconsidering the credential recognition practices of regulated occupations to challenging the risk-averse nature of employers, and addressing the lack of knowledge about education systems and work experience in countries other than Canada. 

The federal government officially recognizes that integration is a two-way street, and that both the receiving society and the immigrant must change and adapt to each other. Yet government statistics show that we are shifting towards an immigration system that favours temporary migrants, who must earn the opportunity to become permanent residents by proving their labour market success in a “two-step” immigration process, without the same access to settlement services and labour rights as immigrants in the past. This system places the responsibility of integration almost entirely on the immigrant. The two groups in this category are Temporary Foreign Workers (TFW) and International Students.

Immigration System Primer

There are three categories through which migrants can gain permanent residency, and then citizenship: Economic Immigrants, Family Immigrants, and Protected Persons. In 2009, of the 252,124 new permanent residents, the Economic Immigrant category (including spouses and dependents) accounted for 61%, while the Family Immigrant category accounted for 25% and Protected Persons for 9%.

The Family Immigrant category applies to family members sponsored by Canadian citizens and permanent residents, while the Protected Persons category applies to individuals who have been sponsored as Convention refugees or who successfully claim refugee status once in Canada. 

In the Economic Immigrant category, there are four streams:

a) Skilled Workers, who are evaluated on education, work experience, language skills, adaptability, and employment prospects, and who must be experienced in one of 29 eligible occupations; in almost all cases they must apply from outside the country;

b) Business Immigrants, who must meet significant minimum net worth standards and have investor, entrepreneurial, or self-employment experience, and in almost all cases must apply from outside the country;

c) Provincial Nominees, who are nominated by a province based on the migrant having the skills, language abilities, education and Canadian work experience to immediately make an economic contribution to the province, and in most cases are temporary migrants or former international students applying from within the country;

d) Canadian Experience Class nominees, who are either highly skilled temporary foreign workers with at least two years of Canadian work experience or former international students who have at least one year of Canadian work experience, and are in all cases applying from within the country.

The Provincial Nominee Programs (PNP) and the Canadian Experience Class (CEC) are relatively new. The PNP was first adopted by Manitoba as a regional immigration strategy in 1999, followed by Saskatchewan, New Brunswick, Newfoundland and Labrador, Nova Scotia, and Prince Edward Island. All provinces and territories except Nunavut now have a PNP, each designed differently according to provincial priorities. The CEC was announced by the federal government in 2008, and began accepting applications in 2009. 

These two immigration streams are the second step in the “two-step” approach to immigration, where the first is working as a temporary migrant to prove Canadian labour market success in order to earn permanent residency through the PNP or CEC. In the past, most Economic immigrants received permanent residency before coming to work and live in Canada. 

The adoption of these programs has been in large part a reaction to ongoing labour-market shortages, coupled with the declining labour-market outcomes of Economic immigrants, and is based on the common-sense belief that former TFW and international students will experience better labour market outcomes than “traditional” Economic immigrants because of their Canadian work experience. While there is currently no conclusive evidence, preliminary research does point to former TFW and international student status providing some indication of better economic outcomes, at least in the short run.

The PNP and CEC programs are significantly changing the structure of the immigration system. By 2014, a third or more of all Economic immigrants can be expected to earn their permanent residency through the CEC or PNPs, almost all after having lived and worked in Canada as temporary migrants or international students for a minimum of two years. The federal government expects 25,000 new permanent residents a year through the CEC by 2014, while Provincial Nominee numbers have increased nationally by more than 13,200% between 2002 and 2009, granting permanent residency to over 30,000 in 2008 compared to 2,127 in 2002. The federal government announced in 2009 that it will continue increasing admissions under the PNPs for 2010. 

Finally, there are two temporary residency categories, as mentioned: International Students and the Temporary Foreign Worker (TFW) Programs, which include the Seasonal Agricultural Worker Program, the Live-in Caregiver Program, as well as low- and high-skill occupation categories. These are the first step in the “two-step” immigration process, although many TFWs will never be eligible to gain permanent residency.

International Students

International students are increasingly viewed as “designer immigrants” who will be able to avoid the employment barriers that highly-skilled immigrants regularly encounter. The idea is that their period of study and work gives them time to acculturate to Canadian society, gain Canadian credentials and work experience, and improve their language skills. In Canada, international student numbers have increased by 51% in 10 years, from 97,336 in 1999 to 196,227 in 2009.

There is no limit set at the federal level on the number of international students admitted, and so the number is enrolment-driven. Ontario recently announced that it plans to increase international student enrolment by 50% in the next five years, meaning an increase of over 35,000 international students in Ontario alone. In line with the increase in international student numbers, there has been almost a doubling in the number of students transitioning to permanent resident status, with just over 5,000 in 1999 to over 10,000 in 2008. The number is expected to increase significantly as the CEC and PNPs target international students.

International students have a need for early and continuing settlement and integration services that are supported with adequate funding and properly trained support staff. Many students have access to specialized services provided by their post-secondary institutions, but adequate funding is an issue for many international student offices. Many smaller institutions do not have the resources to provide such specialized services. 

Still, education provided to international students is a growing export industry, worth over $6.5 billion in 2008, greater than our export of coniferous lumber or coal, and generating more than $291 million in government revenue. Viewed in purely economic terms, the available evidence indicates that we are under-investing in international students: a recent report looking at the economic impact of international students in Nova Scotia found that they spend $3.80 for every dollar that the provincial government spends on them, and that universities spend less on international students then on Canadian students.

There is a risk, however, in seeing international students solely as a revenue stream. A 2009 report commissioned by the Department of Foreign Affairs and International Trade Canada recommends that international students be recognized and supported commensurate with their importance to Canada relative to other similar-sized exports of goods and services. But to recognize and support international students based on their value as a revenue stream dehumanizes them and loses sight of their value as individuals and potential Canadian citizens.

After their studies, international students who intend to immigrate through the CEC, and many of the PNPs, transition to TFW status when they apply for a work permit. Both during their studies and while working towards earning their permanent residency, international students, like TFWs, are ineligible for federally funded settlement services. The result is that the burden and cost of settlement is downloaded onto these individuals, onto the many institutions and organizations that will support them, and to provincial and municipal governments who fund services regardless of an individual’s status. With more than 400,000 TFWs, and current and former international students, the financial impact will be significant. The impact may be especially large on settlement organizations, many of which struggle with funding shortfalls.

Temporary Foreign Workers

Historically, the bulk of Canada’s migrants have entered the country through the Economic immigrant category as permanent citizens, although the Temporary Foreign Workers Program has existed since 1973. But since 2002, with the introduction of the Pilot Project for Hiring Foreign Workers in Occupations that Require Lower Levels of Formal Training, the total number of TFWs in Canada has increased by 148%, from 101,259 to 251,235,  and they now outnumber newly entering Economic immigrants by 33%. 

The program is employer-driven and there is no limit to the number of workers admitted. While the TFW program was originally meant to fulfill short-term labour shortages, the growing reliance on TFWs means that they have in effect become a permanent and increasingly large segment of the Canadian labour market. 

Due to the structure and complexity of the TFW programs and current immigration policies, it is a segment where many have limited exercisable rights or close supports. TFWs are brought into Canada to work for a specific employer at a specific location for a specific amount of time. If TFWs are laid off or otherwise lose their employment during their work permit, they must apply for a new work permit with a new employer. Processing time can take anywhere from six to four months, and by law those TFWs who cannot self-support themselves must return home.  Combined with the fact that available provincial labour protections are complaint-driven, and that no monitoring process of employers exists at the federal level unless they consent, the TFW program is ripe for labour abuse. 

Recently proposed federal initiatives, such as two-year blacklist for offending employers, are a good start, but more needs to be done. TFWs, many of whom are isolated and have limited English or French language skills, are unlikely to complain of substandard work conditions for fear of losing their jobs and being deported. Some provinces, such as Alberta and Manitoba, have begun to recognize and address this issue through targeted support services and legislation.

Although in law TFWs are entitled to many of the same benefits as Canadian workers, in practice the restrictive nature of a TFW work permit makes these benefits very difficult to access. A recent report by Delphine Nakache and Paula Kinoshita gives a number of examples. For instance, in Alberta, injured workers are provided compensation by the Workers’ Compensation Board (WCB) until they are physically fit to return to their previous job or another of comparable pay that they are physically capable of doing. But TFWs who are physically unable to work at their previous jobs but capable of working at another with comparable pay cannot do so because of their restrictive work permit. Despite their legal inability to work at another job, the WCB will terminate the compensation to a TFW it considers fit to work. Another example is access to Employment Insurance. Federal policy states that TFWs are eligible for EI, but, because their restrictive work permit makes them “not available for work,” they are legally ineligible. 

As with international students, TFWs are ineligible for federal settlement services such as language classes, translation, interpretation, and immigration support. TFWs are forced to make do on their own, rely on their community if they have one, or access services through agencies that will support them regardless of whether they are funded for it, straining their already stretched budgets. The provinces also fund settlement services, many regardless of migrant status, and so the ineligibility of TFWs for federal settlement services effectively downloads the settlement costs for a growing segment of the labour market and the immigration system onto the provinces, in addition to settlement agencies and the individual TFW.

Finally, TFWs entering through the low-skilled pilot project, who make up over half of the TFWs in Canada, are unable to transition to permanent residency through the CEC, although a few of the PNPs allow for it. They are also unable to have their family with them in Canada while they work, and a newly proposed regulation change would see them banned from working in Canada for six years after working a cumulative four years. Both of these measures are meant to limit TFWs’ attachment and integration into Canada, in order to ensure the “temporary” nature of the program. TFWs entering through the highly-skilled category are generally not subject to these restrictions.


Historically, Canada has viewed its immigration system as a “nation-building” program, whereby immigrants are selected by the federal government and supported in the settlement and integration process, with their permanent status acting as a protection of their labour and human rights. The declining labour market outcomes of “traditional” Economic immigrants suggests a need to review the way we select immigrants and structure their integration process, in addition to continuing to dismantle the barriers to economic, social, and political integration in Canadian society. However, the de-facto shift towards a “two-step” process is fundamentally changing the immigration system, with very little public debate about its significance and implications. 

The government of Alberta has recognized issues with the TFW program and announced it plans to hold consultations this fall to assess the program and provide recommendations to the federal government for change. It is to be hoped that Alberta’s decision to assess the TFW program will stimulate public debate across Canada, although the discussion also needs to include the “two-step” approach to immigration.

There are important questions that must be discussed and debated, at both a political and social level. For example, what is the impact on Canadian society when a considerable proportion of net migration is increasingly temporary? What is the impact when a significant portion of the labour force has limited access to services, little chance of obtaining permanent residency or citizenship, and limited access to labour rights?  Is a “two-step” immigration process really the best strategy in dealing with the declining labour market outcomes of Economic immigrants? What is the impact of downloading the settlement process onto individuals, employers, educational institutions, and community and settlement agencies? And, if we choose to continue expanding the “two-step” immigration process, how can we also support better social and political outcomes for migrants using this process? 

Immigration policies are increasingly defining Canadian society and values, and public debate must influence the development and goals of these polices.  


     (Erika Gates-Gasse – [email protected] -- is a policy and research analyst with World Education Services.)