Connection Between Youth Unemployment and Immigration in Canada - Report Example

Connection between youth unemployment and immigration in Canada Executive Summary Fuelled partly by fears that the resultant burdens from the recent economic recession have disproportionately affected the youth, the issue of high youth unemployment has elicited substantial unease for many governments. It is a major concern that the many recursions of youth unemployment such as emotional distress and financial hardship could easily erode an individual’s knowledge and skills, and hence exacerbate the uncertainty about the future prospects of the labour market. For the case of Canada, the current aspect of youth unemployment is particularly scarring since the knowledge and skills acquired through the education system lack the necessary opportunity to crystallize into subtle professional ability. Within the aggregated economic spectrum, such erosion of skills and knowledge is further enhanced by the current policies aimed at tapping into the improved skills of the immigrant populations. In fact, the issue of immigration that has been the subject of persistent policy debate for the last two decades has once again taken a central position within the prevailing policy agenda. The debate has taken on some unprecedented turn in Canada due to the apparent fear over the possible job displacement and subsequent unemployment for the Canadian-born workers. In order to understand the effect of the current immigration policies and the impact of filling the present job positions with skilled immigrants, this paper aims at presenting an objective analysis of the displacement of the native workers to pave way for the immigrant workers. The paper evaluates the current immigration-unemployment dynamics in Canada, with special focus on the extent of policy shift from a Keynesian welfare state towards a neoliberal competition state. Keywords: employment, Keynesian state, market forces, labor relations, immigration, youth unemployment, neoliberal Introduction Over the recent years, there has been increased research interest and public policy regarding the impacts of immigration on countries that rely on the skills and knowledge of the immigrant workers. On a historical perspective, immigration has influenced the population and economic growth rates, and the demographic composition of many developed countries. However, low rates of economic growth have often been associated with high unemployment rates in many countries that receive the immigrant workers. At the same time, there have been increase popular fears concerning the limits to growth that have been precipitated by the continuing inflows of immigrant workers. This is the actual case in Canada, where the prevailing skills gap has meant that there is now a high level of youth unemployment, and ironically, a high demand for workers in the country’s mainstream industries (Hamilton, 2011). To a majority of Canadians, there is a belief that the immigrant workers are stealing their jobs. But for the Canadian employers, there is a firm belief that the present skills and knowledge harbored by a majority of the population, especially the youth, do not fit into the current industry requirements. This is mainly the case for the more technical industries, such as technology-based companies, accounting, medicine, and manufacturing. To many Canadian unemployed youth, such as those with university and college degrees, the presumption of a fixed number of employment opportunities in the economy only serves to produce a biased conclusion (Marshall, 2012). Thus, there is a need to allow for an endogenous determination of both the labor supply and labor demand in the wake of high immigration rates. This paper aims at presenting an outline of the broad parameters of neo-liberal change and highlights the negative impacts that such change has had on the conventional welfare of society and state. In particular, the paper aims at exploring the growing issue of social exclusion, with a focus on the effect of skills inflow on the skilled population of native Canadians. Furthermore, the paper considers the relationship between labor markets and systems of social welfare, with a detailed explanation of how the shift to neoliberal policy has facilitated the rise of flexible workforces. Finally, the paper outlines the shift of immigration policy to a more economic-oriented and skill-based recruitment, as well as the demographic change that this shift has brought on the labor market in Canada. Canadian Immigration Policy and a Changing Demographic Profile It is noteworthy that the Canadian and American immigration policy frameworks are demarcated by a pivotal shift that started in the 1960s. In each country, immigration evolved from system of restrictive patterns of recruitment to an open-ended immigration policy (Hall & Soskice, 2001). For the case of Canada, the introduction of a points system for assessing independent class immigrants has raised the necessity for skills-based recruitment, thus opening the door to high immigration levels by skilled workers from the developing nations (Green, 1995). Currently, identifiable minority groups comprise of about 75% of the newly arriving immigrant workers in the country. In contrast to the United States, in which a rigid annual quota system is in place, the immigration policy in Canada appears to be a rather flexible one, with the policymakers altering the numbers of varied rhythms for the shifting labor market (Boychuk, 1997). Generally, Canada receives more immigrants, based on relative population size, than the U.S. Even though class-family immigrants in the country were the major foundation for recruitment in the 1980s, the trend was shaped by economic-based immigration policies in the 1990s (OECD 2001b). By the year 2001, about 60% of all immigrants comprised of skilled workers, with only 27% comprising of the class-family category (Thompson, 2002). The Canadian immigration policy in the 1990s placed much focus on the importance of economic self-sufficiency for the arriving immigrants. In the wake of the economic upheavals, such as the recent economic recession, and the increased pace for globalization, there has been a remarkable shift towards skills and economic based immigration policies (Cerny, Menz, & Soederberg, (2005). It is fairly arguable that that the 2009 recession period can be referred to as the Great Recession because of the depth of the resultant financial crisis and the global trend of the spill-over from this economic downturn. For the case of Canada, economic activity resumed back in a relatively swift manner after just three quarters of unfavorable growth in real GDP. This period was characterized by meaningful government stimulus packages and higher prices of commodities that played a critical supportive role. The hardship felt by the labor market was likewise moderate as compared to the challenges experienced by workers in the periods following the recessions of the 1980s and 1990s. However, the problem of youth unemployment still attracts significant attention from individuals, communities, and the government (McBride, 2005). The concerns for the public are powered by the reflections that the burden of the recent recession could have disproportionately fallen o the youth in Canada. Naturally, one of the most formidable reasons lie in the persistent high unemployment rate among the educated youth, a rate that has superseded the national mean factor of two as at the end of 2014. This level has been the first of its kind for a period of more than thirty years. It is noteworthy the immigrant workers have the potential to reduce the employment prospects of the native workers through their adverse impact on search efficiency of the native workers. Depending on their ability to find employment opportunities, the immigrants can provide formidable competition to the native workers and lead to higher unemployment levels for the native Canadians. This scenario is further exacerbated by the current policy trends where employers are constantly trying to import the necessary skills to fill the available job positions (Bauder, 2001). The debate on immigration policy has taken a multifaceted dimension, particularly in the recent years due to the controversy on the decline of the income levels for the recent immigrant workers. Only recently, Canada amended its immigration policy and increased the point system for the immigrants while at the same time, according priority to certain skill and knowledge characteristics of the immigrant workers. To the native workers who still cannot find that much-sought job position, the perception is that either the immigrant workers are stealing the jobs from their native counterparts or the immigrant workers lack the necessary skills, and thus put a lot of pressure on the public purse since they cannot find the jobs. To an outsider, it can be argued that there exists significant skill shortages in the country and the immigrant workers only serve to fill such bottlenecks. Thus, further immigration would be expected to expand the available job opportunities, thus resulting in an increased demand for labor and high labor wages for the native workers. Thus, the complementarities or substitutabilities between the immigrant workers and the native-born workers are of critical concern in assessing the validity of displacement fears (Canadian Labour Congress, 2003).  Another concern that relate to the displacement fear if whether high levels of immigration in recession times merely contributes to unemployment by displacing the existing workers already in employment, probably under less conditions for employment. However, it is noteworthy that immigrants are just mere additions to the workforce, but they also add capacity to the real output. These workers make significant contribution to the aggregate expenditure in a direct manner through their savings, income, and spending. They also contribute indirectly through government and industrial expenditure on their behalf and such expenditure assist in employment creation. Thus, the assertion made from such trends is that whether or not a particular immigration flow adds or subtracts from the current pool of the unemployed people relies on the relative strength of demand and supply side effects. It also depends on the prevailing policy framework that accommodates such immigrant flows. It is plausible that the capacity of the economy to accommodate the expanding pool of better-educated individuals does not always match with the rate of improvement in the level of academic achievement. For the case of Canada, the number of the youth labor force whose educational level does not beyond high school decreased from 60% in 1990 to roughly over 50% in 2013.Among the young and mature individuals, the rate of the decline was thrice that registered among the youth. Hover, in spite of the declining number of youth with lower education levels, the number of the youth occupying lower-skilled positions has remained unaltered for the last two decades (McBride &Williams, 2001). For the young and mature workers, improvement in job quality has remained disproportionately small when compared to the extent of the positive development s in their levels of education. This can be explained by referring top the case study of the 26-year-old Alexandre Belokoskov who is still on the job search trail despite having an impressive degree in business management. When one considers the fact that there is an apparent lack of skilled workers to fill emerging job opportunities on one hand, and educated people such as Belokoskov looking tirelessly for that first job position, then the situation seems to beat conventional wisdom. One thing that comes out of such situation is a skills gap that is making the native educate for the current job opportunities. In such a case, the industries may be excused for placing a lot of focus on the importation of skilled workers to fill the prevailing skills gap. Even in the wake of the current situation, there is a palpable absence of government intervention in initiating programs aimed at aligning the available training opportunities with the current labor demands in the market. Labor market results by educational achievement In the aftermath of the 2008-2009 economic upheaval, the gap in the labor market results increased between the immigrant degree-holders and their native-born counterparts. The largest differential was conspicuous for the immigrants who had stayed in the country for five years or less. It is notable that these immigrants are often younger, with a high likelihood to possess foreign degrees. Between 2010 and 2011, the employment rate for the university-educated immigrants increased by 6%, with almost all of the individuals in this category occupying full time positions. Due to this employment growth, the rate of unemployment for the immigrant degree-holders decreased from 8.6% to 7.6%, with their employment rate increasing to an all-time high of 78.7%. For the Canadian-born university graduates, the employment rate for 2011 was almost unchanged from the previous year, and this was replicated in their employment and unemployment rates. The combined effect of possessing higher education, the country where the highest education level was achieved, and the time since arrival to the country play a fundamental role in the labor market experiences for the skilled immigrants. It is apparent that the youth are often disproportionately affected by any instances of economic downturns, with resultant declining employment rates and increased unemployment levels. The kinds of policy changes that are taking place in Canada have also been noted in several other political jurisdictions such as the United States and Britain. In these two countries, the trends in employment and immigration have gained substantial influence form neoliberal thinking. Neo-liberalism is a king of political ideology that is quite critical of the direction of welfare state developments that followed World War II. According to the concept of neo-liberalism, modern government, under the guide of a Keynesian public policy framework has become too interventionist and too large within the society and economy. Largely, neoliberals blame state failure for contemporary issues such as the challenges faced by economies in adjusting to the emerging world order. The solution for these issues is the downsizing of the state in order to allow the individual and market initiative to have freer reign in the world market. This seems to be the main reason for the over-emphasis on immigrants’ skills and knowledge as seen in the Canadian industries. In the past, under the influence of Keynesianism, and pressed by an evolving society and the changing demands of various organized groups such as women, natives, labor, minorities, and others, public policies were designed to offer a measure of security and protection from the uncertainties of social and economic dislocations (Banting, 2005). The neoliberal ideological perspective at the world level revolves around several concepts such as free trade, competitiveness, privatization, small government, and deregulation. In this framework, the work of the state is re-defined from its socially protective mandate in the Keynesian model to one of aligning the society and economy in order to compete in an increasingly competitive and open global economy. Within the competition state model, the core function of the government is to facilitate a stable environment for accumulation by providing infrastructure, seeking financial stability, educated workforce, and a favorable system of taxes (Arnold, 2002). When it comes to the liberal welfare states like the U.K. and the U.S, many employers opt for the low skills and low wages route in their pursuit of international competitiveness. To them, this route seems to be profitable, especially with its reliance on affordable, malleable labor pool. Within the social arena, it is clear that the competition state can no longer act as decommodifying factor; that is, taking the economic activities away from the market. In fact, it acts more like a commodifying agent by introducing activities into the market (Cerny, 2000). In order to perform such a role, the competition state is increasingly entangled and constrained by the crosscutting domestic and transnational structural and non-structural conditions. When compared to Keynesian concepts, the current neoliberal competition state moved from decommodification to marketization. Within the precincts of the competition state, the social policy agendas continuously endorse several market forces such as the need for all individuals to partake active participation in the labor market. On the other hand, welfare state retrenchment concentrates on flexibility, individual responsibility, and innovation. In this regard, the flexibility of the labor force is perceived as crucial resource in the capitalist advancement and non-profit production and overly generous social benefits as its main hindrances (Goldberg, 2002). Thus, a critical assumption of such logic points to the assertion that subsidized labor costs, as well as a flexible production model have the potential to serve as subtle investment magnets. When one considers the current situation in Canada, one notable thing is that the primary stated objectives of the Liberal government were aimed at establishing a market that preserves the information economy, promotes an entrepreneurial spirit, offers a competitive environment for more investment, and produces a large pool of flexible workers. When one considers the current policy initiatives that encourage the reliance on immigrant workers, then it becomes clear that the sole objective for the current market leaders is to encourage competition even in the labor market. This, in turn, will increase productivity, efficiency, and enhance consumer choice (Campbell, 2003). Indeed, the provincial Liberals have already made it clear that the economic success of the province depends on its success in attracting investment, and they have endeavored to make the economy more diversified, competitive, and attractive to investors. The supply of a favorable national environment for investors and business has been a major topic in the macroeconomic policy agenda. As a result, substantial measures have been put in place to consolidate the country’s economic position and competitive advantage, with major emphasis on supply-side initiatives, as well as a labor market defined by increased flexibility and nominal government involvement. In practice, the current trends in youth unemployment reveal a disproportionate focus on ensuring optimal conditions for capital, while at the same time, ignoring the role of the state in promoting economic security and citizen well-being. It is in no doubt that neoliberal policies in Canada have precipitated aggressive market competitiveness, a ‘flexible’ labor market and regulation advantage for the employers. This explains why people like Belokoskov, with degrees from recognized universities, have not managed to land even a single job interview. This shows that welfare policy has been re-defined to encourage market dependence at the expense of encouraging the nurturing responsibilities of the state. Under such scenario, the immigrant workers have acquired an opportunity to perform the role of the desired ‘flexible’ workforce that is ideally well suited to the demands of the growing economy. Neoliberal structuring of the economic and social spheres has put the available job opportunities at the middle of public policy attention. From a neoliberal perspective, employment (in terms of active participation in the labor market) has become the best social and economic policy. On the other hand, excessive social spending and social supports, according to the neoliberals, are the key pathways to market and economic dependency. Indeed, the welfare of the state has been constricted to reflect the above political priorities. At the same time, the conventional Canadian labor market has become less than a hospitable host to the native workers due to the realities of the ever-high rates of unemployment and the persistent proliferation of many contingent forms of employment. This explains why the native-born skilled workers view the emergence of ‘flexible’ labor market, in terms of the immigrant workers, as the major promoter of greater levels of job insecurity, polarization, and exclusion (Boismenu & Graefe, 2004). More specifically, the current neoliberal structuring has cut critical social welfare support mechanisms and fostered a highly bifurcated labor market. These two institutions, labor markets and public social support programs, continue to play fundamental roles in enabling the immigrant workers to adjust and integrate themselves in the host society. Given that, the two institutions are now restructured along neoliberal dimensions, particular groups of the population are now more susceptible to the issue of societal exclusion. Within the new labor market, it appears that the immigrant workers are nothing more than a part of a flexible and disposable work force. Moreover, they considered to increasing demands of the just globalized economy. It would be erroneous to make a conclusion that the success or failure of the new immigrant workers is solely dependent on the kinds of skills and qualities that they introduce into the country (Huber & Stephens, 2001). In fact, the institutions that the immigrants encounter on their arrival into the country play crucial roles in influencing the successful integration of the immigrants into their new society. One of these two institutions is the labor market that, largely, enables the workers to establish formidable standing within the society’s social structure. References Banting, K. (2005). Canada: Nation-Building in a Federal Welfare State. Cambridge: Cambridge University Press Bauder, H. (2001). Employment, Ethnicity and Metropolitan Context: The Case of Young Canadian Immigrants. Journal of International Migration and Integration, 2, 3, 315-341. Boismenu, G. & Graefe, P. (2004). The New Federal Tool-belt: Attempts to Rebuild Social Policy Leadership. Canadian Public Policy 30, 1 71–89 Boychuk, G. (1997). Are Canadian and US Social Assistance Policies Converging?’, Canadian-American Public Policy 30: 1–50. 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