Unlocking Career Growth: How Permanent Residency Transforms Temporary Foreign Workers' Earning Potential in Canada

Mexican and Guatemalan workers pick strawberries at a farm in Pont Rouge, Que. A study says when temporary foreign workers are allowed to move jobs across industries, they are more likely to go to higher-paying firms and climb the career ladder. Jacques Boissinot/The Canadian Press

The Economic Mobility Shift

Temporary foreign workers in Canada who obtain permanent residency experience significant economic mobility, according to groundbreaking research published by the National Bureau of Economic Research. The study reveals that these workers move up the career ladder more quickly and secure substantial wage increases in the years following their transition to permanent status.

The Closed Work Permit Challenge

The research specifically analyzes the impact of closed work permits within Canada's Temporary Foreign Worker Program (TFWP). These permits tie workers to a single employer, a feature that has drawn criticism from labor advocates, migrant rights organizations, and even political parties who argue it perpetuates employer mistreatment and suppresses wages.

Key Findings: What Happens After PR Status

Workers who transitioned to permanent residency between 2004 and 2014 saw their earnings increase by 5.7% within three years of obtaining PR status. This financial improvement was directly linked to their newfound ability to switch jobs freely.

The Job Mobility Surge

The study found a "sharp" and "immediate" increase in job-to-job transitions - a remarkable 21.7 percentage point jump over three years. Many of these workers didn't just change employers; they moved into better-paying industries, demonstrating that true economic advancement requires cross-industry mobility.

Expert Insights

"The main takeaway is once you relax the restrictions, you see a big increase in job mobility," explained Kory Kroft, a professor of economics at University of Toronto and one of the paper's authors. "You find that immigrants who were clustered at low-wage jobs quickly sorted themselves into higher-wage jobs."

The Current TFWP Reality

The TFWP remains a crucial immigration stream in Canada, primarily allowing employers to hire low-wage foreign workers in sectors with domestic labor shortages like agriculture. However, workers in the low-wage stream often struggle to secure permanent residency, with Statistics Canada research showing only about one-third obtain PR status within five years of their initial work permit.

Research Methodology

The study utilized data from Immigration, Refugees and Citizenship Canada linking visa records for approximately 200,000 temporary foreign workers who arrived between 2004 and 2014 to Statistics Canada's employer-employee database. This comprehensive approach allowed researchers to track long-term outcomes years after workers obtained permanent residency.

Beyond Same-Industry Moves

The research revealed that simply moving between companies within the same industry wasn't enough to achieve significant wage gains. What truly drove earnings increases was moving across different industries, suggesting that broader occupational flexibility is key to economic advancement.

Policy Developments and Recommendations

Recent developments indicate growing recognition of these issues:

• Internal documents from Employment and Social Development Canada revealed discussions about introducing stream-specific work permits for agricultural and fish-processing workers
• In November 2024, a parliamentary committee on citizenship and immigration recommended eliminating the closed work permit system entirely
• The committee proposed replacing it with regional- or sector-specific permits that would provide workers access to a wider range of employers

The Path Forward

"When a temporary foreign worker has the ability to move jobs, we find, on average, they are more likely to go to higher-paying firms," Professor Kroft emphasized. "This is evidence that these workers can climb the career ladder, if allowed to."