Unlocking the full potential of newcomer skills: How municipalities can help close Canada’s immigrant talent gap

Across Canada, settlement agencies see the same pattern: newcomers arrive with strong education, professional experience, and a desire to contribute. Yet many struggle to find work that matches their skills. The new Signal49 Scorecard for Immigrant Skill Utilization confirms what frontline workers have long known. In municipalities across the country, immigrants are consistently more likely than Canadian‑born workers to be overeducated for their jobs or stuck in involuntary part‑time work.

These indicators matter. They reveal not only how well newcomers are integrating into local labour markets, but also how effectively communities are using the talent they already have. And while the scorecard shows some progress between 2022 and 2024, most municipalities remain in the “mid‑range” – meaning newcomer skills are still significantly underutilized.

For settlement agencies, this is a chance to work with municipalities to help newcomers thrive and strengthen local economies.

Immigrants are working below their potential, even in critical sectors

Walk into almost any construction site, hospital, or restaurant kitchen in Canada, and you’ll find immigrant workers keeping things running. They make up one in five construction workers, almost a third of healthcare workers, and nearly four in ten hospitality workers.

These sectors depend on immigrant labour, but even in the industries that rely on it most, immigrants still can’t realize their full potential.

In construction, immigrants are more than twice as likely to be working below their skill level. In healthcare, it’s over double. Even in hospitality (a sector often seen as accessible), immigrants are still 40% more likely to be overqualified for the jobs they’re doing.

And it doesn’t stop there: Immigrants in construction are 1.8 times more likely to be employed in part‑time roles, compared to Canadian-born workers. In healthcare, it’s 1.6 times more likely. These are industries with chronic labour shortages, yet the people who could help fill those gaps are often underemployed.

Unlocking the full potential of skilled newcomers would help address crucial labour shortages in Canada’s workforce, and help communities across the country thrive.

 

 

Municipalities are stuck in the middle

The scorecard grades municipalities from A to D based on how well they use immigrant skills. Most cities land squarely in the middle:

• One in three municipalities earned a B grade, while more than half of Canada’s municipalities only earned a C grade.

• Both Regina (SK) and Moncton (NB) earned D grades

• Across Canada, only one municipality, Vaughan (ON), earned an A.

From 2022 to 2024, progress was mixed. A few cities improved, a few declined, but most stayed exactly where they were, reflecting consistent immigrant skill underutilization, which is projected to cost Canada $11 billion by 2040.

The scorecard highlights two persistent challenges:

• Overeducation: Newcomers working in jobs below their qualification level

• Involuntary part‑time work: Newcomers unable to secure full‑time roles despite wanting them

Although these issues affect Canadian‑born workers as well, immigrants experience them at much higher rates, due to unclear hiring practices, limited employer awareness, credential recognition barriers, and a lack of targeted supports.

The scorecard also shows that municipal performance varies widely. Some cities have made meaningful improvements, while others have stalled or even declined. But the overall picture is clear: Canada is not fully using the skills of the people it invites.

When newcomers cannot work in their fields, local employers lose out on talent, communities lose out on innovation, and families lose out on stability.

Solutions that work: What municipalities can do now

The scorecard also points toward solutions to address unlocking newcomer potential, and many of these solutions align directly with the work settlement agencies already do.

Here are four evidence‑based strategies communities can adopt to improve newcomer skill utilization:

Strengthen Employer Engagement and Awareness: Many employers still lack understanding of international credentials, global work experience, or the value newcomers bring. Municipalities can partner with settlement agencies to:

• Deliver employer training on inclusive hiring

• Promote tools that help interpret foreign credentials

• Highlight success stories of internationally trained professionals

• Encourage skills‑based hiring rather than experience‑based screening

Expand local bridging and upskilling programs

Bridging programs help newcomers transition into Canadian workplaces by offering:

• Short‑term training

• Mentorship

• Workplace language support

• Sector‑specific orientation

The scorecard shows that cities with strong bridging programs tend to perform better on skill utilization. Municipalities can invest in expanding these programs, especially in sectors facing labour shortages such as healthcare, construction, and technology.

Improve coordination with licensing bodies and employers

While credential recognition is often a provincial issue, municipalities play a key role in connecting newcomers to the right pathways, reducing delays and helping newcomers move into professions faster. Settlement agencies can help by:

• Offering clear guidance on licensing steps

• Advocating for transparent timelines

• Partnering with regulators to share newcomer feedback

• Supporting newcomers through exam preparation and documentation

Create local talent pipelines matching newcomers to high‑demand jobs

Municipalities can work with settlement agencies to build targeted pipelines that connect newcomers directly to employers in high‑need sectors, such as:

• Job‑matching programs

• Paid internships

• Employer‑led training

• Municipal hiring incentives

When newcomers are matched to roles that fit their skills, everyone benefits.

Why this matters for Canada’s future

Settlement agencies are uniquely positioned to lead this work. They understand newcomer needs, they have strong relationships with employers, and they see firsthand how underemployment affects families.

Improving newcomer skill utilization would help build stronger communities, boost local economies, and ensure Canada remains competitive in a global labour market. When newcomers can use their skills, they integrate faster, earn more, and contribute more fully to the places they call home.