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Yane Brogiollo poses for a portrait in Vancouver, British Columbia, Thursday, December 15, 2011. Mrs. Brogillo is an IT professional with a management background and over 15 years experience in Brazil but has not yet made it past the interview phase in Canada. (Rafal Gerszak for The Globe and Mail/Rafal Gerszak for The Globe and Mail)
Yane Brogiollo poses for a portrait in Vancouver, British Columbia, Thursday, December 15, 2011. Mrs. Brogillo is an IT professional with a management background and over 15 years experience in Brazil but has not yet made it past the interview phase in Canada. (Rafal Gerszak for The Globe and Mail/Rafal Gerszak for The Globe and Mail)

Shortchanging immigrants costs Canada Add to ...

In her home city of São Paulo, Brazil, Yane Brogiollo was a manager at Hewlett-Packard Co., where she oversaw a team of 15 database professionals. She also designed and taught courses for a local university’s MBA program.

They were “wonderful” jobs, and she earned a good salary. São Paolo was crowded, though, and too big. Crime was escalating. So a year and a half ago, she moved to Vancouver, hoping to find a better quality of life.

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That hasn’t happened. Despite 15 years of IT experience and a master of science degree in computer engineering, 70 job applications have yielded only five interviews and no offers.

“The first thing they look is for Canadian experience,” she says. “If you don’t have that, they don’t call you for an interview. And if you don’t get an interview, it’s hard to show your skills.”

She’s not alone. Canada has a well-documented history of attracting the best and brightest immigrants from developing countries. But many of these people wind up jobless, or in minimum-wage survival jobs. And there’s a wider economic cost to the country of under-utilizing these skilled workers.

New research by the Royal Bank of Canada, to be published Monday and released exclusively to The Globe and Mail, puts a price tag on that lost opportunity. The study finds that if immigrants’ skills were rewarded in a similar way to that of Canadian-born workers, the increase in their incomes would amount to $30.7-billion – or the equivalent of 2.1 per cent of the country’s gross domestic product.

Closing the gap with Canadian-born workers would also translate into about 42,000 additional jobs.

“If we are going to continue to flourish and grow as a country, we’ve got to be very receptive to foreign capital, to foreign thinking and to foreign skills to maximize our potential,” Gordon Nixon, the bank’s chief executive officer, said in an interview. “I think it is very important that we have that macro discussion, particularly against a backdrop of high unemployment and financial global economic turmoil.”

Beyond Canada’s moral obligation to dismantle employment barriers, Mr. Nixon argues that underemployment and the persistent wage gap have a huge impact on the economy.

The problem is not just individuals suffering “social injustice or underemployment,” he said. Rather, it is about Canada squandering its own growth potential because it delays the ability of newcomers to put down roots by buying homes, saving for their children’s education or investing for retirement.

“If you look at what drives the real-estate market, what drives consumer spending – unemployment and wealth and incomes [are]key drivers in terms of that, so it filters right across the economy,” said Mr. Nixon.

The study uses details from the last census to calculate the earnings gap between immigrants and Canadian-born workers. It also explores reasons for that gap, which widened between the 1970s and 2000s – even though newcomers’ education levels increased.

This year’s report is a follow-up to one the bank produced in 2005, called The Diversity Advantage: A Case for Canada’s 21st Century Economy, which pegged the cost at $13-billion. The new study puts the figure much higher, as its methodology changed to factor in the different educational, demographic and geographic profile of immigrants to Canada.

THE PROBLEM

The recession was hard on recent immigrants. Employment tumbled 12.9 per cent among new immigrants in the downturn, led by a slump in factory jobs, compared with a 2.2-per-cent drop for Canadian-born workers, Statistics Canada figures show.

As of November, the jobless rate among Canadian-born workers was 6.3 per cent, compared with 8.4 per cent for all landed immigrants and 13.4 per cent for recent immigrants, according to Statistics Canada.

Businesses, academics and community leaders are sounding the alarm on this issue – warning that broader Canadian society will pay a steep price if new immigrants continue to struggle with underemployment and a yawning wage gap.

“We need immigrants,” said John Tory, the former Rogers Communications executive and past leader of the Ontario Progressive Conservative Party, in a recent speech. “We need them in our work force, we need them to sustain and expand not only the labour market, but our consumer market as well. And they want to be here. But there are still significant hurdles to overcome, and we need to come together to find a solution quickly.”

Consumer spending accounts for 60 to 70 per cent of the Canadian economy. There is little doubt that underemployment and the sizable income gap facing newcomers have far-reaching consequences for both consumer spending and overall economic growth.

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