Jobs for Immigrants (Vol. 1): Labour Market Integration in Australia, Denmark, Germany and Sweden (Jobs for Immigrants) [1 ed.] 9264033599

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VOLUME 1: LABOUR MARKET INTEGRATION IN AUSTRALIA, DENMARK, GERMANY AND SWEDEN

What can be done to improve the labour market integration of immigrants and their children? Employers need to have the necessary information and incentives to assess the skills and qualifications of immigrants properly. Governments have a role to play in promoting language and vocational training, and encouraging diversity in the workplace. Immigrants themselves need to adapt to the requirements of the host country employers. The viability of future migration policies, in particular greater recourse to immigration, will depend to a large extent on how successful OECD countries and immigrants are in achieving these objectives. This publication presents reviews of the labour market integration of immigrants and their children in four OECD countries (Australia, Denmark, Germany and Sweden), and provides country-specific recommendations. It is the first in a series which will eventually cover some ten OECD countries.

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VOLUME 1: LABOUR MARKET INTEGRATION IN AUSTRALIA, DENMARK, GERMANY AND SWEDEN

When immigrants arrive in a new country, they are confronted with new labour-market requirements such as language proficiency, familiarity with job search procedures and work practices which they are not always able to satisfy. Over time, this expertise can be acquired, and in principle immigrant performance in the receiving country should be similar to that of the native-born. In practice however, differences persist: experience and qualifications may not be fully recognised, social capital may be lacking, or discriminatory hiring practices may persist among employers. These obstacles affect not only new immigrants, but, surprisingly, their children too, even if the children are born and educated in the receiving country.

Jobs for Immigrants

Jobs for Immigrants

Jobs for Immigrants VOLUME 1: LABOUR MARKET INTEGRATION IN AUSTRALIA, DENMARK, GERMANY AND SWEDEN JOBS ORKS

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Jobs for Immigrants VOLUME 1

LABOUR MARKET INTEGRATION IN AUSTRALIA, DENMARK, GERMANY AND SWEDEN

ORGANISATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT

ORGANISATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT The OECD is a unique forum where the governments of 30 democracies work together to address the economic, social and environmental challenges of globalisation. The OECD is also at the forefront of efforts to understand and to help governments respond to new developments and concerns, such as corporate governance, the information economy and the challenges of an ageing population. The Organisation provides a setting where governments can compare policy experiences, seek answers to common problems, identify good practice and work to co-ordinate domestic and international policies. The OECD member countries are: Australia, Austria, Belgium, Canada, the Czech Republic, Denmark, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Italy, Japan, Korea, Luxembourg, Mexico, the Netherlands, New Zealand, Norway, Poland, Portugal, the Slovak Republic, Spain, Sweden, Switzerland, Turkey, the United Kingdom and the United States. The Commission of the European Communities takes part in the work of the OECD. OECD Publishing disseminates widely the results of the Organisation’s statistics gathering and research on economic, social and environmental issues, as well as the conventions, guidelines and standards agreed by its members.

This work is published on the responsibility of the Secretary-General of the OECD. The opinions expressed and arguments employed herein do not necessarily reflect the official views of the Organisation or of the governments of its member countries.

© OECD 2007 No reproduction, copy, transmission or translation of this publication may be made without written permission. Applications should be sent to OECD Publishing [email protected] or by fax 33 1 45 24 99 30. Permission to photocopy a portion of this work should be addressed to the Centre français d’exploitation du droit de copie (CFC), 20, rue des Grands-Augustins, 75006 Paris, France, fax 33 1 46 34 67 19, [email protected] or (for US only) to Copyright Clearance Center (CCC), 222 Rosewood Drive Danvers, MA 01923, USA, fax 1 978 646 8600, [email protected].

FOREWORD – 3

Foreword In many OECD countries, immigration is seen as one possible route to alleviate the adverse consequences of ageing populations and to help fill labour shortages. For this to be a feasible policy option in the future, it is clearly necessary that immigrants – many having arrived only recently – their children, and future arrivals be well “integrated” into OECD societies. Since they now constitute a significant proportion of the resident population in many countries, the integration of immigrants and their children into the labour market is essential to ensure social cohesion and the acceptance of further immigration by the host country population. Although labour market outcomes are not the only outcomes which matter, active participation in the labour market is arguably the single most important factor for the successful integration of immigrants. This volume presents the experience of four countries – Australia, Denmark, Germany and Sweden – with respect to the integration of immigrants into the labour market. These four countries have diverse migration histories and migration regimes and provide a good cross-section of OECD immigration countries for comparison. One of the main issues with respect to the labour market integration of immigrants is the transferability of skills and qualifications acquired in the origin country to the host country. For children of immigrants it is acquiring the education and the knowledge of the host country needed to ensure a smooth transition into the labour market. The challenge all four review countries face is to provide immigrants with the necessary skills to participate fully in the host-country labour market, to assist them in “communicating” to employers the skills which they possess and to remove or bypass obstacles which they face to access the labour market. Children of immigrants, on the other hand, need to be exposed more intensively to the host-country language at an early age, provided with assistance at school, with job search and access to recruitment channels when they enter the labour market. The reviews presented in this publication describe how the four countries covered go about trying to meet this challenge. They are the first in a series of reviews that will also cover Belgium, France, Portugal, the Netherlands, Switzerland and the United Kingdom. Chapter I provides a general overview of integration issues, of outcomes for a broader group of OECD countries and of key findings from the analyses of the four countries covered. It also includes a special section on the integration of children of immigrants, a topical issue, particularly in European OECD countries. Subsequent chapters consist of detailed country reviews which include a diagnosis of the labour market integration of immigrants in each country, as well as specific national features that affect the integration process. A history of recent immigration and of integration policies is presented along with an overview of the framework for integration policy, the relevant actors in the field and the particular measures and initiatives addressed to immigrants or, in some cases, targeted at broader groups but where immigrants are overrepresented. The diagnosis is then extended, with a look at the JOBS FOR IMMIGRANTS – LABOUR MARKET INTEGRATION IN AUSTRALIA, DENMARK, GERMANY AND SWEDEN – ISBN 978-92-64-03359-7 © OECD 2007

4 – FOREWORD evolution of immigrant outcomes over the recent past, paying attention to the nature and characteristics of migration flows, the effect of policy initiatives and in particular of introduction programmes, the recognition of foreign qualifications and experience, the operation of the labour market and discrimination issues. In the studies on Denmark and Germany, special attention is given to the children of immigrants. Each of the country review chapters ends with an overall summary with recommendations. This publication was prepared by the Non-member Economies and International Migration (NEIM) Division in the OECD Directorate for Employment, Labour, and Social Affairs (DELSA). The principal authors are Georges Lemaître and Thomas Liebig.

John P. Martin Director, Employment, Labour and Social Affairs, OECD

JOBS FOR IMMIGRANTS – LABOUR MARKET INTEGRATION IN AUSTRALIA, DENMARK, GERMANY AND SWEDEN – ISBN 978-92-64-03359-7 © OECD 2007

ACKNOWLEDGEMENTS – 5

ACKNOWLEDGEMENTS

These studies would not have been possible without the support of the national authorities involved, in particular the respective country representatives in the OECD Working Party on Migration (at the time of writing): David Watt (Australia), Agnete Mathiesen (Denmark), Dagmar Feldgen (Germany), Michael Hagos (Sweden). The OECD Secretariat would like to thank all of the persons in the countries visited who gave freely of their time to inform the project team about developments in their respective countries and to respond to the numerous questions raised. A special thanks goes to Shubila Balaile, Monir Dastserri, Barbara Fröhlich, Jutta Gross-Bölting, Emilio Hellmers and Magdalena Sivik for their assistance in and contributions to the analysis. The individual country reviews were presented at conferences and press events in the member countries concerned. Draft versions were discussed at the OECD Committee for Employment, Labour, and Social Affairs (ELSAC) and the OECD Working Party on Migration. The OECD Secretariat wishes to thank the participants of these conferences, as well as the members of ELSAC and the Working Party, for their helpful comments.

JOBS FOR IMMIGRANTS – LABOUR MARKET INTEGRATION IN AUSTRALIA, DENMARK, GERMANY AND SWEDEN – ISBN 978-92-64-03359-7 © OECD 2007

TABLE OF CONTENTS – 7

Table of Contents Summaries of country chapters .......................................................................................................... 13 Résumés des chapitres par pays ........................................................................................................ 21 Chapter 1. KEY FINDINGS ON THE LABOUR MARKET INTEGRATION OF IMMIGRANTS Introduction .................................................................................................................................... 31 1. Definitions and methodology ...................................................................................................... 32 2. Immigration and labour market outcomes: an overview .............................................................. 35 3. Key issues in the labour market integration of immigrants .......................................................... 43 4. A significant challenge: the integration of the children of immigrants......................................... 56 Conclusion...................................................................................................................................... 67 References ...................................................................................................................................... 69 Chapter 2. THE LABOUR MARKET INTEGRATION OF IMMIGRANTS IN AUSTRALIA Introduction .................................................................................................................................... 73 1. The framework for integration.............................................................................................. 77 1.1. The evolution of Australia as a multicultural immigration country.................................. 77 1.2. The evolution of selection policy .................................................................................... 81 1.3. Key actors....................................................................................................................... 85 1.4. Main services provided to migrants................................................................................. 87 2. Key issues in the labour market integration of immigrants ................................................... 91 2.1. The impact of selection policy ........................................................................................ 91 2.2. Outcomes of recent arrivals............................................................................................. 94 2.3. The settlement perspective .............................................................................................. 97 2.4. The recognition of foreign qualifications and experience ................................................ 98 2.5. The impact of the waiting period on labour market outcomes ....................................... 103 2.6. Immigrants and the Job Network services ..................................................................... 105 2.7. Importance of English language and effectiveness of language training ........................ 106 2.8. Discrimination .............................................................................................................. 107 2.9. The outcomes of humanitarian migrants........................................................................ 108 2.10. The outcomes of the second generation......................................................................... 110 Summary and Recommendations ................................................................................................. 114 Annex 2.1. Australian migration categories, fiscal years 2004-2005 .............................................. 119 Annex 2.2 Logistic regression on the likelihood of employment relative to non-employment of immigrants ............................................................................................................... 120 References .................................................................................................................................... 122

JOBS FOR IMMIGRANTS – LABOUR MARKET INTEGRATION IN AUSTRALIA, DENMARK, GERMANY AND SWEDEN – ISBN 978-92-64-03359-7 © OECD 2007

8 – TABLE OF CONTENTS Chapter 3. THE LABOUR MARKET INTEGRATION OF IMMIGRANTS IN DENMARK Introduction .................................................................................................................................. 125 1. The framework for integration............................................................................................ 126 1.1. Overview of employment outcomes .............................................................................. 126 1.2. History of migration to Denmark and structure of the immigrant intake........................ 129 1.3. Legislation governing immigration into Denmark ......................................................... 132 1.4. The evolution of integration policy ............................................................................... 134 1.5. Key actors..................................................................................................................... 137 1.6. The introduction programme......................................................................................... 141 1.7. The labour market integration model............................................................................. 143 2. Key issues in the labour market integration of immigrants ................................................. 144 Immigrants’ characteristics and labour market outcomes .............................................. 144 2.1. 2.2. Specificities of the Danish labour market ...................................................................... 153 2.3. Analysis of integration policies ..................................................................................... 161 2.4. Integration of the “second generation” .......................................................................... 166 2.5. Discrimination .............................................................................................................. 174 Summary and Recommendations .................................................................................................. 177 Annex 3.1. Age structure of the Danish population by gender and migration background, 2006.... 185 Annex 3.2. The ten most important origin countries of immigrants and their share in the total immigrant stock in 1985, 1995 and 2006 ................................................................... 185 Annex 3.3. Structure f the Danish language courses ...................................................................... 186 Annex 3.4. Determinants of immigrants' employment probability – odds ratio estimates............... 187 Annex 3.5. Probability of being employed – Persons aged 20 to 29 years old and not in education................................................................................................... 188 References .................................................................................................................................... 189 Chapter 4. THE LABOUR MARKET INTEGRATION OF IMMIGRANTS IN GERMANY Introduction .................................................................................................................................. 195 1. Methodology – Target populations and labour market characteristics................................. 196 2. The main migrant groups in Germany ................................................................................ 199 2.1. “Guestworkers” and their families................................................................................. 200 2.2. Ethnic Germans from Eastern Europe ........................................................................... 201 2.3. Humanitarian migrants.................................................................................................. 203 2.4. Evolution of the labour market situation of people with a migration background .......... 204 3. The framework for integration............................................................................................ 208 3.1. The legal framework ..................................................................................................... 208 3.2. The role of sub-national governments and non-governmental actors ............................. 213 3.3. Main areas of the integration activities.......................................................................... 215 4. Key issues in the labour market integration of immigrants and the second generation ........ 219 4.1. Outcomes of recent arrivals........................................................................................... 219 4.2. Qualification structure of the native and immigrant population ..................................... 221 Summary and Recommendations .................................................................................................. 239 References .................................................................................................................................... 246

JOBS FOR IMMIGRANTS – LABOUR MARKET INTEGRATION IN AUSTRALIA, DENMARK, GERMANY AND SWEDEN – ISBN 978-92-64-03359-7 © OECD 2007

TABLE OF CONTENTS – 9

Chapter 5. THE LABOUR MARKET INTEGRATION OF IMMIGRANTS IN SWEDEN Introduction .................................................................................................................................. 251 1. The Swedish experience with migration ............................................................................. 252 1.1. The labour immigration period (1945-1975) ................................................................. 253 1.2. The refugee immigration period (1970-2004)................................................................ 254 1.3. The development of an active integration policy in Sweden .......................................... 254 2. Immigrant labour force outcomes in Sweden...................................................................... 260 2.1. A comparative overview ............................................................................................... 260 2.2. Comparing immigrant outcomes with those of natives .................................................. 264 2.3. Factors affecting labour market performance ................................................................ 265 2.4. Outcomes in the face of changing migration currents .................................................... 267 2.5. The 1990s economic crisis and its impact on integration............................................... 269 3. Policy impacts .................................................................................................................... 271 3.1. Labour market effects of the introduction programme................................................... 271 3.2. Recognition of qualifications ........................................................................................ 274 3.3. The impact of dispersal policies .................................................................................... 276 3.4. The filling of job vacancies ........................................................................................... 278 3.5. Discrimination .............................................................................................................. 279 Summary and Recommendations .................................................................................................. 281 References .................................................................................................................................... 285 List of Figures Figure 1.1. Educational attainment of the native- and foreign-born populations 15+ in the OECD countries under review, circa 2000.................................................................................................. 37 Figure 1.2. The immigrant population by OECD/non-OECD origin in the OECD countries under review, circa 2000........................................................................................................................... 37 Figure 1.3 Share of persons with a migration background in the population aged 20-29 ................. 59 Figure 1.4. PISA (2003) results in mathematics for the children of immigrants............................... 60 Figure 1.5. Differences in employment rates between native-born persons without a migration background and native-born children of immigrants (second generation), by gender, latest available year......................................................................................................................... 64 Figure 1.6. Unemployment rate of immigrants and second generation relative to that of native-born persons without a migration background......................................................................................... 65 Figure 2.1 Evolution of employment-population ratios of foreign- and native-born in Australia, population aged 15-64, men and women ......................................................................................... 76 Figure 2.2. Characteristics of the immigrant population since 1947 ................................................ 79 Figure 2.3. Evolution of Australia’s migration programme outcomes (incl. humanitarian programme) since financial year 1990/1991.................................................................................... 83 Figure 2.4. Overview of the English-language training available to migrants.................................. 89 Figure 2.5. Percentage-point differences in employment rates between foreign- and native-born and the impact of the qualification structure, population aged 15-64, 2004 ..................................... 92 Figure 2.6. Differences (in percentage points) between the employment-population ratios of 15-64years old native-born and immigrant men and women, by years of presence in the host country, 2004.................................................................................................................................. 96 Figure 3.1. Evolution of the employment/population ratios of native- and foreign-born since 1984, by group of origin, population aged 16-66, men and women......................................................... 128 JOBS FOR IMMIGRANTS – LABOUR MARKET INTEGRATION IN AUSTRALIA, DENMARK, GERMANY AND SWEDEN – ISBN 978-92-64-03359-7 © OECD 2007

10 – TABLE OF CONTENTS Figure 3.2a. Evolution of the immigrant and second-generation population .................................. 130 Figure 3.2b. Evolution of the origin region of the immigrant population....................................... 130 Figure 3.3. Evolution of unemployment and asylum-seeking in Denmark since 1985 ................... 131 Figure 3.4. Percentage point differences in employment rates between foreign- and native-born and the impact of the qualification structure, population aged 15-64, 2004 ................................... 145 Figure 3.5. Differences between the employment-population ratios of 15-64 native-born and immigrant men and women, by years of presence in the host country, 2003-2005 average ..... 149 Figure 3.6. Employment rates by duration of residence in Denmark, men and women, population aged 16-64, 1999 and 2004.......................................................................................... 150 Figure 3.7. Average yearly wages for full-time employed immigrants by duration of residence in Denmark, men and women, population aged 16-64, 2004 ......................................................... 151 Figure 3.8a. Evolution of employment-population ratios of the native-born and various country-of-origin groups for immigrants with less than five years of presence in Denmark since 1997, population aged 16-66 ................................................................................................ 152 Figure 3.8b. Evolution of unemployment rates of native-born and various country-of-origin groups for immigrants with less than five years of presence in Denmark since 1997, population aged 16-66................................................................................................................... 152 Figure 3.9. Differences in employment rates by gender and immigrant status, population aged 15-64, selected OECD countries, 2005..................................................................................................... 159 Figure 4.1. Annual inflows of ethnic Germans since 1985 ............................................................ 202 Figure 4.2. Inflows of asylum seekers into Germany, the European Union, and the traditional immigration countries since 1985 ................................................................................................. 203 Figure 4.3. Employment/population ratios of German nationals, ethnic Germans, Turkish nationals, foreigners and foreign-born, men and women ............................................................................... 205 Figure 4.4. Differences between the employment-population ratios of 15-64 native-born and immigrant women and men, by years of presence in the host country, 2004 ................................. 220 Figure 4.5. Convergence of employment rates of immigrants towards those of the native-born, by years of residence, 2002........................................................................................................... 221 Figure 5.1. Inflows of foreign citizens in Sweden and year-to-year employment change, 1984-2002..................................................................................................................................... 261 Figure 5.2. Employment-population rations of immigrants, by years o presence in the host country, selected OECD countries, 2003..................................................................................................... 263 Figure 5.3. Employment-population ratios of the Swedish native-born population and the foreign-born population, by duration of residence, women and men, 1987-2003........................... 270

List of Tables Table 1.1. Employment and unemployment outcomes of native- and foreign-born persons in the countries under review, men and women, 2005............................................................................... 38 Table 1.2. Odds ratios of employment and unemployment, foreign-born relative to native-born, controlling for various characteristics, 2004-2005 data ................................................................... 40 Table 1.3. Estimated odds ratios of employment and of unemployment, foreign-born relative to native-born.................................................................................................................................. 46 Table 1.4. Education levels for immigrants, second generation, and other native-born, 20-29 and not in education, by gender, latest available year ............................................................................ 62 Table 1.5. Employment rates for immigrants, second generation, and other natives, 20-29 and not in education, by gender, latest available year ............................................................................ 63 JOBS FOR IMMIGRANTS – LABOUR MARKET INTEGRATION IN AUSTRALIA, DENMARK, GERMANY AND SWEDEN – ISBN 978-92-64-03359-7 © OECD 2007

TABLE OF CONTENTS – 11

Table 2.1. Labour force characteristics of the native- and foreign-born populations aged 15-64, selected OECD countries, 2004....................................................................................................... 75 Table 2.2. Percentage of highly-qualified foreign-born population by year of arrival, 25-64 years old, 2004...................................................................................................................... 81 Table 2.3. Most important origin countries and regions of origin of the foreign-born in Australia, 2003................................................................................................................................................ 85 Table 2.4. Employment-population ratios of the native- and foreign-born populations in Australia, by visa category, population aged 15-64, 2004................................................................................ 91 Table 2.5. Share of highly-qualified persons among the adult population (25-64), selected OECD countries, 2003-2004 ...................................................................................................................... 92 Table 2.6. Employment rates by migrant category (principal migrants and spouses) at arrival and thereafter, population aged 15-64 at time of arrival .................................................................. 94 Table 2.7. Percentage of employed highly qualified individuals in low- and medium-skilled jobs in various OECD countries, population aged 15-64, 2003-2004.................................................... 102 Table 2.8. Percentage of employed highly qualified immigrants in low- and medium-skilled jobs in Australia, by years of residence and country of origin groups, population aged 15-64, 2004..... 102 Table 2.9. Job Network services, immigrant participation and outcomes....................................... 105 Table 2.10. Available evidence on the employment outcomes of refugees and other humanitarian migrants in Australia, various years .............................................................................................. 109 Table 2.11. Outcomes of the second generation, population aged 25-36, 2003.............................. 112 Table 2.12. Points differences in the PISA 2003 scores of natives and the second generation, children aged 15 years .................................................................................................................. 112 Table 3.1. Labour force characteristics of the native- and foreign-born populations aged 15-64, selected OECD countries, 2005/2004 average............................................................................... 127 Table 3.2. Percentage point differences in the educational attainment between nativeand foreign-born populations aged 25-64, 2005 ............................................................................ 145 Table 3.3. Gaps in the employment rates between the native- and foreign-born populations aged 15-64, by qualification level, 2005........................................................................................ 146 Table 3.4. Gaps in employment rates by qualification level and origin of education between immigrants and native-born in Denmark, population aged 25-54 .................................................. 147 Table 3.5. Self-employment rates for immigrants and native-born in various OECD countries, population aged 15-64................................................................................................................... 156 Table 3.6. Distribution of the employment by firm size and immigrant status, population aged 15-64, 2003.............................................................................................................................................. 158 Table 3.7. Effects of participation in labour market programmes on employment in the following year............................................................................................................................................... 163 Table 3.8. Distribution of persons of Danish origin and the second generation by educational attainment levels, population aged 25-29 ...................................................................................... 167 Table 3.9. Overrepresentation of the second generation among those with less than upper secondary education, population aged 20-29 and not in education, by gender, around 2000 .......................... 168 Table 3.10. Points differences in the PISA 2003 scores of natives and the second generation, children aged 15 years .................................................................................................................. 169 Table 3.11. Percentage of children in day care or kindergarten by age and migration background.... 170 Table 3.12. Percentage point differences between the employment-population ratios of native-born with and without native-born parents, population aged 20-29 and not in education, by gender...... 173 Table 3.13. Percentage point differences between the employment-population ratios of native-born with and without native-born parents, population aged 20-29 and not in education, by educational attainment and gender ................................................................................................................... 174 JOBS FOR IMMIGRANTS – LABOUR MARKET INTEGRATION IN AUSTRALIA, DENMARK, GERMANY AND SWEDEN – ISBN 978-92-64-03359-7 © OECD 2007

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Table 4.1. Foreign and foreign-born working-age population in Germany, 1992 and 2004 ........... 198 Table 4.2. The main migrant groups in Germany, 1993 and 2003 ................................................. 199 Table 4.3. Evolution of the ratio of the employment-population rates (immigrants/native-born), selected OECD countries, by sex .................................................................................................. 206 Table 4.4. Labour force characteristics of the native and foreign-born populations, selected OECD countries, 2004.............................................................................................................................. 207 Table 4.5a. Employment rates of native-born nationals and native-born foreigners aged 25-34, 2004 ............................................................................................................................................. 208 Table 4.5b. Evolution of labour force characteristics of native-born foreigners relative to native Germans aged 25-34, by gender.................................................................................................... 208 Table 4.6. Course structure for initial language training in 2002 and the new introduction course.... 216 Table 4.7a. Share of persons with less than upper secondary education among the adult population (25-64), selected OECD countries, 2002-2003 average ................................................................. 222 Table 4.7b. Incidence of long-term unemployment among the native and foreign-born unemployed populations, selected OECD countries, 2004................................................................................. 222 Table 4.8. Employment rates of low and higher-skilled foreign-born relative to their native-born counterparts, selected OECD countries, 2004 ............................................................................... 223 Table 4.9. Relative representation of immigrants and the second generation vis-à-vis natives across occupational sectors, 1992 and 2003 .................................................................................. 223 Table 4.10. Evolution of school-leaving degrees of Germans and foreign nationals ...................... 225 Table 4.11. Differences in the PISA 2003 scores of natives and second generation, children aged 15 years .................................................................................................................. 227 Table 4.12. Participation in language courses for unemployed migrants and percentage employed six months after course termination............................................................................................... 229 Table 4.13. Development of self-employment rates of natives and foreign-born, selected OECD countries .............................................................................................................. 234 Table 5.1. Foreign-born population aged 15-64 in selected OECD countries, 2003....................... 261 Table 5.2. Labour force characteristics of the native-born and foreign-born populations, selected OECD countries, 2003..................................................................................................... 262 Table 5.3. Labour force activity of the native- and foreign-born populations aged 15-64, selected OECD countries, 2003..................................................................................................... 263 Table 5.4. Labour force characteristics of immigrants, by region or continent of origin, selected OECD countries, 2003..................................................................................................... 264 Table 5.5. Labour market outcomes by types of migration and time since arrival, Australia and Canada.......................................................................................................................................... 267 Table 5.6. Percentage employed and odds of being employed of the foreign-born relative to the native-born, overall and by duration of residence in host country, 2002........................................ 268 Table 5.7. Difference between employment population ratios of the foreign-born and of the native-born, 1987, 1995 and 2003, men and women, by duration of residence in Sweden... 270 Table 5.8. Odds ratios for employment relative to non-employment in 2004................................. 273 Table 5.9. Persons of specific attainment levels by skill level of job held, selected countries, 2003.............................................................................................................................................. 276

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Summaries of country chapters AUSTRALIA, DENMARK, GERMANY, SWEDEN

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Summary of Chapter 2. The Labour Market Integration of Immigrants in AUSTRALIA The labour market integration of immigrants in Australia is shaped by the country’s long tradition as an immigration country and its selection policy. Over the post-war period, the main origin countries of immigration to Australia have shifted from Englishspeaking countries to other OECD countries, and, since the mid-1970s, to non-OECD countries. Parallel to this shift, immigration policy to Australia became increasingly skills focused, which has partly countered the less favourable employment outcomes of migrants from these countries. This increasing selection has resulted in a situation in which the skills structure of the immigrant population, particularly of those from nonOECD countries, is well above that of the native-born. Overall, the labour market integration of immigrant men in Australia can be considered to be relatively favourable in international comparison. This is partly attributable to selection policy and the prevalence of the English language in many parts of the world. Even with similar socio-demographic characteristics, skilled migrants tend to perform better than other migrant groups. In contrast to the positive outcomes for immigrant men, the labour force participation of immigrant women is not high in international comparison. Given the skilled nature of the majority of Australia’s immigration intake, it is of particular importance that adequate use is made of the skills of the immigrants. This is not always the case, and overqualification is a problem. With the exception of humanitarian migrants, immigrants do not have access to social security and most labour market services in the first two years after arrival. This may have contributed to increase employment of immigrants, but also aggravated the problem of overqualification, particularly for skilled non-OECD immigrants in the first two years after arrival. There are a variety of measures currently undertaken to tackle this problem. Among these are efforts to increase employer-sponsored migration and immigration of people with prior Australian qualifications, as well as further streamlining of the recognition of foreign qualifications. The scope for the latter, however, may be limited due to the fact that professions and occupations are not regulated at the national level. Particularly effective in tackling overqualification seem to be temporary and assisted work placements in skilled jobs, but funding for these measures is regional and limited. As all skilled migrants (principal applicants) need job-ready English and many of these also have Australian qualifications and/or a prior job offer, a large part of the immigrant intake can be considered to be partly pre-integrated. This is not the case for immigrants under the humanitarian programme who in turn receive a broad range of integration services to which other migrants do generally not have access. About half of the humanitarian intake is sponsored by individuals and institutions in Australia, who often also provide part of the initial settlement services. These sponsored humanitarian migrants appear to have lower employment probabilities in the long run. The principal integration aid is provided in the form of language training, which is generally open to all immigrants in need of this. In spite of the comprehensive training provided, there is little measurement of its effectiveness with respect to employment. Furthermore, few settlement services are directly targeted at labour market integration. The outcomes of the children of migrants are very favourable in international comparison. This does not only appear to be attributable to the skilled nature of the immigrant intake, but also to the settlement and integration perspective given to all non-temporary immigrants.

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Summary of Chapter 3. The Labour Market Integration of Immigrants in DENMARK The labour market integration of immigrants has been a key issue both in the public debate and on the government agenda in Denmark, triggered by unfavourable employment outcomes of immigrants – the gaps in employment rates of immigrants compared to the native-born are among the highest in the OECD – and a rapid rise of the immigrant population during the past twenty years. Prior to the 1980s, immigration to Denmark was a very marginal phenomenon. Despite the rapid growth since then, with less than 7% immigrants in the population, Denmark still has one of the smallest immigrant populations in Western Europe. Labour market outcomes for immigrants have been significantly below those of the native-born for more than two decades. This is partly attributable to the fact that immigration to Denmark has been strongly dominated by refugees and family reunification – groups whose labour market outcomes tend to be not as good as the native-born or economic migrants in all countries, particularly in the early years of settlement. Since 2001, lower social assistance has been introduced for all persons who have been in Denmark for less than seven out of the past eight years because of concerns about the impact of Denmark’s relatively high social benefits on work incentives. In addition, participation in integration measures has been made obligatory. Finally, for more than a decade, there have been efforts to improve the labour market integration of immigrants, and these efforts have been enhanced recently. However, the observed unfavourable labour market outcomes are not confined to non-OECD immigrants. Employment rates of immigrants from OECD countries are low in international comparison as well. In addition, a substantial part of the immigrant population in Denmark has tertiary educational attainment, yet this characteristic does not yield as large an impact on employment probabilities as one would expect, even if the qualification is obtained in Denmark. The second generation is now gradually entering the labour market in larger numbers, and this group is of particular policy concern. Their educational attainment is well below that of comparable Danes without a migration background. This is mainly due to the fact that the dropout rates from vocational training for the second generation are more than twice as high as among persons of Danish origin. This, in turn, is at least in part attributable to the fact that persons with a migration background have more difficulties getting apprenticeship contracts with companies than comparable persons of Danish origin. There have been a series of recent measures to address this issue. However, even for those with upper secondary or tertiary education, employment rates of the second generation are significantly lower than for the native-born. This also holds for the offspring of immigrants from the OECD. About one third of total Danish employment is in the public sector, where immigrants are underrepresented, although the degree of underrepresentation seems to be lower than in other OECD countries. Indeed, a variety of measures have been taken to increase immigrants’ employment in this sector, because of its size and importance in the Danish context. The public sector is also viewed as having a role-model function. Private employment is largely dominated by small- and medium-sized enterprises, but immigrants do not seem to be less present there than in large companies – in contrast to other OECD countries.

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Considering the recent nature of most immigration, and the relatively small size of the immigrant population, the overall framework for integration in Denmark is highly developed and a significant amount is invested in integration efforts. This is mirrored by the fact that Denmark is among the few OECD countries which has a separate Ministry for Refugee, Immigration and Integration Affairs, in which immigration and integration policies are considered together. Under this framework, municipalities have to offer a three-year introduction programme to immigrants from outside the European Economic Area, which consists of language courses and a range of labour market integration measures. Indeed, the strong emphasis on labour market integration in the introduction programme is particularly noteworthy. There are strong financial incentives for municipalities to achieve rapid labour market integration of recent arrivals, and an elaborate benchmarking system is in place to monitor municipalities’ integration performance and facilitate the mainstreaming of effective policies. There is some indication that current policies are having the desired effect, as labour market participation and employment of recent arrivals have increased. However, the unemployment rate for this group has also increased and it is getting lower social assistance. One way to escape from the resulting marginalisation is via self-employment, but few immigrants seem to succeed in pursuing this route. This may be linked with the fact that immigrants generally do not have access to loans before they acquire permanent residence, and requirements for permanent residence have been tightened. There is thus a case for better loan access for this group. What is especially striking in the Danish context is the fact that employment gaps relative to the native-born are across-the-board – they are longstanding and they are found for both OECD and non-OECD immigrants and even for offspring of immigrants from both OECD and non-OECD countries, at all attainment levels. Even returns to Danish education are lower for children of immigrants than for children of non-immigrants. Outcomes seem to be improving recently, but the general backdrop remains. Some of this may be attributable to the fact that foreign qualifications and experience may not be recognised by employers in Denmark, as is generally the case elsewhere as well. But this should not be the case for offspring of immigrants born and educated in Denmark, who show poor performance relative to children of non-immigrants at all attainment levels. In any event, the inadequate results for the second generation, whatever the geographic origin or qualifications of persons in this group, suggests that the benefit disincentive explanation often advanced for low immigrant employment rates is not an entirely satisfactory one. A mix of less developed personal networks, information asymmetries and discrimination seems to be part of the answer. These are generally difficult to disentangle as the former in practice have the effect of excluding equally skilled immigrants from certain jobs even where there is no ostensible discrimination. Nevertheless, testing results in the past have shown that immigrants and their children were, not infrequently, selectively ignored in the recruitment process, even when they had similar characteristics as native Danes. This phenomenon undoubtedly still exists. It needs to be more regularly monitored and publicised, and measures to diversify recruitment channels should be encouraged. Given Denmark’s relatively high entry wages, the relative lack of networks and the information asymmetries about immigrant skills and qualifications, which may be more important in the Danish context with its recent immigration experience, one would expect measures which help to overcome hiring reticence and enable employers to evaluate immigrant skills to be particularly effective. Indeed, empirical evidence shows that JOBS FOR IMMIGRANTS – LABOUR MARKET INTEGRATION IN AUSTRALIA, DENMARK, GERMANY AND SWEDEN – ISBN 978-92-64-03359-7 © OECD 2007

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company-based training and wage subsidies to employers have a strongly positive effect on labour market integration. Yet, relatively few immigrants profit from such measures currently. It is thus recommended to increase the scale and scope of these tools. First steps in this direction have recently been taken. There are also a variety of innovative networking projects in place which seek to set off this immigrants’ lack of access to networks, including a nationwide mentorship project, and these benefit from a strong involvement of the civic community.

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Summary of Chapter 4. The Labour Market Integration of Immigrants in GERMANY The current situation of the labour market integration of migrants in Germany has to be viewed in the light of its immigration history. During the post-war economic boom, until 1973, Germany focused on the recruitment of low-skilled foreign labour. Many of these “guestworker” immigrants settled and were joined by their foreign spouses, which has given rise to a second generation of persons with an immigrant background. In the late 1980s and early 1990s, Germany received massive immigration flows of ethnic Germans from Eastern Europe. Shortly after the peak immigration of ethnic Germans, Germany received large numbers of humanitarian migrants. German statistics only distinguish along nationality lines. This hampers assessment of the situation as this does not take account of ethnic Germans – who have German nationality and are now the most important immigrant group, although they face difficulties similar to those of other migrant groups. Assessment based on nationality is also problematic since immigrants with a foreign nationality have increasingly and selectively taken up German citizenship. There is a clear need for statistics based on the country of birth. There are a large number of governmental and non-governmental actors involved at all levels – from the EU to the Federal, Länder and local governments. Germany is currently in the process of a major restructuring of its complex integration framework. Under the new Immigration Act which came into force on 1 January 2005, there is a uniform introduction programme for all permanent immigrants. As in the past, integration services focus largely on language training. There is little evaluation with respect to the effectiveness of this kind of training and it is generally not linked to labour market needs. Indeed, the scarce empirical evidence suggests that language training in Germany may not be very effective as a means of labour market integration. In addition to the regular integration services, there is a multitude of innovative projects. However, these are often locally-based and time-limited, and seldom designed in a way that would enable proper evaluation. With respect to employment and unemployment rates, and particularly given their low educational attainment and the current economic situation, the labour market integration of immigrant men is relatively favourable in international comparison. However, immigrant women, and particularly those of Turkish origin, have very low employment rates. This is partly an outcome of policies which limited the labour market access of spouses. Most of these legal obstacles have been removed under the new Immigration Act. The situation of the so-called “second generation” is of concern, as they have very low educational outcomes. This hampers their access to vocational training, which appears to have an even stronger impact on their employment prospects than on those of natives. The low educational attainment of the second generation seems to be at least partly attributable to structural features in the German education system, such as the early streaming which puts migrants’ children in a lower track. Especially problematic is the relatively late starting age for kindergarten and the prevalence of half-day education in kindergarten and school, which limits exposure to the German language at a crucial age. Immigrants’ access to selfemployment is hampered by legal obstacles and a lack of information and subsequent access to financial credits. Despite positive experiences with temporary employment as a labour market integration tool for immigrants in other OECD countries, immigrants are not a focus group of the Federal temporary employment programme.

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Summary of Chapter 5. The Labour Market Integration of Immigrants in SWEDEN The current situation regarding the integration of immigrants in the labour market in Sweden is the consequence of a number of factors and developments. The past 15 years have seen a higher share of humanitarian migration in Sweden than in the past. This is a form of migration for which labour market integration appears to be slower than for other forms of migration in all countries. At the same time there has been a growing diversification of migration away from “Western” countries to those with a greater cultural distance. With 1985 came the introduction of social assistance for refugees for an eighteenmonth introductory period, the transfer of responsibility for integration away from the Labour Market Board and the refugee dispersal policy in which refugees were assigned to municipalities throughout Sweden to relieve the pressure on the large agglomerations, with local economic conditions not always being taken into account. The dispersal policy had a negative effect on immigrant outcomes, particularly with respect to those arriving during the economic crisis, for whom the effects seem in many cases to be persistent. With the severe economic crisis of the 1990s, asylum seeking in Sweden continued and those asylum seekers that were recognised and granted a residence permit were met with a labour market situation that was highly unfavourable and where considerable numbers of native-born Swedes with domestic formal qualifications and work experience were also looking for work. At the same time, the crisis struck immigrants already present and employed disproportionately. The re-integration of immigrants into the ranks of the employed was rendered all the more difficult by the fact that some two-thirds of jobs, in the Swedish labour market appear to be filled through informal methods The situation of immigrants has improved significantly since the trough of the economic downturn, especially for new arrivals. The relatively favourable impact on employment of a minimum amount of language training and of vocational training for this group and the relatively low take-up of these suggest that there is room for improvement with regard to labour market outcomes in the early years of residence, which can be expected to persist with continued residence. The situation for immigrants having arrived since the mid-1980s and having suffered the brunt of the economic crisis of the 1990s remains unfavourable. It is difficult to see how the continuing employment problems of this group can be turned around without a strong economic expansion, given the re-enforcing nature of further non-employment on both inactivity and employer perceptions. If targeted measures are politically infeasible, then general measures that provide especially favourable results for immigrants need to be encouraged and expanded. In Sweden, as elsewhere, employers do not seem to accord much trust in foreign educational qualifications and work experience, although recognition of qualifications as equivalent to Swedish ones does appear to convey benefits. An expansion of this process and a streamlining of procedures for carrying this out would be beneficial. What employers recognise and reward seems to be Swedish work experience and successful integration tends to be associated with early contact with the labour market. Results seem to suggest that the benefits of early employment experience on later employment are much stronger than those of Swedish vocational education. Improving the efficiency of language instruction so as not to overly prolong labour market entry and

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20 – SUMMARIES OF COUNTRY CHAPTERS ensuring that proficiency requirements reflect actual occupational needs are matters of some importance. The evidence concerning discrimination suggests that this is not an insignificant impediment to employment in Sweden. Studies of persons with an immigrant background born in Sweden, who presumably do not have language deficiencies, show less favourable outcomes than for persons with similar characteristics born to native-born Swedes. The evidence overall does point to discrimination problems, and the diversity programmes in place in Sweden to encourage a better representativity of immigrants in work places and in society seem therefore a necessary intervention. From a situation where labour market outcomes of immigrants in the late 1980s, at least with respect to employment rates, seemed relatively favourable, Sweden now finds itself with an immigrant work force that is significantly under-represented among the ranks of the employed. There is a general awareness that the issue needs to be solved and an impressive mobilisation of the social partners in this regard. A reorientation of efforts towards measures that yield demonstrable returns is needed. Labour shortages may solve the problem of integration over the medium term, but a more optimal use of human resources then would be served by a more balanced labour market absorption now.

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Résumés des chapitres par pays ALLEMAGNE, AUSTRALIE, DANEMARK, SUÈDE

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Résumé du chapitre 4. L’insertion des immigrés sur le marché du travail en ALLEMAGNE Pour comprendre la situation actuelle en matière d’insertion des immigrés sur le marché du travail allemand, il convient de s’imprégner de l’histoire de l’immigration dans le pays. Pendant l’essor économique de l’après-guerre et jusqu’en 1973, l’Allemagne a privilégié le recrutement de main-d’œuvre étrangère faiblement qualifiée. Un grand nombre de ces « travailleurs invités » se sont installés et ont été rejoints par leur conjoint étranger, ce qui a donné naissance à une deuxième génération d’immigrés. A la fin des années 80 et au début des années 90, l’Allemagne a accueilli des flux massifs d’Allemands de souche provenant d’Europe orientale. Peu après la crête de cette vague d’immigration, le pays a reçu de très nombreux migrants pour raisons humanitaires. Les statistiques allemandes établissent des distinctions uniquement en fonction de la nationalité, ce qui gêne pour évaluer la situation. En effet, elles ne tiennent pas compte des Allemands de souche, qui possèdent la nationalité allemande et constituent aujourd’hui le groupe d’immigrés le plus important, alors qu’ils se heurtent à des difficultés analogues à celles rencontrées par d’autres groupes de migrants. La difficulté d’évaluation que crée cette distinction sur la base de la nationalité se trouve renforcée par le fait que les immigrés qui n’étaient pas de souche allemande ont été de plus en plus nombreux à obtenir leur naturalisation à l’issue d’un processus sélectif. Nous aurions manifestement besoin de statistiques fondées sur le pays de naissance. Nombreux sont les acteurs gouvernementaux et non gouvernementaux qui interviennent, depuis le niveau de l’UE jusqu’à celui des autorités locales en passant par le niveau fédéral et celui des Länder. Actuellement, l’Allemagne restructure en profondeur son cadre d’intégration qui était particulièrement complexe. Aux termes de la nouvelle loi relative à l’immigration entrée en vigueur le 1er janvier 2005, il existe désormais un programme d’accueil uniforme pour tous les immigrants permanents. Comme dans le passé, les services d’accueil font principalement porter leurs efforts sur l’enseignement de la langue. L’efficacité de ce type de formation ne fait que très peu l’objet d’évaluations et, généralement, l’enseignement dispensé n’est pas lié aux besoins du marché du travail. Les rares données d’observation dont on dispose font penser que la formation linguistique en Allemagne n’est probablement pas très efficace comme moyen d’intégration sur le marché du travail. A côté des services d’intégration habituels, il existe une multitude de projets innovants. Toutefois, ceux-ci sont fréquemment limités dans l’espace et dans le temps, et sont rarement conçus d’une manière permettant de les évaluer convenablement. S’agissant des taux d’emploi et de chômage, et compte tenu tout particulièrement du faible niveau d’instruction des immigrés et de la conjoncture économique actuelle, l’intégration des immigrés de sexe masculin sur le marché du travail est relativement aisée par rapport à ce qu’on observe dans d’autre pays. En revanche, les immigrées, en particulier les femmes d’ascendance turque, connaissent des taux d’emploi très faibles. Cela tient en partie aux politiques ayant limité l’accès des conjoints au marché du travail. Mais la plupart des obstacles juridiques de ce type ont été levés avec le vote de la nouvelle loi sur l’immigration. La situation des immigrés de la deuxième génération est préoccupante vu la médiocrité des résultats scolaires qu’ils obtiennent. Cela gêne leur accès à la formation professionnelle et il s’avère que les incidences de ce problème sur les perspectives d’emploi sont plus fortes dans leur cas que dans celui des autochtones. Il semble que le faible niveau d’instruction de cette deuxième génération soit en partie imputable aux JOBS FOR IMMIGRANTS – LABOUR MARKET INTEGRATION IN AUSTRALIA, DENMARK, GERMANY AND SWEDEN – ISBN 978-92-64-03359-7 © OECD 2007

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caractéristiques structurelles du système éducatif allemand, notamment à l’orientation précoce qui place les enfants d’immigrés en position peu favorable. Sont particulièrement problématiques l’âge relativement tardif de scolarisation en maternelle et la prévalence de la demie journée d’enseignement à la maternelle puis à l’école, ce qui limite les contacts des enfants immigrés avec la langue allemande à un âge clé. Par ailleurs, des obstacles juridiques entravent l’accès des immigrés au travail indépendant ; s’y ajoute le manque d’informations et, partant, d’accès aux moyens de financement. Bien que l’expérience de l’emploi temporaire comme instrument d’insertion des immigrés sur le marché du travail se soit révélée concluante dans d’autres pays de l’OCDE, cette catégorie de population n’est pas le cœur de cible du programme fédéral d’emploi temporaire.

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Résumé du chapitre 2. L’insertion des immigrés sur le marché du travail en AUSTRALIE En Australie, l’intégration des immigrés sur le marché du travail est marquée par la longue tradition du pays en tant que terre d’immigration et par sa politique de sélection. Au lendemain de la guerre, les principaux pays d’origine des immigrants ont changé : les pays anglophones ont cédé la place à d’autres pays de l’OCDE et, depuis le milieu des années 70, à des pays n’appartenant pas à l’Organisation. Parallèlement à cette évolution, la politique australienne d’immigration a privilégié de façon croissante les compétences, ce qui a en partie compensé les médiocres résultats sur le plan de l’emploi qu’enregistraient les immigrés dans leur pays d’origine. Du fait de la rigueur accrue du processus de sélection, l’Australie se trouve maintenant dans une situation où la structure des compétences de la population immigrée, en particulier des individus originaires de pays n’appartenant pas à l’OCDE, est bien supérieure à celle des autochtones. D’après les comparaisons internationales, on peut dire que, globalement, les immigrés de sexe masculin s’intègrent relativement bien sur le marché du travail australien. Cela tient en partie à la politique de sélection pratiquée par l’Australie et à la prévalence de la langue anglaise dans beaucoup de régions du monde. On peut même ajouter qu’à caractéristiques sociodémographiques égales, les migrants qualifiés affichent généralement de meilleures performances que les autres groupes de migrants. Mais les comparaisons internationales montrent que, contrairement aux hommes, les femmes immigrées n’affichent qu’un faible taux d’activité. Comme la majorité des immigrants admis en Australie sont des personnes qualifiées, il est particulièrement important d’utiliser les compétences de cette main-d’œuvre de manière appropriée. Ce n’est pas toujours le cas et la surqualification pose un problème. A l’exception des migrants pour raisons humanitaires, les immigrés n’ont accès ni à la sécurité sociale, ni à la plupart des services liés au marché du travail pendant les deux années suivant leur arrivée dans le pays. Cette disposition a peut-être contribué à augmenter le taux d’emploi des immigrés, mais elle a également aggravé le problème de la surqualification, en particulier pour les immigrés qualifiés ne provenant pas de la zone OCDE, pendant leurs deux premières années de séjour en Australie. Actuellement, une panoplie de mesures est prise pour remédier à ce problème. On peut notamment citer les efforts visant à accroître les migrations parrainées par les employeurs et l’accueil de personnes ayant obtenu des qualifications en Australie, ainsi que les mesures de simplification de la reconnaissance des qualifications acquises à l’étranger. Toutefois, la portée de ces mesures est probablement limitée du fait que la réglementation en matière de professions et de métiers n’a pas de dimension nationale. Une mesure semble particulièrement efficace pour remédier au problème de la surqualification, à savoir le placement temporaire avec mesures d’accompagnement, permettant aux immigrés d’occuper des emplois qualifiés ; mais le financement de cette mesure, qui s’effectue au niveau régional, est limité. Comme tous les migrants qualifiés (demandeurs principaux) doivent posséder un niveau d’anglais suffisant pour travailler et comme nombre d’entre eux possèdent déjà des qualifications australiennes et/ou une offre d’emploi préalable, une grande partie des immigrants admis peuvent être considérés comme partiellement « pré-intégrés ». Ce n’est pas le cas des immigrants arrivant au titre du programme humanitaire qui, pour leur part, bénéficient d’une large palette de services d’intégration auxquels les autres migrants n’ont généralement pas accès. Environ la moitié des immigrants pour raisons humanitaires admis en Australie sont parrainés par des individus ou des institutions qui leur offrent souvent une JOBS FOR IMMIGRANTS – LABOUR MARKET INTEGRATION IN AUSTRALIA, DENMARK, GERMANY AND SWEDEN – ISBN 978-92-64-03359-7 © OECD 2007

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partie des services initiaux d’installation. Il semble qu’à terme, les probabilités d’emploi de ces migrants parrainés soient moindres. La principale forme d’aide à l’intégration est la formation à l’anglais dont peuvent généralement bénéficier tous les immigrants qui en ont besoin. Mais en dépit du caractère exhaustif de la formation dispensée, son efficacité du point de vue de l’emploi est rarement mesurée. En outre, peu de services d’installation ciblent directement l’intégration sur le marché du travail. Les résultats affichés par les enfants de migrants sont très positifs comparés à ceux que l’on observe dans d’autres pays. Il semble que cela ne tienne pas uniquement à l’accueil d’immigrants qualifiés mais aussi aux perspectives d’installation et d’intégration offertes à tous les immigrés autres que temporaires.

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Résumé du chapitre 3. L’insertion des immigrés sur le marché du travail au DANEMARK Suscitée par les médiocres résultats des immigrés au regard de l’emploi (au Danemark, l’écart entre leur taux d’emploi et celui des autochtones compte parmi les plus importants de la zone OCDE) et par l’accroissement rapide de cette population au cours des vingt dernières années, l’intégration des immigrés sur le marché du travail est une question clé qui fait débat dans l’opinion publique et que le gouvernement a inscrite dans son programme. Avant les années 80, l’immigration dans ce pays était un phénomène très marginal. Pourtant, en dépit de la progression rapide de cette population depuis lors, les immigrés représentent moins de 7 % de la population totale. Ainsi, le Danemark compte encore l’une des populations immigrées les plus faibles d’Europe occidentale. Cela fait plus de vingt ans que les immigrés affichent de médiocres résultats au regard du marché du travail, ce qui tient en partie au fait qu’au Danemark, cette population est composée d’un fort pourcentage de réfugiés et de personnes arrivées dans le cadre du regroupement familial – deux groupes dont les résultats au regard du marché du travail ne sont généralement pas aussi bons que ceux des autochtones ou des migrants pour raisons économiques et ce, dans tous les pays, notamment pendant les premières années d’installation. Depuis 2001, l’immigration pour regroupement familial fait l’objet de mesures restrictives. Parallèlement à ces mesures, le Danemark a opté pour un plafonnement des prestations sociales accordées aux nouveaux arrivants et rendu obligatoire leur participation à des programmes d’intégration. De plus, depuis plus de dix ans de nombreux efforts ont été faits pour améliorer l’intégration des immigrés sur le marché du travail, et encore accélérés récemment. Toutefois, les immigrés originaires de pays non membres de l’OCDE ne sont pas les seuls à afficher de médiocres résultats. Les taux d’emploi des immigrés provenant de pays de l’OCDE sont faibles également d’après les comparaisons internationales. De surcroît, au Danemark, une part non négligeable de la population immigrée possède un niveau d’études supérieures. Pourtant, cette caractéristique n’influe pas autant sur les probabilités d’emploi qu’on pourrait s’y attendre, même lorsque les qualifications ont été acquises au Danemark. Aujourd’hui, les immigrés de la deuxième génération entrent progressivement dans la vie active. Ils sont nombreux et leur groupe préoccupe tout particulièrement les pouvoirs publics. Leur niveau de formation est nettement inférieur à celui des Danois qui présentent des caractéristiques comparables mais ne sont pas issus de l’immigration. Cela tient principalement au fait que les taux d’abandon en cours de formation professionnelle des immigrés de la deuxième génération sont plus de deux fois supérieurs à ceux des personnes nées au Danemark de parents eux-mêmes autochtones. Cette situation s’explique principalement par le fait que les personnes issues de l’immigration rencontrent plus de difficultés pour obtenir des contrats d’apprentissage dans les entreprises que les jeunes nés au Danemark de parents eux-mêmes autochtones présentant un profil comparable. Toutefois, même lorsqu’ils possèdent un niveau d’études du deuxième cycle du secondaire ou d’études supérieures, les immigrés de la deuxième génération affichent des taux d’emploi nettement inférieurs à ceux des autres autochtones. Cette remarque vaut également pour les enfants d’immigrés originaires de pays de l’OCDE. Considérant la nature récente d’une grande partie de l’immigration ainsi que la taille relativement faible de la population immigrée, on constate qu’au Danemark, le cadre global de l’intégration est extrêmement développé. En témoigne le fait que ce pays

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compte parmi les quelques pays de l’OCDE à s’être dotés d’un ministère chargé des réfugiés, de l’immigration et de l’intégration bien distinct, qui s’occupe à la fois des politiques de l’immigration et de l’intégration. Dans ce cadre, les communes sont tenues de proposer aux immigrés originaires d’un pays n’appartenant pas à l’Espace économique européen (EEE) un programme d’accueil sur trois ans, qui comporte des cours de langue et une palette de mesures d’intégration sur le marché du travail. De fait, la grande importance accordée par ce programme à cette forme d’intégration mérite d’être soulignée tout particulièrement. Les communes bénéficient de fortes incitations financières pour faire en sorte que les nouveaux arrivants s’intègrent rapidement sur le marché du travail, et un système élaboré d’évaluation comparative est en place pour observer les résultats qu’elles obtiennent en matière d’intégration et faciliter la généralisation des politiques ayant prouvé leur efficacité. Certains indices donnent à penser que les politiques actuelles produisent les effets désirés, les taux d’activité et d’emploi des immigrés de fraîche date ayant progressé. Toutefois, le taux de chômage de ce groupe a lui aussi augmenté, alors que les prestations sociales dont il bénéficie sont inférieures à celles des autochtones. Une méthode pour éviter la marginalisation qui en résulte consiste à devenir travailleur indépendant mais, semble-t-il, peu d’immigrés empruntent cette voie avec succès. Cela est peut-être lié au fait qu’en règle générale, les immigrés ne peuvent contracter un emprunt avant d’avoir obtenu un titre de séjour permanent, et que les critères d’octroi de ce titre ont été durcis. En conséquence, il conviendrait de faciliter l’accès de ce groupe aux prêts. Ce qui frappe particulièrement dans le contexte danois, c’est que les disparités d’emploi par rapport aux autochtones se retrouvent partout : elles existent depuis longtemps et concernent aussi bien les immigrés provenant de pays de l’OCDE que ceux qui sont originaires d’autres pays ; elles touchent même les descendants de ces deux catégories d’immigrés et ce, quel que soit leur niveau de formation. Même le rendement de l’éducation danoise est inférieur dans le cas des enfants d’immigrés à celui que l’on observe chez les enfants non issus de l’immigration. Récemment, les résultats au regard de l’éducation semblent s’être quelque peu améliorés mais, globalement, la situation perdure. Peut-être cela tient-il en partie au fait que les qualifications et l’expérience acquises à l’étranger ne sont pas forcément reconnues par les employeurs du Danemark qui, à cet égard, ne fait pas exception. Mais les enfants d’immigrés, nés et scolarisés au Danemark, ne devraient pas connaître ce problème. Pourtant, ce groupe affiche de médiocres résultats par rapport aux enfants de personnes non issues de l’immigration, à tous les niveaux de formation. Quoi qu’il en soit, les résultats peu probants de la deuxième génération, quelles que soient l’origine géographique ou les qualifications des individus de ce groupe, font penser que l’explication souvent avancée pour expliquer les faibles taux d’emploi des immigrés (l’effet démobilisateur des prestations) n’est pas totalement satisfaisante. Les observations communiquées nous conduisent à penser qu’il y a lieu de lutter contre la discrimination, de la surveiller et de la dénoncer de manière plus efficace. Compte tenu de l’absence relative de réseaux relationnels et de l’asymétrie de l’information concernant les compétences et les qualifications des immigrés, qui ont peut-être plus d’importance dans le contexte danois caractérisé par une expérience récente de l’immigration, on pourrait penser que des mesures destinées à aider les employeurs à surmonter leurs réticences à l’idée d’embaucher des immigrés et à leur permettre d’évaluer les compétences de ceux-ci seraient particulièrement efficaces. De fait, selon des données économétriques, la formation à l’intérieur de l’entreprise et le versement aux employeurs de subventions salariales ont eu un effet extrêmement positif sur l’intégration sur le JOBS FOR IMMIGRANTS – LABOUR MARKET INTEGRATION IN AUSTRALIA, DENMARK, GERMANY AND SWEDEN – ISBN 978-92-64-03359-7 © OECD 2007

28 – RÉSUMÉS DES CHAPITRES PAR PAYS marché du travail. Actuellement, pourtant, les immigrés qui bénéficient de ces mesures sont assez peu nombreux. En conséquence, il est recommandé d’accroître l’envergure et la portée de ces dispositifs. Au Danemark, le secteur public compte pour un tiers environ de l’emploi total. Il s’agit d’un secteur où les immigrés sont sous-représentés. Toute une palette de mesures ont été prises pour augmenter l’emploi des immigrés dans ce secteur du fait de sa taille et de son importance dans le contexte danois. On considère aussi que le secteur public doit jouer un rôle de modèle. Dans le secteur privé, les petites et moyennes entreprises sont largement majoritaires comme pourvoyeurs d’emploi mais nombreuses sont celles qui ne possèdent qu’une connaissance limitée de la population immigrée. En outre, les contacts avec les employeurs dans ce secteur s’établissent souvent par le biais de réseaux de relations personnelles. Or, les immigrés ont généralement moins de relations de cette nature. Le Danemark a donc mis en place une multiplicité de projets innovants de constitution de réseaux par lequel il s’efforce de remédier à ce problème, y compris un projet de mentorat à l’échelle nationale. Ces projets bénéficient de la forte implication de la société civile.

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Résumé du chapitre 5. L’insertion des immigrés sur le marché du travail en SUÈDE S’agissant de l’insertion des immigrés sur le marché du travail suédois, il semblerait que la situation actuelle résulte d’un ensemble de facteurs et de développements. Les quinze dernières années ont vu une part plus importante de l’immigration humanitaire que par le passé. C’est une forme de migration pour laquelle l’intégration sur le marché du travail des personnes concernées est plus lente que pour les autres formes de migration. En même temps, il y a eu une augmentation de l’immigration en provenance de pays non « occidentaux » et partageant des cultures plus éloignées. L’année 1985 a vu la mise en place d’un système d’aide sociale à l’intention des réfugiés pendant les 18 mois correspondant à la phase d’accueil. C’est aussi en 1985 que les responsabilités en matière d’intégration ont été transférées (désormais, l’intégration ne relève plus de l’Office du marché du travail), et qu’a été mise en œuvre la politique de dispersion géographique (en vertu de laquelle les réfugiés sont dirigés vers des communes réparties un peu partout sur le territoire). Pourtant, même si cette politique visait à relâcher un peu la pression s’exerçant sur les grandes agglomérations, elle ne tenait pas nécessairement compte du contexte économique local. La politique de dispersion a eu des effets négatifs sur les performances des immigrants, notamment ceux qui sont arrivés pendant la crise économique. Il semble en outre que, dans bien des cas, ces effets ont persisté. Dans les années 90, alors que sévissait une grave crise économique, la Suède a continué de recevoir des demandes d’asile. Les requérants ayant obtenu le droit d’asile ainsi qu’un permis de séjour se sont trouvé confrontés à un marché du travail extrêmement déprimé, sur lequel se pressaient un nombre considérable de demandeurs d’emploi suédois nés sur le territoire et possédant des qualifications formelles ainsi qu’une expérience professionnelle acquises dans leur propre pays. Parallèlement, la crise a frappé de manière disproportionnée les immigrés déjà présents sur le territoire et munis d’un emploi. Les immigrés ont eu d’autant plus de difficultés à réintégrer les rangs des salariés qu’environ les deux tiers des emplois en Suède semblent être pourvus par des méthodes informelles. Après que la courbe de la récession a atteint son point bas, la situation des immigrés s’est nettement améliorée, surtout parmi les nouveaux arrivants. L’impact positif sur l’emploi d’une formation linguistique minimum et de la formation professionnelle pour les nouveaux arrivants, ainsi qu’une souscription peu importante à ces programmes, indiquent qu’on pourrait mieux faire quant aux résultats sur le marché du travail les premières années du séjour en Suède, résultats qui auraient tendance à se prolonger avec la durée de séjour. En revanche, la situation des immigrés arrivés depuis le milieu des années 80 et qui ont été frappés de plein fouet par la crise économique des années 90 ne s’est guère redressée. On ne sait pas très bien comment contourner les problèmes persistants de ces groupes au regard de l’emploi en l’absence d’une forte expansion économique, quand on connaît les effets délétères de la prolongation d’une période de non-emploi sur l’inactivité et sur la perception qu’en ont les employeurs. Si des programmes ciblés pour ces immigrés sont politiquement inacceptables, alors les mesures générales existantes produisant de bons résultats pour les immigrés doivent être encouragées et étendues. En Suède comme ailleurs, les employeurs ne semblent pas avoir grande confiance dans la formation ni dans l’expérience professionnelle acquises à l’étranger, quoique la reconnaissance des qualifications étrangères comme équivalentes à des diplômes suédois JOBS FOR IMMIGRANTS – LABOUR MARKET INTEGRATION IN AUSTRALIA, DENMARK, GERMANY AND SWEDEN – ISBN 978-92-64-03359-7 © OECD 2007

30 – RÉSUMÉS DES CHAPITRES PAR PAYS semble bien conférer des avantages. Une expansion des mesures en place à cet égard, ainsi qu’une rationalisation des procédures, semblent s’imposer. Les employeurs reconnaissent et récompensent l’expérience professionnelle acquise en Suède, et une intégration réussie va souvent de pair avec une insertion rapide sur le marché du travail. Les résultats semblent indiquer qu’une insertion rapide sur le marché du travail a un impact plus important sur les chances d’un emploi par la suite qu’une formation professionnelle suédoise. Il importe par conséquent de rendre plus efficient l’enseignement du suédois de manière à ne pas prolonger à l’excès la période précédant cette insertion, et de veiller à ce que les compétences exigées des immigrés traduisent les besoins réels du marché du travail. Les résultats sur la discrimination révèlent que cette dernière ne constitue pas un obstacle sans importance à l’emploi en Suède. Les études sur les personnes issues de l’immigration nées en Suède, et qui en principe ne devraient pas avoir de problèmes linguistiques, montrent des résultats moins favorables que pour les personnes ayant des caractéristiques semblables mais nées de parent nés en Suède. . Des problèmes de discrimination existent et il semble nécessaire d’intervenir pour mettre en place des programmes de diversité afin d’encourager la représentation et de veiller à assurer la représentativité des immigrés sur leur lieu de travail comme au sein de la société. Alors que vers la fin des années 80, les résultats au regard de l’emploi des immigrés semblaient relativement positifs, du moins sur le plan des taux d’emploi, la Suède se retrouve aujourd’hui avec une population active d’immigrés nettement sous-représentée dans les rangs des actifs occupés. Tout le monde est bien conscient de la nécessité de résoudre le problème et, à cet égard, les partenaires sociaux se sont mobilisés de manière impressionnante. Il convient de réorienter les efforts vers des mesures permettant d’obtenir des résultats tangibles. Les pénuries de main-d’œuvre pourront peut-être résoudre le problème de l’intégration à moyen terme, mais pour parvenir à une utilisation optimalisée des ressources humaines d’ici là, il faut dès maintenant chercher un meilleur équilibre dans l’insertion sur le marché du travail.

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Chapter 1. KEY FINDINGS ON THE LABOUR MARKET INTEGRATION OF IMMIGRANTS

Introduction International migration is high on the policy agenda in many countries and it is generally expected that, to respond to labour shortages and the decline in the size of the working-age population, recourse to further migration will be necessary in most countries in the future. For migration to play the role expected of it in this regard, however, it is clearly necessary that the current stock of immigrants and future arrivals be integrated into the labour markets and societies of the receiving countries and be perceived as contributing to the economy and development of the host country. The issue of the integration of immigrants, however, is not really a new one. Immigrants at all times and places have had to adapt to the host country and vice-versa. The nature of the integration process has differed from country to country and over time, depending on the migration history of the country, the characteristics of arrivals, the existing programmes in place to assist immigrants upon arrival and the general social and economic conditions in the country. The issue seems pressing now because of the large numbers of immigrants that have entered OECD countries during the past fifteen years, because integration results do not seem to be as favourable in recent years in a number of countries as they were in the past and because many countries expect that a recourse to further immigration may be necessary in the near future. This publication contains overviews of the labour market integration of immigrants in Australia, Denmark, Germany and Sweden. They are the first in a series of reviews that will also cover Belgium, France, Portugal, the Netherlands, Switzerland and the United Kingdom. Each review includes a preliminary diagnosis of the labour market integration of immigrants and in some cases, of children of immigrants, in the country, as well as particular national features that affect the integration process. A history of recent immigration and of integration policies is presented along with an overview of the framework for integration policy, the national stakeholders and the particular measures and initiatives addressed to immigrants or, in some cases, targeted at broader groups but where immigrants are overrepresented. Indeed, it is generally the case in all countries covered that aside from special programmes addressed to immigrants shortly after their arrival in the host country, any labour market difficulties experienced by immigrants are dealt with through mainstream labour market programmes. The preliminary diagnosis in each review is then extended, with a look at the evolution of immigrant outcomes over the recent past, with attention to the nature of migration flows, the effect of policy initiatives and in particular of introduction programmes, the recognition JOBS FOR IMMIGRANTS – LABOUR MARKET INTEGRATION IN AUSTRALIA, DENMARK, GERMANY AND SWEDEN – ISBN 978-92-64-03359-7 © OECD 2007

32 – CHAPTER 1. KEY FINDINGS ON THE LABOUR MARKET INTEGRATION OF IMMIGRANTS of foreign qualifications and experience, the operation of the labour market and discrimination issues. The reviews end with an overall summary with recommendations. This chapter describes the methodology adopted for the reviews and contains a summary of key issues and findings. It also includes a concise summary of migration history and systems in the four countries under review and a comparative statistical overview of labour force outcomes over 21 OECD countries. A special section addresses the issue of the outcomes of the children of immigrants, which has become a subject of particular interest in many OECD countries. 1. Definitions and methodology Integration for immigrants means having labour force outcomes similar to those of native-born persons of the same qualifications and skills. The concept of “integration” with respect to immigrants can take a number of meanings. At one end of the spectrum is the notion of an economic/social convergence between the immigrant and native population with respect to a number of statistical measures, such as the unemployment rate, the employment/population ratio, average earnings, school achievement, home ownership, fertility rates, voting behaviour, participation in community organisations, etc., without this similarity necessarily implying any abandonment of home country culture and beliefs. At the other end is the much broader notion of integration as assimilation, i.e. acceptance of, and behaviour in accordance with, host country values and beliefs, including similarity of economic and social outcomes. This study will limit itself to integration into the labour market. This is not to imply that these are the only sorts of outcomes which matter, as clearly they are not, but to limit the scope of the study to something of manageable proportions. In addition, if integration into the labour market does not necessarily guarantee social integration, it is certainly a major step with respect to immigrants’ being able to function as autonomous citizens in the host country and with respect to ensuring both acceptance of immigration by the host country population and the sustainability of migration policy over the long term. Labour market integration is arguably the single most important thing that can be done to contribute to the integration of immigrants, in whatever way this term is defined. A central issue for integration is that of the transferability of skills and qualifications acquired in the origin country to the host country The economic view of integration was developed by Chiswick (1978) and reflects a human capital perspective. According to this view, immigrants generally arrive in a country with human capital acquired in their country of origin, but which may not be entirely transferable to the country they have moved to. The most obvious example is language, but it may also include knowledge of different work practices, industrial standards, legal systems and even cultural norms (for example, the need to “sell” oneself at a job interview). Over time, immigrants can be expected to acquire the human capital specific to the host country and show a range of labour market outcomes similar to those of persons born and educated in the host country. According to Chiswick, immigrants generally arrive in a country with human capital acquired in their country of origin, but which may not be entirely transferable to the country they have moved to. The most obvious example is language, but it may also include formal

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qualifications, knowledge of work practices, industrial standards, legal systems and even cultural norms (for example, the need to “sell” oneself at a job interview). The human capital perspective is a fundamental one with respect to the analysis of immigrant labour market outcomes and underlies much of the analyses carried out in the following chapters. It gives rise to a number of basic questions. Are the arriving immigrant’s qualifications and skills appropriate in the host-country labour market? If they are appropriate, are they equivalent to those of native-born persons? How can the value or worth of the qualifications and skills of immigrants be “communicated” to the employer, so that the latter can make appropriate hiring decisions? The ability to link up with employers may involve forms of human capital in a broad sense which immigrants cannot bring with them to the host country, namely the network of relationships with friends, relatives, acquaintances which can facilitate economic transactions, including those in the labour market, although not necessarily always in a socially equitable way.1 The immigrant by definition will be leaving these behind and to the extent that labour market decisions in the host country depend on these kinds of personal networks, may be at a disadvantage compared to a native-born person. This being said, the view of integration presented above is one that tends to presuppose an intention to settle in the host country on the part of immigrants. In certain cases, however, entry into the country of destination is conditional on a job offer, so that the immigrant is immediately employed upon entry, and often in a job commensurate with his/her qualifications. Sometimes, the family is left behind in the country of origin, and there may indeed be little intention of eventual settlement. In situations such as this one, labour market integration can almost be said to be immediate. In other cases, the migration may be humanitarian in nature, with the immigrant having fled the country of origin as a result of war, persecution or threat to life or limb. In such cases, the host country may be viewed as a temporary refuge in anticipation of an eventual return. In addition, such migrants may have been subjected to significant psychological distress and interruption of education and working life. Thus, the objective of “integration” may not even be viewed as a necessary or an immediate one, except in so far as what is needed to function more or less well in the (temporary) host country. This type of migration is particularly pertinent for Denmark and Sweden, because a very large proportion of long-term migration (except that involving the free-movement regime of the European Economic Area) has been humanitarian with subsequent family reunification. Still, the question of “integration” in the sense at least of self-sufficiency does arise in both labour and humanitarian migration, if the initial job is lost in the case of the labour migrant or as the stay in the host country is prolonged in the case of the humanitarian migrant and the expected return to the host country never materialises. The question is nonetheless posed differently if the immigrant already has a job upon entry, which is a pre-condition for labour migrants in many host countries. The perception of the migrant regarding eventual settlement possibilities will be conditioned by the receiving country’s perspective on migration. For a number of countries, in particular the countries which have been settled by migration, the right of permanent residence is granted upon entry and integration into the home country is viewed as part of the national heritage, which may take more or less time depending on 1.

This is commonly known as “social capital”. Networks may be exclusive and exclude (from jobs, investment opportunities, etc.) those who are not or cannot become members.

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34 – CHAPTER 1. KEY FINDINGS ON THE LABOUR MARKET INTEGRATION OF IMMIGRANTS the individual migrant but is generally considered to be attainable, if not necessarily automatic. For certain other countries, migration until fairly recently was viewed as a way of dealing with labour market imbalances, with migrants eventually returning to their countries once the imbalances were resorbed or being replaced by other cohorts of (temporary) migrants. Although some immigrants did remain and were eventually joined by their families, there was little experience with the incorporation of other nationalities or ethnic groups into an otherwise homogeneous population with a strong social and cultural identity. The experience of integration in these rather different situations can be expected to be different and indeed perhaps even differentially successful. The focus of the reviews published here is the labour force outcomes of foreign-born persons and their children The target population considered in this report will be the foreign-born population. Some finer distinctions are possible that are perhaps more pertinent as far as integration is concerned, for example foreign-born persons educated mainly in the host country versus those educated largely abroad, but the data sources do not always permit such distinctions. Although the foreign-born population is not ideal as a target group and may result, for example, in different members of the same family being classified differently or in children born abroad of native-born parents being grouped in the immigrant population, it is a useful and easily understandable categorisation that captures the population that has actually immigrated as well as most of the relevant features of this population for the purposes of analyses. Although many children of immigrants may actually have been born and educated in the host country, their outcomes will also be considered in some of the reviews. To the extent that the socio-economic characteristics of the parental generation have an impact on that of their offspring (which they generally do) or that the second generation is still visibly of immigrant origins and that hiring, lay-off or wage discrimination with regard to this population exists, the assessment of integration will be incomplete. Events in recent years involving the second generation in a number of countries as well as empirical results on their educational and labour market outcomes have illustrated that equality of outcomes for the second generation is not automatic. Although these reviews did not initially target the integration of the second generation, the outcomes of this group have become an issue of concern in many OECD countries and will be covered in most of the reviews. The assessment of labour market integration of immigrants in this report will be based on differences between the native- and foreign-born population with respect to labour force status and earnings, as well as any mismatches between educational attainment and the skill level of jobs held. Sectoral and occupational differences per se will not be examined, except in so far as they affect employment and wages, essentially because the distribution of employment among immigrants by sector and occupation will depend not only on demand in the host country and possible labour market segmentation effects, but also on the prior education and work experience of immigrants in the countries of origin. Under the circumstances, it is questionable whether differences in the sectoral or occupation distributional of employment among immigrants compared to non-immigrants convey any useful information with respect to integration outcomes. Finally the approach taken in the country chapters is an empirical and comparative one, to the extent possible. Attempts have been made to exploit special national data sources, in particular administrative and/or longitudinal ones, that are not commonly available internationally, and whose availability and accessibility vary by country. JOBS FOR IMMIGRANTS – LABOUR MARKET INTEGRATION IN AUSTRALIA, DENMARK, GERMANY AND SWEDEN – ISBN 978-92-64-03359-7 © OECD 2007

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Although the use of such data sources requires a significant investment in time and resources, they have tended to yield some of the more interesting results presented in these reviews. The comparative approach is fundamental as well in understanding why outcomes for immigrants vary from country to country and what policies might explain this variation. Before this can be envisaged, however, some consideration needs to be given to the variations in the history and composition of the immigrant population across countries. This is the subject of the next section. 2. Immigration and labour market outcomes: an overview The four countries covered in this review have had very different migration histories, which has strongly influenced the composition of their immigrant populations The four countries covered in this report (Australia, Denmark, Germany and Sweden) are characterised in the first instance by rather different migration histories and migration regimes. Australia is a country that was built on migration and has consistently tried to attract migrants since the post-war period, introducing a points-based selection system in 1979 to identify potential immigrants with characteristics deemed to contribute to their integration into the Australian labour market and society. Germany and Sweden had significant influxes of low-skilled “guest workers” hired directly by employers or through recruitment channels during the 1950s, 1960s and early 1970s, a phenomenon that was much less common in Denmark. With the first oil-crisis in the early 1970ss, worker migration to Denmark, Germany and Sweden essentially ceased, to be replaced by humanitarian migration and subsequent family reunification, but also, in the case of Germany by large inflows of “ethnic Germans” from the countries of central and eastern Europe and the republics of the former Soviet Union, following the fall of the Berlin Wall and the Iron Curtain. Migration to Australia continued throughout the period, with the level of inflows being adjusted according to economic conditions. In the latter half of the 1990s, the immigrant selection system was significantly strengthened, when recent immigrants began showing labour market outcomes after arrival that were less favourable than in the past. All four countries also saw migrations as a result of free movement regimes, the Nordic Passport Union for Denmark and Sweden, the European Union for all three European countries considered here and the Trans-Tasman Travel Agreement between Australia and New Zealand. Finally, all four countries also saw a certain amount of “family formation” over the entire period, that is, situations in which nationals or permanent residents marry persons from other countries. Because of natural links to the country of origin, this tends to be more common among immigrants and their offspring and tends to maintain migration networks, affecting both the geographic and socio-economic origins of immigrant populations. The category of migration (labour, family, humanitarian) is a key predictor of labour force outcomes The nature of migration movements and the extent of skill-biased selection can be expected to affect the labour market outcomes of immigrants, because these outcomes have varied according to migration category (see below in the review chapters) and, as well, according to the education level of immigrants. Australia provides a case in point in this respect. Although it directly selects no more than about 25% of its immigrants (OECD, 2006a), spouses of selected immigrants tend to have the same educational

JOBS FOR IMMIGRANTS – LABOUR MARKET INTEGRATION IN AUSTRALIA, DENMARK, GERMANY AND SWEDEN – ISBN 978-92-64-03359-7 © OECD 2007

36 – CHAPTER 1. KEY FINDINGS ON THE LABOUR MARKET INTEGRATION OF IMMIGRANTS attainment level as their husbands or wives; there is thus an indirect effect of selection as well. The high humanitarian intake of Denmark and Sweden over the past two decades, on the other hand, can be expected to adversely affect the outcomes in those countries, because this group seems to have the most difficulties in the labour market in all countries, for reasons perhaps having to do with the involuntary nature of the migration and the fact that economic considerations such as the possible transferability of skills and the expected return on human capital have not entered into the migration decision. Because of this, humanitarian migrants may represent a less positively selected group with respect to labour market performance than labour migrants, despite often having high educational attainment. They may also suffer from prolonged absence from the labour market and the consequences of trauma or flight from their native countries. As already mentioned, migration to Germany over the past twenty years has involved, in addition to the usual family and humanitarian migration witnessed in many European countries, substantial numbers of persons (some 3 million since the late 1980s) of German ancestry from central and eastern Europe and the republics of the former Soviet Union. By the basic German constitutional law, such persons under certain conditions have the right to German nationality upon entry into Germany. Ethnic Germans received preferential treatment among immigrants to Germany until 2005. Although in some sense “selected” by Germany, they cannot be said to have been chosen for their potential economic contribution to the Germany economy in the same way as persons selected in the skilled migrant stream in Australia. In practice, knowledge of German among many such immigrants, especially those having arrived in later years, has been limited, their education and experience not always being easily transferable and integration into the labour market not necessarily simple. In short, both immigrant selection systems (or the lack of them) and the nature of the immigrant flow have affected the distribution of educational attainment among immigrants as well as their readiness for employment in the four countries covered in this report. In particular, high levels of educational attainment are observed among Australian immigrants and lower levels in the other three countries, where immigration has been largely non-discretionary and generally without direct consideration of the skill levels of the immigrant intake. Only in Germany and to a somewhat lesser extent in Denmark does the educational level of the current immigrant population appear to differ significantly from that of the native-born population (see Figure 1.1),2 with in both cases proportionally more immigrants with low qualifications. The qualification differences among the foreign-born across countries are mirrored by the differences in the distribution of immigrants by geographic origin (Figure 1.2). Here again, Germany stands at one extreme, with two-thirds of its immigrant population coming from Turkey and non-OECD countries, and Australia at the other extreme with over 60% of its immigrants coming from OECD countries (excluding Turkey). Denmark and Sweden tend to be close to the OECD average on this account.

2.

One cannot look at Figure 1.1 without noting the apparent association across countries between the educational distribution of the foreign-born and that of the native-born. Although this may be due in part to the fact that many immigrants arrived young and were largely educated in the host country, it may also reflect the influence of the structure and output of national educational systems on the coding of foreign qualifications in national data sources. JOBS FOR IMMIGRANTS – LABOUR MARKET INTEGRATION IN AUSTRALIA, DENMARK, GERMANY AND SWEDEN – ISBN 978-92-64-03359-7 © OECD 2007

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Figure 1.1. Educational attainment of the native- and foreign-born populations 15+ in the OECD countries under review, circa 2000 100% 90% 80% 70% 60% 50% 40%

Low Medium High

30% 20% 10% 0%

nativeborn

foreignborn

Germany

nativeborn

foreignborn

Denmark

nativeborn

foreignborn

Sweden

nativeborn

foreignborn

nativeborn

OECD average

foreignborn

Australia

Source: OECD Immigrant and Expatriate database, www.oecd.org/els/migration/censusdatabase.

Figure 1.2. The immigrant population by OECD/non-OECD origin in the OECD countries under review, circa 2000 OECD less Turkey

non-OECD and Turkey

100% 80% 60% 40% 20% 0%

Germany

Denmark

OECD average

Sweden

Australia

Destination countries

Source: OECD Immigrant and Expatriate database, www.oecd.org/els/migration/censusdatabase.

Table 1.1 provides a comparison of aggregate employment/population ratios and unemployment rates for the native- and foreign-born populations for the four countries considered here. Such comparisons do not take into account the composition of the migration intake and its possible impact on outcomes (see below Section 3). However, this composition is in part a consequence of migration policy. Australia differs from the other three countries considered here, not in having little humanitarian or family migrants – such forms of migration exist in all countries – but rather in selecting each year in addition to these, significant numbers of skilled migrants and their families on the basis of their expected integration potential and the needs of the Australian labour market. Current JOBS FOR IMMIGRANTS – LABOUR MARKET INTEGRATION IN AUSTRALIA, DENMARK, GERMANY AND SWEDEN – ISBN 978-92-64-03359-7 © OECD 2007

38 – CHAPTER 1. KEY FINDINGS ON THE LABOUR MARKET INTEGRATION OF IMMIGRANTS immigration rates to Australia, for example, are some 50% higher than in Sweden and more than twice as high as in Denmark and Germany. Australia also has the advantage of having a national language that is widely used around the world and knowledge of which is used as a filter for selection, an advantage shared in only a limited way by Germany and almost not at all by Denmark and Sweden, almost all of whose immigrants (except those from other Scandinavian countries) must learn the national language after arrival. Note, however, that immigrants to Australia generally have not had a job on arrival into Australia and have had to find a job in the same way as native-born new entrants into the labour market.3 In addition, Australia is a country that was established through immigration and there is generally a national consensus about the overall benefits of immigration. Germany, on the other hand, until recently has not considered itself an immigration country, despite the large numbers of foreign-born persons, whether of German origin or otherwise, on its territory. Indeed, spouses of foreign labour migrants were often not allowed to work upon arrival, hence depriving them of one key factor contributing to integration into national life and implying in effect that the immigrant family was deemed to be temporarily resident in Germany, a situation not conducive to investment in German language and education. Both Denmark and Sweden were viewed as havens for humanitarian migrants, both because they visibly welcomed such migrants and because their extensive social protection systems may have been viewed by potential humanitarian migrants as providing a buffer against hardship in the early years of settlement and adjustment to a normal life. Table 1.1. Employment and unemployment outcomes of native- and foreign-born persons in the countries under review, men and women, 2005 Australia

Denmark

Germany

Sweden

OECD average

Employment-population ratio Native-born Men Foreign-born

80.5 74.3

80.8 69.4

72.2 66.0

76.3 64.1

73.8 72.4

Native-born Foreign-born

71.9 61.8

72.6 52.7

61.7 48.0

72.9 57.5

60.7 53.9

Unemployment rate Native-born Men Foreign-born

4.7 5.0

4.0 7.2

10.6 17.5

7.9 15.6

6.3 10.5

Native-born Foreign-born

5.0 5.2

5.0 12.4

10.2 16.3

7.9 14.1

7.5 12.5

Women

Women

Source: OECD (2007), Table I.A1.4.

Aside from free movement within the European Union, there has been little concurrent long-term labour immigration into Germany, Denmark and Sweden, that is, of persons with generally favourable labour market outcomes from the outset.

3.

This is less the case currently than in the past. Australia now grants points for a job offer and has opened up pathways for immigration for persons already in the country on temporary assignments or for study. JOBS FOR IMMIGRANTS – LABOUR MARKET INTEGRATION IN AUSTRALIA, DENMARK, GERMANY AND SWEDEN – ISBN 978-92-64-03359-7 © OECD 2007

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In summary then, one lesson to be learned from the experience of these four countries is that migration policy and the nature of migration flows matter significantly with respect to integration outcomes. Experience has shown that outcomes for immigrants whose motivation is not primarily economic are not always favourable compared to those of the native-born, and that settlement countries like Australia obtain good results overall by admitting on a discretionary basis additional immigrants whose outcomes can be expected to be as least as good if not better than those of the native-born. This is not necessarily a simple task, because not all countries have sizeable linguistic basins outside their borders on which to draw, nor are they necessarily willing to increase immigration beyond the current largely incompressible levels of humanitarian migration and family reunification and formation for existing residents.4 Increasing levels may also be difficult under adverse economic conditions and requires a favourable climate towards immigration and immigrants in the host country, conditions which may not always be satisfied. Still, it is hard to point to a country where migration is largely humanitarian and family-linked and which shows generally favourable labour market outcomes for immigrants. How does the composition of migration affect labour force outcomes across countries? How do the labour market outcomes for immigrants across countries compare if one controls for certain immigrant characteristics such as age, educational attainment and the geographic origin of immigrants5 and where do the four countries covered in this publication stand with respect to other OECD countries in this regard? One might expect differences in immigrant outcomes across countries to reflect, to a certain extent, differences in the composition of immigration. Can one quantify this? Ideally, one would like to get some basis for comparison on a common basis and as well, some idea of the impact of policy interventions after differences attributable to supply factors have been accounted for. Table 1.2 provides some basic results along these lines. Note that the category of migration is not taken into account here, because information on this is rarely available in conjunction with data on labour force outcomes. To a certain extent, it may be accounted for indirectly through the country of origin, in situations where migration from a particular country has been largely of a particular category. This is especially the case with respect to countries where there has been significant civil or ethnic conflict, such as Afghanistan, former Yugoslavia or Somalia, which have seen heavy outflows of humanitarian migrants. Many immigrants from OECD countries, on the other hand, have been labour migrants, but many have also been accompanying spouses of workers, persons who migrated as children or persons having migrated as a result of marriage to a citizen or resident. Geographic origin is thus likely to be an imperfect substitute in general for the category of migration.

4.

They can of course be compressed temporarily if conditions for family reunification are made more strict and perhaps even over the longer term if immigrants forego family reunification because of what they perceive as an unwelcome atmosphere.

5.

Geographic origin here is a proxy for a number of factors which include worker productivity, the quality of the educational system, work practices, etc.

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40 – CHAPTER 1. KEY FINDINGS ON THE LABOUR MARKET INTEGRATION OF IMMIGRANTS Table 1.2. Odds ratios of employment and unemployment, foreign-born relative to native-born, controlling for various characteristics, 2004-2005 data Controlling for:

Employment-population ratio

Unemployment rate

Age Educational attainment

N N

Y Y

Y Y

Y Y

N N

Y Y

Y Y

Y Y

National odds for employment/unemployment

N

N

Y

Y

N

N

Y

Y

Odds by country of origin for employment/unemployment

N

N

N

Y

N

N

N

Y

Odds ratios

Men Australia Austria Belgium Czech Republic Denmark Finland France Germany Greece Hungary Ireland Italy Luxembourg Netherlands Norway Portugal Spain Sweden Switzerland United Kingdom United States

Data processed country by country 0.73 0.59 0.78 0.67 0.70 0.46 0.78 0.64 0.46 0.44 0.72 0.57 0.89 0.79 0.77 0.83 1.64 1.85 1.65 1.41 1.07 0.60 1.90 1.67 1.69 1.18 0.51 0.34 0.60 0.49 1.26 0.90 1.36 1.20 0.56 0.39 0.73 0.60 0.75 0.60 1.55 1.58

Data pooled across countries 0.59 0.72 0.59 0.60 0.33 0.62 0.83 0.76 1.79 1.26 0.75 1.80 1.23 0.38 0.40 1.16 1.24 0.48 0.48 0.53 1.34

0.64 0.82 0.48 0.62 0.51 0.58 0.74 0.62 1.28 0.81 0.67 1.34 0.94 0.54 0.51 1.13 1.03 0.52 1.03 0.58 0.95

Data processed country by country 0.95 1.55 2.94 2.76 2.61 2.98 1.74 1.57 2.42 2.76 2.66 2.72 1.82 1.91 1.64 1.38 1.18 0.82 0.35 0.39 1.41 1.70 1.13 0.79 1.86 1.82 3.23 3.84 2.48 2.78 1.64 1.77 1.56 1.26 2.05 2.75 2.86 2.90 1.52 1.72 0.88 0.69

Data pooled across countries 1.18 2.20 2.69 2.30 2.26 2.49 1.87 1.56 0.83 0.39 1.32 0.85 1.05 2.66 2.67 1.33 1.23 2.53 1.68 1.69 0.79

1.02 1.07 1.93 1.58 1.22 1.73 1.30 1.50 0.69 0.31 1.10 0.65 0.87 1.54 1.57 0.97 1.04 1.79 1.08 1.23 0.77

Average Standard deviation

1.00 0.44

0.85 0.44

0.85 0.43

0.78 0.26

1.85 0.74

1.95 0.89

1.69 0.70

1.19 0.41

Women Australia Austria Belgium Czech Republic Denmark Finland France Germany Greece Hungary Ireland Italy Luxembourg Netherlands Norway Portugal Spain Sweden Switzerland United Kingdom United States

0.72 0.73 0.52 0.80 0.44 0.45 0.66 0.62 1.11 1.07 0.96 1.11 1.35 0.52 0.58 1.21 1.49 0.52 0.64 0.62 0.68

0.62 0.64 0.41 0.72 0.37 0.44 0.59 0.69 0.97 0.89 0.63 0.87 0.90 0.44 0.52 0.82 1.29 0.42 0.62 0.52 0.73

0.66 0.79 0.53 0.72 0.33 0.40 0.74 0.71 0.87 0.86 0.70 0.92 1.11 0.50 0.40 1.34 1.30 0.47 0.62 0.53 0.63

0.75 1.02 0.53 0.81 0.78 0.75 0.87 0.67 0.77 0.71 0.65 0.73 0.87 0.85 0.94 1.64 1.00 0.93 1.30 0.80 0.89

0.74 2.28 1.97 1.51 1.88 2.27 1.64 1.27 1.24 1.07 1.59 1.65 2.35 1.79 1.76 1.35 1.34 1.83 2.60 1.65 0.87

1.29 2.30 2.63 1.37 2.50 2.57 2.03 1.39 1.07 1.09 1.77 1.32 2.39 2.28 2.14 1.35 0.97 2.45 2.68 2.23 0.85

0.95 1.83 2.69 1.88 2.07 2.84 1.96 1.59 0.92 1.22 1.31 1.37 1.39 1.76 1.89 1.18 0.92 2.44 1.75 1.73 1.03

0.91 1.19 2.24 1.67 1.63 2.12 1.48 1.62 0.88 0.96 1.22 1.12 1.23 1.16 1.31 0.96 1.04 2.02 1.24 1.34 0.91

Average Standard deviation

0.80 0.30

0.67 0.22

0.72 0.27

0.87 0.23

1.65 0.47

1.84 0.61

1.65 0.54

1.34 0.39

Note: The first and fifth columns give the unadjusted odds ratios. For European countries except for the Netherlands, data are pooled over 2004 and 2005. For Australia, data are for 2003 and for the United States and the Netherlands, 2005. Source: European Union Labour Force Survey for European Union members, Current Population Survey for the United States, Survey of Household, Income and Labour Dynamics for Australia and national labour force surveys for Norway and Switzerland. JOBS FOR IMMIGRANTS – LABOUR MARKET INTEGRATION IN AUSTRALIA, DENMARK, GERMANY AND SWEDEN – ISBN 978-92-64-03359-7 © OECD 2007

CHAPTER 1. KEY FINDINGS ON THE LABOUR MARKET INTEGRATION OF IMMIGRANTS – 41

Differences in the age and educational distribution of immigrants do not explain the cross-country differences in outcomes Table 1.2 shows that, roughly speaking, observed labour market outcomes for immigrants in Europe relative to those of the native-born, unadjusted for composition, improve as one moves from north to south (first column of each panel).6 This is purely a convenient geographic way of describing the results and clearly does not reflect any impact due to geography itself.7 Results for immigrants in the United States are also favourable, as are unemployment outcomes in Australia. Labour force outcomes controlling for age and educational attainment independently for each country are shown in the second column of each of the employment/unemployment panels for men and women in Table 1.2. They reveal that, first of all, immigrant employment outcomes generally worsen if one takes into account their age distribution and educational attainment, that is, immigrants tend to be less employed than one would expect on the basis of their age and reported educational attainment alone.8 The only exceptions among the countries shown are the United States, Germany and Greece for immigrant men and the United States and Germany for immigrant women. For unemployment, the picture is somewhat more mixed, with southern European countries and the United States showing better results than expected and Australia, Belgium, Netherlands, Denmark and Sweden worse outcomes than would be expected on the basis of the age and educational attainment of their immigrant populations. Controlling for these basic demographic factors, however, does not fundamentally change the overall cross-country picture with respect to immigrant outcomes. The cross-country variation in outcomes therefore cannot be explained purely by differences in the age and educational distributions of immigrants compared to non-immigrants. What about cross-country differences in the origins of immigrants? One generally observes more favourable outcomes in destination countries for immigrants from OECD countries and less favourable ones for immigrants from the rest of the world (see Table 5.4 in Chapter 5, p. 264). And as was seen in Figure 1.2, some countries have more immigrants from OECD countries than others. In order to compare host countries on this basis, the data from individual countries need to be pooled and account taken of overall national differences in labour force outcomes as well as average differences in outcomes by country of origin (estimated over all countries).9 In pooling the data, one continues to correct for differences in the age and educational attainment of immigrants compared to

6.

Hungary and Luxembourg are exceptions to this general rule, the first because immigrants to Hungary were largely of ethnic Hungarian origin from neighbouring countries, the second partly because of the large numbers of Portuguese immigrants in Luxembourg, who generally have good labour market outcomes whatever the country of destination.

7.

Other characteristics which vary roughly along the same geographic dimension are the prevalence of humanitarian migration, the strength of social protection systems, the size of the underground economy, the prevalence of irregular migration, the coverage of national integration policy, etc. Which, if any of these, may have a significant causal link to immigrant outcomes is uncertain. An extensive programme of research would be required to assess this.

8.

The benchmark is the employment-population ratio of all persons of a given age group and educational attainment in the country.

9.

The data sources used here allow for differentiation according to 80 countries and 15 regions of origin.

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42 – CHAPTER 1. KEY FINDINGS ON THE LABOUR MARKET INTEGRATION OF IMMIGRANTS non-immigrants, but the “correction” is now carried out over all countries rather than individually. This sometimes makes a difference, as a comparison between columns two and three in Table 1.2 indicates. Accounting for differences in the countries of origin of immigrants tends to reduce but does not eliminate the differences in labour force outcomes across countries What do the data show? The results appear in column four of each of the panels in Table 1.2. First of all there is a significant reduction in the cross-country variation in immigrant outcomes,10 between those calculated on the basis of observed data and those estimated by taking account of differences in age, educational attainment, country-ofresidence effects and country-of-origin effects. A non-trivial part of the cross-country differences in employment and unemployment rates among immigrants therefore reflects a different composition of immigrants, in particular by country of origin. Host countries with an overrepresentation of immigrants from origin countries that generally have good labour market outcomes show a decrease in the odds ratios compared to the native-born after adjustment, the implication being that the outcomes prior to adjustment were more favourable largely because of this overrepresentation. This is the case for Australia, Belgium, Ireland and the United Kingdom, all of which tend to have more skilled migration or more migration from European and/or OECD countries than most other immigration countries. Likewise, host countries with an overrepresentation of immigrants from countries that generally have less favourable outcomes tend to show an increase in the odds ratios after adjustment. This is the case in the Nordic countries and the Netherlands with respect to employment outcomes. One country stands out in particular in having significantly better outcomes after adjustment, for both employment and unemployment and for both men and women, and that is Switzerland. With few exceptions, despite the narrowing of differences between countries with better performances and those with less favourable results, the picture that emerges is again not that different from that conveyed by the odds ratios calculated on the basis of the observed outcomes of the native- and foreign-born. It is the United States and the new migration countries of southern Europe which continue to show better results, in particular for men. All of these are characterised by high levels of unauthorised movements and considerable job growth in lower skilled occupations which native-born workers no longer wish to take on. Many of the workers are actually arriving legally in these countries, via tourist and family visit visas, finding work (without the required work permit) and overstaying beyond the time limit specified on their visas. A significant proportion of the immigrants, especially in southern Europe, seem to be relatively well-educated and working in jobs for which they are ostensibly over-qualified (see OECD, 2007). With this exception, current migration to southern Europe looks remarkably like what was observed during the so-called “guestworker” era, when many workers arrived in host countries with tourist visas, got hired and had their situation subsequently regularised. As is the case currently in southern Europe, employment rates among immigrants at the time were higher than for the native-born and unemployment rates were more similar as well. 10.

This is measured by the standard deviation in the odds ratios, which themselves are a measure of the outcomes of immigrants relative to those of non-immigrants. An odds ratio less than one for a characteristic means that the value of the characteristic for immigrants is less than that for non-immigrants. Favourable outcomes for immigrants are represented by odds ratios greater than one for employment and less than one for unemployment. JOBS FOR IMMIGRANTS – LABOUR MARKET INTEGRATION IN AUSTRALIA, DENMARK, GERMANY AND SWEDEN – ISBN 978-92-64-03359-7 © OECD 2007

CHAPTER 1. KEY FINDINGS ON THE LABOUR MARKET INTEGRATION OF IMMIGRANTS – 43

Whether the residual differences in outcomes after adjustment reflect the success or failure of different policies across countries is uncertain. Undoubtedly they do to some extent, but the specificities of the situation in southern Europe should warn one off any facile generalisations on this count. Outcomes there were favourable from the beginning of large-scale immigration, despite language differences for many if not all of the immigrants. It is difficult to argue that successful integration policies have made the difference in these countries, both because migration is a recent phenomenon and largely irregular in nature and because little existed in the way of formal integration or introduction programmes. Even recent initiatives in this regard in southern Europe have not yet had to deal with difficult labour market and high unemployment conditions. The existence of significant country-of-origin effects is not entirely surprising in the case of women, because many immigrant women may come from countries where the participation of women in the labour market is more limited and adaptation to the participation behaviour of women in OECD countries may not be immediate, if it occurs at all. The reasons for the lower employment and higher unemployment rates of immigrant men from some countries rather than others, on the other hand, are less obvious and may reflect true human capital differences not conveyed through formal attainment levels, or general differences in employer hiring behaviour with regard to different nationalities, which may in turn reflect real or perceived productivity differences or actual discriminatory behaviour. To the extent that immigrants always retain some characteristics of their origins, one could in principle argue that they are therefore never fully substitutable with native-born workers and that any residual differences in employment or unemployment outcomes, all other things being equal, are a consequence of this. What gives the lie to this assertion, however, is the fact that immigrant outcomes which are more favourable than those of the native-born are observed for certain nationalities, under certain labour market conditions, in certain host countries. Identifying the reasons for these successes is a matter of particular interest. 3. Key issues in the labour market integration of immigrants When immigrants arrive during adverse economic conditions, they take longer to find work and this weakens their longer term integration prospects The late 1980s and early 1990s saw a large increase in international migration. A large part of this increase concerned asylum seekers, following the fall of the Iron Curtain. Asylum seeking was used not only by persons fleeing persecution but also by those seeking a better life for themselves and their families in the world of free movement that had just emerged before the destination countries introduced stronger screening mechanisms. The increase in new arrivals occurred at the same time as a deterioration in labour market conditions in a number of countries, especially in Europe, with high unemployment levels and with many unemployed native-born workers in the labour market at the same time also searching for work. As a consequence, the entry of the new arrivals into employment was often delayed and this has had longer term consequences on their marketability to employers (Aslund and Rooth, 2003). Immigrants already resident in host countries were sometimes the object of selective lay-offs, essentially acting as employment buffers during downturns (see OECD, 1999 and 2003), sometimes even despite seniority provisions with respect to lay-offs (Arai and

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44 – CHAPTER 1. KEY FINDINGS ON THE LABOUR MARKET INTEGRATION OF IMMIGRANTS Vilhelmsson, 2003). In addition, many older immigrants saw their jobs eliminated by economic restructuring and retraining was often a remote if not impossible option. Sweden in particular underwent a severe crisis in the early to mid-1990s which saw a 12% drop in employment levels in less than three years, followed by a rapid recovery. The employment prospects of immigrants, both recent and long-standing were selectively and strongly affected and the employment-population ratios of immigrants at all durations of residence are still in relative terms below the favourable levels that prevailed in the latter part of the 1980s. In Germany, the difference between the employment-population ratios of foreigners and of German nationals has almost doubled (from 5 to 9 percentage points) between 1991 and 2004. With large numbers of new arrivals of humanitarian immigrants from the mid-1980s to the late 1980s and early 1990s occurring at the same time as an economic downturn, Denmark also saw a drop in the employment-population ratio of its foreign-born population of almost 15 percentage points. The existence of a slack labour market makes it possible for employers to be more selective at the hiring stage and characteristics such as language difficulties, which may be viewed as a drag on productivity, may be used to screen out applicants. The actions of employers may not in fact be based on precise information about particular applicants but rather on general perceptions or hearsay about the average productivity of particular immigrant-related groups. With an abundance of candidates, there is little incentive to search beyond the familiar and relatively predictable. There is evidence as well that personal or informal networks are more commonly used for job seeking during economic downturns than formal methods (Behtoui, 2004) and that at all times, many jobs tend to be filled in this way. Here again, immigrants may not have as good access to such networks and therefore be disadvantaged with respect to the native-born (see below on networks). In any event, experience has amply supported the conclusion that economic downturns are particularly pernicious for immigrants, both those who arrive and must compete with a larger supply of unemployed natives for a smaller supply of vacancies and those who have been resident for a longer time and may lose the jobs for which they were originally recruited. Language proficiency is arguably the most important element of human capital with respect to integration… Conceivably, the most important human capital component with respect to integration is the extent of knowledge of the host country language. This is almost always a problematical issue for countries with little to no speakers of the national language outside the borders of the host country. In practice, this means that except with respect to employment with an enterprise for which the language of work is a commonly used language in many other countries (English, French, Spanish, etc.), all immigrants arriving in such countries will need to have a period of language learning that will be more or less long, depending on the migrant. It also means that the hiring of immigrants directly into jobs, in particular higher skilled jobs, will be exceptional, although experience has shown that low language proficiency does not seem to be an obstacle to the filling of lower skilled jobs. Thus, one might expect that, all things being equal, immigrants in countries with “rare” languages will take longer to attain the same level of integration as immigrants migrating to a country with a language commonly used outside the country and which attracts immigrants who speak that language.

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CHAPTER 1. KEY FINDINGS ON THE LABOUR MARKET INTEGRATION OF IMMIGRANTS – 45

How significant is the impact of language on the labour market performance of immigrants? According to Chiswick and Miller (2007a), proficiency in the host country language is a monotonically decreasing function of the age at arrival, after controlling for education, years since migration, marital status and linguistic distance. Although there is variation in proficiency whatever the age at arrival, the Chiswick and Miller result suggests that on average, immigrants to the United States arriving with no knowledge of English never acquire the same proficiency in language as native-born persons. This is not necessarily a major handicap, if full language proficiency is not needed for the jobs held by immigrants, and the labour experience of lower skilled immigrants during the guest-worker period as well as currently in southern Europe and the United States suggest that immigrants (and employers) manage to get by without full proficiency in the short-term, either because there are persons available who play the role of intermediaries or because rudimentary communication may be sufficient for many low-skilled jobs. Another study by Chiswick and Miller (2007b) suggests that in the United States the labour market tends, not surprisingly, to match immigrant worker’s English skills and the language proficiency requirements of occupations. …but objective measures of language proficiency are uncommon Direct measures of language proficiency are rarely available in data sources, so that it is generally difficult to assess directly the impact of proficiency levels on labour market outcomes. One exception is the International Adult Literacy Survey (IALS), in which reading and quantitative tests were administered to adults in their homes using reading material encountered in everyday life.11 It also gathered detailed information on background and labour market characteristics. Although the samples were small, it is possible to pool the data across countries to allow for an assessment of human capital determinants of immigrant labour market outcomes.12 The assessment results are an indication of language proficiency, reading ability and cognitive skills and are a direct measure of human capital that is comparable for both immigrants and native-born persons. This is not the case for educational attainment, which for immigrants may involve formal qualifications obtained in another country and which may or may not be equivalent to qualifications obtained locally. Fortunately, IALS also has information on whether or not immigrants obtained their educational qualifications in the country of residence. The IALS results presented below, although not presented individually for the four countries covered in this publication, provide a useful general backdrop with regard to language and formal qualifications issues. Although IALS seems a valuable data source, it is not without deficiencies. Firstly, immigrants are underrepresented in the sample, because of non-response, and the non-response may be related to greater difficulties in taking the test. If the latter are associated with lower employment or higher unemployment, then the reported results may tend to underestimate the impact of literacy on labour force outcomes, because 11.

The IALS was administered in three waves in over twenty countries from 1995 to 1998. For the sake of brevity, reference will be made to results of IALS as measures of “literacy” in what follows. However, this is not literacy in the usual sense of the term; IALS scores measure functional literacy on a continuous scale and thus are measures of the “degree” of literacy rather than of the ability to read.

12.

The countries covered in the analysis presented here are Belgium (Flanders), Denmark, Finland, Germany, Ireland, Italy, the Netherlands, Norway, Portugal, Sweden, Switzerland and the United Kingdom.

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46 – CHAPTER 1. KEY FINDINGS ON THE LABOUR MARKET INTEGRATION OF IMMIGRANTS persons with both poor literacy results and unfavourable labour force outcomes may be less present in the sample. In addition, although literacy levels can be expected to affect employment outcomes, literacy may also be affected by employment, because work may facilitate social interaction and language learning. Part of the unfavourable outcomes of immigrants in Europe is due to lower levels of language proficiency Table 1.3 shows that including the literacy score in a logistic regression of the odds of employment or unemployment tends to significantly increase the odds of employment or decrease the odds of unemployment for the foreign-born relative to the native-born, for both men and women. Thus part of the lower employment rates or higher unemployment rates of immigrants, at fixed educational levels, are associated with lower human capital as embodied in measured literacy levels. The effect is stronger for men. Indeed, for men including the IALS score in the regression largely eliminates the impact of educational attainment on employment or unemployment. Table 1.3. Estimated odds ratios of employment and of unemployment, foreign-born relative to native-born International Adult Literacy Survey 1995-1998, pooled data, selected European OECD countries Employment-population ratio Men

Control variables Age

Education (ISCED 1976 classification)

Women

15-24 45-64 (reference: 25-44)

0.35 0.73

0.35 0.73

0.35 0.73

0.33 0.78

0.33 0.78

0.33 0.78

1.17 0.80

1.17 0.80

1.17 0.80

1.16 0.83

1.16 0.83

1.16 0.83

Secondary education, first stage Secondary education, second stage Tertiary education, first stage, non-university Tertiary education, first stage, university Tertiary education, second stage, university (reference: below secondary education)

1.38 1.67 2.21 2.69 3.89

1.37 1.64 2.18 2.66 3.82

1.35 1.63 2.20 2.64 3.95

0.91 0.90 1.01 1.11 1.62

0.91 0.89 1.01 1.11 1.61

0.90 0.89 1.02 1.11 1.70

2.27 3.99 8.14 7.54 5.45

2.26 3.99 8.10 7.52 5.43

2.26 3.99 8.11 7.55 5.45

1.58 2.47 4.69 4.02 2.98

1.58 2.47 4.63 4.02 2.98

1.58 2.47 4.65 4.04 2.99

1.04

1.04

1.04

1.03

1.03

1.03

0.94 0.48

0.93

0.91 0.69

0.909

Literacy score 0.51

Foreign-born Highest education in host country Highest education outside the host country -Highest education in an OECD country -Highest education in a non-OECD country (reference: native-born)

0.62 0.80 0.38

0.80

0.65

1.16 0.23

0.76 0.80 0.57

1.38 0.30

0.81 0.69 0.49

0.765 0.628

Unemployment rate Men Age

Education (ISCED 1976 classification)

Women

15-24 45-64 (reference: 25-44)

2.23 0.89

2.25 0.90

2.24 0.90

2.27 0.84

2.28 0.84

2.27 0.85

1.62 0.71

1.62 0.71

1.62 0.71

1.65 0.69

1.65 0.69

1.65 0.69

Secondary education, first stage Secondary education, second stage Tertiary education, first stage, non-university Tertiary education, first stage, university Tertiary education, second stage, university (reference: below secondary education)

0.62 0.58 0.41 0.40 0.34

0.63 0.59 0.42 0.40 0.35

0.64 0.60 0.42 0.41 0.34

0.97 1.12 0.95 1.04 0.87

0.97 1.14 0.95 1.04 0.87

0.99 1.14 0.95 1.04 0.84

0.60 0.45 0.23 0.28 0.15

0.60 0.45 0.23 0.28 0.15

0.60 0.45 0.23 0.28 0.15

0.78 0.65 0.36 0.46 0.25

0.78 0.65 0.36 0.46 0.25

0.78 0.65 0.36 0.46 0.25

0.96

0.96

0.96

0.98

0.98

0.98

1.24 1.15

1.23

Literacy score 2.27

Foreign-born Highest education in host country Highest education outside the host country -Highest education in an OECD country -Highest education in a non-OECD country (reference: native-born)

1.79 1.58 2.89

1.59 1.13 4.64

1.33 1.36 2.15

1.37 0.93 3.20

1.19 1.34 1.33

1.32 1.14 1.47

1.06 1.21

Note: Shaded estimates are based on logistic regression coefficients that were not significant at conventional levels (p=0.05). Underlined estimates are from coefficients significant at p 10

Note: The figure shows the development over time in the ratio of the odds of being employed (foreign-born/native-born). The underlying estimates are based on a “per cent increase per year” for the first ten years of residence, after controlling for age, marital status and educational attainment. At an odds-ratio of one, the employment rates of natives and foreignborn are the same. Source: Logistic regression using European Community Labour Force Survey Data.

4.2.

Qualification structure of the native and immigrant population

In international comparison, the gap in educational attainment between immigrants and natives is particularly pronounced in Germany. Although many European countries have high shares of the low-qualified among the immigrant population, only France has a higher share than Germany (Table 4.7a). One of the key drivers of the high unemployment of the foreign-born is their low qualifications. Indeed, there is ample evidence that structural change in OECD countries is increasingly disadvantaging unskilled and semi-skilled workers (see e.g. Acemoglu, 2002), and Germany is no exception in this respect. Among the adult (25-64 years old) population, 47% of the foreign-born only have a (lower) secondary degree or did not complete their education. In contrast, only 14% of the native-born in that age group have such a low educational attainment. Surprisingly, even when comparing the second generation with the native-born nationals of a similar age (in that case the age group 25-53), there is a large attainment gap (9% low-qualified among the native-born Germans and 30% among the second generation). Empirical studies also indicate that a large part of the lower occupational status of migrants is attributable to their lower educational attainment. This is even more pronounced for the second generation, where the lower educational attainment almost entirely explains their lower occupational status vis-à-vis natives (see also Kalter and Granato, 2002).

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222 – CHAPTER 4. THE LABOUR MARKET INTEGRATION OF IMMIGRANTS IN GERMANY Nationals from the former recruitment countries have much lower educational attainment levels than other immigrant groups.23 Indeed, the focus of the labour recruitment period was on low-skilled labour, and migrants were mainly recruited from the rural regions. Data from a 1971 foreigner survey show that the mean educational attainment of the “guestworkers” was below seven years. In contrast, the German native population had already mandatory schooling of at least eight years since 1919, and 30% of the 1971 working population had ten years or more. Given the high share of low-qualified among Germany’s foreign-born population visà-vis natives, one might expect that the incidence of long-term unemployed (i.e. unemployed for more than one year) to be much more pronounced among immigrants than among natives. This is not the case in Germany (Table 4.7b). Table 4.7a. Share of persons with less than upper secondary education among the adult population (25-64), selected OECD countries, 2002-2003 average

Germany Netherlands Denmark Sweden France Austria United Kingdom

Native-born 14% 32% 28% 18% 34% 19% 15%

Foreign-born 47% 44% 31% 24% 64% 42% 17%

Source: European Community Labour Force Survey, see OECD (2005, p. 65) for remarks.

Table 4.7b. Incidence of long-term unemployment among the native and foreign-born unemployed populations, selected OECD countries, 2004

Germany Netherlands Denmark Sweden France Austria United Kingdom

Native-born 52% 30% 24% 16% 37% 29% 21%

Foreign-born 52% 41% (19%) 23% 44% 25% 23%

Source: European Community Labour Force Survey.

Examining the employment performance of native-born and immigrants who have low and upper educational attainment separately, Germany fares relatively well. Indeed, as is also the case for France and Austria, immigrants with low educational attainment have higher employment rates than their native-born counterparts. This, however, does not hold for Germany’s second generation, where the low-educated lag slightly behind the employment rates of comparable natives (Table 4.8). 23.

Statistics from the European Community Labour Force Survey for 1992 – the only year where foreignborn foreigners from the “guestworker” countries can be clearly distinguished from other immigrant groups – show that more than 62% of these individuals of working-age had a low educational attainment, compared to about 22% for other immigrant groups and 21% for native-born nationals. JOBS FOR IMMIGRANTS – LABOUR MARKET INTEGRATION IN AUSTRALIA, DENMARK, GERMANY AND SWEDEN – ISBN 978-92-64-03359-7 © OECD 2007

CHAPTER 4. THE LABOUR MARKET INTEGRATION OF IMMIGRANTS IN GERMANY – 223

Table 4.8. Employment rates of low and higher-skilled foreign-born relative to their native-born counterparts, selected OECD countries, 2004 Germany – United “2nd Netherlands Denmark France Austria Germany Sweden Kingdom generation”1 Low education 0.80 0.80 0.79 0.87 1.12 1.18 1.12 0.94 Medium and 0.86 0.88 0.88 0.73 0.85 0.88 0.87 0.89 high education 1. Ratio defined as 25-34 year old native-born Germans/native-born foreigners. Source: European Community Labour Force Survey.

Due to their low educational attainment, immigrants are highly overrepresented in the less-skilled occupational sectors. These sectors have experienced a decline in employment since 1992, as Table 4.9 demonstrates. The only exception in this regard is service workers. It is also noteworthy that the concentration of immigrants in the lessskilled declining sectors has increased substantially since 1992. Although the second generation also tends to be overrepresented in these sectors, the pattern is much less pronounced. However, due to their lower education levels, their share in the stronglygrowing professional sector is only about one-third of that of native-born nationals, and has declined since 1992. Table 4.9. Relative representation of immigrants and the second generation vis-à-vis natives across occupational sectors, 1992 and 2003

Clerks

Service and shop and market sales workers

Craft and related trades workers

Plant and machine operators and assemblers

Elementary occupations

Average of all occupational sectors

8%

12%

20%

17%

30%

46%

17%

42%

27%

2%

26%

-15%

-12%

0%

9%

0.94

0.79

0.68

0.64

0.96

1.17

1.60

1.82

1.00

0.85

0.64

0.63

0.60

1.15

1.20

1.80

2.26

1.00

0.74

0.41

0.77

0.76

1.77

1.48

0.86

1.05

1.00

0.93

0.37

0.77

0.98

1.58

1.38

1.12

1.32

1.00

Occupational sector1

Legislators, senior officials and managers

Professionals

Technicians and associate professionals

Share of lowqualified Growth of occupation between 1992 and 2003

9%

2%

Relative representation of foreignborn 1992

13%

Relative representation of foreignborn 2003 Relative representation of second generation 1992 Relative representation of second generation 2003

1. ISCO classification. Only sectors representing more than 1 million individuals are depicted. Source: European Community Labour Force Survey.

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224 – CHAPTER 4. THE LABOUR MARKET INTEGRATION OF IMMIGRANTS IN GERMANY One of the reasons for the large differences in educational and, subsequently, occupational attainment between the native and immigrant population is the strong emphasis on formal certification and qualifications in the German labour market, which is particularly apparent with respect to vocational training (see below). There appears to be a broad consensus in Germany regarding this emphasis. The reliance on formal certification also tends to hamper labour market access of immigrants with a high qualification obtained abroad. This is notably the case for ethnic Germans, who have a relatively high educational level, but obtained their human capital in a different educational and work environment. Indeed, there is ample evidence that the qualifications of the ethnic Germans are largely discounted on the German labour market (Kalter and Granato, 2002; Konietzka and Kreyenfeld, 2001). Ethnic Germans with higher educational levels experience the sharpest deterioration in their labour market position vis-à-vis their origin country (Bauer and Zimmermann 1999, see also Table 4.12 below). Similar results have been found for immigrants to Canada, with shifts in the composition of immigrants towards persons of non-Western European origin being accompanied by returns to foreign experience falling from positive values in the 1980s to essentially zero in the 1990s (Green and Worswick, 2002; Ferrer, Green and Riddell, 2004). The formal recognition of foreign qualifications is cumbersome in Germany due to the dual nature of apprenticeship, i.e. the combination of practical experience and rather theoretical (classroom) knowledge. Unlike most other migrants from non-EU countries, who have few opportunities to get their foreign qualifications recognised, there is a facilitated procedure for the recognition of vocational certificates of ethnic Germans. However, this procedure generally does not lead to a full recognition of their formal qualifications. Since 1998, however, there is a possibility for all migrants (and natives) to have their practical knowledge certified. In addition, the Ministry of Education and Research on the one hand, and the Ministry for Family, Senior Citizens, Women and Youth on the other, finance measures to adapt foreign-obtained qualifications to the needs of the German labour market and to facilitate access to universities. These measures, in place since 1985, include language and bridging courses for qualified ethnic Germans and refugees.

Level of education of parents and its impact on the outcomes of children Empirical data from many studies show some tendency towards the intergenerational transmission of human capital (see Box 4.4). Because of the large difference in the educational attainment between immigrants and natives, one might expect a difference between the educational outcomes of the second generation and those of the offspring of native-born residents. Indeed, the second generation does show a significantly lower probability of accessing one of the upper educational tracks in the German school system (Esser, 2003; Frick and Wagner, 2001). Moreover, statistics on the educational attainment of school leavers show that the large gap in educational attainment between foreign and German nationals has only slightly improved since the early 1990s (Table 4.10).24

24.

Because national education statistics, based on the nationality criterion, do not distinguish between foreign- and native-born foreigners and since naturalised offspring of immigrants appear as nationals, it is difficult to identify and map the progress of the second generation (i.e. native-born offspring of immigrants). JOBS FOR IMMIGRANTS – LABOUR MARKET INTEGRATION IN AUSTRALIA, DENMARK, GERMANY AND SWEDEN – ISBN 978-92-64-03359-7 © OECD 2007

CHAPTER 4. THE LABOUR MARKET INTEGRATION OF IMMIGRANTS IN GERMANY – 225

Box 4.4. Intergenerational consequences of low-skilled migration A large part of Germany’s second generation have parents who entered Germany during the labour recruitment period of the 1950s and 1960s. The focus of this “guestworker” recruitment was essentially on low-skilled labour. However, the education and socio-economic status of parents have an important impact on the educational success of children. Taking years of schooling as a measure for educational attainment, adult persons of the second generation in Germany have, on average, almost one year less schooling than natives of the same sex and age-group. After controlling for their parents’ educational attainment, a gap remains, although it is reduced by half. Thus, despite an upward skills trend in the second generation, they do not reach the same level as natives of a similar background. The situation appears to be different in Switzerland, where it seems that the second generation has a higher attainment than natives of comparable background (Office fédéral de la statistique, 2005). A similar result is observed with respect to enrolment in France (Caille, 2005). The OECD’s Programme for International Student Assessment (PISA) revealed that the impact of the parents’ background on the outcomes of children tends to be higher in Germany than in other countries. Germany’s socio-economic gradient in the reading test – which measures how a student’s reading performance is linked with his or her socio-economic background – is by far the steepest in the OECD area. The slope of the gradient – which measures the impact of a change in the socio-economic background on the student’s PISA score – was 50% above the OECD average in the 2000 study. This indicates that the German education system is less capable of providing equitable learning opportunities than those in other OECD countries. However, in the 2003 study, where the focus was on mathematics, Germany’s slope of the gradient was at the OECD average (OECD 2004). The PISA study also indicated strong linkages between the skills level of the migrant intake and the educational attainment of the second generation relative to that of natives. In OECD countries which select their immigrants based on qualifications and labour market needs, such as Australia and Canada, the average achievement level of the second generation (i.e. prior to controlling for the socio-economic background) is about the same as that of the native generation or even slightly better. At the other end of the spectrum are Belgium, Germany and Switzerland, which have, in the past, relied heavily on the recruitment of low-skilled labour. Although there may be a tendency for the transmission of educational attainment across generations, educational systems may be able to compensate for or to attenuate this effect. One would not expect it to be exacerbated. If this happens, it may lead to a perpetuation of disadvantage across several generations, i.e. even of people who neither themselves nor their parents were foreign-born. Such a phenomenon, however, is difficult to establish empirically since there is no data on third-generation migrants available, although there is some anecdotal evidence that the “third generation”, that is, native-born persons whose grandparents were immigrants, is encountering educational difficulties in Germany. Table 4.10. Evolution of school-leaving degrees of Germans and foreign nationals

Left school without degree

1991/1992 Nationals Foreigners 6.7 20.9

1994/1995 Nationals Foreigners 7.7 19.7

2003/2004 Nationals Foreigners 7.9 19.2

Hauptschulabschluss (lower secondary degree, ISCED 2A)

25.1

44.4

25.7

43.8

24.5

41.5

Realschulabschluss (intermediate secondary degree, ISCED 2A)

41.6

26.3

40.1

26.8

41.6

29.1

(Fach-)Abitur (upper secondary degree, ISCED 2B)1

26.6

8.4

26.5

9.6

26.0

10.2

1. The typical school-leaving degree of a person that has attended Gymnasium is the Abitur after 12 or 13 years (depending on the Land). If he or she leaves Gymnasium at an earlier stage, the person may obtain one of the lower degrees. Source: German Federal Statistical Office.

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226 – CHAPTER 4. THE LABOUR MARKET INTEGRATION OF IMMIGRANTS IN GERMANY Though the exact specifics of the school system vary among Germany’s Länder, the process is generally the following: at the end of the fourth grade, the elementary school proposes one of the three tracks available for secondary education: Hauptschule (lower track), Realschule (intermediate track) and Gymnasium (upper track). Each of the three main tracks is associated with a typical school-leaving degree and programme duration – 9, 10 and 12 or 13 years, respectively. The school proposal is mainly based on the student’s grades, but also takes other factors such as his or her learning behaviour into account. In general, however, parents are relatively free to decide whether or not they follow this advice, but some Länder impose grade requirements for the upper tracks. In any case, persons of the second generation are much more often placed in the lower tracks than Germans. In analysis with microdata, Riphahn (2003, 2004) has found that the educational attainment of the second generation even lags behind natives’ educational expansion, i.e. there may be a divergence trend between natives and the second generation. This trend, however, appears to be due to a change in the country-of-origin composition, since the share of Turks – who have more unfavourable educational outcomes than other second generation groups – has increased over time. Within a given nationality, and particularly among Turks, a slight convergence towards the attainment of natives can be observed. If years of schooling are used as a proxy for educational attainment, an analysis of the German Socio-Economic Panel shows that the second generation is disfavoured. Because of the tendency for the characteristics of offspring to regress towards the mean relative to those of their parents and because immigrants tend to be a self-selected group that is highly motivated, one might expect the educational attainment of the second generation relative to that of children of the native-born without a migrant background to improve compared to what is observed for the parental group, even if the levels are still lower. However, after controlling for age, sex, and the educational attainment of the parents, the second generation in Germany has about half a year less schooling than their native counterparts. Studies for other countries, e.g. for the United States (Card, 2004) and Switzerland (Office fédéral de la statistique, 2005), show that after controlling for their parents’ background, the second generation tends to have higher attainment levels than their native counterparts. This is explained by the desire of migrant parents and their children to achieve a higher status. It appears that the early streaming after the fourth grade in Germany leads to a tendency to place students with a less favourable starting position in the lower levels of Germany’s multi-tiered educational system (see also Immigration Council, 2004, p. 267). These levels are associated with fewer years of schooling and limit access to higher educational tracks, although an analysis of the Third International Mathematics and Science Study (Schnepf, 2003) illustrates that about 10% of Hauptschule students and one-third of students in Realschule perform better than those in the bottom quartile of Gymnasia. Yet, permeability between the different school types is relatively low. The data of the OECD’s Programme for International Student Assessment (PISA) are particularly apt for an evaluation of the performance of the second generation compared to natives without a migrant background. The PISA data contains rich information on the student’s background, including his or her parents’ place of birth, their education level, and the language spoken at home. In international comparison, the disadvantages of the second generation with respect to educational attainment are particularly pronounced in countries which had both relatively low-skilled immigration and where the language of immigrants differs from that of natives. It is therefore not surprising that countries like Australia and Canada have much lower differences in natives’ and “second-generations” PISA scores than JOBS FOR IMMIGRANTS – LABOUR MARKET INTEGRATION IN AUSTRALIA, DENMARK, GERMANY AND SWEDEN – ISBN 978-92-64-03359-7 © OECD 2007

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Germany, as Table 4.11 shows. The gap in Germany, however, is even more pronounced than in other European countries like France, the Netherlands, or Sweden. It is particularly alarming that large differences between natives and the second generation remain in Germany, even after controlling for the socio-economic background of the students. Table 4.11. Differences in the PISA 2003 scores of natives and second generation, children aged 15 years Before accounting for the effects of socio-economic background of students

Australia Austria Belgium Canada Denmark France Germany Netherlands New Zealand Sweden Switzerland United States

Mathematics O 56 92 O 70 48 93 59 32 34 59 22

Reading O 73 84 10 57 48 96 50 22 20 53 22

After accounting for the effects of socio-economic background of students Mathematics o 26 47 -8 36 14 45 26 16 15 36 o

Reading O 31 40 12 O O 48 22 O O 32 O

Note: “o” indicates that the value does not differ statistically significant from that of natives. The socio-economic background was created on the basis of the following variables: the International Socio-Economic Index of Occupational Status (ISEI), the highest level of education of the student's parents (converted into years of schooling), the index of family wealth, the index of home educational resources and the index of possessions related to “classical culture” in the family home. For each test, the mean score across all OECD countries was set at 500 points, with a standard deviation of 100 points (see OECD, 2004 for details). Source: Secretariat calculations based on the OECD PISA database.

However, the remaining differences, after controlling for the socio-economic background, appear to be largely due to the fact that less well performing persons of the second generation do not speak German at home. This is surprising since, in principle, the share of the second generation which does not speak the national language is not higher than in other OECD countries.25 A recent econometric study (Schnepf, 2004) analysed the OECD’s PISA study and other international evaluations of pupils (PIRLS, TIMSS)26 with respect to the determinants of their educational achievement. This study found that – after controlling for language spoken at home in addition to the students’ background27 – the 25.

According to the PISA database, in Germany, 30% of all second-generation migrants speak a language other than the national language or a dialect at home, compared to 36% in the United Kingdom, 33% in Denmark, 50% in Australia, 42% in Sweden, and 23% in Canada and France.

26.

The PISA study assesses ability in reading, science and maths of 15 year-old students. TIMSS stands for the Third International Maths and Science Study, which covers 7th and 8th graders. The Programme of International Reading Literacy Study (PIRLS) measures the reading and understanding capability of 4th graders.

27.

Note that the background variables differ from those reported in Table 4.10. In particular, for the educational background of the parents, only the mother’s education was controlled for.

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228 – CHAPTER 4. THE LABOUR MARKET INTEGRATION OF IMMIGRANTS IN GERMANY scores of the second generation in Germany in the mathematics tests are quite favourable in international comparison. In contrast, the negative effect of a foreign language spoken at home was largest in the Germany, along with the United States. Similar results for Germany have been reported in other studies (e.g. Entorf and Minoiu, 2004; Weber, 2003) that showed a strong, positive impact of German spoken at home on the PISA scores of the children of migrants. Bleakley and Chin (2004), using microdata from the 2000 U.S. Census, show that parental language knowledge explains over half of the differences in dropout rates between non-Hispanic whites and U.S.-born Hispanic children of immigrants. That study also indicated that the parental English skills have the largest effect on the English of their children at very young ages. Given the early streaming, the high influence of socio-economic background on educational attainment and the strong importance of the German language spoken at home for educational outcomes, it appears crucial that the second generation have early contact with the German education system. This avoids potential disadvantages due to the migrant background from the outset and strengthens language competence by early contact with natives. In general, the participation rate of foreign children in kindergarten in Germany has converged in recent years towards that of natives and is now only slightly below that of nationals. However, the OECD Education Database shows that the overall participation rates of children aged four to six are relatively low in international comparison. At the age of six, Germany had the lowest enrolment rates in the comparison group (Australia, Austria, Denmark, France, Netherlands, Sweden and the United Kingdom – data for Canada was not available) in the year 2003. Pre-kindergarten (i.e. at an age of 2) is also not as common in Germany as in countries like France, where there is empirical evidence for a strong impact of kindergarten attendance at the age of 2 on elementary school success of immigrants (Caille, 2001). Furthermore, kindergarten and school in Germany are generally only half day. Due to the half-day nature of kindergarten and school, the time spent in public institutions – where students would likely have more contact with the host-country language – is lower than in other countries. For example, the average instruction time for students at age 7 to 8 is almost 20% below the OECD average (OECD, 2003). It is thus not very surprising that the impact of language spoken at home on educational outcomes is larger in Germany than in other countries, where children spend more of their time outside of home.

The impact of German language knowledge As has been seen, language training has traditionally been the main pillar of Germany’s integration activities, and, indeed, its role is being reinforced under the new immigration law. Given the dominant role of language training in public integration aid, it is striking to note that the link between language training and labour market integration has not been a subject of comprehensive study to date. Evaluations of language courses have almost exclusively focused on pre- and post-assessment of language mastery, but not on their impact on labour market success. Indeed, available micro-datasets include no information on language course attendance. Recently, however, information has become available on the labour market status of ethnic Germans and refugees six months after attending one of the 900 hours’ language courses for targeted groups of unemployed immigrants. Theses courses were co-ordinated by the Federal Employment Agency (see above). Along with the deteriorating labour market situation since 2001, the percentage of migrants that had a job six months after completing the language course (the so-called “integration quota”) declined significantly JOBS FOR IMMIGRANTS – LABOUR MARKET INTEGRATION IN AUSTRALIA, DENMARK, GERMANY AND SWEDEN – ISBN 978-92-64-03359-7 © OECD 2007

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(see Table 4.12). It is also interesting to observe that language courses are more effective for ethnic Germans than for the other eligible migrant groups. However, even in this group, only 15% were employed six months after course completion. Furthermore, the courses appear to be more effective in labour market integration for migrants with low- and medium education than for those with a prior university degree. It is also noteworthy that the integration quota for women is only half of that of men, despite the fact that these courses are only available to people who had been previously employed in their country of origin and are registered as unemployed in Germany. In general, the “integration quota” is relatively low. However, this may be partly attributable to the fact that language courses are often only a first step before further labour market integration measures are undertaken. Furthermore, six months is a very short period. One would need a longitudinal follow-up running for 5-10 years to adequately evaluate the long-term effectiveness. Table 4.12. Participation in language courses for unemployed migrants and percentage employed six months after course termination

Total of which

January 2001 - June 2001

July 2001 - June 2002

July 2002 - June 2003

July 2003 - June 2004

27 295

53 995

55 426

40 606

72% 2% 14% 12%

72% 2% 14% 13%

66% 2% 17% 15%

66% 1% 16% 17%

58% 20% 6% 8%

57% 21% 6% 7%

55% 19% 6% 6%

59% 17% 6% 6%

49% 51%

49% 51%

49% 51%

49% 51%

29%

23%

18%

13%

34% 18% 7% 24%

28% 18% 6% 20%

22% 17% 5% 15%

15% 12% 3% 12%

31% 29% 16% 15%

24% 25% 14% 9%

18% 19% 12% 14%

13% 14% 8% 6%

38% 20%

30% 17%

23% 13%

17% 9%

Ethnic Germans People granted asylum Quota refugees Not available of which Without a vocational certificate Vocational training (non-university) College or university Not available of which Men Women

Percentage employed six months after course termination Total of which Ethnic Germans People granted asylum Quota refugees Not available of which Without a vocational certificate Vocational training (non-university) College or university Not available of which Men Women Source: Federal Employment Agency, Secretariat calculations.

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230 – CHAPTER 4. THE LABOUR MARKET INTEGRATION OF IMMIGRANTS IN GERMANY The limited micro-data available show, furthermore, that there is no strong direct link between (self-reported) language knowledge and employment. For example, in an analysis with data from the German Socio-Economic Panel, the employment rates of immigrants who arrived in the past ten years do not differ between those who are able to speak German well and those who are not. After controlling for socio-demographic characteristics and migrant group, German language knowledge becomes a significant determinant of immigrants’ employment participation, but the result is not very robust. A profound knowledge of the German language may, however, be important with respect to occupational attainment (Constant and Zimmermann, 2003). This indicates that language mastery may have an influence on the transferability of human capital. Perhaps even more importantly, a lack of German language knowledge could hamper young migrants’ access to vocational training – for example, by limiting their chances in a job interview – which, in turn, makes them more vulnerable to lose employment at a later stage (see below). On the other hand, there is a cost to language instruction, particularly if it is not targeted to work-related language acquisition, as is currently the case in Germany. Language courses keep people out of the labour market for the duration of the programme. However, the Swedish experience (see Chapter 5 in this volume) has shown that early employment has a much stronger impact on employment four years after arrival than language instruction. The companion report on Sweden also suggested that the returns to language training in terms of higher employment probabilities fall strongly after 500 hours of such training. In other words, the 900 hours of training that have been provided in Germany may have been above the efficient level. These results suggest that extensive language training may be less important for labour market integration than work experience, particularly for older migrants. Nevertheless, knowledge of the host country’s language is doubtless an important factor for integration from a broader perspective. Therefore, it is worrying that even a part of the second generation faces language difficulties, though the percentage is not very high. Calculations from the German Socio-Economic Panel – the only major dataset which has some information on language competence – show that about 6% of the second generation describe their knowledge of spoken and written German as being less than good. It is also alarming to note that almost 40% of the ethnic Germans that arrived under the post-1993 scheme describe their language knowledge as being less than good, despite the considerable investment in their language training by the German authorities. Since the education level of these later migrants does not appear to differ greatly from that of earlier arrivals, the strong decline in employment rates described above for ethnic Germans may be explained by the fact that under the slack labour market conditions which these migrants faced at arrival, language competence becomes a more important criterion.

Migrants’ participation in vocational training The predominant transition regime from school to work in Germany is apprenticeship.28 In principle, the hands-on nature of that system could be expected to be more appropriate to the skills of the second generation than formal classroom teaching, particularly in the presence of reading and language difficulties. This should be especially apparent in craft-based sectors which have been a traditional focus of vocational training, and where fluent mastery of the German language may be less important. However, 28.

Only Denmark and Switzerland (and, to a lesser degree, Austria and the Netherlands) place a similar emphasis on apprenticeship as a transition regime. JOBS FOR IMMIGRANTS – LABOUR MARKET INTEGRATION IN AUSTRALIA, DENMARK, GERMANY AND SWEDEN – ISBN 978-92-64-03359-7 © OECD 2007

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foreigners’ participation in vocational training is much lower than that of natives. In 2003, the participation rate of foreigners aged 18-21 was 27%, compared to a rate of 60% for nationals (Federal Ministry for Education and Research, 2005).29 Such a discrepancy is also observed in craft-based apprenticeships, although the vocational training participation of foreigners in this sector is slightly higher than that in other sectors. For the second generation, the lack of a vocational degree is the key employment obstacle. The employment rate of second generation men and women in the age group of 25-35 is about 10 and 16% lower than that of native men and women in that age group, respectively. This, however, is entirely due to their lack of a vocational degree. For those with a vocational degree, employment rates are even higher than those of natives with such a degree. This result even holds after controlling for age, sex, marital status and (other) educational attainment. In econometric analysis, the interaction term between the second generation and a vocational degree is strong and very robust, which shows that obtaining a vocational degree is much more important for the second generation than it is for native-born nationals. Whereas the adjusted (i.e. controlling for other sociodemographic characteristics) odds of being employed are 2.4 times higher for native-born nationals if they have a vocational degree than for those who do not, the corresponding figure for the second generation is 5, i.e. more than twice as high. Given the fact that the share of the second generation in the labour force has not reached its peak yet – an indication of this is the fact that two-thirds of the native-born foreigners are below the age of 18 – the low participation rates are thus particularly worrying. The reasons for the low participation of the second generation in vocational training are plentiful. It appears that competition between natives and the second generation has increased due to a structural lack of vocational training places in Germany. Given the lower initial educational attainment and a lower level of language mastery among the second generation, such increased competition tends to disproportionately affect them. However, the participation rates of the second generation were already relatively low even during more favourable circumstances. Furthermore, a substantial gap remains even among young foreigners and nationals with the same school-leaving degree (Granato and Uhly, 2005). Another possible explanation for the low participation rates of the second generation in vocational training could be that these individuals try to get into regular paid employment as soon as possible. An indication of this is the fact that among all 15-20 year old persons subject to social security contributions (i.e. either in vocational training or in regular employment) registered by the Federal Employment Agency, 43% of the foreigners are not in vocational training, but only 24% of the nationals. Since training wages are relatively low, this is associated with higher mean earnings by young foreigners – they earn on average almost 20% more than their German counterparts.30 However, the causality is not clear since the higher wages and (regular) employment figures of these young foreigners could also be a result of the lack of access to training. In any case, the lack of a vocational degree hampers the second generation’s upward occupational mobility and makes them more prone to unemployment at a later age.

29.

The official figures are based on reports from the Chambers of Commerce and unfortunately do not distinguish between second-generation migrants and native Germans whose parents are also native-born.

30.

These calculations are based on an employee panel dataset from the Federal Employment Agency (BA-Beschäftigtenpanel).

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232 – CHAPTER 4. THE LABOUR MARKET INTEGRATION OF IMMIGRANTS IN GERMANY These obstacles are also confirmed by survey data. In a 2001 survey among the foreign population (Venema and Grimm, 2002), the lack of vocational training places was mentioned by young foreigners without a training place as the prime obstacle, followed by a lack of knowledge of German, lack of an adequate school degree, and the desire to earn money immediately. The opposition of their parents to vocational training was only mentioned by a few foreigners, a considerable decline in comparison to the response to a similar question in a similar survey in 1995. This indicates that distrust of vocational training by migrants does not seem to be responsible for the low participation of second generation in vocational training, despite the fact that their parents come from countries where this type of training is less common than in Germany. In Germany, as in other OECD countries, it appears that the majority of jobs – both regular jobs and apprenticeships – are filled through contacts with friends or relatives.31 Presumably, these personal contacts would be more extensive for the native-born than for the foreign-born. While the second-generation should not face this problem, their networks with respect to employers might be more oriented towards enterprises that are run by people of the same ethnic background. However, enterprises which are run by foreigners offer vocational training much less frequently (see Federal Ministry of Education and Research, 2004). This is attributable to a variety of factors. Since most migrant entrepreneurs come from countries where apprenticeship training was not as common as in Germany and were not apprentices themselves, they may not be aware of the opportunities which this kind of training provides for employers and apprentices alike. Furthermore, foreign enterprises may be less linked with the local Chambers of Commerce and Trade. As already mentioned, these chambers play an important role in the vocational training system. Until recently, any employer wishing to provide vocational training also had to pass an extensive examination set by the chambers. This formal examination has been abandoned by a decree of the federal government in August 2003. Though any trainer still needs to have the approval of the chambers, they now have much more flexibility in the certification process. This measure should in principle foster migrant entrepreneurs’ willingness to provide vocational training, but there has been no evaluation of whether this has occurred to date. However, despite the apparent lack of access of the second generation to regular vocational training, young foreigners have been underrepresented in the federal programmes aimed at promoting vocational training access for disadvantaged groups (see Integration Officer, 2005). Given the overwhelming importance of vocational training for the “second-generation’s” labour market access, there are now a large variety of targeted initiatives and projects in place. There are 42 projects alone to promote vocational training in foreign-run enterprises (Federal Ministry for Education and Research, 2004, p. 53). In addition, ten regional networks have been established that aim at promoting migrants’ access to vocational training (see Box 4.5). Further initiatives have, inter alia, aimed at profiting from the second generation’s bilingual capabilities in so-called “binational vocational training”, which includes a traineeship in the migrants’ (or his/her parents’) origin country. For immigrants without vocational training, but at a more advanced age, certification-oriented modular schemes have been

31.

However, there is mainly anecdotal evidence on this. Only the German Socio-Economic Panel provides information on the way an individual found his/her current job. Out of the analysable responses, more than half mentioned “through friends and relatives”. JOBS FOR IMMIGRANTS – LABOUR MARKET INTEGRATION IN AUSTRALIA, DENMARK, GERMANY AND SWEDEN – ISBN 978-92-64-03359-7 © OECD 2007

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tested in a series of model projects (see Granato and Gutschow, 2004). However, it is impossible to judge the effectiveness of such small-scale, locally based and timelimited projects in the absence of any rigorous evaluations. Box 4.5. The vocational qualification networks (BQNs) A particularly good example for the approach taken with respect to integration measures are the vocational qualification networks (Berufliche Qualifizierungs-Netzwerke – BQNs). The programme, which is co-financed by the Federal Ministry of Education and Research and the European Social Fund, is part of a larger federal initiative aimed at qualifying young individuals with special needs. It aims at promoting migrants’ and the second generation’s access to jobs and vocational training through awareness-building measures and the establishment of regional networks of the relevant stakeholders; i.e. employment agencies, chambers of commerce, migrant organisations and local governments and entrepreneurs. The networks target young people “with a migration background”, which includes both the foreign-born and those members of the second generation which should receive special attention. Since 2004, ten regional networks have been established on a project basis for an initial period of three and a half years, i.e. until July 2007. Infrastructure is generally not financed, and the financing is entirely expenditurebased (mainly personnel, brochures, etc.). Most networks are either attached to the local chambers of commerce or to institutions of the local governments. Prior to the establishment of the networks, a needs-assessment was conducted in each of the ten regions concerned. Based on this assessment, each network defined its own focus areas. For example, in regions where low initial educational attainment of migrants was identified as especially problematic, focus has been laid on information campaigns in schools. In other areas, where access to vocational training places was deemed particularly limited, the focus is on acquisition of internships and vocational training places for foreigners. In other areas, the main emphasis is placed on awareness-building measures with local entrepreneurs and the chambers of commerce, as well as the general public. The projects thus serve mainly as mediators between the second generation and the mainstream services, based on the conviction that the formers’ access to these services is often hampered due to misconceptions and ignorance of German institutions on the one side and lack of knowledge on the specifics of the situation of migrants and the second generation on the other. A similar regional network approach, but targeted at the qualification of adult migrants, has been adopted with the network “integration through qualification” (Netzwerk IQ), which started in January 2005.

Migrants’ access to self-employment The self-employment of migrants is receiving increasing attention in Germany. This is particularly apparent in the Turkish community, where several business centres and associations for the self-employed have been established in the past few years. The available data suggests that self-employed immigrants, and particularly Turks, earn more than self-employed or salaried Germans (Constant, Shachmurove and Zimmermann, 2003). This is in contrast to salaried employees, where native Germans earn more than immigrants. Self-employed immigrants are thus at the top of the earnings-income distribution, whereas salaried immigrants are rather at the bottom. These findings indicate that self-employment may help immigrants to overcome structural obstacles in the German labour market which prevent them from gaining the same wages as Germans. However, as Table 4.13 shows, the self-employment rates of immigrants in Germany are lower than those of natives and have remained so since 1992. Furthermore, despite some increase since 1992, which was driven by an almost 90% increase in the self-employment rate of Turks, these rates are still somewhat lower than those of immigrants in the other OECD countries shown in Table 4.13 with the sole exception of Austria.

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234 – CHAPTER 4. THE LABOUR MARKET INTEGRATION OF IMMIGRANTS IN GERMANY Table 4.13. Development of self-employment rates of natives and foreign-born, selected OECD countries Germany

Sweden

Austria

Netherlands

United Kingdom

France

2004 Foreign-born /from Turkey Native

8.7 7.1 10.7

11.1

7.4

9.6

14.6

9.9

9.2

12.5

11.2

12.1

9.7

Foreign-born /from Turkey Native

8.6 4.9 10.5

12.2

6.8

9.5

15.3

10.5

10.5

13.9

11.2

11.3

12.0

Foreign-born /from Turkey Native

7.3 3.8 8.2

11.4

6.9

6.9

16.2

11.6

10.5

11.4

9.8

11.9

12.3

1999

1992

1

1. Data refer to 1995 for Sweden and Austria. Source: European Community Labour Force Survey.

The low self-employment rates are partly attributable to the fact that foreigners’ access to self-employment has been generally restricted to individuals with “consolidated residence”. Under the pre-2005 framework, in line with the view that Germany was not an immigration country, most migrants from non-EEA countries initially did not have access to self-employment. Indeed, the pursuit of self-employment was generally prohibited for all foreigners without an unrestricted or permanent residence permit. As a result, more than one third of all foreigners were initially legally excluded from self-employment, although the authorities had the discretion to grant access to self-employment for such individuals as well. The reasoning behind this was that the pursuit of self-employment should be the result of a “consolidation” of residence (i.e. after at least five years of residence – the duration of stay before an unrestricted permit was granted). Otherwise, self-employment could hamper the necessary departure once the residence permit had expired. Despite some improvements under the new immigration law, access to self-employment is still generally restricted to people with a “consolidated residence”. It is not entirely clear how much discretionary scope remains under the new law. Unfortunately, it is also not yet possible to identify the share of foreigners with access to self-employment in the labour force. This, however, is likely to change with the revision of the data collection of the Federal Employment Agency in light of the new immigration law. The German government provides two measures to promote self-employment of formerly unemployed persons. One of these measures, the so-called “Me, Inc.” (“Ich-AG”), has been introduced in January 2003 as part of the recent labour market reforms and is targeted at small business start-ups by the unemployed. These people get a monthly lump-sum subsidy if their income does not exceed EUR 25 000 annually. If self-employment is more important as a means of escaping unemployment for foreigners than for nationals, one would expect foreigners to be overrepresented in the unemployed participating in this measure. An evaluation that has been prepared by the Institute for Employment Research for this report shows that foreigners comprised about 13% of the officially registered unemployed in December 2002, but only about 10% of all beneficiaries of the “Me, Inc.” between January 2003 and June 2004. For the other measure to promote self-employment of unemployed persons, the so-called “bridging JOBS FOR IMMIGRANTS – LABOUR MARKET INTEGRATION IN AUSTRALIA, DENMARK, GERMANY AND SWEDEN – ISBN 978-92-64-03359-7 © OECD 2007

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allowance” (Überbrückungsgeld), the figure is even lower (8%). Though – given the limited access of foreigners to self-employment and the lack of statistics on the permit category of unemployed foreigners – this is only indirect evidence, it suggests that selfemployment may not be a more frequent way of escaping unemployment than for natives.32 This finding is corroborated by a recent study of Constant and Zimmermann (2004) who, using data from the German Socio-Economic Panel, find that natives’ transition probabilities from unemployment to self-employment are more than twice as large as those of immigrants. Whereas immigrants are still underrepresented among the stock of self-employed, they participate disproportionately in new start-ups. A large, nation-wide survey of more than 40 000 individuals (Lehnert and Täuber, 2003) showed that migrants are twice as inclined as natives to found new enterprises. These recent migrant entrepreneurs also tend to employ more people than Germans. However, the fact that there has been little increase in the stock of self-employed immigrants (see Table 4.13) suggests that the failure rate of new start-ups by immigrants may be higher than that of natives. In that survey, access to financial credits, particularly micro-credits, was mentioned twice as often by migrants as an obstacle to self-employment than by natives. Though there are federal programmes in place which provide such credits, migrants appear to be less informed about these possibilities than natives. Based on their characteristics, Lehnert and Täuber (2003) estimate that 15% of all entrepreneurs which participate in the federal credit programme for self-employment should be migrants. Their actual participation, however, is only 3%. 45% of the migrant entrepreneurs which did not participate mentioned lack of information as the main reason for not applying for a credit, compared to 25% of the natives.

The issue of discrimination Anti-discrimination measures have not been a main focus of integration policy in Germany, and there is currently no anti-discrimination law. This stands in marked contrast to the Nordic countries, but also to France, where anti-discrimination policy has been part of the formal integration framework. While much anecdotal evidence suggests that there is discrimination against immigrants in the German labour market, the precise extent of it is difficult to assess. In particular, isolating its effects from that of other factors is problematic. Moreover, given the substantial structural disadvantage of immigrants and the second generation in Germany in terms of their lower educational attainment and reduced access to vocational training compared to natives, the issue of discrimination in the labour market tends to be masked. Economic theory suggests that the low attainment levels observed among the offspring of immigrant parents may be in part a response to a perception of discrimination or of likely low returns to education in the labour market (Becker and Tomes, 1986), but the extent to which this is the case in Germany is unknown. However, since until recently public discourse was emphasising the uncertainty in immigrant status (“Germany is not an immigration country”), the incentive to invest in host-country human capital may have well been reduced. Empirical studies show a somewhat mixed picture. Results based on a panel data sample of all employed individuals provided by the Federal Employment Agency (BA-Beschäftigtenpanel) show that the wage gap between foreigners and nationals in the 32.

Given the ample advertisement of the “Me, Inc.”, it is unlikely that information asymmetries are responsible for foreigners’ lower programme participation.

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236 – CHAPTER 4. THE LABOUR MARKET INTEGRATION OF IMMIGRANTS IN GERMANY Western Länder is about 15%. Controlling for age, sex and education, the wage gap between foreigners and natives is reduced to about 8%. Studies have also observed a relatively high wage mobility of foreigners. For example, 1 000 days after completion of professional training, immigrants – especially Turkish ones – obtained slightly higher wages than Germans who had also undertaken this kind of training, but also had higher unemployment rates (Seifert, 2001). There is some tentative evidence that recruitment practices tend to disfavour immigrants (Goldberg, Mourinho and Kulke, 1995). Immigrants have a lower upward mobility with respect to occupational status but have higher wage returns to experience than natives (Constant and Massey, 2004). Data from the BA panel data set cited above show that foreigners and Turks in particular, were disproportionately affected by layoffs between 2001 and 2002. This holds even after controlling for age and education – two factors likely to influence productivity. However, no control was possible for seniority, i.e. the length of presence at the workplace which may also be a significant factor affecting layoff rates. With respect to recruitment, less than 5% of the foreigners without a vocational training place mentioned outright discrimination as one of the reasons for not obtaining a place in a large study of the foreign population (Venema and Grimm, 2002). Furthermore, there is also a marked decline in reports of such outright discrimination compared to a similar 1995 study. Immigrant groups themselves rarely refer in discussions to discrimination as a labour market barrier for young persons with an immigrant background, but tend to point instead to qualification deficits. Germany did not immediately adopt the EU anti-discrimination directive, which obliged Member states to introduce measures to combat discrimination due to ethnic origin in the workplace. Only four other EU countries (Austria, Finland, Greece and Luxembourg) do not have an anti-discrimination law. In December 2004, the draft of such a law (Gesetz zur Umsetzung europäischer Antidiskriminierungs-vorschriften) was presented in the Bundestag. The law includes provisions to oblige employers inter alia to draft job offers in a non-discriminatory way, and to introduce measures to prevent potential discrimination. The proposed law does not impose public sanctions for companies with discriminatory practices – sanctions are only envisaged under civil law. If there are indications of discriminatory practices, however, it is the employer who has to prove that discrimination did not occur. The draft law is still being debated. In summary, although discrimination is – as in other countries – likely to be present in the labour market, there is little empirical evidence for it and attention on the part of stakeholders including immigrant groups tends to be focused more on the issue of deficient qualifications among immigrants and offspring of immigrants. Although the discrimination issue may be difficult to address as long as there exist such serious deficiencies, the latter may also act as a convenient screen for discriminatory attitudes among employers.

Effects of recent labour market reforms The German federal government has introduced a series of labour market reforms in recent years, which also affect migrants’ labour market access. Among the measures taken are comprehensive programmes to promote the labour market access of disadvantaged groups. This has inter alia led to the establishment of the vocational training networks (BQNs), the abolition of trainer certificates, and to the promotion of small self-employment (“Me, Inc.”) described above. JOBS FOR IMMIGRANTS – LABOUR MARKET INTEGRATION IN AUSTRALIA, DENMARK, GERMANY AND SWEDEN – ISBN 978-92-64-03359-7 © OECD 2007

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In the first package of labour market reforms (“Hartz I”), introduced in 2003, the scale and scope of employment opportunities through temporary employment agencies was increased. Since then, this form of employment is promoted by means of so-called “Personnel Service Agencies” (PSAs), which aim at integrating unemployed individuals into the labour market through work experience, combined with accompanying qualification measures. The PSAs are publicly financed, but run by private temporary employment agencies who receive – in addition to an upfront infrastructure payment – lump-sum contributions per each employed individual. These contributions decrease along with the time needed for labour market integration. In principle, employment through temporary employment agencies (and therefore the PSA programme) should be particularly attractive for migrants. Constant and Massey (2004) show that migrants’ return to employment experience is higher than that of natives, and this kind of employment is one channel of providing migrants with such an experience. Employment through temporary employment agencies also allows the employer to test an individual’s skills, which is particularly important in cases with large information asymmetries, e.g. with respect to qualifications and experience obtained abroad. Andersson and Wadensjö (2004) show for Sweden that immigrants, although they are no more likely than natives to enter the temporary employment sector, are more likely to move thereafter into employment in another sector than comparable natives. These results thus seem to suggest that temporary employment agency work may have provided immigrants with the needed experience to overcome employer hiring reticence. In Australia, similar forms of employment programmes which provide job experience through temporary work have been used to bring unemployed skilled migrants in contact with potential employers. In Germany, however, the PSA programme does not appear to be an effective tool for the labour market integration of migrants. The programme participation of foreigners in the PSAs reaches only 50% of that of nationals. Moreover, despite overall low success rates for the PSAs (only about 5% of the programme participants had a job six months after participation in the programme), the rates are especially low in the case of foreigners. Only 2% of the foreigners who participated were successfully integrated into a regular job six months after their programme completion. No other disadvantaged group for which separate statistics are available (handicapped, long-term unemployed, low-qualified, and unemployed above the age of 50) had such a low success rate. This may be partly attributable to the fact that the incentives are set to ensure that the unemployed should be integrated as soon as possible into regular employment. As migrants face some particular difficulties (lower education, limited German language knowledge) and may thus need more time to move into regular employment, the incentives to integrate migrants in the labour market through this programme may be limited. In contrast to the other above-mentioned groups with potential disadvantages in the labour market, migrants are not identified as a main target group of the programme. Whereas the PSA programme may not be apt for all migrant groups, it could be effective for recent arrivals (i.e. ethnic Germans and refugees) whose qualifications have not been recognised and who could thereby demonstrate their knowledge and skills on the job. On 1 January 2005, parallel to the new immigration law, the central part of the labour market reforms became effective. The reform package, commonly known as “Hartz IV”, merged social assistance and long-term unemployment aid (the so-called “unemployment aid II”). Everybody capable of working, but not in employment, receives a basic support payment. If the person concerned does not accept an employment offer, he or she will receive support payment cuts. At the same time, more emphasis is being placed on caseJOBS FOR IMMIGRANTS – LABOUR MARKET INTEGRATION IN AUSTRALIA, DENMARK, GERMANY AND SWEDEN – ISBN 978-92-64-03359-7 © OECD 2007

238 – CHAPTER 4. THE LABOUR MARKET INTEGRATION OF IMMIGRANTS IN GERMANY specific counselling, and each unemployed person receives a tailor-made labour market integration plan. The case-specific counselling should improve the targeting of the mainstream services to the particular needs of immigrants. There are also important interactions between the new immigration act – in particular the new integration courses – and the “Hartz IV” reforms. For example, if the foreigners’ office or the employment services oblige an already resident foreigner to participate in an integration course and he or she does not comply, this may not only lead to an eventual denial of a prolongation of the residence permit, but also to cuts in the “unemployment aid II” of up to 30%.

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Summary and Recommendations

Germany received a large number of immigrants at a time when the economic situation worsened.

The current situation of the labour market integration of migrants in Germany reflects its immigration history. A substantial part of the immigrant population is low-skilled, which is partly a result of the focus on low-skilled labour during Germany’s labour recruitment period prior to 1973. These “guestworkers” were later joined by their family and had children. Due to a stringent naturalisation law, many persons of the second generation did not obtain German nationality. Since the late 1980s, two large additional immigrant groups rapidly emerged, whose entry was not linked with labour market needs: humanitarian immigrants and ethnic Germans from Eastern Europe. The latter are now the most important immigrant group in Germany. The massive immigration of ethnic Germans and humanitarian migrants in the late 1980s and early 1990s coincided with a worsening of the economic situation. Given this background, immigrant men are reasonably well integrated in the labour market.

Until 1992, employment and unemployment rates of immigrant men were very close to those of natives. However, immigrants have been particularly affected by the deteriorating economic situation since then. But labour market outcomes of immigrant men are not unfavourable when compared to those of immigrant men in other countries. In addition, convergence of employment rates towards those of natives appears to be more rapid than in other countries. The picture is less favourable for immigrant women, especially for Turks.

In contrast to the relatively favourable picture for immigrant men, the employment rates of immigrant women in Germany are very low. Although low employment rates of this group are also observed in other countries, the rates in Germany are among the lowest in the OECD – not only in absolute terms, but also relative to those of native women. This is especially pronounced among the Turkish women – the largest group of immigrant women after ethnic German women. While this may be partly culturally related, it is also to some degree an outcome of policies, since immigrant spouses with foreign nationality did not obtain immediate labour market access. Furthermore, even when access was given, it was initially subject to labour market testing. Most of these legal obstacles have been removed under the new immigration act, and spouses now immediately obtain the same labour market access as the principal migrant. JOBS FOR IMMIGRANTS – LABOUR MARKET INTEGRATION IN AUSTRALIA, DENMARK, GERMANY AND SWEDEN – ISBN 978-92-64-03359-7 © OECD 2007

240 – CHAPTER 4. THE LABOUR MARKET INTEGRATION OF IMMIGRANTS IN GERMANY Ethnic Germans now face similar difficulties to other groups…

Until the early 1990s, ethnic Germans had been well integrated into the labour market, and their employment rates were similar to those of natives. Currently, however, ethnic Germans lag behind, and their situation is similar to other migrant groups, despite the fact that they have a much better legal position and receive a considerable amount of integration support. In particular, employment rates of ethnic Germans with less than eight years of presence have fallen by almost 20% since 1992. This appears to be attributable to a change in their country-of-origin conditions, with more recent arrivals coming from more distant areas, and being apparently less able to speak German. However, there is some evidence that the measures taken since 1996 to limit the inflow of ethnic Germans – which inter alia require proof of German language knowledge – may have had a favourable impact on the employment rates of that group. Ethnic Germans also tend to have a higher educational attainment than other migrant groups, but their qualifications appear to be almost completely disregarded in the German labour market. …but available statistics do not mirror the changed composition of migrant stocks.

It is, however, impossible to provide exact figures on the labour market integration of ethnic Germans and the degree to which their human capital is under-utilised. This is remarkable given the large size of this group – more than three million ethnic Germans arrived since 1985 – and due to the fact that official statistics distinguish population groups along nationality lines. Since the ethnic Germans are German citizens, it is impossible to identify them. There is thus a clear need for statistics on the foreign-born – if not for abandoning the somewhat dated distinction based on nationality altogether. Indeed, statistics based on nationality are less and less meaningful as the foreign-born increasingly take up German nationality. There is also evidence that citizenship take-up is selective, i.e. naturalised migrants tend to have a better labour market performance than their counterparts who maintain their foreign nationality. At the same time, the second generation is now entering the labour market in large numbers. It is thus also increasingly important to be able to identify the second generation. This, however, can only be done with information on the parents’ country of birth – and not on their nationality. The change in Germany’s composition of immigration flows since the 1980s has given rise to a complex integration framework…

Initially, the presence of the “guestworkers” from Germany’s labour recruitment period was seen to be linked with employment. A formal integration policy was thus not developed, and the need for integration became only gradually acknowledged. Various authorities at all levels of government gradually began to tackle some of the most pressing needs within their area of competence. For those “guestworkers” who stayed, some language training was provided, and migration-related advice was provided by non-governmental actors, who were remunerated by the government. For ethnic and humanitarian migrants, who arrived in larger numbers only towards the end of the 1980s, new, separate structures were created. On top of the resulting complexity of the structure, subnational governments play an important role. Education, for example, is a prime responsibility of the Länder, and local governments stepped in where the measures JOBS FOR IMMIGRANTS – LABOUR MARKET INTEGRATION IN AUSTRALIA, DENMARK, GERMANY AND SWEDEN – ISBN 978-92-64-03359-7 © OECD 2007

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provided by the other two government levels did not suffice to meet integration needs. In this structure, labour market integration has traditionally not been the principle focus of integration activities for two main reasons. First, since Germany did not define itself as a “country of immigration”, most immigration was deemed to be of a temporary nature, without the need for further integration of migrants. Humanitarian migrants who did not obtain formal asylum faced some legal obstacles in labour market access. The notable exception have been ethnic Germans, who have always had full and immediate labour market access. Second, when integration measures have been taken, emphasis has mainly been on acquisition of the German language. …but there is some progress under the new immigration law.

Germany is currently in the process of a major restructuring of its immigration system. This change particularly affects the approach to integration, which is now a clearly established government task. Furthermore, in principle, all immigrants are subjected to the same broad integration structures. For the first time, with the new integration programmes and the subsequent “initial integration advice”, a uniform approach with respect to integration is adopted for all migrant groups whose presence is not merely temporary. In contrast, prior to the new immigration act, there was a clear distinction between the main migrant groups, i.e. “guestworkers” and their families, ethnic Germans, and humanitarian migrants, with respect to integration support and labour market access. The educational outcomes of the second generation are less favourable than elsewhere…

It appears that the second generation is in a very unfavourable position. Their employment rates are below those of natives. However, it is difficult to adequately identify these individuals, since current statistics do not provide information on the parents’ place of birth. Given the identification problems in official statistics and the fact that two-thirds of the native-born foreigners are below the age of 18, most studies have focused on the results of international student assessments such as the OECD PISA study, and not yet on their labour market integration. The gap between the educational attainment of the “second-generations” parents and that of their native counterparts is higher than in other OECD countries. Although human capital may tend to be transmitted across generations, educational systems can compensate in part for this. In Germany, it seems to exacerbate it. The impact of the education level of parents on the outcomes of children is stronger in Germany than in the rest of the OECD. The combined effect of these two factors – the low education level of the parents and the particularly strong intergenerational links in educational attainment – has led to a situation in which the second generation lags more behind their native counterparts than elsewhere, as the OECD’s PISA study has shown. The gap is particularly pronounced for second generation children where a language other than German is spoken. In fact, it seems that the language spoken at home has a much stronger impact on the second generation’s educational outcomes than in other countries. In any case, the second generation does not reach the same attainment as natives, not even as those with a similar socio-economic background, contrary to what is observed in other OECD countries.

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242 – CHAPTER 4. THE LABOUR MARKET INTEGRATION OF IMMIGRANTS IN GERMANY …reflecting early streaming in the German system, which puts migrants’ children in a lower track.

This appears to be linked to the early educational streaming, together with the clear hierarchy and low permeability in the educational system. Measures should be considered to assure a better permeability between the educational tracks and to avoid a situation where migrants are only placed in the lower tracks because of language obstacles. Vocational training is the key determinant of the second generation’ labour market success.

The limited international data available suggest that the employment rates of Germany’s second generation are lower in relative terms than those observed for the second generation in other countries. The low initial educational attainment of the second generation hampers their access to vocational training, which is the main entry channel into the German labour market. The participation rate of young foreigners (who are mainly of the second generation) in vocational training is only about half that of nationals. Although the impact of vocational training on the labour market status is already important for natives, it is twice as important for the second generation. As a consequence, the employment rates of the second generation increasingly lag behind those of natives. This gap is particularly pronounced in the case of second generation women. However, the structural lack of vocational training places has increased competition with natives. Furthermore, enterprises owned by foreigners – to which the second generation might be expected to have better access since places are often filled through informal contacts – seldom provide vocational training. This is due to both institutional obstacles and a lack of awareness. The institutional obstacles have been partly removed with the abolition of a formal trainer examination, and there are a variety of programmes in place to increase awareness of the importance of vocational training for the second generation, targeting both the second generation and potential employers. However, it is not yet possible to evaluate to what degree these measures have had the desired effect. There is an urgent need for more investigation into the effectiveness of such programmes, since the share of second generation among the new labour market entrants is growing quite rapidly. The German language needs to be systematically promoted from kindergarten age on…

Given the early streaming in Germany’s educational system, it is crucial to promote language learning of migrant children at the earliest possible stage. Early kindergarten participation thus seems particularly important for migrant children, since it provides them with early contact with the German language. Although kindergarten participation of foreign children has almost fully converged with that of natives, overall coverage is relatively low in international comparison. Moreover, kindergarten and primary schooling are generally only half-time. This may explain why the effect of a foreign language spoken at home has a stronger negative impact on students’ educational outcomes than in other countries. Language training should thus be systematically integrated into the kindergarten activities, and ideally be offered also after the half-day kindergarten. It also appears that language testing in the year prior to elementary school, combined with JOBS FOR IMMIGRANTS – LABOUR MARKET INTEGRATION IN AUSTRALIA, DENMARK, GERMANY AND SWEDEN – ISBN 978-92-64-03359-7 © OECD 2007

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intensive language training for those who do not have sufficient language capabilities at that time, is an effective means to bring young migrants to a starting position similar to that of their native counterparts. … to be better linked with employment, based on a more systematic evaluation of what works.

The focus of the integration activities for new arrivals under the new immigration law is laid on language training. It remains to be seen if the funding of the introduction courses, which are generally provided by semi-public and non-governmental institutions, is effective. Due to a lump-sum per capita financing, there are little incentives for the providers to aim at higher levels of language competence, to focus on groups which face particular difficulties, or to combine language instruction with labour market needs. An alternative would be to introduce a more outcome-based funding scheme which accounts for the composition of the participants. Furthermore, the introduction courses aim only at a basic level of German language knowledge which is unlikely to be sufficient for the needs of the labour market. Although a programme has recently been launched for more advanced language training and adapted to the professional needs of immigrants, this programme is only targeted at immigrants who receive unemployment aid in Germany, i.e. generally not open to migrants who do not have prior work experience in Germany. Furthermore, given the great emphasis being placed on language courses, at present as in the past, it is striking to note that there is no evaluation system in place to identify which kind of language training – and how much – serves best to achieve a cost-efficient labour market integration. Indeed, the scarce evidence that is currently available suggests that language training may be less efficient with respect to labour market integration than is often assumed in the German debate. One indication of this is the fact that only 15% of ethnic migrants who participated in language courses for unemployed migrants were in employment six months after course completion. There is thus a clear need for an indepth study of the links between language training and labour market integration. Discrimination is not perceived as a key problem but cannot be ignored.

In contrast to many other OECD countries, notably the Nordic ones, anti-discrimination measures have not been a main focus of integration policy in Germany. Given the sizeable structural disadvantages faced by migrants due to their considerably lower educational attainment and the strong emphasis place on formal certification, the significance of discrimination may be masked. Migrants themselves do not report discrimination as a key problem with respect to labour market access. Empirical results on the question are mixed, with one study in particular showing greater wage mobility for immigrants and others relative disadvantage with respect to recruitment and layoff practices. However, the existence of qualification deficits may act a convenient screen for discriminatory attitudes, so some vigilance on this score would be warranted. Migrants’ access to self-employment should be improved.

In contrast to countries like France, the United Kingdom and Sweden, migrants are still under-represented among the self-employed. This is partly attributable to the fact that JOBS FOR IMMIGRANTS – LABOUR MARKET INTEGRATION IN AUSTRALIA, DENMARK, GERMANY AND SWEDEN – ISBN 978-92-64-03359-7 © OECD 2007

244 – CHAPTER 4. THE LABOUR MARKET INTEGRATION OF IMMIGRANTS IN GERMANY about one-third of the foreign population need special permission to have access to self-employment, since the duration of their residence is not sufficiently “consolidated”. Given the potential positive contribution of self-employment to a dynamic development of the economy and its importance as an integration tool, legal access to self-employment should be given more generously, at least in cases where immigration can be expected to be of a permanent nature. Another obstacle is the lack of access to financial micro-credits, which particularly affects migrants. Although there are federal programmes in place to provide credits for start-ups in cases where commercial banks would not do so, the proportion of migrant entrepreneurs in these programmes is well below the average. This appears to be due to a lack of information. Programmes to support self-employment, particularly through micro-credits, should thus be more actively promoted to migrants. Employment through temporary employment agencies has not developed its full potential as a tool for fostering migrants’ labour market integration.

Experiences in Sweden and Australia have shown that employment through temporary employment agencies can be an effective labour market integration tool for migrants, since it provides them with the necessary domestic employment experience, and allows employers to evaluate their skills. Yet, in Germany, migrants are under-represented in the federal programme for employment through temporary employment agencies (i.e., in the “Personal Service Agencies”) and for the few migrants who do participate, success rates are much lower than for natives. This appears to be partly attributable to the incentive-oriented structure of the programme, which emphasises rapid labour market integration. Migrants may need more time and support measures than natives do, to profit from such measures. Since the evaluation of skills through this form of employment is particularly important for recent arrivals who face difficulties in having their qualifications recognised – notably the ethnic Germans and humanitarian migrants – they should be included as a special target group. There is a multitude of innovative projects, but a need for better evaluation and mainstreaming.

Within the past decade, Germany has gone from neglecting the need for an integration policy to acknowledging the beneficial contribution of immigrants to the economy and the society. This has culminated in broad-based support for the new immigration law and its integration programme. It is also mirrored in a multitude of initiatives, many of which have been established only recently. However, these initiatives are generally only funded on a short-term basis, and evaluation is often lacking. Indeed, the problem of inadequate programme evaluation, though shared with other OECD countries, is particularly striking in Germany, due to the fact that most projects have been locally-based, multi-level and expenditure-based funded, and limited in time. Very few of them are permanent or designed in a way that would enable a proper evaluation to take place. They also appear to be often not sufficiently co-ordinated, let alone integrated, with mainstream services. There are few structures in place to identify projects that would be worthwhile to carry out nation-wide, and subsequently expanded. Such structures would be even more important since the participation of migrants in the regular labour market programmes lags behind that of natives. Some of these regular programmes appear not to JOBS FOR IMMIGRANTS – LABOUR MARKET INTEGRATION IN AUSTRALIA, DENMARK, GERMANY AND SWEDEN – ISBN 978-92-64-03359-7 © OECD 2007

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be sufficiently adapted to migrants’ needs. Instead of providing more and more new projects for migrants, it might be considered a better strategy to adapt mainstream programmes to migrants’ needs, and to include those projects for migrants that have proved to be effective into the mainstream services.

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Constant, A., Y. Shachmurove and K. Zimmermann (2003), “What Makes an Entrepreneur and Does it Pay? Native men, Turks, and other migrants in Germany”, IZA Discussion Paper No. 940, Bonn. Constant, A., Y. Shachmurove and K. Zimmermann (2004), “Self-employment Dynamics across the Business Cycle: migrants versus natives”, IZA Discussion Paper No. 1386, Bonn. Entorf, H. and N. Minoiu (2004), “PISA Results: what a difference immigration law makes”, IZA Discussion Paper No. 1021, Bonn. Esping-Andersen, G. (1990), Three Worlds of Welfare Capitalism. New York. Esser, H. (2003), “Does the New Immigration Require a New Theory of Intergenerational Integration?”, Mannheimer Zentrum fuer Europäische Sozialforschung Discussion Paper No. 71, Mannheim. Federal Ministry for Education and Research (2004), Berufsbildungsbericht 2004, Bonn and Berlin. Federal Ministry for Education and Research (2005), Berufsbildungsbericht 2005, Bonn and Berlin, forthcoming. Federal Office for Migration and Refugees (2004), Bundesweite Erhebung zu Integrationsaktivitäten. Nuremberg. Ferrer, A., D. Green and W.C. Riddell (2004), The Effect of Literacy on Immigrant Eearnings, Statistics Canada, Ottawa. FOKUS (2003), Evaluation von Pilotmassnamhmen im Jahr 2002 zur Einführung des Gesamtsprachkonzeptes des Bundes – Abschlussbericht, Bergisch-Gladbach. Frick, J. (2004), Gutachten zur ‚Integration von Migranten in Deutschland’ auf Basis nationaler und international vergleichbarer Mikrodaten im Auftrag des Sachverständigenrates für Zuwanderung und Immigration, Berlin. Frick, J. and G. Wagner (2001), “Immigrants’ Knowledge of German and their Main Language of Usage”, Economic Bulletin, Vol. 38(8). Geiss, B. (2001), “Die Ausländerbeauftragten der Bundesregierung in der ausländerpolitischen Diskussion”, in Edda Currle and Tanja Wunderlich (eds.), Deutschland - ein Einwanderungsland? Rückblick, Bilanz und neue Fragen, Stuttgart. GIB (2004), Wissenschaftliche Begleitung der mit Mitteln des Bundesministeriums des Innern vom Bundesamt für die Anerkennung ausländischer Flüchtlinge geförderten “Modellprojekte zum Abschluss von Eingliederungsverträgen“ – Abschlussbericht, Berlin. Goldberg, A., D. Morinhou and U. Kulke (1995), “Labour Market Discrimination against Foreign Workers in Germany”, ILO International Migration Papers No. 7, Geneva. Granato, M. and K. Gutschow (2004), “Eine zweite Chance: Abschlussbezogene Nachqualifizierung für junge Erwachsene mit Migrationshintergrund”, Informationen für die Beratungs- und Vermittlungsdienste der Bundesagentur für Arbeit (ibv), No. 14/2004, Nuremberg. Granato, M. and A. Uhly (2005), Die berufliche Qualifizierung junger Menschen mit Migrationshintergrund in Deutschland, mimeo.

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248 – CHAPTER 4. THE LABOUR MARKET INTEGRATION OF IMMIGRANTS IN GERMANY Green, D. and C. Worswick (2004), “Immigrant Earnings Profiles in the Presence of Human Capital Investment: measuring cohort and macro effects”, Institute for Fiscal Studies Working Paper No. 04/13, London. Immigration Council (2004), “Migration und Integration – Erfahrungen nutzen, Neues wagen”, Jahresgutachten 2004 des Sachverständigenrates für Zuwanderung und Integration, Nuremberg. Integration Officer (2002), Bericht der Beauftragten der Bundesregierung für Ausländerfragen über die Lage der Ausländer in der Bundesrepublik Deutschland, Bonn and Berlin. Integration Officer (2005), “Bericht der Beauftragten der Bundesregierung für Migration”, Flüchtlinge und Integration, Bonn and Berlin. Kalter, F. and N. Granato (2002), “Ethnic Minorities’ Education and Occupational Attainment: the case of Germany”, Mannheimer Zentrum für empirische Sozialforschung Working Paper No. 58, Mannheim. Konietzka, D. and M. Kreyenfeld (2001), “Die Verwertbarkeit ausländischer Bildungsabschlüsse. Das Beispiel der Aussiedler auf dem deutschen Arbeitsmarkt”, Zeitschrift für Soziologie, Vol. 30(4), pp. 267-282. Lehnert, N. and M. Täuber (2003), Wirtschaftsdynamik durch Existenzgründungen von Migranten, Deutsche Ausgleichsbank, Bonn. Liebig, T. (2004), “Recruitment of Foreign Labour in Germany and Switzerland”, in OECD (ed.), Migration for Employment – Bilateral agreements at a crossroads, pp. 157-186, Paris. OECD (2001), Knowledge and Skills for Life. First results from the OECD Programme for International Student Assessment (PISA) 2000, OECD, Paris. OECD (2003), Education at a Glance, OECD, Paris. OECD (2004), Learning for Tomorrow's World – first results from PISA 2003, OECD, Paris. OECD (2005), Trends in International Migration. 2004 Edition, OECD, Paris. Office fédéral de la statistique (ed.) (2005), L’intégration des populations issues de l’immigration en Suisse : personnes naturalisées et deuxième génération, Neuchâtel. Riphahn, R. (2003), “Cohort Effects in the Educational Attainment of Second Generation Immigrants in Germany: an analysis of census data”, Journal of Population Economics, Vol. 16(4), pp. 711-737. Riphahn, R. (2004), “Are there Diverging Time Trends in the Educational Attainment of Nationals and Second Generation Immigrants?”, Journal of Economics and Statistics, forthcoming. Schnepf, S. (2003), “Inequalities in Secondary School Attendance in Germany”, Southampton Statistical Sciences Research Institute, Applications and Policy Working Paper No. A03/16, Southampton. Schnepf, S. (2004), “How Different are Immigrants? A cross-country and cross-survey analysis of educational achievement”, IZA Discussion Paper No. 1398, Bonn.

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Seifert, W. (2001), Berufliche Integration von Zuwanderern in Deutschland, Expertise for the Federal Commission on Migration to Germany, Federal Ministry of the Interior, Berlin. Venema, M. and C. Grimm (2002), Forschungsbericht im Auftrag des Bundesministeriums für Arbeit und Sozialordnung: Situation der ausländischen Arbeitnehmer und ihrer Familienangehörigen in der Bundesrepublik Deutschland. Repräsentativuntersuchung 2001, Federal Ministry of Economics and Labour, Bonn and Berlin. Weber, A. (2003), “What Influences the Performance of Immigrant Children? An analysis using German PISA data”, mimeo, Mannheim.

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Introduction Sweden is not among the countries that generally come to mind when one considers the question of immigration in OECD countries and the integration of immigrants in the labour market. Yet it figures among OECD countries that have a relatively high share of foreign-born persons in its population (12.4%), almost as many in relative terms as the United States. This is not a recent development. At the beginning of the 1990s, the percentage was already between 9 and 10%, among them guest-worker migrants from the 1960s and early 1970s, persons from other Nordic countries having moved in the context of the Nordic common labour market (since 1954) and refugees and their families, for whom Sweden has long been viewed as a haven. However, apart from the free movement of persons from other Nordic countries and more recently, from other countries of the European Union, there has been little labour migration in Sweden since the first oil crisis. The Swedish economy is export-oriented with a highly skilled work force and there is a strong emphasis on active measures for the unemployed as well as on continuous training for the employed. Eighty percent of the workforce is organised in trade unions and discussion and co-operation among the social partners are central in many areas of public policy development and implementation. There is considerable wage compression, high taxation and extensive public services. The Swedish language is scarcely spoken or understood (except by persons from other Nordic countries) outside the national borders, which means that virtually all immigrants coming to Sweden have to spend a certain amount of time learning the language before they are ready for the labour market. This posed less of a problem during the guest-worker era prior to the first oil crisis when most jobs for immigrants were less skilled and language proficiency was less of an issue. The economy has changed considerably since then, however, and the jobs available in the labour market require more in the way of skills, of mastery of the language and perhaps of adaptability to changing work practices as well. Labour force participation is high in Sweden, for both men and women and has been so for some time. However, labour force participation and employment declined strongly during the deep economic crisis of the 1990s and although the recovery has been strong, participation and employment have not returned to the levels of the early 1990s. As will be seen, the 1990 economic crisis had a very strong effect on labour market outcomes of immigrants in Sweden, both for recent arrivals, of whom there were many at the time, and for those who had been established for a long time in Sweden. The relative labour market performance of immigrants in Sweden has come to the forefront of public debate and of JOBS FOR IMMIGRANTS – LABOUR MARKET INTEGRATION IN AUSTRALIA, DENMARK, GERMANY AND SWEDEN – ISBN 978-92-64-03359-7 © OECD 2007

252 – CHAPTER 5. THE LABOUR MARKET INTEGRATION OF IMMIGRANTS IN SWEDEN policy concern in Sweden, because the outcomes during the 1990s had deteriorated to the point where they appeared to be among the least favourable in OECD countries, compared to those of the native-born. The reasons for this, however, are complex and the objective of this chapter is to examine the situation in more detail, with a view to arriving at a more precise diagnosis of the situation. The target population considered in the chapter is the foreign-born population. Some finer distinctions are possible that are perhaps more pertinent as far as integration is concerned, for example foreign-born persons educated mainly in the host country versus those educated largely abroad, but the data sources do not generally permit such distinctions. Although the foreign-born population is not ideal as a target group and may result, for example, in different members of the same family being classified differently or in children born abroad of native-born parents being grouped in the immigrant population, it is a useful and easily understandable categorisation that captures the population that has actually immigrated as well as most of the relevant features of this population for the purposes of analyses. One deficiency, however, with restricting oneself to the foreign-born population is that it ignores any problems which the second generation, that is, the children of the foreign-born population, may encounter in the labour market. To the extent that the socioeconomic characteristics of the parental generation have an impact on that of their offspring (which they generally do) or that the second generation is still visibly of immigrant origins and that hiring, firing or wage discrimination with regard to this population exists, the assessment in this document will be incomplete. Indeed some studies suggest that integration is not fully achieved for the second generation in Sweden (Rooth and Ekberg, 2003) for some immigrant groups. Still the nature of the questions one needs to consider for the native-born second generation are different, because in principle host country education and language acquisition should not be at issue. The chapter begins with a historical overview of immigration to Sweden (Section 1). The Introduction Programme that is the heart of the refugee reception process in Sweden is described (Section 1.3), as well as other labour market related measures that are not necessarily targeted at immigrants but are nevertheless relevant. This includes a number of recent initiatives that affect immigrants. A general diagnostic of the current labour market situation of immigrants in Sweden is then presented (Section 2), in a comparative perspective involving similar results for a number of other OECD countries. The diagnostic is then extended, with a look at the evolution of immigrant outcomes over the past 15 years, with attention to the nature of migration flows, the effect of a number of policy initiatives, the differential impact of the 1990s economic crisis on immigrants and the subsequent slow recovery. Section 3 then addresses the labour market effects of the Introduction Programme, the recognition of foreign qualifications and experience, the filling of vacancies and discrimination issues. The chapter ends with an overall summary with recommendations.

1. The Swedish experience with migration Sweden traditionally was an emigration country until World War II, having seen large exoduses to the United States in the latter half of the nineteenth century and continuing into the twentieth century. By the end of the 1930s emigration to America declined and the stage was set for a turnaround in migration movements.

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1.1.

The labour immigration period (1945-1975)

Immigration began with the Second World War when Sweden received refugees from the Nordic, Baltic and other European countries. After the Second World War Swedish industry had a strategic advantage because of its intact infrastructure and production capital which, combined with low production costs and high consumption demand, both nationally and internationally, resulted in a significant demand for labour in manufacturing and especially in the textile sector. Swedish economic growth between 1950 and 1973 averaged 4% per year, with a period of growth of over 7% between 1959 and 1965. Labour migration to Sweden has generally been dominated by Nordic citizens. During the 1950s, however, workers also came from Germany, Austria and Italy and in the 1960s from Yugoslavia, Greece and Turkey. At the end of the 1960s about 60% of the working-age immigrant population (about 375 000 persons or over 6.5% of the working-age population) was working in industry. The service sector expanded quickly following World War II and in 1950 every fifth employee in the hotel and restaurant sector was a foreign citizen. Immigrant women worked mainly in the textile industry and in the home care sector. The need for skilled labour was extensive and skilled foreign labour was recruited partly in sending countries. However, the majority of labour migrants came to Sweden as tourists and found employment after arriving. Immigration to Sweden was essentially free in principle in the early 1950s, a liberalisation that was induced by the need for foreign labour. In 1954 the Nordic Passport Union was established which guaranteed a common Nordic labour market. The Swedish requirement for work permits for Nordic citizens, however, had already been abolished in 1943. During the 1950s and 1960s the average net migration of Finnish citizens amounted to 9 000 persons per year. To facilitate the active recruitment of nonNordic citizens bilateral agreements were signed with Italy and Hungary in 1947 and a number of other European countries. In the 1950s, the Swedish Labour Market Board collaborated with authorities in western Germany, Austria, Belgium, Italy and the Netherlands to recruit labour. In 1965 net migration rose to 34 000 and unemployment started to be observed among the immigrant population. In 1968 the requirement of a work permit prior to entry into the country for work was re-introduced. After 1968 workers were again recruited through bilateral agreements with Yugoslavia and Turkey. In addition, up to 80 000 Finnish citizens emigrated to Sweden in 1969 and 1970, due to an economic and financial crisis in Finland. Labour migration continued until the downturn precipitated by the oil crisis in 1973. At the end of the 1960s the manufacturing sector had started to decline in importance both in terms of employment and production (as a proportion of GDP). The service sector began to expand, especially the public sector. An economic slowdown in the beginning of the 1970s in combination with a shrinking industrial sector lead to increasing unemployment among certain groups such as youth, women, foreign labour and the handicapped. From 1950 to 1970 general economic growth had been 4% on average. But from 1970 to 1990 growth decreased to an average level of 1.7%. One of the reasons for this decrease was the increasing competition from abroad, for example in the shipbuilding and textile industries, which had previously been high-growth sectors. It was also these kinds of sectors which had employed large numbers of foreign workers. The decline lessened the need for labour with the result that Sweden became increasingly reticent to admit more workers. JOBS FOR IMMIGRANTS – LABOUR MARKET INTEGRATION IN AUSTRALIA, DENMARK, GERMANY AND SWEDEN – ISBN 978-92-64-03359-7 © OECD 2007

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1.2.

The refugee immigration period (1970-2004)

Spontaneous refugee immigration became an increasing part of total immigration at the end of the 1960s when Greeks sought protection after the military takeover in Greece. After the oil crisis followed by the industrial downturn in the mid-1970s labour immigration declined in importance and refugees became the main source of immigrants. From 1973 until the end of the 1970s asylum seekers mainly came from Latin America and during the 1980s persons fleeing the Middle East made up the majority of humanitarian flows coming to Sweden. In the first part of the 1990s persons fleeing former Yugoslavia dominated among refugee migrants and in the end of the 1990s and the beginning of 2000 asylum seekers from Iraq were the largest group. Over time, the number of asylum seekers has gradually increased. Between 1968 and 1977 the average number of asylum seekers was 2 400. During the following five-year period their numbers increased to about 3 000 per year. Since then the increase has been larger and at the end of the 1980s the number of asylum seekers amounted to between 20 000 and 30 000 per year. In the 1990s the number of asylum seekers varied considerably with 84 000 requests in 1992 but only 5 700 in 1996. Since 1996 the number of applicants has risen again and is today at a level of about 30 000 per year. Under the current set-up, only Nordic and EEA citizens are guaranteed free access to Sweden and the Swedish labour market. On the other hand, persons in need of protection, including quota refugees and convention refugees1, can be granted a residence permit. Other grounds for receiving a residence permit, whether permanent or of limited duration, include family reunion, adoption of foreign children, the holding of a work permit and international study. Since 1980 over half of all residence permits (amounting to about 376 000 work permits in all) have been granted for family reunion reasons. Persons in need of protection have received 37% of all residence permits and labour migrants (not counting movements of Nordic and EEA citizens) a little more than 1% (8 600). Because of the preponderance of protection-related migration during the 1990s, most family reunion migrants are coming to join someone who has received a residence permit for protection.

1.3.

The development of an active integration policy in Sweden

Early developments It was not until the mid-1960s that the situation for foreign labour in Swedish society received focused policy attention, in part because of trade union interest and pressure. The trade unions for some years had been asking for a control of labour imports, especially of the so-called “tourist immigration” (that is persons who came to Sweden on a tourist visa and stayed on to work), which they saw as a rising threat to workers’ rights. The working and living conditions which many immigrants were encountering in Sweden were not always deemed adequate. The immigrants often had the lowest paid jobs and did not speak much Swedish. The unions feared that access to cheap labour would hamper the improvement of the working environment and the evolution of wages in Sweden. After negotiations between the trade unions, the employers’ organisation and the Government, the Parliament accepted a government bill in 1968 that regulated “tourist immigration” 1.

Quota refugees are refugees resettled in a host country from a country where they are temporarily residing, often in refugee camps under the auspices of the United Nations High Commission for Refugees. Host countries agree to accept a certain quota of such refugees each year. Convention refugees are asylum seekers whose request for asylum has been recognised by the host country according to the terms of the 1951 Geneva Convention. JOBS FOR IMMIGRANTS – LABOUR MARKET INTEGRATION IN AUSTRALIA, DENMARK, GERMANY AND SWEDEN – ISBN 978-92-64-03359-7 © OECD 2007

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and in particular required non-Nordics who wanted to work in Sweden to have a work permit upon entry. The Swedish Immigration Board was established in 1969 and took over the responsibilities for immigration from the Swedish Labour Market Board, which had been the responsible authority until then. In 1970 the government decided to introduce free language training, including for “tourist immigrants”. Two years later a Government bill was passed guaranteeing newly arrived immigrants the right to 240 hours of salaried language training. The development of integration policy continued as the number of immigrants in the country rose. During the early stages of immigration in Sweden, immigrants had not had the right to run a company, to own real estate property or to be employed by the state. These conditions changed over the years and in 1974 foreign citizens received the same access to public jobs as native Swedes with the exception of jobs in the police, the judiciary and the armed forces as well as high-level government positions. In 1975 foreign citizens who had been residing in Sweden for three years received the right to vote in local and regional elections.

Migration policy The growing number of immigrants in Sweden of varying origins and backgrounds introduced a focus on minority groups. The result was, among other things, an amendment in the Swedish constitution in 1979 which stipulated that ethnic, language and religious minorities’ possibilities to keep and develop a cultural and social life should be encouraged. Growing unemployment among immigrants meant that they as well as other groups became the object of specific labour market measures. Other measures to integrate immigrants on the labour market included a system to convert foreign educational qualifications to their Swedish equivalents. With the emphasis on labour market integration, it was in many respects the Swedish Labour Market Board that was responsible for the integration of immigrants into Swedish society. From 1985 on, however, the Swedish Immigration Board, which was responsible for handling asylum applications, was assigned the responsibility for the integration of newly arrived immigrants. To avoid a large concentration of immigrants in the three metropolitan regions (Stockholm, Göteborg, Malmö) the authorities started to practice an active placement policy in 1985 through which newly arrived refugees and asylum seekers were assigned to municipalities throughout the country. As the number of newly arrived persons increased and housing became a limiting factor, immigrants tended to be placed in municipalities where there was available housing, with less attention being paid to the state of the local labour market. The migrants were free to move if they found housing elsewhere but were to participate in an 18-month introduction scheme in the municipality in which they had originally been placed, during which time they received social assistance. The dispersal policy was later abandoned in the face of large increases in the number of asylum seekers. In 1998 the responsibility for integration and the introduction of newly arrived immigrants was transferred to the Swedish Integration Board that was established the same year. The Integration Board is responsible for disbursing the introduction allowance to municipalities and issuing general guidelines on integration, but implementation and direct responsibility for newly arrived immigrants is in the hands of the municipalities.

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The Introduction Programme Asylum seekers coming to Sweden and whose applications have been accepted for consideration can locate in whatever municipality they wish.2 Many locate in areas where there are friends or relatives or members of their nationality already living. If it is considered that the assessment of the asylum application will take longer than fourth months, asylum seekers are allowed to work. Indeed all asylum seekers awaiting decisions concerning resident permits are expected to participate in some “organised activity” arranged by the Swedish Migration Board. The Board grants daily allowances, which are means-tested, to asylum seekers. Municipalities are expected to arrange schooling for their children. If an asylum seeker receives a resident permit and is not already in a municipality with suitable housing, the Migration Board provides the asylum seeker with information on life in Sweden, on the introduction programme and on the varying conditions across municipalities. The Swedish Integration Board, which is responsible for the granting of residence permits and for refugee reception, enters into (voluntary) agreements with municipalities regarding the number of refugees that are to settle in each municipality. These agreements provide for grants to the municipalities for each refugee participating in the introduction programme. It is the municipalities which in practice administer, provide and co-ordinate the activities of the introduction programme. The Introduction Programme is intended to prepare the immigrant for, and facilitate the transition to, the labour market. Recognised asylum seekers plus any family members joining them within two years of the granting of the original residence permit are eligible. At the beginning of the Introduction Programme, the municipal refugee reception service, in consultation with the Employment Services, carries out a preliminary assessment to determine if the immigrant is ready for insertion into the labour market. If not, an action plan is developed together with the immigrant to map out a specific strategy for movement into the labour market. This would generally involve, at the very least, language training and introduction to life in Sweden, but may also involve specific vocational upgrading or training, as required. Participation in an introduction programme is not compulsory. However, once an integration plan has been agreed to with the municipal refugees reception service, it must be followed in order for the participant to be entitled to continued social benefits. The benefits can be reduced by the municipality if the immigrant is deemed not to be respecting the terms of the agreement. However, neither absence from, nor non-compliance with the terms of, the integration plan can by itself lead to revocation of the residence permit. This system was introduced in 1985 when responsibility for the reception of immigrants was transferred from the Ministry of Labour to the Immigration Board. From 1991 on, the government has financed the municipal refugee reception through a standard grant with a fixed amount for each person received.3 The grant is administered by the Swedish Integration Board and regulated through a governmental decree. It is paid out over a period of 24 months and follows the refugee if he moves to another municipality. If a refugee finishes the introduction programme earlier than the anticipated two years and becomes self-supporting, the municipality can use the remainder of the grant for other refugees who are in need of more support and other measures. 2.

Much of the discussion concerning integration in this report focuses on non-OECD migration to Sweden.

3.

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The standard grant is supposed to cover extra costs which the municipality incurs due to the reception of refugees, such as living expenses, housing, language courses, vocational training and costs related to extra resources that may be needed for refugee children in day-care centres and schools. There is no specification for how the funds should be spent. On average 90% of the grants were spent on income support for refugees who were granted residence permits in 1998 and 1999. Although the introduction period is intended to last for about two years, the actual situation can differ from municipality to municipality and from individual to individual. Municipalities can also apply for certain additional costs in connection with reception of elderly and disabled persons, unaccompanied minors as well as health care, within certain limits. The target groups for the introduction programme are refugees, families of refugees and persons in need of protection and their families. Nevertheless, municipalities can decide to include other immigrants for whom government grants are not provided. All immigrants have the right to attend Swedish language courses. From 1994 on, municipalities have been encouraged to grant individuals participating in an introduction programme an “introduction allowance” rather than social assistance. The objective is to emphasise the special character of the allowance granted during the early stay in Sweden and to avoid the notion that social assistance is a normal means of support for immigrants. The size of the introduction allowance depends on the municipality. In some municipalities it is the same amount as regular social assistance and is means-tested. Other municipalities have chosen an allowance at the level of the minimum wage. In practice, the allowance may vary from EUR 350 to 800 per month per person. Because the actual implementation of the introduction varies by municipality, it is difficult to get a comprehensive overview of the different regimes in place. Currently about 60 municipalities make use of the introduction allowance and two-thirds of refugees reside in these municipalities. It is largely the metropolitan municipalities which have chosen to introduce an allowance that is higher than normal social assistance and that is means-tested. The municipality also decides whether the allowance can be combined with income from work without being reduced. Again the situation varies with municipality, with some allowing a certain amount of earnings before the introduction allowance is reduced and others following the same rules that apply to social assistance. An essential part of the introduction programme consists of Swedish language instruction (Swedish for Immigrants, SFI). The language instruction is in principle to be combined with work experience, in order to ensure familiarity with work-related terms and usage. Language competence is assessed through a national standardised test in Swedish. Immigrants are considered “ready” for the labour market when they have attained a certain level of competence, which depends on the educational background of the immigrant. The labour offices will not generally consider an applicant for services or labour market measures if the immigrant is not considered ready for the labour market in terms of language ability. In recent years, there have been initiatives to ensure that language teaching is more adapted to the needs of immigrants, with classes organised homogeneously by education level of the participants. As part of the introduction programme, labour offices may make available and finance workplace-based training programmes or support measures. The length of the introduction period varies in practice between 18 and 36 months. Participants who have not reached an acceptable level of Swedish can continue language JOBS FOR IMMIGRANTS – LABOUR MARKET INTEGRATION IN AUSTRALIA, DENMARK, GERMANY AND SWEDEN – ISBN 978-92-64-03359-7 © OECD 2007

258 – CHAPTER 5. THE LABOUR MARKET INTEGRATION OF IMMIGRANTS IN SWEDEN training. About 50% of persons taking language training do not have the required level of competence after two years. Municipalities that have chosen to support the participants at the social assistance level have an introduction programme that can last up to three and a half years. The length of the introduction period can be abridged, however, if the participant interrupts it to take on a job, for example. Following the end of the introduction programme, immigrants are considered in the same category as Swedish citizens, with no special measures targeted to them. The usual employment office measures are available to immigrants who qualify. The measures include recruitment incentives, self-employment start-up grants, training for employment, advanced vocational education, job search training, work experience at a workplace and the municipal follow-up programme for youth (MIEC, 2002). Immigrant workers tend to be overrepresented among the unemployed and among certain subgroups of the unemployed (e.g. the long-term unemployed) eligible for certain labour market measures. Immigrants looking for a job in Sweden may have their upper secondary diplomas or degrees recognised through the National Admissions Office for Higher Education; which is the office which centralises applications of foreign students for admission to the Swedish university system. The recognition of academic degrees is carried out by the Swedish National Academic Recognition Information Centre. The criteria applied in evaluating foreign degrees include the objectives and duration of programmes and the theses or papers required. If certain study subjects are deemed to more ideological than professional or to have too strong a local influence, such as law or in some cases, humanities, the validated duration may be shortened (Dingu-Kyrklund, 2004). The programmes are then compared to those for the award of a qualification in Sweden. The product of the evaluation is not a Swedish qualification but an assessment of the equivalence to such a qualification. It is intended to provide guidance to employers.

Recent policy emphases Since 2000 there have been a number of programmes introduced at the national level aimed at improving the integration of immigrants in the labour market. Currently the Swedish Labour Market Board is allocating funds for strengthening the personnel capacity at job centres in regions where the number of jobseekers of foreign origin is large or where the local or regional labour market conditions are difficult. Thus, while no labour market measures per se are targeted at immigrants, labour board staff will be able to spend more time addressing the problems of unemployed immigrants. From September 2003 to December 2005 the Swedish Labour Market Board has been instructed to launch a labour market experiment. This is known as “Work Place Introduction” for persons of foreign origin, which aims to support both the jobseeker and the employer in early stages of employment. Instructors are assigned whose role is to map out the job-seeker’s qualifications and wishes, match interested employers and unemployed immigrants and assist in initiation and training at the workplace. Support is provided to both parties for up to six months. During the Work Place Introduction Programme the employee is paid by the employer, except if the job starts with a traineeship period, in which case the employee is paid through the job centre. The objective of the project is to strengthen the labour market position of persons of foreign origin who have particular problems entering the labour market because of the lack of Swedish work experience. The measure is not intended for persons with weak Swedish knowledge or for handicapped persons, for which there are other measures. Women are cited as having particular problems entering the labour market and are one of the main targets of this programme. JOBS FOR IMMIGRANTS – LABOUR MARKET INTEGRATION IN AUSTRALIA, DENMARK, GERMANY AND SWEDEN – ISBN 978-92-64-03359-7 © OECD 2007

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An additional labour market measure is specifically aimed at persons of foreign origin with a foreign education but who today have work tasks for which they are overqualified. The project aims to strengthen sectors where there is a shortage of labour. If the current employer can offer the overqualified employee a more qualified job after the completion of supplementary education, the person receives a regular salary from the employer, otherwise compensation during education is paid by the job centre. In directions addressed to the Swedish Labour Market Board for 2004, the Swedish Government indicated that the unemployed foreign-born, among other groups, should be prioritised by job centres. It also underlined that the job centres’ participation in the introduction of newly arrived immigrants must be strengthened and that in accordance with an existing agreement, the Swedish Labour Market Board needs to co-operate more actively with the Migration Board, the Integration Board and the National Agency for Education. The specific responsibilities of various authorities for the integration of immigrants are currently under review. As noted above, immigrant workers can also profit from general labour market measures aimed at the long-term unemployed. One such measure is the so-called activity guarantee, equivalent to unemployment benefit, for those on, or who risk being on, longterm unemployment. Existing labour market programmes are applied within the framework of the activity guarantee or for other traineeships where the trainee is sponsored through the job centre. Labour market education is viewed as a way to strengthen or re-educate workers to better answer the demands in the labour market. The main courses are currently within manufacturing, technical and computer occupations and health services. Box 5.1 describes some more recent policy initiatives introduced since the assessment in this chapter was carried out. Box 5.1. New policy measures in support of immigrant integration Despite the progress registered with respect to the outcomes of immigrants since the 1995-1996 low point, disparities between immigrants and the native-born remain large in Sweden, both with respect to employment and unemployment rates. To address these continuing disparities, two labour market programmes, known as “Trial opportunity” and “Occupational skill assessment” were introduced in February 2005. The purpose of the first of these is to give the immigrant who lacks work experience the opportunity to demonstrate his/her knowledge and competence on a trial basis with private or public employers or non-profit organisations. The second programme, as the name suggests, offers the immigrant the opportunity to receive a vocational assessment (during at most three weeks) of their individual skills and work experience, with a certificate being issued which can be included in future job applications. In 2007, some additional measures have or will be introduced. Within general labour market policy, a programme called “re-entry jobs” has been introduced, replacing many of the previous selective labour market schemes. Under this scheme, employers’ payroll contributions amounting to 32.4% of gross salary will be waived for persons hired who have been on unemployment or sickness benefit, disability pension or social assistance more than one year. This programme will be open as well to newly arrived refugees and their family members unconditionally during the first three years following the granting of their residence permits. The programme is open only to private sector and state-owned business enterprises. A number of previous measures considered to be ineffectual for which persons with a foreign background were a priority group have been abolished. These include “Plus jobs” which were fully subsidised jobs in the public sector for long-term unemployed; temporary replacement training schemes; computer activity centres; international work placement grants; and employment training in the regular educational system. It is intended to replace these by a job and development guarantee for those unemployed more than 300 days, the objective of which is to get participants back to working life by means of individually tailored measures. Remuneration to participants is 65% of lost income from work, paid only if targeted persons participate. JOBS FOR IMMIGRANTS – LABOUR MARKET INTEGRATION IN AUSTRALIA, DENMARK, GERMANY AND SWEDEN – ISBN 978-92-64-03359-7 © OECD 2007

260 – CHAPTER 5. THE LABOUR MARKET INTEGRATION OF IMMIGRANTS IN SWEDEN There are a number of special measures for immigrants that are planned. New arrivals will be offered labour market-oriented language instruction that is better adapted to individual skills and occupations. One incentive being considered is a bonus for immigrants who pass a course in Swedish or obtain work within a certain time-frame; a bonus of this kind already exist for municipalities who take in refugees who receive it when immigrants pass a Swedish test or obtain a job or work placement. Pilot activities to validate skills using special industry-specific models are being implemented. Anonymous job applications will be implemented in the public sector on a trial basis and their impact on hiring practices assessed. Complementary courses for immigrant academics who wish to work as teachers in Swedish schools or in human services management and public administration are being arranged, as well as supplementary professional education for lawyers and persons educated in health and medical services. A programme known as “Step-in jobs” is to be introduced, offering possibilities to combine language training with part-time employment, preferably in the field of education or skill. Employers offering jobs under this scheme will have 75% of their labour costs subsidised. Finally the Work Place Induction Scheme, in place since 2003, will be made permanent. This scheme is based on the method of supported employment used at the public employment service to help jobseekers with disabilities. The purpose of the scheme is to compensate for immigrants’ lack of contacts and networks in the community and the job market. An assessment of this scheme in 2005 found that it increased the probability of finding permanent work within three months by 15%.

2. Immigrant labour force outcomes in Sweden 2.1.

A comparative overview

Immigrant populations4 in many OECD countries exceed 10% and Sweden, with about 14.5% of its working-age population (15-64) foreign-born (Table 5.1), has attained proportions that are comparable to those of certain traditional settlement countries, such as the United States (not shown).5 However, as is evident from Table 5.1, this is becoming a general feature of European countries. Over a third of the current foreign-born working-age population in Sweden entered during the past ten years. As far as additions to the working-age population due to immigration are concerned, Sweden has seen a relatively large increase over the ten-year period ending in 2003 (5.1 percentage points) exceeded only by that observed in Australia. This large increase in Sweden, however, has occurred at a time of difficulty for the Swedish economy and labour market, with unemployment rising from scarcely 2% at the beginning of the 1990s to almost 10% from 1993 through 1997, before falling again to 5-6% by 2003. Employment levels declined by fully 12% between 1990 and 1994, a decline unparalleled in recent decades in OECD countries, except in Finland at about the same period. Labour force participation rates over the same period have fallen by about five percentage points, among both men and women. Thus immigrants arriving in Sweden over this period were subject to a particularly unfavourable economic and labour market situation (Figure 5.1). No other country shown in Table 5.1 suffered as significant an economic downturn in the 1990s. Indeed, some countries (in particular, the Netherlands and the United Kingdom) showed strong 4.

The term ”immigrant” here is used in the sense of ”person having immigrated”, that is, foreign-born. It does not necessarily imply that the person in question is of foreign nationality.

5.

The comparison countries shown in Table 5.1 and in other tables and figures were chosen because they figure among the countries participating in the round of reviews of labour market integration, except for Canada, which was included because of its selective migration programme and historically favourable record with integration of immigrants. JOBS FOR IMMIGRANTS – LABOUR MARKET INTEGRATION IN AUSTRALIA, DENMARK, GERMANY AND SWEDEN – ISBN 978-92-64-03359-7 © OECD 2007

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employment growth during this period, accompanied by significant declines in unemployment. Although employment in Sweden recovered strongly around the turn of the century, it still stood at over 5% below its 1990 level in 2002. Table 5.1. Foreign-born population aged 15-64 in selected OECD countries, 2003 By years of presence in host country

Sweden Germany Netherlands United Kingdom Australia Canada

All foreign-born % of total workingage population 14.5 14.3 13.2 10.4 27.2 17.8

Of which arrived over past 10 years % of total working% of total foreignage population born 35.1 5.1 33.0 4.7 3.5 26.4 4.2 40.6 21.5 5.8 26.4 4.7

Source: For European countries, the Community Labour Force Survey. Australia: Population Census (2001, population 15+). Canada: Survey of Labour and Income Dynamics (2002).

Figure 5.1. Inflows of foreign citizens in Sweden and year-to-year employment change, 1984-2002 150

100

50

0

thousands

1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 -50 Inflows Employment change -100

-150

-200

-250

-300

These adverse conditions in Sweden were reflected in the unemployment rates of the foreign-born, which deteriorated over the 1990s and still remain high in 2003 (Table 5.2).6 Among the countries covered in Table 5.2, Germany and Sweden are the countries with the highest unemployment rates among the foreign-born. Sweden again ranks high in unemployment of the foreign-born relative to the native-born, a pattern shared in this case with the Netherlands, a country for which employment growth during the 1990s was, by contrast, particularly strong. 6.

The nature and composition of immigration varies considerably among the countries shown in Table 5.2. Australia and Canada, for example, have a pro-active immigration policy that involves some selection of immigrants on the basis of skills deemed to favour labour market integration such as age, educational attainment and knowledge of the host country language. Germany has a significant inflow of so-called “ethnic Germans”, who are persons of German origin from Poland, Romania and the former Soviet Union who acquire German nationality upon entry. The effect of differences in the nature of migration are considered below.

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262 – CHAPTER 5. THE LABOUR MARKET INTEGRATION OF IMMIGRANTS IN SWEDEN Table 5.2. Labour force characteristics of the native-born and foreign-born populations, selected OECD countries, 2003 Participation rate Employment-population Unemployment rate Native-born Foreign-born Native-born Foreign-born Native-born Foreign-born Both sexes Sweden Germany Netherlands United Kingdom Australia Canada

79.3 73.0 78.0 76.2 77.0 77.8

70.1 66.3 65.8 68.1 69.4 75.9

75.5 66.4 75.7 72.7 72.5 73.7

62.3 55.9 59.9 63.1 65.0 70.9

4.8 9.1 2.9 4.6 5.9 5.2

11.1 15.7 8.9 7.3 6.4 6.7

Men Sweden Germany Netherlands United Kingdom Australia Canada

80.7 79.3 85.5 82.8 83.8 83.2

74.0 77.1 75.3 78.5 79.3 83.2

76.5 71.9 83.1 78.5 78.9 78.6

63.4 64.1 68.4 72.1 74.2 77.7

5.2 9.3 2.8 5.2 5.8 5.5

12.7 16.9 9.1 8.1 6.4 6.6

Women Sweden 77.7 Germany 66.7 Netherlands 70.3 United Kingdom 69.3 Australia 70.0 Canada 72.4 Note and Source: See Table 5.1.

66.4 55.4 56.5 58.3 59.6 68.9

74.4 60.6 68.0 66.6 65.5 68.8

60.0 47.6 51.6 54.6 56.1 64.2

4.4 8.8 3.2 3.9 6.4 4.9

9.5 14.0 8.6 6.3 5.9 6.8

Table 5.3 shows labour force outcomes by years of presence in the host country for the same set of OECD countries. Note that these results do not describe the situation of immigrants over time, that is, they do not show how immigrants who arrived in the past have done after less than five, then after six to ten years and finally after more than ten years in the host country, but rather how foreign-born persons in the country in 2003 with the given durations of presence were doing in the labour markets of the respective countries. Nonetheless, the pattern observed is as expected, namely that immigrants who have been in the country longer have better outcomes in the labour market and the longer the presence, the closer average outcomes tend to be to those of natives (Figure 5.2). However, only in Australia and Canada (and in the United Kingdom with respect to unemployment) does one observe outcomes for foreign-born persons who have been in the country for over ten years that resemble those of the native-born. Although immigrants in Sweden show, as in other countries, improvement with stay in the country, immigrants having arrived recently show among the lowest participation rates and the highest unemployment rates during the early years in the host country. Indeed, what characterises Sweden, Germany and the Netherlands together are the more unfavourable outcomes in the early years relative to Australia, Canada and the United Kingdom as well. For the latter countries, most of the convergence to native results is already achieved within five years of presence in the host country.7

7.

The fact that the host-country language for the latter three countries is English (also French for Canada) and that the pool of potential (and actual) immigrants with knowledge of these languages is extensive may have contributed in part to the better outcomes observed for these countries. JOBS FOR IMMIGRANTS – LABOUR MARKET INTEGRATION IN AUSTRALIA, DENMARK, GERMANY AND SWEDEN – ISBN 978-92-64-03359-7 © OECD 2007

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Table 5.3. Labour force activity of the native- and foreign-born populations aged 15-64, selected OECD countries, 2003 By years since arrival in the host country

Sweden Germany Netherlands United Kingdom Australia Canada

10 years 69.3 72.5 68.6 67.8 54.8 69.1 66.2 70.9 63.1 67.1 70.5 78.4

Native born 79.3 73.0 78.0 76.2 66.1 77.7

Sweden Germany Netherlands United Kingdom Australia Canada

10 years 59.3 66.2 57.1 58.3 47.8 64.0 61.1 66.4 56.5 62.7 63.0 74.6

Native born 75.5 66.4 75.7 72.7 61.8 73.7

Sweden Germany Netherlands United Kingdom Australia Canada

10 years 14.4 8.7 16.7 14.1 12.9 7.4 7.7 6.4 10.5 6.5 10.7 4.8

Native born 4.8 9.1 2.9 4.6 6.5 5.2

Source: See Table 5.1. For Australia, the statistics concern the population 15+. " >10" refers to 11-30 years.

Figure 5.2. Employment-population rations of immigrants, by years o presence in the host country, selected OECD countries, 2003 80 70 60 50 10 Native born

40 30 20 10 0 Sweden

Germany

Netherlands

United Kingdom

Australia

Canada

Source: see Table 5.1.

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264 – CHAPTER 5. THE LABOUR MARKET INTEGRATION OF IMMIGRANTS IN SWEDEN Finally, the outcomes overall in each country including Sweden are mirrored in those observed by region or continent of origin, with generally less favourable outcomes for immigrants from North Africa and the Middle East and outcomes approaching (and in some cases equalling) those of the native-born for immigrants from OECD countries (Table 5.4).8 Table 5.4. Labour force characteristics of immigrants, by region or continent of origin, selected OECD countries, 2003 Participation rate

North Africa & Middle East Latin America Sub-Saharan Africa East/South/Southeast Asia Central and Eastern Europe North America/Oceania/Japan European Economic Area and Switzerland Native-born

Germany Netherlands 59.4 57.3 55.1 72.5 67.9 62.7 53.1 61.7 66.2 65.5 72.5 80.0

Sweden 60.1 69.6 62.5 68.3 68.2 70.1

United Kingdom 55.3 67.9 72.3 61.0 56.3 80.6

Australia 53.9 -78.2 65.1 60.9 78.4

Canada 71 81 82 73 78 80

75.1 79.3

76.3 73.0

74.8 78.0

74.4 76.2

75.1 77.0

76 78

North Africa & Middle East Latin America Sub-Saharan Africa East/South/Southeast Asia Central and Eastern Europe North America/Oceania/Japan European Economic Area and Switzerland Native-born

45.9 40.1 54.0 45.7 52.3 65.3

Employment-population ratio 50.3 46.7 47.0 66.3 62.3 60.6 57.2 48.4 66.7 56.8 59.6 56.1 57.1 59.3 50.4 74.5 64.5 77.7

46.7 -73.9 59.8 57.4 73.4

62 76 77 67 70 74

68.6 66.4

71.2 75.7

70.7 75.5

70.6 72.7

71.7 72.5

73 74

North Africa & Middle East Latin America Sub-Saharan Africa East/South/Southeast Asia Central and Eastern Europe North America/Oceania/Japan European Economic Area and Switzerland Native-born

22.8 27.3 20.5 13.8 20.1 9.9

12.3 8.6 8.6 8.0 12.9 6.9

Unemployment rate 22.2 10.5 22.6 13.1 12.9 8.0

15.0 10.7 7.8 8.1 10.5 3.6

13.4 -5.5 8.1 5.8 6.4

13 6 6 8 9 8

10.1 9.1

4.8 2.9

5.9 4.8

5.1 4.6

4.5 5.9

4 5

Source: See Table 5.1.

For Australia, North America/Oceania/ Japan includes includes Latin America but excludes Japan; Japan is included in Asia; Central and Eastern Europe also includes Southern Europe, which is then excluded from the European Economic Area.

2.2.

Comparing immigrant outcomes with those of natives

The economic framework for examining labour market integration issues was formulated in Chiswick (1978). According to this, immigrants arriving into a receiving country may have general skills but are lacking the country-specific human capital valued 8.

Comparable data on earnings for the foreign-born relative to the native-born are unfortunately more difficult to obtain. JOBS FOR IMMIGRANTS – LABOUR MARKET INTEGRATION IN AUSTRALIA, DENMARK, GERMANY AND SWEDEN – ISBN 978-92-64-03359-7 © OECD 2007

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by employers that makes their general skills usable and that contributes to productivity. The most obvious element of country-specific human capital is knowledge of the host country language, but it also includes knowledge of work practices, local institutions, of cultural norms and behaviours, of how organisations are structured and function, etc. According to this theory, over time, with investment of time and resources, immigrants can be expected to acquire the needed skills and to show, in principle, a range of labour market outcomes similar to those of the native population. The amount of time this takes, however, is of course not known a priori and can only be examined empirically. In practice, there are a number of reasons why this model of human capital acquisition and reward for immigrants may not operate entirely as portrayed. The first concerns the extent to which domestic employers will recognise the value or transferability of the formal qualifications and labour force experience acquired in institutions or labour markets or societies with which they are not familiar. This is especially the case if they were acquired in a developing country and perceived rightly or wrongly by the employer as being not entirely up to domestic standard. Thus, even if an immigrant does acquire an adequate mastery of the host country language, both the likelihood of employment and the level of earnings when employed may suffer, particularly in a slack labour market when the number of native candidates with known qualifications and experience is plentiful. One might expect, however, that any discrepancy between group hiring rates and productivity levels would tend to disappear over time, as employers learned more about immigrant workers and their performance on the job. This might not be the case, however, if the immigrant population was especially heterogeneous, making “learning” by employers about immigrant performance haphazard, or if immigrants were the object of discrimination. These points are discussed later in this report. Any assessment of differences in labour market outcomes between immigrants and natives needs to take into account differences in observed characteristics that affect participation, unemployment or earnings, such as sex, age, educational attainment, labour force experience, sector and occupation, but also for immigrants, duration of residence in the host country. Ideally, it should include as well measures of language proficiency and of knowledge of the host country. In practice, however, data on the latter are rarely available. This makes it difficult to assess whether residual differences in outcomes are attributable to discrimination or to remaining differences in characteristics.

2.3.

Factors affecting labour market performance

A number of other factors have had a significant impact on the labour market outcomes of immigrants observed in Sweden over the 1990s. The first of these concerns the nature of international migration to Sweden which, as noted above, consists of essentially two types of migrants, namely persons moving under the free-movement regime of the European Economic Area and humanitarian migrants accompanied or followed by their families.9 Labour migration from non-OECD countries accounts for an insignificant proportion of migration to Sweden. On the other hand, humanitarian migration and its associated family migration have accounted for 60 to 80% of all foreign migration to Sweden over the past 15 years. This migration, as is evident from Figure 5.1, has not been in response to either

9.

The former labour migration of the 1960s and 1970s is sufficiently distant that the current family migration can be safely assumed to arise largely out of the admission of quota and convention refugees.

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266 – CHAPTER 5. THE LABOUR MARKET INTEGRATION OF IMMIGRANTS IN SWEDEN cyclical or structural labour market needs, but rather a consequence of irregularly occurring civil and ethnic conflict across the globe. As noted earlier, the arrival of immigrants to the host country at times of adverse economic conditions can be expected to have a significant impact on the labour market performance of new arrivals. However, immigrants were not the only group in this situation in the 1990s. Indeed, another group of new entrants, namely young (16-24) Swedish-born persons also saw a significant deterioration in their labour market outcomes in the early 1990s, with unemployment rates rising from over 5% to over 20% and participation rates declining from close to 70% to a little over 50%. Both young Swedish-born persons and immigrants had little to no labour market experience in Sweden and thus were undoubtedly at a handicap with respect to the experienced labour force, in regard to both hiring and layoff decisions. The one significant difference between two groups, of course, is that the young Swedish-born had knowledge of the Swedish language and society and the advantage of a Swedish qualification recognised in the labour market. Nonetheless, the evidence does suggest that new entrants are adversely affected during an economic downturn, if for no other reason than that hiring by employers declines and new entrants by definition are looking for their first jobs.10 In addition, unfavourable economic conditions at time of immigration have not only an immediate impact but also one in the medium-term on employment and earnings (Aslund and Rooth, 2003). With the Swedish policy of openness to humanitarian migration, the insensitivity of humanitarian migration to domestic economic conditions and the differential impact of adverse conditions on new entrants to the labour market, it is clear that without additional policy measures, immigrant outcomes in this context may tend to suffer during downturns as well as thereafter. In addition, humanitarian migration is perhaps the one form of migration that is neither self-selected nor country-selected, that is, the decision to migrate on the part of the migrant is involuntary, resulting from persecution or from risk to life or limb, and the receiving country (whether directly or through an employer) generally foregoes the right to exercise discretion with respect to the choice of migrant. Whatever the exact reasons for this, humanitarian migration does tend to manifest labour market outcomes that are generally less favourable during the early years in the host country than for labour or family-related migration (see Table 5.5 and Cortes, 2004). This tends to be observed in all receiving countries, regardless of the history of migration in the country or the nature of the migration regime. Finally, it is evident that the pool of potential migrants around the world that have some prior knowledge or understanding of the Swedish language is, outside of the Nordic countries, extremely limited. Thus the integration of virtually all non-Nordic migrants to Sweden into the labour market will need to be preceded by a period of language acquisition, which may be more or less long, except in those cases where the language of work is another language, in particular English, where the work does not require much communication or where there are persons available who can mediate between immigrants and employers. In other immigration countries, selection or hiring of immigrants may be based in part on prior knowledge of the host-country language, with an expected favourable impact on labour market outcomes. 10.

In at least one other OECD country (Canada: Green and Worswick, 2004), general earnings deterioration for new entrants explains almost one half of the decline in immigrant outcomes relative to those of natives. JOBS FOR IMMIGRANTS – LABOUR MARKET INTEGRATION IN AUSTRALIA, DENMARK, GERMANY AND SWEDEN – ISBN 978-92-64-03359-7 © OECD 2007

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Table 5.5. Labour market outcomes by types of migration and time since arrival, Australia and Canada Australia 16-17 months after Distribution (%) 4-5 months after arrival arrival PR UR PR UR Immigrant category Preferential family 34 54 21 62 13 Concessional family 13 88 21 87 6 Business & employer nominated 11 65 4 85 0 Independent 29 89 9 92 7 Humanitarian 12 16 75 32 43 Note: PR – Participation rate. UR – Unemployment rate. Preferential family concerns spouses, children or parents. Concessional family relate to other relatives. Source: Longitudinal Survey of Immigrants to Australia, second cohort. Canada Year of admission 2000 1999 (% reporting employment earnings in 2000) Immigrant category Family 57 69 Skilled - principal applicant 66 80 Skilled - spouses and dependents 43 61 Refugees 44 57 Note: Year of admission indicates the year permanent residence status was granted. Some immigrants, in particular recognised asylum seekers, may have resided in the country for some time before becoming landed residents. Source: The Longitudinal Immigration Database.

Language deficiencies and the other factors mentioned above do not explain entirely a slower convergence of immigrant labour market outcomes to those of natives, but they do suggest that certain integration problems may in part reflect the consequences of broader migration or entry policies and that achieving outcomes that are as favourable as in other countries may require more intensive efforts or specially targeted policies.

2.4.

Outcomes in the face of changing migration currents

Recent immigrants to Sweden from non-OECD countries are less likely to be employed upon arrival, they earn less and are more dependent upon social assistance than other immigrant groups. Their earnings converge over time, particularly in the first five years, but they do not seem to catch up (Edin, Lalonde and Aslund, 2000). The wage convergence for men is slower than that for women. For non-European men, there remain substantial earnings disadvantage even when they have stayed in Sweden for more than 20 years. The earnings gap cannot be explained by immigrants having less observed general human capital than natives have (le Grand and Szulkin, 2000; Bevelander and Nielsen, 1999).11 There are significant differences with natives, even when controlling for variables such as schooling, experience, gender, civil status and place of residence. There are also differences between immigrants from different regions and between different immigrant cohorts (Hammarstedt, 2003). Duration of residence has a significant impact on employment chances up to and including the first 25 years in Sweden, especially for 11.

By « observed » general human capital here is meant formal educational qualifications and years of work experience, normally estimated as age minus years of education minus 6. It does not include knowledge of or degree of proficiency in Swedish.

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268 – CHAPTER 5. THE LABOUR MARKET INTEGRATION OF IMMIGRANTS IN SWEDEN East European and non-European immigrants, but even with over 20 years of residency, certain groups continue to show a significant employment gap (Nekby, 2002). Table 5.6 presents results for immigrant outcomes in a comparative perspective, showing results for Sweden and a number of other countries, where employment population ratios have been compared to those of the native born overall, of those who have just entered and for those with more than ten years of residence. Note, first of all, that the employment odds of the foreign-born relative to the native-born tend to fall, after one adjusts for age, marital status and educational attainment. This is observed for all countries and for both sexes. The table shows as well the estimated annual rate of increase in the odds ratios of employment rates for immigrants relative to natives during the first ten years of residence. By way of illustration, at current rates of increase with duration of residence for the first ten years, it would take about 25 years for employment population ratios of immigrants in Sweden to converge to those of the native-born, compared to approximately half that figure in Germany. Table 5.6. Percentage employed and odds of being employed of the foreign-born relative to the native-born, overall and by duration of residence in host country, 2002 Ratio of percentage employed (foreign-born/native-born) Women Men

Overall Overall

Germany 0.80 0.91

Netherlands 0.78 0.86

Sweden 0.78 0.84

United Kingdom 0.84 0.91

Ratio of odds of being employed (foreign-born/native-born) Unadjusted Women Overall Men Overall

0.61 0.75

0.52 0.49

0.45 0.51

0.60 0.67

Adjusted Women Overall First year % Increase per year > 10 years

0.52 0.22 14.2 0.89

0.45 0.16 5.6 0.58

0.37 0.14 8.4 0.47

0.56 0.43 -0.64

0.58 0.24 12.5 0.86

0.35 0.12 5.5 0.46

0.36 0.13 7.9 0.45

0.55 0.35 -0.66

Men

Overall First year % Increase per year > 10 years

Note: Adjusted estimates control for age, marital status and educational attainment. The "per cent increase per year" estimate concerns the first ten years of residence only. It can be considered as the rate at which the foreign-born odds ratio converges to one, the ratio for which native- and foreign-born outcomes are the same. Results for the United Kingdom show the effects of recent increases in labour migration, with many persons already having a job upon entry and convergence thus appearing as essentially nil relative to previous entering cohorts. Source: Logistic regression using European Union Labour Force Survey data.

The failure of employment and earnings of immigrants to match those of native Swedes, even after many years of residence in Sweden, does not seem to be a phenomenon limited to refugee / asylum migrants and their families. Swedish data for the 1970-1990 period show that male immigrants from Yugoslavia and to some extent, Finland, who arrived prior to 1970 have slower upward mobility and unfavourable income trends compared to Swedish-born men (Ekberg, 1994). In addition, a high proportion had left the labour force by 1990. In short, although more recent immigrants do not appear to have as favourable outcomes, at least in the 1990s, as earlier arrivals, earlier waves of labour immigrants did not necessarily reach parity with native Swedes either.

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Note, however, that the kinds of outcomes observed here are not atypical for immigrants not selected on the basis of their qualifications. The earnings of refugee and family migrants to Canada, for example, converge to Canadian average earnings for the population 15+ only after about 20 years of residence in Canada (CIC, 1998), while those of skilled principal applicants exceed the Canadian average after only three years of residence.12

2.5.

The 1990s economic crisis and its impact on integration

The situation of immigrants in Sweden during the 1990s was strongly affected by the severity of the economic downturn at the beginning of the decade. The 1990s downturn was perhaps the most severe (with that in Finland occurring at about the same time) undergone by an OECD country in terms of output and employment decline (16% and 12%, respectively) over the past 15 years. Figures 5.3a and 5.3b show the evolution of the employment population ratio 1987-2003 for men and women for the native-born and for the foreign-born by duration of residence in Sweden. Towards the end of the 1980s differences in employment ratios between the native-born and the foreign-born were not overly large, except for relatively recent arrivals. That is clearly not the situation since then and today. With the downturn, the foreign-born were relatively more affected and differences with the native-born population increased substantially. By 1995, the foreign-born with less than five years presence in Sweden had employment rates13 50 points lower than the native-born; those with five to nine years presence, about 30 points difference. This selective impact on immigrants of the 1990s crisis has been the object of closer study. The risk of unemployment for employed immigrants during the period 1991-1995 has been shown to be higher than for the native-born, even after controlling for job seniority and education (le Grand, 2000), with higher risks for non-European as opposed to European and Nordic immigrants (Arai and Vilhelmsson, 2003). This in principle goes against the stipulations of the Swedish Security of Employment Act, in which seniority is supposed to determine the order of lay-off. Deviations from this practice are allowed, however, if employers and unions can agree on exceptions. When the year of immigration is also taken into account in the Arai and Vilhelmsson study, high risks of unemployment appear even for Nordic and non-Nordic European immigrants, relative to the native-born. Thus deviation from normal seniority-based procedures during the economic crisis would seem to have affected all immigrant groups. The evolution of integration in Sweden since then has been, at least in part, a slow, gradual recovery from the trough of the 1990s economic crisis. Policies for new arrivals seem to be yielding initial outcomes, relative to the native-born, that are close, if not identical, to those that were observed at the end of the 1980s. Outcomes for immigrants with longer durations of residence, however, have not yet recovered to previous levels relative to the native-born (Table 5.7). Current integration problems in Sweden would thus appear to be, at least in part, a reflection of the selective impact of the 1990s downturn on foreign-born workers and to the lasting effects this seems to have had on their subsequent labour market prospects.

12.

The reference population for the Canadian average consists of taxfilers 15 years of age and older, which may include some retired persons without earnings.

13.

The term employment rate here is used synonymously with the employment-population ratio. It is not the ratio of persons employed to persons in the labour force.

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270 – CHAPTER 5. THE LABOUR MARKET INTEGRATION OF IMMIGRANTS IN SWEDEN Figure 5.3a. Employment-population ratios of the Swedish native-born population and the foreign-born population, by duration of residence, women, 1987-2003 90 80 70 60 Native-born 20+ years 10-19 years 5-9 years 0-4 years

50 40 30 20 10 0 1987 1988

1989 1990

1991 1992

1993 1994

1995 1996 1997 1998 1999

2000 2001

2002 2003

Figure 5.3b. Employment-population ratios of the Swedish native-born population and the foreign-born population, by duration of residence, men, 1987-2003 100 90 80 70 60

Native-born 20+ years 10-19 years 5-9 years 0-4 years

50 40 30 20 10 0 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003

Table 5.7. Difference between employment population ratios of the foreign-born and of the native-born, 1987, 1995 and 2003, men and women, by duration of residence in Sweden Percentage points

1987 1995 2003

Men 0-4 years 5-9 years 10-19 years 20+ years -29 -5 -3 2 -45 -28 -11 -6 -26 -19 -17 -5

Women 0-4 years 5-9 years 10-19 years 20+ years -34 -9 -4 -3 -54 -35 -15 -9 -38 -22 -16 -10

Source: Secretariat calculations using data from Integration Report 2003, Swedish Integration Board. JOBS FOR IMMIGRANTS – LABOUR MARKET INTEGRATION IN AUSTRALIA, DENMARK, GERMANY AND SWEDEN – ISBN 978-92-64-03359-7 © OECD 2007

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During the recovery in the latter part of the 1990s, employment among immigrants has increased more than among the native-born. This accentuation of cyclical labour market effects for immigrant workers, both during a downturn and recovery, has been observed in a number of OECD countries during the 1980s and 1990s (OECD, 1999 and 2003), although perhaps not to the same extent as was observed in Sweden in the early part of the decade.

3. Policy impacts 3.1.

Labour market effects of the introduction programme

Notwithstanding what would appear to be the origins of current employment problems for migrants with longer durations of residence in the economic crisis of the 1990s, the role of the introduction programme in facilitating the transition of new arrivals to the labour market remains pertinent, to ensure that the current situation is not aggravated by persistent problems among new immigrants. The main thrust of the introduction programme in Sweden is to ensure that immigrants have the necessary language skills for entry into the Swedish labour market. This is a critical part of the integration process because few immigrants upon entry into Sweden have any knowledge or understanding of the Swedish language, although they may learn some elements of it during the time their application for asylum is being considered.14 Although some knowledge of the host-country language is generally necessary for participation in the labour force and for many and perhaps most jobs, the extent of knowledge necessary can be expected to vary according to the nature of the job. It has been claimed that the changing nature of employment in OECD economies, with increasing use of information technology and with a premium placed on interpersonal communication skills (for increasing interaction between workers, between workers and management and between workers and customers) has made entrance into gainful employment more difficult for immigrants (Rosholm, Scott and Husted, 2001; Bevelander and Nielsen, 1999). It is difficult to assess the extent to which this holds. The widening use of information technology has been accompanied by a wider accessibility of this technology, so that more and more persons are able to use and profit from it. Moreover, when there exist labour shortages, language problems seem to be in practice less of a problem and inadequate language proficiency an obstacle to employment that appears surmountable for both worker and employer. Under slack labour market conditions, on the other hand, language proficiency becomes an additional criterion by which to assess the suitability of applicants for potential jobs. What does seem to be true is that new technologies have made the creation of reading materials much easier and contributed to their proliferation throughout all aspects of daily life. To the extent that employment has also become more associated with the production, use and public dissemination of such materials, mastery of the host-country language does become a more significant element in the hiring decision and in this respect, immigrants may well be at a disadvantage. However, there continue to exist many jobs which do not require such skills (in construction, hospitality, manufacturing, etc.) but 14.

The question of language learning on the part of immigrants who may already speak several widely spoken languages and needing to learn a language with a relatively narrow population base has not as yet been the object of study. If there are expectations of a return to the home country, the motivation for learning a new language may be small.

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272 – CHAPTER 5. THE LABOUR MARKET INTEGRATION OF IMMIGRANTS IN SWEDEN they will tend to be low-skilled and may not correspond to the skill profile of incoming immigrants. What constitutes “readiness” for the labour market with respect to language competence thus needs to be determined as a function of the intended occupation and with respect to the actual needs of the labour market. Because a prolonged absence from work is generally associated with human capital depreciation in the eyes of employers, the efficiency of host-country language instruction can become a significant issue for immigrants. High quality language instruction that is completed over a relatively short period of time would be preferred over extensive language instruction aimed at achieving a level of competence that may turn out to be elusive and indeed, perhaps not entirely necessary. In addition, a number of studies have shown that employers tend not to value homecountry work experience (Rooth, 1999; and Ferrer, Green and Riddell, 2004), but that host-country work experience is highly rewarded. Thus measures that encourage early entry into the labour market would tend to favour integration, provided they do not occur at the expense of adequate language competence. This is all the more true in that it seems to take time for certain economic incentives (e.g. labour market attachment) to have their effects on immigrant language proficiency (Chiswick, Lee and Miller, 2002). Empirical results for Sweden indicate that less than half of immigrants appear to undertake Swedish language instruction in connection with the Introduction Programme and of these, over half take less than three hundred hours. However, among non-OECD immigrants, the percent taking language courses is somewhat higher (57%), with again about half taking less than three hundred hours. An analysis of employment rates seven years after entry into Sweden for immigrants 15-64 having entered in 1997, controlling for age, sex, marital status, educational attainment, type of migration and region of origin, indicates some additional likelihood of employment after three to five hundred hours of language instruction (taken during the first two years of residence). However, publicly funded labour market training and especially early employment (both within the first two years) appear to have a greater impact (see Table 5.8). A number of measures to improve language instruction for immigrants in Sweden have already been recommended, if not always necessarily implemented in all municipalities. These include grouping immigrants by educational level, introducing occupation-related instruction and ensuring that language instruction and workplace introduction or practice take place concurrently rather than consecutively, to maintain a link to work during the instruction period and to avoid prolonging the introduction period. Despite these improvements, there remains a considerable variety in municipal implementations of the introduction programme and allowance, without any clear means or structures for identifying and transferring best practices across municipalities. A number of reviews of integration have been mandated at the national level in the recent past, which has ensured a fresh look at the introduction programme and its possible deficiencies and resulted in a number of recommendations, but a dynamic for regular improvement of the programme has yet to be developed and internalised. Although guidelines are issued nationally, there seems to be a very broad flexibility with respect to how these are to be observed. This admittedly allows room for local initiatives, but may not ensure a minimum performance level.

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Table 5.8. Odds ratios for employment relative to non-employment in 2004 As a function of Swedish language instruction, public expenditures on training and employment in 1997-1998 for immigrants having arrived in 1997 Men

Women

Swedish language instruction in 1997-1998 None 1-149 hours 150-299 hours 300-499 hours 500+ hours

Ref. 0.926 1.161 1.498 1.449

Ref. 1.121 1.139 1.426 1.697

Ref. 1.029 1.146 1.474 1.606

Compensation during training 1997-1998 None 1-4999 5000-9999 10000-14999 15000+

Ref. 1.373 1.928 1.757 1.847

Ref. 1.781 1.907 1.437 1.537

Ref. 1.534 1.937 1.596 1.698

Employment status in 1997-1998 Employed in 1997 Employed in 1998

1.305 2.310

1.305 2.272

1.293 2.325

Educational attainment in 2001 Primary education Secondary education Post-secondary Post-graduate degree

Ref. 1.515 1.390 1.889

Ref. 1.646 1.426 2.000

Ref. 1.553 1.377 1.913

---

---

-0.475

Sex

Both sexes

Note: The data were also controlled for age, marital status, reason for settlement (family, humanitarian, etc.) and region of origin. Immigrants arriving for study or employment were excluded. Expenditures on training are actually compensation received by participants during training. They are assumed to be proportional to the amount of training received. All estimates except those shaded were significant with p < 0.01. Estimates in lightly shaded cells were significant with p < 0.01. Source: The data source is STATIV, a database compiled by Statistics Sweden for the Swedish Integration Board.

The use of social assistance as a means of income support during the introduction period by some municipalities may be transmitting a message to immigrants that is at variance with the intended labour market orientation and the ultimate objective of autonomy. In addition, the typical duration of the introduction programme varies by municipality, which conveys varying expectations concerning the time needed to prepare entry into the labour market. The kind of claw-back of the introduction allowance in the event of receipt of earned income that exists in some municipalities has been shown in many studies not to encourage labour market entry, but rather to act as a disincentive to work. The length of the language training/introduction period, which often lasts two to three years, seems an excessively long period of time to be absent from the labour market. In general, the role of the municipalities in the integration process is an important one, but there is a risk of clientalising recent arrivals with the offer of broad-based and continued assistance.

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274 – CHAPTER 5. THE LABOUR MARKET INTEGRATION OF IMMIGRANTS IN SWEDEN

3.2.

Recognition of qualifications

The question of the extent to which the experience and formal qualifications of immigrants are recognised by potential employers can clearly be a significant factor in hiring decisions and in determining remuneration of workers. The issue here is one of partial information on the part of employers, who may be ill-equipped to assess the expected productivity of workers being considered for hiring and may consider educational qualifications obtained outside Western industrialised countries as not equivalent to similar education acquired in Sweden (le Grand, 2000). This may introduce an additional element of risk in the hiring decision, which an interview with a candidate not necessarily having the fluency in Swedish normally associated with his/her formal qualification may not dispel. Empirical results from Sweden would appear to support these assertions. Higher schooling, as measured by the level of pre-immigration education, has been shown to have no statistically significant effects on the unemployment rate for many immigrant groups (Rooth, 1999). For immigrants arriving in 1997 (see Table 5.8), the increase in the odds of employment relative to non-employment for persons with tertiary attainment would appear to be lower than for persons with secondary attainment (persons with only primary were the reference group). Other studies (Nekby, 2002), however, show a more systematic increase in employment of immigrants with education, especially for immigrant women, for whom the impact of education on the odds of employment is similar to that for native-born Swedish women. The data cover a longer time period (1990-2000) and apply to the entire stock of immigrants over this period. Returns to formal qualifications and earnings have been shown to be lower for male immigrants than for comparable Swedish-born workers, with immigrants from outside Western countries showing the greatest obstacles to earnings progression (le Grand and Szulkin, 2000). In addition, foreign-born persons with Swedish qualifications have been shown to have higher returns than foreign-born persons with foreign qualifications, although both have lower employment rates and wages than native-born persons with Swedish qualifications (Wadensjö, 1992). Similar results have been found for immigrants to Canada, with shifts in the composition of immigrants towards persons of non-European origin being accompanied by lower returns to education and by returns to foreign experience falling from positive values in the 1980s to essentially zero in the 1990s (Green and Worswick, 2002; Ferrer, Green and Riddell, 2004). A number of lines of evidence would appear to suggest that when employers are faced with competencies which they can evaluate, however, hiring and remuneration decisions would appear to change. For example, non-Western foreign-born persons who completed their upper secondary education in Sweden show a considerably reduced immigrant-native earnings gap (le Grand and Szulkin, 2000). Likewise, the time spent employed since arriving in Sweden seems to be an important predictor of the likelihood of being employed (and therefore of being hired) and of good labour market attachment15 (Rooth, 1999). Likewise, early employment (in the year following arrival) appears to show the most significant impact on employment

15.

Measured as having an annual income above 100 000 SEK (1995). JOBS FOR IMMIGRANTS – LABOUR MARKET INTEGRATION IN AUSTRALIA, DENMARK, GERMANY AND SWEDEN – ISBN 978-92-64-03359-7 © OECD 2007

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seven years after arrival (Table 5.8), outweighing the impact of language instruction and vocational training.16 Andersson and Wadensjö (2004) show that immigrants, although they are no more likely than natives to enter the temporary employment sector, are more likely to move thereafter into employment in another sector than natives of the same age, educational level, marital status and (large) city of residence. This is the case for immigrants from the European Union, North America and Oceania, but especially for those from Asia, African and South America. The results would seem to suggest that temporary employment agency work in these cases may have provided immigrants with the needed labour market experience to overcome employer hiring reticence. These kinds of results argue in favour of labour market measures and incentives aimed at getting immigrants into employment as soon as is feasible after arrival and acquiring labour market experience that is recognised and rewarded by employers. Indeed, studies of Swedish labour market programmes have shown that programmes that place persons into real jobs, such as recruitment subsidies and trainee replacement programmes (as opposed to labour market training, work practice and relief work programmes), are the only ones that yield positive employment probability effects over a five-year horizon after the start of the programme (Sianesi, 2002). These are also the programmes for which the outcomes for non-Nordic citizens (the proportion of participants with jobs six months after completing a programme) are highest and most resemble those of Swedish citizens (close to 90% of the proportion of Swedes with jobs, Thoursie, 2004). However, they are also the most expensive of the programmes and have been found to be subject to sizable displacement effects (65-70%, Sianesi, 2002). However, in a situation in which employers may be reticent to hire immigrants because of uncertainty concerning the value of their qualifications, the displacement effects can be viewed as contributing to levelling the playing field. Despite the fact that programmes and procedures aimed at the recognition of formal qualifications obtained abroad do exist in Sweden, it is not clear to what extent these are successful or recognised by employers. Evidence from one country (Canada) suggests that employers tend to discount foreign qualifications (Finnie and Meung, 2002). Even with recognition procedures in place, however, if the outcome of the recognition process is to effectively downgrade foreign qualifications relative to domestic ones, the impact on employers may well be to reinforce existing pre-conceptions regarding the value of foreign qualifications. In a limited review of immigrants having had their qualifications evaluated, almost all felt that the evaluation presented to the employer had probably not played an important part in their getting hired (Dingu-Kyrkland, 2003). In addition, employers considered that the content of the evaluation did not convey the information they needed. On the other hand, more direct evidence seems to suggest that the recognition process does convey benefits, with an evaluation of a degree as totally comparable to a Swedish resulting in an increase in odds of holding a qualified job that is much higher than that of a partial recognition, which in turn shows an increase that is 16.

One would of course expect that persons employed in the year after arrival would automatically have a higher chance of being employed later than others not employed at that time. Moreover, there may be some self-selection occurring, in that more motivated immigrants may be finding jobs earlier and holding them. Still the increased odds of downstream employment associated with early employment experience appear to be especially large, given that they are measured six years after the early employment experience in question.

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276 – CHAPTER 5. THE LABOUR MARKET INTEGRATION OF IMMIGRANTS IN SWEDEN higher than no recognition at all (Berggren and Omarsson, 2001). However, having a Swedish degree increases the chances of holding a qualified job even more. Evidence from labour force surveys on persons holding a job with a skill level that is beneath what would be expected on the basis of their formal qualifications show greater differences between the foreign-born and the native-born in Sweden than in a number of other European countries (Table 5.9). This is especially the case for persons holding formal tertiary qualifications, almost a third of whom are holding medium-skilled jobs compared to less than 5% of native-born Swedes. Although not all tertiary qualifications earned outside of Sweden can be considered as equivalent to their Swedish counterparts, the larger discrepancy between job skill levels and immigrant qualifications in Sweden merits a closer examination. Table 5.9. Persons of specific attainment levels by skill level of job held, selected countries, 2003

Job held

Attainment level of incumbent Upper secondary Tertiary NativeForeignNativeForeignborn born born born

Germany In high-skilled job In medium-skilled job In low-skilled job

18 80 2 100

19 69 12 100

66 34 0 100

50 43 7 100

In high-skilled job In medium-skilled job In low-skilled job

51 47 3 100

47 45 9 100

88 11 1 100

63 35 1 100

In high-skilled job In medium-skilled job In low-skilled job

17 81 2 100

22 68 11 100

97 3 0 100

60 35 5 100

10 84 7 100

23 65 13 100

66 32 2 100

60 34 6 100

Netherlands

Sweden

United Kingdom In high-skilled job In medium-skilled job In low-skilled job

Note: The job skill level is obtained from the International Standard Occupational Classification (ISCO 1998). High-skilled jobs consist of those in professional and associated professional occupations and technicians. Low-skilled jobs are those in elementary occupations (street vendors, cleaners, building caretakers, messengers, sweepers, labourers). Medium-skilled occupations are the residual. Source: European Union Labour Force Survey.

3.3.

The impact of dispersal policies

Policies to disperse or to encourage immigrants to disperse throughout the country have been introduced in a number of countries (OECD, 2003). The reason for this is the observation that immigrants tend to concentrate in large centres, often in enclaves with persons of the same origin, that this creates a social and fiscal burden in host regions which needs to be spread more equally across the country, and that living in such enclaves tends to retard the integration process, because immigrants tend to socialise with persons of their own communities and have less contact with the native population as a JOBS FOR IMMIGRANTS – LABOUR MARKET INTEGRATION IN AUSTRALIA, DENMARK, GERMANY AND SWEDEN – ISBN 978-92-64-03359-7 © OECD 2007

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result. This was the rationale for the refugee placement policy introduced in 1985 in Sweden, when responsibility for refugee reception was transferred from the Labour Market Board to the Immigration Board. Under this policy, asylum seekers who received a residence permit were assigned to a specific municipality, but were free to leave this location if they could find housing elsewhere. Initially the plan was to locate immigrants where there was opportunity for work and education; however, this was soon abandoned because availability of housing became a critical issue. At the same time, refugee immigrants were placed on social assistance for an introductory period of about 18 months. The dispersal system broke down with the massive inflows from former Yugoslavia in 1992 but was formally in place until 1994. The impact of the policy shift appears to have been negative, with immigrants suffering fairly important long-run earnings losses, and has been attributed at once to the settlement process and to the introduction of income support measures following arrival (Edin, Fredriksson and Aslund, 2001). The transfer of responsibility for integration from the Labour Market Board to the Immigration Board did not necessarily imply less concern with effective labour market integration; indeed, the aim was to facilitate the reception of immigrants to Sweden. However, in practice, the reception of refugees was in most cases placed within departments of social services at municipal level with, perhaps inevitably, a change in focus from viewing immigrants as a potential resource for the labour market to a professional concern for persons requiring support following difficult experiences in their home countries before they could be deemed ready for the labour market. The shift also meant that features of labour market skills peculiar to the immigrant population (language ability, applicability of foreign experience and education to the Swedish economy) were no longer the Labour Board’s formal responsibility during the introduction period and thereafter. Rather its function became to deal with persons who were, at least in principle, “ready” for the labour market on the same basis as native-born Swedes. The fact that no labour market programmes were targeted to immigrants may have contributed to re-enforcing this view. The evidence on the advantages and disadvantages of living in immigrants enclaves is not entirely clear-cut. Although living in such enclaves may result in social insularity, it is also the case that the possibilities of mutual assistance and of information sharing on host-country job opportunities, institutions and customs with friends and countrymen are much greater than in cases where immigrant families are isolated and living in communities where there are few other immigrants. Indeed the evidence seems to point to immigrant enclaves contributing to an increase in the level of earnings, although they may not necessarily contribute to assimilation (increases in earnings over time) (Edin, Fredriksson and Aslund). Evidence for Denmark where a dispersal policy similar to that in Sweden was in place from 1986 to 1998 suggests that residence in a small or medium-sized municipality (see Box 5.2) further characterised by low regional unemployment, a high concentration of fellow countrymen and a large number of vocational and higher education institutions increases the rate of movement into the first job for refugees (Damm and Rosholm, 2003). In any event, it is clear that population composition does play an important role in residential decisions of immigrants. They are attracted to large municipalities but also to those with favourable labour market prospects, with low unemployment rates and high average earnings, given other characteristics (Aslund, 2001).

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278 – CHAPTER 5. THE LABOUR MARKET INTEGRATION OF IMMIGRANTS IN SWEDEN Box 5.2. Local initiatives in favour of integration – an example Lysekil is a small centre of about 15 000 persons on the northwest coast of Sweden, about 8% of whom are foreign-born, a high proportion for a town of this size. Local industry includes marine research, energy, port facilities and tourism. The population of Lysekil peaked at 15 550 in 1994 and has declined steadily to reach 14 792 in 2001, an almost 5% drop over seven years. Both natural increase and net migration have been largely negative over this period. On the other hand, 2002 saw positive net migration slightly exceeding a significantly negative natural increase. Most of the positive net migration could be attributed to migration from outside the country. International migration thus provides the opportunity of making up for unfavourable demographics and departures of local residents. For this to succeed, however, arriving immigrants need to find lasting employment and a role within the local society. The municipality of Lysekil has put in place a pilot project which invests intensively in immigrant reception, with a view to ensuring that immigrants find work and remain in Lysekil. The project involves a number of features, including in-depth identification of qualifications, job matching tied to immigrant aspirations, real-life (rather than classroom) language instruction, employment support based on the individual and social networks of instructors, contacts and mediation with employers and subsidised apprenticeships. The pilot incorporates an evaluation (forthcoming) and identification of the successful features of the project, so that they can be implemented downstream in a cost-effective manner. In a situation in which labour market integration of immigrants is proving difficult nationally, it is clear that the prospect of reversing the demographic decline of smaller centres can prove a powerful motivating force for putting in place local initiatives aimed at facilitating the integration of immigrants and their longer term settlement.

3.4.

The filling of job vacancies

Discrimination could account for the less favourable employment outcomes observed in general among immigrants relative to the native-born and in particular, for the higher unemployment risks witnessed during the economic downturns. There are, however, alternative explanations for the latter. These would include, for example, an underlying higher mobility among immigrants, which, however, would have had to persist even in the adverse economic conditions of the 1990s. Generally, however, voluntary departures tend to decrease during a downturn. Alternatively, native-born workers may have managed to line up new jobs to move into before they are actually laid-off. The question of how jobs are filled in the Swedish labour market thus becomes an issue of some importance. Jobs may be found not only through formal means (employment offices) but also through networks or contacts of friends and relatives. These contacts would generally be more extensive for persons born in the country than they would be for immigrants, at least in the early years following arrival and perhaps even for immigrants with longer periods of residence in the host country. The existence of such networks can facilitate job search but may also act as de facto screening mechanisms that limit access to jobs by immigrants. In Sweden, although all job vacancies by law are supposed to be reported to employment offices, studies (Okeke, 2001; and Ekström, 2001, cited in Behtoui, 2004, forthcoming) indicate that as many as two thirds of jobs are filled through informal recruitment methods. Behtoui (2004), in a study of job search methods that led to a hiring over the period 1992-1999, finds that the odds of informal methods being the means of hiring, as opposed to formal methods17, is 25-30% lower among immigrants and that the 17.

Informal methods consisted of “help of friends/relatives” or “employer made contact with the worker”, formal methods of “use of government or private employment agencies” and “through newspaper ads”. “Applied directly to employers” and “other methods”, because there was no way to determine the JOBS FOR IMMIGRANTS – LABOUR MARKET INTEGRATION IN AUSTRALIA, DENMARK, GERMANY AND SWEDEN – ISBN 978-92-64-03359-7 © OECD 2007

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hirings done through such informal methods expand considerably during adverse economic conditions. Job vacancies in the private sector in particular are 70% more likely to be filled by informal methods than those in the public sector. In other words, even if there were no overt discrimination against immigrants in layoffs, the recruitment channels in place would favour persons with a network of local connections and contacts, which immigrants could develop over time, although perhaps not to the same extent as native-born persons. This feature of the Swedish labour market would tend to reinforce the adverse effect of whatever employer uncertainty and reticence may exist regarding the hiring of immigrant workers.

3.5.

Discrimination

The outcomes of immigrants in the labour market are rarely up to those of natives, especially in the early years after arrival. Over time, however, as immigrants pick up country-specific human capital and learn the language, work habits and customs of the receiving country and build up networks, one does expect a certain convergence to native labour market outcomes, especially after taking into account differences with the native population that could account for any shortfall, such as differences in age, sex, educational attainment, years of work experience, occupation and sector of employment. Any remaining differences could in principle be attributed to discrimination, but this can rarely be demonstrated unequivocally. Immigrants with the same educational qualifications as native-born persons may nonetheless differ in characteristics that could be associated with productivity, such as comprehension of or literacy in the local language, knowledge of work processes or of local technology, etc., for which there is generally not a direct measure. Employer preference for native candidates for employment may be based on these.18 In a certain sense, empirical comparisons of immigrant and native outcomes tend to be inconclusive, because of the possibility that certain determinants of differences in outcomes may not be observed. Still, one should not underestimate the possibility of discrimination or the cost, both social and economic, to the country, not to mention, of course, to the immigrant him-herself, of a sub-optimal allocation of human resources. Virtually all studies of immigrant earnings and employment show that differences persist after accounting for observed characteristics that can be expected to have an impact on these, such as age, sex, educational attainment, experience in the labour market, sector of activity and occupation and years of residence in the host country. However, the studies do not generally incorporate a direct measure of language proficiency, which is clearly an important country-specific skill that is an essential requirement for full participation in the host country work force. Studies on adopted children or on persons of immigrant background born in the country tend to give less ambiguous results, because it cannot be assumed that they have language deficiencies.

formal/informal degree of these, were classified as formal methods for the purposes of the study. The fact that at best one-third of vacancies is filled through the employment offices does reduce the scope for intervention through this means, however. 18.

Employer preferences based on either true or perceived average productivity-related characteristics of immigrants is generally know as “statistical discrimination”, as opposed to preferences based on race, religion or ethnic origin.

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280 – CHAPTER 5. THE LABOUR MARKET INTEGRATION OF IMMIGRANTS IN SWEDEN In one study (Rooth, 2002), adopted children of native-born Swedes whose physical appearance was different from that of native children were seen to fare worse as young adults in the labour market, that is, they had a lower probability of employment than natives with comparable characteristics. Moreover, the difference could not be attributed to an adoption effect because adopted children from Northern Europe showed little difference with native Swedes. The presumption is that the non-European adopted children are in some sense “visible” and may thus be the object of discrimination. Schröder and Vilhelmsson (1998) in a study of labour market outcomes of young individuals who had graduated from compulsory schooling, show a lower probability of employment, a higher risk of unemployment or of being outside the labour force for persons with immigrant backgrounds compared to persons born in Sweden of native-born parents. One study provides an interesting spotlight on country-of-origin differences, by examining the effect of language skills on employment using a test-score of directly assessed Swedish reading skills. Taking Swedish proficiency into account essentially eliminates any impact on employment rates of immigrants of different regions of origin (Nordic, European, non-European) (Rooth, 2004)19. This suggests that differences in employment probabilities by countries of origin may have less to do with cultural differences than with language proficiency. However, the study did not include a direct comparison of employment outcomes of immigrants and native-born persons of comparable language proficiency. The results cited earlier concerning differential unemployment risks of immigrants during the 1990s, even after taking into account seniority differences and other characteristics, suggest rather widespread discriminatory behaviour in the face of economic adversity. This is also more serious than hiring discrimination, because it left persons who may have been the object of this worse off than before. While employment probabilities do seem to differ between persons of immigrant background and native Swedes for reasons unrelated to demographic and human capital characteristics, the results with respect to earnings appear to be less dramatic. The immigrant-native earnings gap generally observed is considerably reduced for both immigrant men and women that have Swedish upper secondary education (le Grand and Szulkin, 2000). However, for men born outside Europe a 5% wage gap persists when average upper secondary grades are accounted for.

19.

A cause-and-effect relationship cannot be assumed, however, because the higher incidence of employment among persons with better reading skills could be the responsible for the latter, rather than the reverse.

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Summary and Recommendations

There are more humanitarian migrants than in the past…

The current situation regarding the integration of immigrants in the labour market in Sweden is the consequence of a number of factors and developments. The past 15 years have seen a higher share of humanitarian migration in Sweden than in the past. This is a form of migration for which labour market integration appears to be slower than for other forms of migration in all countries. At the same time there has been a growing diversification of migration away from “Western” countries to those with a greater cultural distance. However, different degrees of labour market integration would appear to result more from differences in language proficiency than from cultural differences per se. …and this group is slower to integrate.

The 1990s economic crisis also seems to have played a significant role in the deteriorating outcomes of immigrants observed during the 1990s. Employment rate differences between the native- and foreign-born populations at the end of the 1980s were not large except for recent arrivals. The situation for this latter group at that time seemed the normal one observed in all countries in which immigrants arrive without a pre-arranged offer of employment. The performance of immigrants in the late 1980s deteriorated thereafter in part because of the increasing share of humanitarian migration in Sweden. This category of migrants, being neither self-selected nor selected by the receiving state, tends to be slower in achieving parity with the native-born population in all countries, no doubt because immigration is involuntary, because of the traumatic nature of the refugee experience and its aftermath and because the economic motivation for migration is less prominent. The role of the labour market board has been reduced.

With 1985 came the introduction of social assistance for refugees for an eighteen-month introductory period, the transfer of responsibility for integration away from the Labour Market Board and the refugee dispersal policy in which refugees were assigned to municipalities throughout Sweden to relieve the pressure on the large agglomerations, with local economic conditions not always being taken into account. The dispersal policy had a negative effect on immigrant outcomes, particularly with respect to those arriving during the economic crisis, for whom the effects seem in many cases to be persistent. Analyses also suggest that the change in the administrative responsibility for integration and the emphasis on income support, if not necessarily responsible for, was nonetheless associated with less favourable outcomes for new arrivals, independently of local economic conditions. In addition, the Labour Board’s mandate effectively became that of dealing with JOBS FOR IMMIGRANTS – LABOUR MARKET INTEGRATION IN AUSTRALIA, DENMARK, GERMANY AND SWEDEN – ISBN 978-92-64-03359-7 © OECD 2007

282 – CHAPTER 5. THE LABOUR MARKET INTEGRATION OF IMMIGRANTS IN SWEDEN workers deemed to be ready for the labour market, that is, requiring no services other than those provided by the Labour Boards. Responsibility for immigrant-specific skill deficiencies, both with respect to language competence and the applicability of foreign qualifications and work experience to the Swedish situation, lay consequently elsewhere. The 1990s economic crisis was especially hard on immigrants.

With the severe economic crisis of the 1990s, asylum seeking in Sweden continued and those asylum seekers that were recognised and granted a residence permit were met with a labour market situation that was highly unfavourable and where considerable numbers of native-born Swedes with domestic formal qualifications and work experience were also looking for work. At the same time, the crisis struck immigrants already present and employed disproportionately, independently of job seniority and of the nature of the employment contract held. It is not clear if this was the consequence of employer/union agreement to deviate from standard procedures, as allowed by law, but the apparent selectivity of layoffs during the economic crisis is a matter for concern. The re-integration of immigrants into the ranks of the employed was rendered all the more difficult by the fact that some two-thirds of jobs, in the Swedish labour market appear to be filled through informal methods, that the networks and contacts of immigrants with potential employers are less extensive than those of the native-born and that the recourse to informal methods seems to expand in more difficult economic conditions. Take-up of language and vocational training needs to be increased.

The situation of immigrants has improved significantly since the trough of the economic downturn, with new arrivals now showing outcomes compared to the native-born that are closer to those observed in the late 1980s than has been the case over the past decade. It remains to be seen whether the improved situation for new arrivals will persist and whether their outcomes will improve as much with stay in Sweden as was the case in the past. The relatively favourable impact on employment of a minimum amount of language training and of vocational training for new arrivals and the relatively low take-up of these suggest that there is room for improvement with regard to labour market outcomes in the early years of residence, which can be expected to persist with continued residence. More needs to be done for immigrants currently without jobs.

The situation for immigrants having arrived since the mid-1980s and having suffered the brunt of the economic crisis of the 1990s remains unfavourable. Employment rates for these groups according to their time of residence in Sweden, although they have improved since the mid-1990s, are still substantially below what was seen for immigrants of comparable stays at the end of the 1980s. Whether this is a “backlog effect” or reflects greater employer hiring reticence concerning this group, with its undoubtedly more extensive history of inactivity in Sweden; is uncertain. In any event, it is difficult to see how the continuing employment problems of this group can be turned around without a strong economic expansion, given the re-enforcing nature of further non-employment on both inactivity and employer perceptions. If targeted measures are politically infeasible,

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then general measures that provide especially favourable results for immigrants need to be encouraged and expanded. Recognition of qualifications needs to be expanded and streamlined.

In Sweden, as elsewhere, employers do not seem to accord much trust in foreign educational qualifications and work experience, although recognition of qualifications as equivalent to Swedish ones does appear to convey benefits. An expansion of this process and a streamlining of procedures for carrying this out would be beneficial. It is not clear, however, that formal recognition of foreign educational qualifications is necessarily a solution in all cases, especially if this means a downgrading of foreign qualifications relative to Swedish ones and a need to take time to pursue further education, to obtain recognition of equivalence, that would be better spent acquiring work experience. Recognition would be useful in cases where there are licensing requirements for certain professions which could not be otherwise exercised or in cases where an equivalence could be granted on the basis of foreign (or Swedish) work experience without the need for formal study. However, to the extent that the lack of a recognised formal qualification is not a barrier to the exercise of an occupation, the benefits of further study to obtain a Swedish equivalence for its own sake remains to be proven. Results seem to suggest that the benefits of early employment experience on later employment are much stronger than those of Swedish vocational education. Work experience is critical.

What employers recognise and reward seems to be Swedish work experience and successful integration tends to be associated with early contact with the labour market. Thus improving the efficiency of language instruction so as not to overly prolong labour market entry and ensuring that proficiency requirements reflect actual occupational needs are matters of some importance. Real work experience also provides immigrants the opportunity to learn Swedish work organisation and practices, to demonstrate skills on-the-job and to meet and socialise with native Swedes. Evidence suggests that temporary jobs, whether or not subsidised by the employment office, appear to be a stepping-stone to more lasting employment for immigrants. This is an avenue that needs to be encouraged for both immigrants and employers. The fact that immigrants seem to move readily out of temporary agency employment into other sectors than natives of the same educational qualification may well indicate that the pool of immigrants doing temporary agency work is on average highly motivated and has managed to demonstrate skills which employers value. Discrimination is a problem…

The evidence concerning discrimination suggests that this is not an insignificant impediment to employment in Sweden. Although virtually all studies tend to show less favourable outcomes for immigrants than natives, even after taking into account age, sex, marital status, educational attainment and work experience, it is difficult to conclude that widespread discrimination exists without examining outcomes on the basis of a measure of human capital that is common to both the native- and the foreign-born. On the other hand, studies of persons with an immigrant background born in Sweden, who presumably do not have language deficiencies, show less favourable outcomes than for persons with similar characteristics born to native-born Swedes. JOBS FOR IMMIGRANTS – LABOUR MARKET INTEGRATION IN AUSTRALIA, DENMARK, GERMANY AND SWEDEN – ISBN 978-92-64-03359-7 © OECD 2007

284 – CHAPTER 5. THE LABOUR MARKET INTEGRATION OF IMMIGRANTS IN SWEDEN …and diversity programmes seem necessary.

The situation of immigrants seems to have worsened significantly during the economic crisis of the early to mid-1990s, which witnessed a selectivity in layoff practices that seems to have particularly affected immigrants. The recovery in the latter part of the 1990s and the early part of the new century has been more favourable for them, but outcomes still remain substantially below those for native-born Swedes and those observed historically for immigrants. The evidence overall does point to discrimination problems, and the diversity programmes in place in Sweden to encourage a better representativity of immigrants in work places and in society seem therefore a necessary intervention. But there are signs of progress on this front.

There are, nonetheless, positive signs. The earnings of persons of immigrant background approach (but admittedly do not attain) those of native Swedes of comparable education. Moreover, immigrants from different regions of origin having the same Swedish literacy level tend to have similar labour market outcomes, which suggests that cultural origins by themselves may not be the sole explanations for observed discriminatory behaviour. In addition, immigrants seem to exit from temporary agency work into other jobs more readily than the native-born. A more balanced labour market absorption would be beneficial.

Thus, from a situation where labour market outcomes of immigrants in the late 1980s, at least with respect to employment rates, seemed relatively favourable, Sweden now finds itself with an immigrant work force that is significantly under-represented among the ranks of the employed. Although there has been some catch-up with the economic recovery, it is not large for those who arrived shortly before and during the economic crisis, a group which continues to have serious difficulties finding jobs. There is a general awareness that the issue needs to be solved and an impressive mobilisation of the social partners in this regard. A reorientation of efforts towards measures that yield demonstrable returns is needed. With Sweden being one of the OECD countries where the imbalance between the size of the outgoing baby-boom labour force cohorts and the new incoming cohorts appears to be the largest (about 25%), the role of immigrants in making up for the deficit will be an important one. Labour shortages may solve the problem of integration over the medium term, but a more optimal use of human resources then would be served by a more balanced labour market absorption now.

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REFERENCES Andersson, P. and E. Wadensjö (2004), “Temporary Employment Agencies: a route for immigrants to enter the labour market?”, IZA Discussion Paper No. 1090, Bonn. Arai, M. and R. Vilhelmsson (2003), “Unemployment-risk Differentials between Immigrant and Native Workers in Sweden”, Forthcoming in Industrial Relations. Aslund, O. (2000), “Immigrant Settlement Policies and Subsequent Migration”, Working Paper Series, No. 2000:23, University of Uppsala. Aslund, O. (2001), “Now and Forever? Initial and subsequent location choices of immigrants”, IFAU Working Paper No. 2001:11, Uppsala. Aslund, O. and D.A. Rooth (2003), “Do When and Where Matter? Initial labor market conditions and immigrant earnings”, IFAU Working Paper No. 2003:7, Uppsala. Berggren, K. and A. Omarsson (2001), “Rätt man på fel plats” (The right man in the wrong place), Arbetsmarknadsstyrelsen, Ura 2001:5. Behtoui, A. (2004), “Network Recruitment and Wage Differences”, Forthcoming. Bevelander, P. and H. Skyt Nielsen (1999), “Declining Employment Assimilation of Immigrants in Sweden: observed or unobserved characteristics?”, Discussion Paper No. 2132, Centre for Economic Policy Research, London. Chiswick, B. (1978), “The Effect of Americanization on the Earnings of Foreign-born Men”, Journal of Political Economy, Vol. 86, pp. 897-921. Chiswick, B., Yew Liang Lee and P.W. Miller (2002), “Immigrants’ Language Skills and Visa Category”, IZA Discussion Paper No. 471, Bonn. CIC (1998), “The Economic Performance of Immigrants: Immigration Category Perspective”, Citizenship and Immigration Canada, IMDB Profile Series, Ottawa, December. Damm, A.P. and M. Rosholm (2003), “Employment Effects of Dispersal Policies on Refugee Immigrants, Part II: Empirical evidence”, IZA Discussion Paper No. 925, Bonn. Dingu-Kyrklund, E. (2004), “Globalisation, International Migration, Comparative Higher Education and Recognition of Diplomas”, First International Euredocs Conference, Paris. Edin, P.A., P. Fredriksson and O. Aslund (2001), “Settlement Policies and the Economic Success of Immigrants”, CEPR Discussion Paper No. 2730, London. Edin, P.A., R.J. Lalonde and O. Aslund (2000), “Emigration of Immigrants and Measures of Immigrant Assimilation: evidence from Sweden”, Working Paper Series No. 00:20, University of Chicago Harris School.

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286 – CHAPTER 5. THE LABOUR MARKET INTEGRATION OF IMMIGRANTS IN SWEDEN Ekberg, J. (1994), “Economic Progress of Immigrants in Sweden from 1970 to 1990: a longitudinal study”, Scandinavian Journal of Social Welfare, Vol. 3, pp. 148-157. Ferrer, A., D.A. Green and W. Craig Riddell (2004), “The Effect of Literacy on Immigrant Earnings”, TARGET Working Paper No. 11, University of British Columbia. Finnie, R. and R. Meung (2002), “Are Immigrants’ Human Capital Skills Discounted in Canada?”, Canadian Employment Research Forum, University of Calgary, May. Green, D. and C. Worswick (2002), “Earnings of Immigrant Men in Canada: the roles of labour market entry effects and returns to foreign experience”, Citizen and Immigration Canada. www.cic.gc.ca/english/research/papers/earnings/earningstoc.html Green, D. and C. Worswick (2004), ”Immigrant Earnings Profiles in the Presence of Human Capital Investment: measuring cohort and macro effects”, www.econ.ubc.ca/green/chrcoh9.pdf. Hammarstedt, M. (2003), “Income from Work among Immigrants in Sweden”, Review of Income and Wealth, Vol. 49, No. 2, June. Kortes, K.E. (2004), “Are Refugees Different from Economic Immigrants? Some empirical evidence on the heterogeneity of immigrant groups in the United States”, IZA Discussion Paper No. 1063, Bonn. Le Grand, C. (2000), “On-the-job Training, Firm Resources and Unemployment Risks: an analysis of the Swedish recession 1991-1993”, IFAU Working Paper No. 2000:3. Le Grand, C. and R. Szulkin (2000), “Permanent Disadvantage or Gradual Integration: Explaining the immigrant-native earnings gap in Sweden”, Scandinavian Working Papers in Economics, No. 7/2000, Swedish Institute for Social Research, Stockholm University. MIEC (2002), Basic Information Report, Ministry of Industry, Employment and Communications, Stockholm. Nekby, L. (2002), “How Long Ddoes it take to Integrate? Employment convergence of immigrants and natives in Sweden”, Trade Union Institute for Economic Research (FIEF) Working Paper No. 15, Stockholm. OECD (1999), Trends in International Migration, OECD, Paris. OECD (2003), Trends in International Migration, OECD, Paris. Rooth, D.O. (1999), Refugee Immigrants in Sweden, Lund Economic Studies No. 84, Lund. Rooth, D.O. (2002), “Adopted Children in the Labour Market – Discrimination or Unobserved Characteristics?”, International Migration, Vol. 40(1). Rooth, D.O. (2004), “The Effect of Language Proficiency on Employment for Immigrants – The Case of Sweden”, Acta Wexioensia, Vol. 55, pp. 81-96. Rooth, D.O. and J. Ekberg (2003), “Unemployment and Earnings for Second Generation Immigrants in Sweden. Ethnic background and parent composition”, Journal of Population Economics, Vol. 16, pp. 787-814.

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Rosholm, M., K. Scott and L. Husted (2001), “The Times they are A-changing: organizational change and immigrant employment opportunities in Scandinavia”, IZA Discussion Paper No. 258, Bonn. Sianesi, B. (2002), “Swedish Active Labor Market Programmes in the 1990s: overall effectiveness and differential performance”, The Institute for Fiscal Studies, WP02/03. Thoursie, A. (2004), “National Labour Market Policies: basic information reports – ethic minorities and immigrant groups on the labour market”, European Employment Observatory, www.eu-employment-observatory.net/ersep/trd32_uk/00300222.asp. Wadensjö, E. (1992), “Earnings of Immigrants with Higher Education in Sweden”, mimeo, Swedish Institute of Social Research, Stockholm University.

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OECD PUBLICATIONS, 2, rue André-Pascal, 75775 PARIS CEDEX 16 PRINTED IN FRANCE (81 2007 14 1 P) ISBN 978-92-64-03359-7 – No. 55629 2007

VOLUME 1: LABOUR MARKET INTEGRATION IN AUSTRALIA, DENMARK, GERMANY AND SWEDEN

What can be done to improve the labour market integration of immigrants and their children? Employers need to have the necessary information and incentives to assess the skills and qualifications of immigrants properly. Governments have a role to play in promoting language and vocational training, and encouraging diversity in the workplace. Immigrants themselves need to adapt to the requirements of the host country employers. The viability of future migration policies, in particular greater recourse to immigration, will depend to a large extent on how successful OECD countries and immigrants are in achieving these objectives. This publication presents reviews of the labour market integration of immigrants and their children in four OECD countries (Australia, Denmark, Germany and Sweden), and provides country-specific recommendations. It is the first in a series which will eventually cover some ten OECD countries.

The full text of this book is available on line via these links: www.sourceoecd.org/employment/9789264033597 www.sourceoecd.org/socialissues/9789264033597 Those with access to all OECD books on line should use this link: www.sourceoecd.org/9789264033597 SourceOECD is the OECD’s online library of books, periodicals and statistical databases. For more information about this award-winning service and free trials ask your librarian, or write to us at [email protected].

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VOLUME 1: LABOUR MARKET INTEGRATION IN AUSTRALIA, DENMARK, GERMANY AND SWEDEN

When immigrants arrive in a new country, they are confronted with new labour-market requirements such as language proficiency, familiarity with job search procedures and work practices which they are not always able to satisfy. Over time, this expertise can be acquired, and in principle immigrant performance in the receiving country should be similar to that of the native-born. In practice however, differences persist: experience and qualifications may not be fully recognised, social capital may be lacking, or discriminatory hiring practices may persist among employers. These obstacles affect not only new immigrants, but, surprisingly, their children too, even if the children are born and educated in the receiving country.

Jobs for Immigrants

Jobs for Immigrants

Jobs for Immigrants VOLUME 1: LABOUR MARKET INTEGRATION IN AUSTRALIA, DENMARK, GERMANY AND SWEDEN JOBS ORKS

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