Immigrants in the labour market

Characteristics and scope

Why is labour participation important for integration?

The Norwegian welfare state requires a high labour force participation. The consequences of a lack of labour participation are extensive, both for the individual and society as a whole. Not having a job leads to poor finances and often poorer living conditions^[1]. In a demanding working life, the costs of being on the outside are double: In addition to losing wage income, these people are also excluded from important skills development in the workplace^[2]. Long periods of unemployment can also weaken motivation and self-esteem. Potential employers can interpret this as a signal of low productivity^[3]. Thus, the threshold for finding or returning to employment may be higher.

For society, a low level of employment among immigrants means loss of labour, lower tax revenues and extra social security costs. In a broader perspective, the lack of participation by large groups in working life will challenge the sustainability of the welfare state. In addition, the refugees themselves^[4] and the majority population^[5] say that participation in the labour market means the most for experiencing integration and participation.

Fewer immigrants are in employment than in the rest of the population

Sixty-five per cent of the immigrants in Norway between the ages of 20 and 66 were employed in 2020. The corresponding share was 78 per cent in the rest of the population^[6]. Norwegian-born persons with immigrant parents are more often employed than immigrants but to a somewhat lesser extent than persons without an immigrant background^[7].

Behind the lower average employment rate among immigrants are significant differences between groups with different lengths of residence, gender, the reason for immigration, or level of education.

The proportion of people in employment is highest among labour immigrants at 78 per cent. Among persons who have arrived as refugees or through family reunification, the proportion is 54 and 65 per cent, respectively^[8].

There is a big difference between how the labour market participation of migrant workers and refugees changes with the length of residence in Norway. Labour immigrants often come to Norway because they have expertise that is in demand in the Norwegian labour market. The employment rate is therefore high among labour immigrants, regardless of their length of residence, and approximately on a par with the rest of the population, as shown in Figure 1.

FIGURE 1: Employment rate, broken down by the length of the period of residence and the reason for immigration. (Source: Register-based employment among immigrants, Statistics Norway, 2019)

Refugees and their reunited families arrive in Norway because they need protection. It often takes longer for many refugees to acquire relevant competence and find employment. Most people in this group participate in the introduction programme during the first few years after they settle in a municipality and the proportion of them in employment is low. However, the labour force participation rate increases quickly and around five years after arrival it peaks at around 60–70 per cent for men and 40–50 per cent for women. After between seven and tens years of residence, employment among refugees has tended to fall again. This applies especially to men.^[9]

When it comes to gender differences in employment, there is on average a lower proportion of women in employment than men, 63 compared with 71 per cent. While the employment rate among immigrants who arrive in Norway to work or study is almost the same for both sexes, the gender differences are particularly significant among refugees. In 2019, 47 per cent of the female refugees and 59 per cent of the male refugees were in employment. Since 2015, the proportion employed among female refugees has not increased as much as among male refugees. As a result, the gender differences in employment among refugees have increased in recent years^[10].

Immigrants are usually employed in part-time and temporary positions

A larger proportion of immigrants are employed in part-time positions than the rest of the population, and this applies especially to refugees. The difference in the proportion in full-time employment between refugees and employees in the population as a whole must be seen in the context of, among other things, the occupations in which they work. Refugees are overrepresented in occupations where part-time work is prevalent, such as sales and service occupations, cleaning, care work, etc. For example, 51 per cent of the refugees work in sales and service occupations. In 2019, 52 per cent of refugee women were full-time employees, compared with 63 per cent for female workers as a whole. Among men, the proportions in full-time employment were 71 and 85 per cent, respectively^[11].

The knowledge available indicates that some immigrants work part-time involuntarily. People who work in part-time positions but want more working hours, are often called underemployed. Figures from Statistics Norway’s Labour Force Survey show that the proportion of underemployed people has been about twice as high among immigrants as among the rest of the population in recent years. In 2020, 21 per cent of all immigrants in part-time positions stated that they would like more contractual working hours, while the corresponding figure among part-time employees in the rest of the population was 11 per cent^[12].

Immigrants from Asia, Africa, Latin-Amerika, Oceania except for Australia and New Zealand, and Europe outside the EU/EAA are also more often employed in temporary positions. Although the proportion of temporary employees in this group has decreased since 2012, it was still twice as high as among the rest of the population, at 13 versus 7 per cent^[13].

Immigrants in the labour market during the Covid-19 pandemic

Immigrants in the labour market were more severely affected by the restrictions in connection with the Covid-19 pandemic than the rest of the population. Between November 2019 and November 2020, the proportion of immigrants in employment decreased by 1.9 percentage points, compared with 0.7 percentage points among the rest of the population.

The decline in employment among immigrants must be seen in the context of employment patterns in this group. Immigrants are strongly overrepresented in the industries that were hardest hit by the COVID-19 crisis in 2020. This applies in particular to industries such as hospitality (accommodation and food and beverage service), land transport of passengers, and business services, which together saw a 9.4 per cent reduction in the number of employees. A total of 23 per cent of immigrants were employed in these industries in 2019, compared with 7 per cent of the general population.

Broken down by national background, immigrants from EU countries in Eastern Europe had the largest reduction in the proportion of employed persons, with a decline of 3.6 percentage points. Immigrants from Africa and North America and Oceania had the smallest decline; 0.8 percentage points in both groups^[14].

Many reasons why fewer people are employed

There are several reasons why immigrants, and especially refugees, have a lower employment rate than the rest of the population. One reason is the characteristics of the Norwegian labour market. In Norway, there are smaller differences in the employees’ wages compared with many other countries. This results in high minimum requirements for productivity and competence. Hiring a person with low qualifications can become unprofitable. The employer cannot offer a salary that suits the person’s productivity level^[15]. Norway is one of the countries in the OECD with the lowest proportion of employed persons in occupations with low requirements for formal qualifications. Figures show that it is becoming difficult to get a job in Norway without formal competence^[16]. Lack of education is just as big a barrier for everyone, regardless of immigrant background^[17]. Many refugees come from counties without well-developed education systems and therefore, have little prior education when they arrive in Norway^[18]. In 2020, more than half of the refugees in Norway had a primary and lower secondary school education^[19]. Therefore, low or little relevant competence is an important reason for a lower proportion of employment among immigrants and especially refugees.

Discrimination can also prevent immigrants from finding employment. A field experiment conducted in Norway^[20] shows that people with a Pakistani-sounding name received 25 per cent fewer invitations to first-time interviews than people with a Norwegian-sounding name, despite having identical competence. These are similar to findings from other Western countries. Managers seem to recruit candidates similar to themselves.^[21]

The Norwegian social security system may have an impact that results in lower labour market participation. Social security schemes are supposed to ensure that those who cannot work have a decent income. This is intended to reduce poverty but can also influence the motivation to work, especially for people with more marginalised labour market attachment. Immigrants have a more marginalised labour market attachment than people born in Norway. They often work part-time involuntarily^[22], are more often overqualified for their job^[23] and on average have a lower hourly wage than the population in general^[24]. Immigrants from poor countries are overrepresented in companies that are vulnerable to downsizing and closure. In addition, becoming unemployed has greater consequences for immigrants than Norwegian-born people in terms of future employment and income.^[25]

Refugees are also a group that has experienced trauma and suffering that can lead to health problems. These can come to the surface quickly after arrival but also have a certain time. Poor health, along with lower labour market attachment may be one reason why refugees are overrepresented among social security recipients^[26].

Differing views on gender roles can also be a barrier to job participation^[27][28]. In Norway, the norm is that both men and women work. However, many of the refugees come from countries where gender inequality is high^[29]. In addition, refugee women have a somewhat different family situation than women in the rest of the population. Refugee women more often live in a relationship and have children and they also have care responsibilities for more children than other women. Thirty-six per cent of the refugee mothers had three or more children while the same applied only to 19 per cent of the mothers in the rest of the population^[30].

Lower employment among refugee women may also be due to less education and work experience from their home country than men.

Measures and possible solutions

To have more immigrants in employment is the most important objective of the Government’s integration strategy^[31]. Many different actors can contribute to this - central government and municipal authorities, NGOs, the employers and not least – the immigrants themselves.

Firstly, the refugee settlement policy is important. The labour market in the municipality in which the refugee is settled after being granted residence in Norway also controls how quickly the refugee finds employment and becomes self-sustaining^[32]. This suggests settling refugees in areas with low unemployment and high demand for labour.

Qualification and education are key factors in helping immigrants to succeed in working life. People who only have a primary and lower secondary education have by far the lowest employment rate regardless of whether they are from an immigrant background or not. Since more than half of the refugees have only a primary and lower secondary education, the group has a negative impact on the average employment rate in the immigrant population. Refugees with an upper secondary or higher education taken in Norway are close to the rest of the population with the same level of education. Many of these refugees have immigrated at a young age^[33].

The Scandinavian countries offer newly arrived refugees introduction programmes where the emphasis is on language and work training. The objective of these is to equip newly arrived refugees for quick and permanent participation in education and the Norwegian labour market. Several studies have shown that there is considerable variation between municipalities in terms of programmes and achievement of goals. We have limited knowledge of the effect of such programmes. A recent study from Norway indicates that the programme has led to increased employment of resettlement refugees but has no effect on the employment rate among former asylum seekers^[34]. Nordic research suggests that individually adapted qualification programmes have a positive effect. It is also an advantage that the refugee himself or herself helps to draw up the plans.^[35]

Participation in labour market initiatives for unemployed immigrants also increases the likelihood of finding employment. However, this is a heterogeneous group in need of different types of measures. A review of studies on the effects of labour market initiatives for immigrants shows that individual adaptation is most important for newly arrived refugees. The ordinary labour market initiatives, such as wage subsidies, work best for unemployed immigrants and refugees with longer periods of residence^[36].

Knowledge needs

There is a need for more knowledge about how to reduce the immigrants’ barriers to working life. For example, we have little reliable knowledge about how the language training and the rest of the introduction programme for newly arrived refugees should be designed so that the target group is sufficiently qualified for Norwegian working life.

We also need better to know why the employment rate among refugees declines, especially men, after 7-10 years in Norway. We know that fewer immigrants have a strong and stable attachment to working life and there is a need to study how this affects permanent employment. In other words, can part-time work and temporary work be some of the reasons for work dropout rates among immigrants in the longer term?

More knowledge is also needed about how the immigrants’ participation in the labour market is related to their physical and mental health and this is especially true for refugees.
Gender differences in employment among refugees are significant and widening. There may be various reasons for low labour market participation among refugee women that should be looked at more closely - for example, the lack of competence and language skills, health challenges or gender roles in different family situations.

Immigrants are a very heterogeneous group. We need more knowledge about what measures work for whom. Wage subsidies have been highlighted when it comes to the transition to work. A recent study indicates that this initiative does not work for refugees^[37]. This is something that should be investigated more closely.

Reference List

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