Road to work for migrants – a crucial issue for Sweden

A costly and desolate trek through social measures or a worthwhile rescue for Sweden? Olof Åslund, Professor of Economics, sees migration as a key issue for Sweden’s overall labour needs in the long term.

“Successful migration can reduce the future problems of an ageing population and create better public finances. Unsuccessful migration will instead make these challenges more difficult,” says Olof Åslund.

He is the Director-General of IFAU, the Institute for Evaluation of Labour Market and Education Policy and Adjunct Professor of Economics at Uppsala University.

He has spent much of the past 20 years studying the mechanisms that hinder or promote employment for migrants. He has also seen the discussion swing back and forth between seeing migrants as a resource and seeing them as a problem. Since the large wave of refugees in 2015, the dominant themes in the political discussion have been restriction and regulation.

“But the challenges did not begin in 2015. Sweden has long had extensive refugee and family reunification immigration. It’s a net cost to society, but it’s not enormous. Many come when they are of an employable age and don’t cost so much to train. What the outcome will be depends on whether the person works and pays taxes or becomes dependent on support systems.”

Linking migration to Sweden’s ageing population can provide perspective. According to the Swedish Association of Local Authorities and Regions (SALAR), Sweden needs half a million people in welfare professions up to 2026.

“These two challenges in the Swedish labour market need to be each other’s solutions.”

Lifting one’s sights, the think-tank Bruegel, for example, has pointed to a future situation where countries may compete for labour, not just highly qualified labour.

“What will Sweden’s competitive advantage be then? Who will want to move to a strange little country on the Arctic Circle? Migration is network-driven, earlier flows predict future flows. If one takes this perspective, this is our great opportunity. It’s very clear that the Swedish debate is one-sided right now. It needs to be supplemented.”

“Sweden does not stand out as exceptionally bad compared with other countries even if the ‘gap’ between natives and immigrants is larger than in many other countries,” says Olof Åslund, researcher and Director-General of IFAU. Photo: Mikael Wallerstedt

So what does the road to work look like for migrants in Sweden? In the report Flykting- och anhöriginvandrades etablering på den svenska arbetsmarknaden [Refugee and family reunification immigrant establishment in the Swedish labour market] (2017), the researchers study the period 1990–2014. Here, it is apparent that things go better for men than for women and that the first jobs for immigrants are often in small low-wage businesses in the service sector. After five years in Sweden, around 45 per cent have established themselves in the labour market and after 15 years, the percentage is 80 per cent. This result is similar to the situation in other Western countries.

“The pattern from arrival to the first job is well-known. Sweden does not stand out as exceptionally bad compared with other countries even if the ‘gap’ between natives and immigrants is larger than in many other countries. If we compare with our Nordic neighbours, there are some studies that indicate that it goes a bit slower in the beginning in Sweden, but a bit better in the long term.”

According to the report, three factors are crucial to how things go for newcomers in the labour market – the job supply, demand and matching. The supply of jobs that may be available to migrants increases or decreases depending on a number of ‘human capital factors’. Region of birth and level of education are two of them.

“If you come with a low level of education from, say, North Africa or the Middle East and have attended school for five or six years when upper-secondary school is the minimum requirement in Sweden, there’s a large gap.”

Another important human capital factor is language. Acquiring a knowledge of the host country’s language leads to greater success in the labour market, but should not take too long.

“We know that being outside the labour market for a long time is quite negative. It can therefore be an advantage to organise and supervise work in a way that allows migrants to begin working and learn the language gradually,” says Åslund.

The supply of possible jobs to apply for is also affected by how the newcomer’s competence and skills are validated. The purpose of validation is to enable a person who has worked or studied in another country to find out how their competence and professional experience stand up in the Swedish labour market. If their competence and skills are found to be inadequate, they will need further education and training.

The researchers at IFAU have gone on to study the demand situation. In spring 2018, the labour market is hot. According to the most recent figures from Statistics Sweden, unemployment among migrants has decreased.

“An economic upswing benefits newcomers, who are otherwise at the back of the queue. From earlier research, it is clear that marginal groups fare best in good times and tend to be at a disadvantage in bad times,” comments Åslund.

Political instruments have long sought to facilitate the road to work for migrants. There are some differences of opinion as to what works best. The Confederation of Swedish Enterprise and the liberal and conservative parties want to see lower starting salaries while Social Democratic policies traditionally focus more on educational efforts and targeted programmes.

“Some research shows that high starting salaries disadvantage newcomers. Other studies show that they have little or no effect. It can be said that high starting salaries have some limited effect on newcomers’ chances of work,” says Åslund.

The current subsidy schemes that the Public Employment Service offers include new start jobs and introduction jobs, which mean that an employer can hire a person with certain characteristics in their business at a low cost.

Even though the labour cost is discounted by up to 80 per cent, there has been no rush among employers to use these subsidies. In the debate, it has been argued that it is too complicated, that the employers are not aware of the subsidies and that they do not want to become dependent on them.

“It’s nonetheless surprising that it hasn’t worked better. In part it is pure discrimination, based on background and name. But it is perhaps also due to newcomers not having networks and informal contacts. They never come up as possible candidates in the recruitment process.”

Another area IFAU has studied that affects migrants’ chances in the labour market is matching. Studies have shown that when the Public Employment Service’s administrators have had a chance to work for a long time with a smallish group of jobseekers, this, combined with wage subsidies, has very good effects. This is true even for groups that are very detached from the labour market. Would it be possible to scale up this kind of matching to tens of thousands of people and still maintain quality?

“We don’t know. But the fundamental lesson is that increasing the exposure of migrants this way can be expected to have positive effects. Especially if we remember Sweden’s skills supply needs in the years ahead.”

Henrik Möller



Migrants’ road to work

The independent committee Delmi, the Migration Studies Delegation, also initiates studies and disseminates research results in the migration area. In the Pathway to Work project, researchers identify five factors that can help explain the substantial differences in labour market participation:

  • Reason for immigration – people in need of protection and their family members have had more difficulty finding work than labour immigrants
  • Human capital – people born abroad have limited Swedish working life experience and a poorer knowledge of the Swedish language
  • Social networks – people born abroad have fewer informal contacts in the labour market than those born in Sweden
  • Thresholds to the labour market – inadequate access to simple jobs and high starting salaries can make it harder for both young people and people born abroad to enter the labour market.
  • Diskrimination – large groups of people born abroad are discriminated against when they seek work.

The IFAU research institute

The Institute for Evaluation of Labour Market and Education Policy (IFAU) is a research institute under the Ministry of Employment based in Uppsala. The Institute was established in response to the financial crisis at the beginning of the 1990s and the high unemployment in its wake. Its mission includes evaluating the effects of labour market policies, how the labour market works, the effects of various reforms and measures in the educational system, and labour market effects of social insurance.

21 June 2018