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2016-11-04 13:46:10
Too few refugees, not too many, are working in Europe
Nov 5th 2016 | STOCKHOLM
WHEN Ameen first arrived from Aleppo, he was thrilled to have made it to Sweden. Speaking as he takes a break from a protest near parliament, he says he thought there would be plenty of jobs. But none was available. Now that the government has made it harder for family members to join the refugees, some have taken to Stockholm s cobbled streets. The rules on asylum-seeking in Europe mean refugees like him have to stay in their country of arrival. If we could leave, many of us would, he says.
A big reason refugees cause alarm across Europe is the fear that they will steal jobs. But a more serious problem may be their joblessness. France, Germany and Norway all have big employment gaps between native- and foreign-born workers. But the gap is widest in the Netherlands and Sweden and these figures do not yet include the 163,000 asylum-seekers who arrived in Sweden last year (see chart).
In part, Sweden is a victim of its own generosity and success. No European country has a larger proportion of refugees in its population and in 2015 none welcomed a larger flow of asylum-seekers, proportionate to its population, than Sweden did. Employment rates for refugees are no lower than in most European countries, but the difference with Swedish-born workers is striking. Partly it is because many Swedish-born women work and Swedes are highly educated. Nevertheless, fears are mounting about the social impact of the two-tier labour market that is developing. Magnus Henrekson, an academic, fears further ghettoisation and alienation.
On the surface, Sweden has one of the least troubled labour markets in the world. The economy is growing, vacancies are plentiful, only 5% of 15-74-year-old native-born workers are jobless and the unemployment rate is falling. But foreign-born workers are three times as likely to be unemployed, and the ratio is rising. For those from outside the EU it is higher still (22.5% are unemployed). Hidden discrimination, housing problems and a Swedish reliance on informal networks help explain the gap. But many refugees simply lack the skills for Sweden s job market.
The issue is not unique to Sweden. In a report published in September, the OECD and UNHCR found that many employers do not see recruiting refugees as a business opportunity, but as a CSR (corporate social responsibility) issue. Large employers made a big fuss about providing apprenticeships and mentoring schemes, but few offer jobs. The obstacles employers cite include uncertainty about refugees qualifications and their right to work, sceptical public opinion, and worries that language barriers will mean lower productivity.
The concerns reflect changes in Sweden s employment market. Fewer than 5% of jobs are now low-skilled, requiring less than a high-school qualification, compared with 9% in Germany and 16% in Spain. Countries such as Greece and Italy have larger shadow economies, helping explain why refugees there have higher employment levels than natives. High-school diplomas are Sweden s biggest divider, says Anna Breman, chief economist at Swedbank. Nearly all Swedes have them, yet only half of new arrivals do, according to government statistics.
The paradox, says Thomas Liebig, from the OECD, is that Sweden has among the most advanced refugee-integration policies. A two-year programme is meant to make refugees job-ready , but is often too long for educated refugees and too short for those lacking basic literacy and numeracy. Only 22% of low-educated foreign-born men and 8% of women found work in the year after completing the programme. On average it takes seven to eight years for newcomers to find employment. According to a survey in 2014, across Europe it takes refugees and other beneficiaries of international protection 20 years to reach employment rates similar to natives. This contrasts with America, where research has shown that refugees find work faster than other immigrants, and even do better than economic migrants over time.
Highly educated migrants also lag behind their Swedish-born peers in finding work. The biggest difficulties are posed by the large group with few qualifications. The obvious way to help is to train them better, particularly the young. Around 70,000 of last year s arrivals were minors, half of them unaccompanied. But a large proportion of 15-24 year-olds, especially women, drop out of education or training.
Ms Breman thinks the real bottleneck in Sweden is that the lowest wages are so high. But cutting wages or lowering the minimum wage is impossible: powerful unions would object. So instead, successive governments have experimented with wage subsidies for certain sectors, such as restaurants, as well as tax credits, for example for house renovation. Supporters argue that such subsidies compensate employers for taking a risk and a (temporary) fall in productivity.
Worries about unemployed refugees have been masked by the recent strong performance of Sweden s economy ironically boosted by increased spending on refugees. (IKEA, a furniture chain, is reported to have run out of mattresses at one point.) But there is a growing realisation that Sweden and Europe as a whole cannot afford to delay reforms to ease the integration of refugees. The numbers now are simply too big.
Like most of Europe, Sweden s population is ageing. Educating and integrating young refugees could help plug gaps in the labour market. Failure to do so will exacerbate pressure on government spending and could lead to permanent exclusion and further polarisation. Europe is right to be worried about refugees and jobs albeit for the wrong reasons.