Immigrants Earning Less Than Native Workers: Assessment of Overqualified Individuals Receiving Lower Salaries
In a groundbreaking study, researchers Marta M. Elvira, Are Skeie Hermansen, and Andrew Penner have proposed a series of measures to address the pay gap between immigrants and native workers across Europe. The study, which analysed the salaries of 13.5 million workers across nine countries between 2016 and 2019, found that immigrants from Europe, North America, and other Western countries experience an average pay difference of just 9%.
The researchers suggest that these measures could help close the pay gap, which currently averages around 19.6% for first-generation immigrants in Germany and similarly high in Spain and Canada. The key interventions include language training and support programs, recognition of foreign qualifications, job training and job search assistance programs, improved access to domestic education, and legal and policy reforms to facilitate the hiring of skilled immigrants.
Language training is crucial for accessing better positions, as it helps immigrants communicate effectively with employers and colleagues. Recognition of foreign qualifications prevents overqualification and allows immigrants to work in jobs that match their skills and education. Job training and job search assistance programs directly connect immigrants with employers and help build professional networks, while improved access to domestic education enhances immigrants' qualifications in the host country's labor market.
Legal and policy reforms are also essential. Germany's 2024 Skilled Immigration Act, for example, enables foreign graduates to work while their degrees are being formally recognised. France has reformed its "Carte Talent" permit to attract skilled foreign professionals, addressing labour shortages, particularly in healthcare.
These interventions aim to reduce both within-job pay disparities (currently small) and the segregation of immigrants into lower-paid sectors and jobs, which explains the majority of the wage gap. Improving access to higher-paying jobs could narrow the wage gap, as seen in Sweden, where the pay gap is just 7%, a country where many employed immigrants find work in the public sector.
The study also highlights the issue of job-level segregation and its impact on immigrant integration into the European workforce. In 2023, 39.4% of non-EU citizens were overqualified for the jobs they were in, according to the latest Eurostat figures. Three-quarters of the pay gap is due to a lack of access to higher-paying jobs, while one-quarter is due to pay differences in the same job.
The highest average overall pay gaps are for immigrants from sub-Saharan Africa (26.1%) and the Middle East and North Africa (23.7%). In Spain, the pay gap is over 29%, the highest among the seven European countries analysed.
The researchers stress that these policies are not just about fairness but also about productivity gains, higher tax revenue, and reduced inequality. Improving social mobility could raise the Gross Domestic Product (GDP) of European countries by 3% to 9% and close the skills gap expected by 2030 without needing new training or reskilling, according to a McKinsey study.
In conclusion, addressing pay disparities requires a multi-faceted approach targeting structural access issues, qualification recognition, skills enhancement, and legal support for immigrant employment pathways across Europe. The researchers emphasise that "smart immigration policy doesn't end at the border - it starts there."
Education and self-development are vital components in reducing pay disparities for immigrants. Language training, recognition of foreign qualifications, job training programs, improved access to domestic education, and legal and policy reforms can help immigrants enhance their qualifications and integrate them into the host country's labor market, thus narrowing the wage gap.
