BRIEFING. Characteristics and Outcomes of Migrants in the UK Labour Market.

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1 BRIEFING Characteristics and Outcomes of Migrants in the UK Labour Market AUTHOR: CINZIA RIENZO PUBLISHED: 12/11/2014 NEXT UPDATE: 12/11/2015 3rd Revision

2 This briefing gives an overview of the key characteristics (age, education and occupation) and labour market outcomes (employment rates, unemployment rates, and wages) of migrants in the UK labour market. Key Points Migrant workers are, on average, slightly younger than workers. Nearly 38% of foreign-born workers were aged between 25 and 35 years old in 2013, while 25% of workers were in that age group. However, a higher percentage of workers are among the youngest (aged 16-24) and oldest (aged 46-55) demographic cohorts in the labour force than foreign-born workers. Since 1993, the employment rate for migrants has been lower than that of individuals. In recent years, the difference between migrant and employment rates has narrowed for men, but has stayed constant among women. On average, between 1993 and 2013 the unemployment rate of foreign-born people in the UK has been higher than that of people. Male migrants are concentrated in the two lowest paid occupational categories (elementary and processing occupations) and in one of the highest paid occupational categories (professional), while female migrants are more concentrated in the professional (e.g. nurses, engineering professionals, information technology and telecommunication, and health professionals), elementary (e.g. cleaners, kitchen and catering assistants), and personal service occupations. In 2013, nearly one in two recent migrants, defined as those born abroad who have spent fewer than 5 years in the UK, were in the highest educational category compared to one in four among the population. Since the late 1990s, migrants average hourly wages have exceeded those of workers. Understanding the evidence Most of the analysis in this briefing discusses data on foreign-born people. Whenever relevant, the analysis separates out recent migrants, defined as foreign-born people who have been living in the UK for 5 years or less. It is important to emphasise that the averages reported in this briefing often mask considerable variation among different groups of migrants. All data in this briefing paper are taken from the Labour Force Survey (LFS). The analysis focuses on individuals of working age (i.e years for men and years for women). Unless indicated otherwise, both fulltime and part-time workers are considered, while the inactive population (i.e. those not working or looking for work) is excluded. THE MIGRATION OBSERVATORY PAGE 2

3 workers are younger than workers workers tend to be younger than their counterparts (Figure 1). In 2013 the average age of a worker was 39 years compared to the foreign-born average age of 38 years. Nearly 38% of foreign-born workers were aged between 25 and 35 years old, while nearly 25% of workers were in that age group. However, a higher percentage of workers are among the youngest (aged 16-24) and oldest (aged 46-55) demographic cohorts in the labour force. From , the percentage of foreign-born workers increased in the year-old age group, and slightly decreased in the older group (aged 46 and over) in contrast to the workforce. Since 2009 this pattern has been less clear. The trends for foreign-born women are very similar to those for men, except that the percentage of men aged has always been slightly higher than that of women. About 75% of foreign-born workers who arrived in the UK between 2009 and 2013 are distributed in the two younger groups (17% in the age group and 58% in the age group). In contrast, the percentage of recent foreign-born workers in the older group is very small (less than 2%). Figure 1 40% Age distribution of workers 35% % in each age group 30% 25% 20% 15% 10% 5% 0% (16-24) (16-24) (25-35) (25-35) (36-46) (36-46) Age group (46-55) (46-55) Foreign born (56-64) UK born (56-64) Source: Labour Force Survey, Quarter 4 (October-December) Employment gap between foreign-born and men has been narrowing A key indicator of labour market outcomes is the employment rate measuring the share of the employed in the total working-age population. Historically, employment rates of the foreign-born have, on average, been lower than those of the (Aldin et al. 2010). From 1993 to 2007, the employment rates for both, male and female migrants, was lower than the corresponding rates for the (Figure 2). However, since 2008 the employment rates of male migrants (77% for 2013) has been similar to that of males (76% for 2013), while those of female migrants (60% for 2013) has remained lower than that of females (77% for 2013). THE MIGRATION OBSERVATORY PAGE 3

4 Figure 2 90 Employment rate of foreign-born and, Percentage Year male f emale male f emale Source : Labour Force Survey Employment rates vary between countries of origin: A8 migrants have higher employment rates The averages reported above mask significant variations in employment rates between different groups of migrants. In 2013 the employment rates of male workers from the A8 (88%), Australia (86%), India (84%), Bangladesh (83%), EU (80%), and America (79%) were higher than that of men (76%) (see Figure 3). In contrast, migrants from other Asian countries experience significantly lower employment rates than the UKborn. The differences are particularly large among women. Only female workers coming from Australia have higher employment rates than women. Female workers from the A8 countries have the same employment rate as those from the UK (71%). The employment rate of female workers from Bangladesh and Pakistan is about one third lower than that of women. Figure 3 100% Employment rate by country and region of birth, % Percentage 50% 25% 0% A8 EU America India Pakistan Bangladesh Other Asia Africa Australia UK Countries Men Women Source: Labour Force Survey, Q1-Q4, 2013 THE MIGRATION OBSERVATORY PAGE 4

5 Unemployment rates of the foreign-born have been higher than those of the The unemployment rate measures the share of the economically active population who are unemployed. The economically active population includes all people who are employed (i.e. employees or self-employed) and unemployed (i.e. without work, but currently available and seeking work). Since 1993, unemployment rates of foreign-born and workers have followed a similar trend, decreasing up to 2001 and slightly increasing afterwards (see Figure 4). Between 1993 and 2013, foreign-born workers (both male and female) experienced higher average unemployment rates than their counterparts. However, in 2009 and 2010 the unemployment rate of foreign-born workers (both male and female) converged with that of men, while increasing since 2011 for female foreign-born, and decreasing slightly in 2013 for men foreign-born. In contrast, women have a lower unemployment rate, though this has increased since There has been a rise in unemployment rates for foreign-born and workers (both male and female) during the current recession. Figure Unemployment rate of foreign-born and, Unemployment rate Year male f emale male f emale Source : Labour Force Survey, Q1-Q4 Occupational profiles There can sometimes be a mismatch between an individual s educational attainment and the skill level required for his or her job in the UK. Specific groups of foreign-born workers (e.g. recent migrants from the A8 countries) are known to be frequently employed in jobs that do not correspond with their education and skills. In 2013 greater shares of male migrants were employed in professional occupations (e.g. software professionals and health professionals) and in the two lowest paid occupations: elementary (e.g. cleaners, kitchen and catering assistants) and processing occupations (e.g. transport drivers, food, drink and tobacco process operators), compared to male workers (see Figure 5). About 28% of foreign-born male workers were employed in elementary and processing occupations compared to 20% of their counterparts. THE MIGRATION OBSERVATORY PAGE 5

6 Figure 5 25% Occupational distribution for male workers, % Percentage 15% 10% 5% 0% Managerial Professional Assistant professional Administrative Skilled trades Personal service Sales Processing Elementary occupation Occupations Source: Labour Force Survey Q1-Q4. Standard Occupational Classification (SOC 2000) The differences in occupational profiles between foreign-born and women (see Figure 6) are broadly similar to those of men. A greater share of female migrants is employed in professional, and at the low-skilled end in elementary and processing occupations. About 24% of the female migrants in the professional occupations are nurses and midwives. Figure 6 25% Occupational distribution for female workers, % Percentage 15% 10% 5% 0% Managerial Professional Assistant professional Administrative Skilled trades Personal service Sales Processing Elementary occupation Occupations Source: Labour Force Survey, Q1-Q4. Standard Occupational Classification 2000 THE MIGRATION OBSERVATORY PAGE 6

7 Compared with their counterparts, the foreign-born workforce has become more educated Based on the age at which individuals completed full-time education, between 1993 and 2013 there was an improvement in educational attainment for both foreign-born and workers (see Table 1). However, foreign-born men and women showed higher educational attainment than their counterparts during this period, with the educational attainment gap rising over time. Recently arrived foreign-born workers in particular have been more educated than both workers and all other migrants. In 2013, around 9% of recently arrived male foreign-born workers had only completed education up to 16 years of age, compared to 18% for all male foreign-born workers, and nearly 47% for men. In 2013, nearly one in two recent migrants was in the highest educational category compared to one in four workers. Table 1 - Education of foreign-born and workers in the UK Source: Labour Force Survey, Q1-Q4 Wages of migrants have been converging with those of the, but A8 migrants have lower wages Figure 7 plots the real hourly wage for foreign-born and men and women from 1993 to The analysis is limited to workers who are employees, both full-time and part-time, considering only their main job. To limit the effect of outliers, only observations with an hourly wage between one and a hundred pounds at 2013 levels are included. On average, women (both foreign-born and ) earn a lower hourly pay than men. For example in 2013 the real hourly wages for female and foreign-born were and respectively, while those for the male and foreign-born nearly converged being respectively and Female migrants hourly earnings were higher than those of women during the entire period under consideration. There has, however, been a trend of convergence. THE MIGRATION OBSERVATORY PAGE 7

8 Figure Real hourly wage for foreign-born &, Real hourly wage Year male f emale male f emale Source : Labour Force Survey,Q1-Q4 In contrast, men s wages have exceeded those of male migrants since This is likely to be a result of the higher share of A8 migrants who, being employed in lower skilled occupations, have been earning a lower hourly wage. In fact, although characterised by very high employment rates, workers from the A8 countries earn the lowest average wages among different groups of migrants considered (see Table 2) after workers from Bangladesh. Workers from Pakistan are also relatively poorly paid. On the other hand, workers from Australia have the highest hourly wage followed by workers from the EU, America, and India. The trends are similar for female migrants, though the differences with the female are less marked. Table 2 - Average hourly wage ( ) by country of birth, 2013 Source: Labour Force Survey, Q1-Q4 THE MIGRATION OBSERVATORY PAGE 8

9 All figures are based on both part-time and full-time workers; however, differences in labour market outcomes may arise when accounting for those in part-time or full-time jobs. For example, in 2013 a lower share of female migrants were in part-time jobs than their counterparts (37% and 43% respectively). Although on average there are fewer men in part-time jobs than women, in 2013 the percentage of foreign-born men in part-time jobs (16%) was higher than that of their counterparts (12%). In both cases this percentage is higher than in the past. Moreover, in % of migrant workers in part-time jobs were also full time students, while the percentage of working part-time and studying full time is slightly higher (12.7%). Evidence gaps and limitations The LFS is likely to underestimate the number of migrants in the UK. See the briefing on Migrants in the UK Labour Market: An Overview for further discussion and the data sources and limitations section of the Migration Observatory. The LFS includes two measures that classify educational attainment: age at which individuals completed fulltime education and highest qualification achieved. The latter measure is problematic because it is based on UK schooling, which means that using this variable to define foreign-born people s educational attainment may not classify them in their appropriate level of education. Following the existing literature, the age at which individuals left full-time education is used to compare the level of education of employed foreign-born and (Dustmann et al. 2013; Wadsworth 2010). Workers can be classified in three educational groups: completed education at 16 or under, between 17 and 20, and at 21 or older; the analysis in this briefing is based on this classification. References Aldin,V., D. James, and J. Wadsworth. The Changing Shares of Migrants Labour in Different Sectors and Occupations in the UK Economy: An Overview. In Who Needs Migrant Workers? Labour Shortage, Immigration and Public Policy, edited by Martin Ruhs and Bridget Anderson. Oxford:Oxford University Press, Dustmann C., T. Frattini, and I. Preston. The Effect of Immigration along the Wage Distribution. Review of Economic Studies 80, no. 1 (2013): Wadsworth, J. The UK Labour Market and Immigration. National Institute Economic Review No. 213 (2010): R35-R42. Further reading Dickens, R. and A. Mcknight. Assimilation of Migrants into the British Labour Market. CASE Working Paper no. 133, Centre for Analysis of Social Exclusion, London School of Economics, ac.uk/28244/1/casepaper133.pdf Lemos, S. and J. Portes. New Labour? The Impact of Migration from Central and Eastern Countries on the UK Labour Market. The B.E. Journal of Economic Analysis and Policy 14, no. 1 (2013): Manacorda M., A. Manning and J. Wadsworth. The Impact of Immigration on the Structure of Wages: Theory and Evidence from Britain. Journal of the European Economic Association 10, no 1 (2012): Related material Migration Observatory briefing: Migrants in the UK Labour Market: An Overview With thanks to Martin Ruhs, Carlos Vargas-Silva and Jonathan Wadsworth for comments and suggestions on an earlier version of this briefing. THE MIGRATION OBSERVATORY PAGE 9

10 The Migration Observatory Based at the Centre on Migration, Policy and Society (COMPAS) at the University of Oxford, the Migration Observatory provides independent, authoritative, evidence-based analysis of data on migration and migrants in the UK, to inform media, public and policy debates, and to generate high quality research on international migration and public policy issues. The Observatory s analysis involves experts from a wide range of disciplines and departments at the University of Oxford. COMPAS The Migration Observatory is based at the ESRC Centre on Migration, Policy and Society (COMPAS) at the University of Oxford. The mission of COMPAS is to conduct high quality research in order to develop theory and knowledge, inform policy-making and public debate, and engage users of research within the field of migration. About the authors Dr Cinzia Rienzo Research Associate, COMPAS Press contact Rob McNeil Head of Media and Communications + 44 (0) (0) Recommended citation Rienzo, Cinzia. Characteristics and Outcomes of Migrants in the UK Labour Market. Migration Observatory Briefing, COMPAS, University of Oxford, UK, November THE MIGRATION OBSERVATORY PAGE 10

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