Sweden s recent experience of international migration - issues and studies

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1 Session 2: Social coàhesion, diversity and inequality Björn Gustafsson October 2001 Sweden s recent experience of international migration - issues and studies Abstract When Sweden entered the new millennium the foreign born population numbered slightly more than one million persons. This corresponds to 11 percent of the total population, higher than that observed in many other industrialised countries. Most immigrants to Sweden who arrived during the 50s and the 60s entered as work migrants or as their relatives. Most often they had not travelled very far. However, since the mid 70s refugees and their relatives came to make up a larger proportion of the new arrivals, many originating from countries outside Europe. During this period when country of origin changed, the labour market situation of foreign-born people deteriorated. This development continued when at the beginning of the 90s the Swedish economy went into its deepest recession for many decades. Since some time is joblessness among many groups of immigrants extensive and the social situation of immigrants has become a critical issue in Sweden. In this paper we will describe the flows of immigrants to Sweden and the composition of the immigrant population at the end of the 90s. We will also describe the changed labour market situation of various groups as well as research on the issues. The emphasis will be on the recent experience and on economic research. Such research has come to concentrate on questions of the labour market situation among immigrants and the literature has grown rapidly. Studying immigrants in the Swedish labour market, their receipt of transfer payments, effects on the public sector budget as well as the factors affecting migration flows have 1

2 turned into a lively field of research. There is a great demand for such knowledge outside the academic community. Empirical researchers in this field have been able to work successfully because of relevant micro data being more readily available than in most other countries and because of the rapid development of econometric technique. The problem studied has changed character since World War II. Most foreigners who arrived to Sweden during the 50s and 60 came as labour migrants (many having a job upon arrival), or as relatives to such migrants. This has changed and most people who arrived to Sweden during the 80s and 90s were refugees or relatives to refugees. While there are some grounds in deeming the earlier waves of immigration a success, this is not the case for later flows. In the 90s, a general perception has spread among the public as well as among policymakers that there is a vast immigrant problem. The immigrant problem as it is manifested in the beginning of 21st century originates from foreign born in work active ages are on average not employed to the same extent as natives. There are also similar problems for members of the second generation, many of whom are growing up in segregated residential areas. For immigrants, the difficulties of finding jobs means a lower living standard than natives. An higher proportion of recent immigrants than natives are poor and many depend on social assistance. Rates of early retirement are high among immigrants who have resided in Sweden for more than two decades. There are thus grounds for immigrants to be dissatisfied with the situation. Natives are just as dissatisfied. Nowadays, relatively large expenditures for transfers to immigrants and relatively small payments of income taxes makes the average immigrant a burden to the public sector, thus costly for the native population. This is a marked change from the situation some decades ago. An important lesson from the research summarised in the paper is that although there are substantial differences between immigrants and natives in Sweden, there are also greater differences between immigrants from different countries. People who originate from the 2

3 other Nordic countries or from several countries in Europe perform relatively well in the Swedish labour market. Many such immigrants are well-integrated into Swedish society, they have resided in Sweden for many years and they are not visibly different from natives. Many such immigrants came for labour market reasons, and realistically many return to their countries of origin in the future. The opposite case is made up of people who recently arrived as refugees or as relatives of refugees from countries in the Middle East, Bosnia - Herzegovina and from countries in the north-east of Africa. Most of these immigrants are visibly different from the native population and many have had difficulties finding a job in Sweden. Returning to the country of origin is not a realistic option for many of those immigrants. It is among such immigrants that dependence on governmental programmes is high, and much of the present immigration debate concerns such immigrants. There is a consensus that the present situation is not acceptable. The issue is in which directions changes can and should be made. Let us identify some various areas for policy and comment on options that appear in the policy debate. One policy area is clearly the admission policy. Under which circumstances should a person be granted residency is the fundamental question for immigration policy in all countries. First of all, it should be restated that when it comes to granting admission to Sweden there is clear discrimination between accepting citizens in the European Union and Norway, and accepting all other citizens. It is the admission policy for the latter that is less difficult to change. This making of policy is made in the environment of the European union and the governments of the member states. Low employment-rates among recent immigrants can of course be avoided if Sweden only admits people who already have jobs. In the paper we discuss the fact that this is also most likely the reason why recent immigrants to Switzerland have not had the same employment problems as their counterparts in Sweden. However, as a solution to the labour market problem for immigrants to Sweden, not admitting any refugees at all will not help those who already are admitted. Further, such a move is hardly backed by 3

4 leading policymakers and most probably not by a majority of the electorate. There is a general belief that Sweden is rich enough to house people escaping from political oppression. The motivation for this part of the immigration policy thus has striking similarities with the motivation for development aid. However, a general commitment to a humanitarian immigration policy does not prevent policymakers from becoming more aware of its costs. It is probably true to say that such an increased awareness was an important reason for the criteria guiding admission becoming somewhat less generous during the 90s. As a consequence, fewer refugees received residency permits. There is also an increased awareness that refuge status could be granted temporarily. A second area important for the labour market outcome of immigrants, although often not discussed as an area for policy, is collective bargaining and other factors affecting wage structure and the relatively generous transfer systems. The latter makes it possible for recent immigrants to live at an income level lower than for natives, but nevertheless for several persons higher than in the country of origin. Permitting a separate labour market for immigrants in which their earnings are lower than for natives, or depriving immigrants of entitlements to transfer could theoretically be ways to lessen the problem of low employment among immigrants. However, such changes are most likely not supported by the Swedish population or by policymakers. The prevailing view among probably most Swedes is that immigrants should not be treated as second class citizens, they should have the same rights as natives and live under conditions similar to natives. The low employability of many immigrants at the wages prevailing in Sweden can nevertheless help to throw light on a phenomenon which many residents are fully aware of and often directly benefit from. Many immigrants, particularly people born outside Europe, are self-employed and thus not paid according to pay-scales decided in collective agreements. The self-employed immigrants are often found in the service sector or in retail, typically in small restaurants and shops. Many work long hours which makes it 4

5 possible to survive on a net profit which is meagre compared to the hours of work spent in the activity. Leaving pricing in the labour market, there are several ways by which the mismatch between employers and employees can be lessened by policymeasures. There are supply measures as well as measures affecting labour demand and we will consider them starting with the supply. Beginning with the formal qualifications of immigrants it can be noted that there is not much of an average gap in educational attainment between foreign-born and natives in Sweden. Increased formal education can thus hardly be a universal measure for increasing employment-rates for immigrants to Sweden but it can definitely play a role for some groups. Take immigrant women from Turkey who arrived during the 80s as an example. Most of them had an education shorter than what was compulsory for natives who entered the labour force during the same period. It is thus difficult not to see an improved formal education as a necessary requirement for those women to increase their employment in Sweden. Level of education is only one aspect of immigrants' qualifications. Education can have limited transferability from abroad to Sweden. There is also the issue of language proficiency. There seems to be a general perception among policymakers that immigrants to Sweden are best taught the ability to speak, read and write the Swedish language in classrooms financed by public funds. Knowledge of institutions, laws and customs guiding life in Sweden can also be taught in such ways. Nonetheless, there is also a general perception that although considerable amounts of resources have been put into such programmes, they have not always been successful. Alternatives are to learn specific Swedish skills at a work-place and there are also public programmes aiming to ease this. Most probably the debate on how resources for increasing adult immigrant skills be best used will continue in the future. 5

6 Among many observers, the demand side is given a prominent role in explaining the poor labour market performance of many recent immigrants to Sweden. How can it be possible to successfully prevent employers from discriminating against immigrants when immigrants apply for a job? Some argue that the law should be changed and enforcement be made stronger. There have also been voices asking for positive discrimination of immigrants. The argument against such proposals is that that it would be difficult to forcefully implement such legislation. Further, to positively discriminate immigrants might actually back-fire on popular opinion, increasing hostility against immigrants and should therefore best be avoided. To conclude, it seems safe to assume that a number of suggestions aimed to improve the labour market situation of immigrants in Sweden will be heard in the future. The problem is severe. One single measure will not solve it; several measures in combination will be necessary. 6