Research published in late 2002 finds that 'non-western' immigrants (ie those from outside Europe and North America) in Norway earn considerably less than 'native-born' employees. Although the income gap narrows over time, the income of some groups of immigrants, in particular those from Asia, remains 25% lower than that of indigenous employees.
Recent research has found that 'non-western' immigrants in Norway earns considerably less than 'native-born' employees, even after a long time in the labour market. The research also finds that the income of non-western immigrants is more vulnerable to cyclical developments such as increasing unemployment than that of native-born Norwegians, and that income differentials thus increase during periods of economic downturn and decrease in times of prosperity. The data stem from a comparative study carried out by the Frisch Centre (Stiftelsen Frischsenteret) and the Institute for Social Research (Institutt for samfunnsforskning, ISF). The main results of these studies have been summarised and published in an article by researchers Erling Barth, Bernt Bratsberg and Oddbjørn Raaum in the publication Søkelys på arbeidsmarkedet (volume 19).
Income situation for immigrants
The studies emphasise that the actual income of immigrants is determined by a variety of factors. These include 'assimilation effects', which relate to the degree to which immigrants are able to acquire the necessary qualifications, experience and positions/posts to succeed in the labour market. Although the immigrant population in Norway is a highly homogeneous group, its members share certain common characteristics with regard to their situation in the national labour market. They have to learn a new language and to gain an understanding of new social codes and cultural traits. Furthermore, many immigrants may also lack the required labour market skills, or their existing qualifications may not be adequate for employment in Norway. As such, most immigrants will earn less at their point of entry to the country, so the crucial question is whether they are able to improve their relative position as time goes by, or whether their income will remain permanently lower than for native Norwegians.
Although the new study confirms that all groups of immigrants improve their relative positions vis-à-vis the native population, the process of catching up and narrowing the income gap varies considerably between groups of immigrants. Overall, the gap between non-western immigrants and native-born Norwegians is 20%-30% for men and somewhat lower for women. For immigrants from the Organisation for Economic Cooperation and Development (OECD) countries, these differences are minor, and they achieve an income at the level of native-born Norwegians within a relatively short period of time. The 'catching up period' for male immigrants from Asia lasts for almost 15 years, after which the narrowing process comes to a halt, and after 25 years they are still earning 25% less than native-born Norwegians of the same age and with the same educational background. After 10 years, the income of eastern European men stalls at 25% below the indigenous level, while the income of African men remains 20% below the native-born level after 25 years. This may be contrasted with immigrants from the OECD countries, who are able to close the gap fully after 15 years of working and living in Norway.
Similar tendencies may be also found in relation to the income situation of immigrant women. The 'catching up rate' of Asian, African and South American women is significant in the first 10 years of employment, after which their income stabilises at around 10%-15% below that of native-born Norwegian women. However, the income of this latter group continue to increase well into their late 40s, and the wage gap thus continues to increase over time.
The impact of unemployment
The research emphasises the importance of macroeconomic developments and variations in unemployment, in particularly the unemployment rate at the local level, on the labour market participation rate of non-western immigrants and thus on their income situation. Increasing unemployment from the late 1980s until the mid-1990s is an important factor in explaining why non-western immigrants have experienced a weaker income growth, relatively speaking, than native-born Norwegians. Income differentials between immigrants and native-born Norwegians are greatest when unemployment is high, and fall when unemployment is low. The reason for this is that the employment situation of non-western immigrants is more vulnerable in times of high unemployment. Variations in the employment situation do not affect the income of native-born employees and employees from the OECD countries to the same degree as for other immigrants.
The impact of unemployment is sustained when looking at wage differences between cohorts of immigrants of the same origin. Those immigrants who arrived in the late 1960s and the 1970s stood a greater chance of acquiring a job and valuable work experience than those arriving during the late 1980s and the 1990s.
Norway and the USA - same trends, different outcomes
The researchers have also carried out a comparative study based on similar data from both Norway and the USA. The aim is to compare two countries representing different extremes with regard to their labour markets and immigration policy. The same trends in the income situation of immigrants are found in both Norway and USA. The income gap is at its highest at the point of entry (when immigrants first enter the country), and it is reduced as time goes by. However, the gap is smaller in the USA than in Norway. Furthermore, immigrants in both countries start catching up early on, but the 'catching up time' of immigrants in the US labour market is significantly shorter than in the Norwegian labour market. All this may seem puzzling, considering the relatively compressed wage structure in Norway and the relatively large wage differences that exist in the US labour market. In the study, the differences between the two countries are explained by three factors.
- it seems that immigrants to the USA on average possess higher qualifications than immigrants to Norway. This may possibly be explained by the relatively restrictive Norwegian attitude towards labour immigration. However, it may also be that immigrants with higher qualifications may choose to immigrate to the USA rather than a country like Norway;
- the USA is by nature a multicultural society, compared with the relatively homogenous Norwegian society, which may ease immigrant access into the labour market. In this regard, the researchers point to the fact that integration is eased by the fact that English is very much a universal language; and
- Norway's 'egalitarian' labour market system may be seen as being best suited for those already situated within the system, whereas the relatively flexible American labour market lends itself better to those coming from the outside.
Commentary
It takes time for immigrants to settle in the labour market, and there will thus always be an income gap between immigrants and native employees. As the research indicates, this income gap narrows as immigrants become more familiar with language, gain work experience and acquire knowledge about social and cultural codes in the labour market as well as in society at large. However, as the research reveals, both the income gap and 'assimilation effects' very much depend on job opportunities and cyclical macroeconomic developments. Non-western immigrants are more vulnerable to changes in unemployment rates, and failure to get access to the labour market prevents them from gaining valuable working experience and thus hampers income growth.
The research also illustrates that, although periods of unemployment (and economic slumps) have an adverse effect on the income of immigrants, there are also more permanent, structural features that contribute to keeping the income of immigrants well below that of native Norwegians. Employer reluctance, communication problems and/or negative attitudes towards immigrants are beyond doubt influential factors in determining whether or not immigrants will be recruited and their subsequent income. Studies based on income data will, for obvious reasons, not be able to take into account the effect of direct or indirect discrimination.
Wages and salaries are the main sources of income for most immigrants in Norway (as opposed to receiving social benefits). Most studies demonstrate that non-western immigrants experience higher unemployment rates and lower pay than indigenous Norwegians of the same age and with the same educational background. The labour market participation rate among 'non-western' immigrants (ie those from outside Europe and North America) in Norway is low compared with other groups, and there are indications to suggest that this is very much due to a general reluctance among employers to recruit people from such groups. Non-western immigrant workers have also to some degree a lower trade union density rate than indigenous workers in Norway (NO0111113F).
The Norwegian authorities, the social partners and organisations looking after the interests of immigrants are all concerned about the inadequate integration of non-western immigrants in the labour market. The government has also signalled increased efforts to combat discrimination in working life (NO0207101F). However, the success of these efforts may be doubted, given the recent increase in the unemployment rate in Norway (NO0212105F). In the event of further increases, immigrants will be hardest hit, which will serve to undermine any efforts taken by the national authorities. (Håvard Lismoen, FAFO Institute for Applied Social Science)