The Labour Market Integration of Refugees

As a result of the Syrian civil war and other conflicts, several million refugees have come to Europe in recent years, including some to Switzerland. Refugee numbers have fallen sharply since 2017, although are still above pre-2015 levels. Many refugees end up staying in Europe for a number of years, and some remain permanently.

The Joint Economic Forecast (Gemeinschaftsdiagnose), in which the KOF is involved, has considered how well refugees are integrated into the German labour market. The results are relevant for Switzerland as it is confronted with similar challenges.

The individual prospects for integration of refugees recently arriving in Germany are not as good as those of earlier cohorts. This is due, amongst other things, to their lower educational qualifications, the lengthy asylum process and the increased risk of suffering from post-traumatic stress disorder. Nonetheless, significant progress has been made in integrating the most recent refugee cohorts into the German labour market.

Refugees more widely involved in gainful activity

In the second half of 2017, 21% of refugees who had arrived since 2013 were involved in gainful activity. The equivalent percentage for the second half of 2016 had only been 9%. Whilst figures for 2018 are not yet available, there are up-to-date statistics for asylum seekers from the eight commonest countries of origin (Afghanistan, Eritrea, Iraq, Iran, Nigeria, Pakistan, Somalia and Syria). This group currently comprises around 1.2 million people, of whom around 32% were in work in January 2019 – up 7 percentage points on the previous year. By way of comparison, the proportion in work of all foreign nationals in Germany was 50% (+2.7 percentage points), whilst the figure for German nationals was 69% (+0.3 percentage points).

Unfortunately, no figures are available regarding the labour situation of people who arrived in Switzerland in 2013 as a result of the various conflicts. However, a rough comparison may be drawn based on figures from a 2014 study, which investigated the labour market integration of previous incoming refugees into Switzerland, drawing on data contained in official registers.

The study differentiates between so-called “recognised refugees”, i.e. people whose asylum application has been approved, and “provisionally accepted” refugees, i.e. people whose asylum application has been rejected, but who cannot be deported due for instance to armed conflict in their country of origin. Statistics indicate that, five years after their arrival in Switzerland, around one fifth of provisionally accepted refugees have a job. In 2014, around one third of recognised refugees were involved in gainful activity.

While these figures are similar to those for refugees arriving in Germany in 2013, the study focuses on people aged between 25 and 50 at the time of arrival, thus in their prime working age, which makes the results for Switzerland look better than they actually are. Overall, the labour market integration of refugees in Switzerland is low by international standards – despite a highly inclusive labour market in which other immigrant categories have high rates of employment.

It is likely that a major driver behind this has been the legal and regulatory barriers which refugees must overcome in order to be able to start working. The increases within the most recent asylum statistics of the labour market involvement of provisionally accepted and recognised refugees must therefore be welcomed. The State Secretariat for Migration has attributed this development, amongst other things, to the increased integration initiatives pursued by a number of state bodies.

Gross earnings half as high as other workers

In Germany, on the other hand, the currently relatively high labour market involvement at first glance is a sign of significant progress in the integration of refugees. However, there are significant differences compared to the rest of the population in terms of skill levels as well as the work performed. Around 50% of employees liable for social insurance from the eight commonest countries of origin for asylum seekers perform so-called auxiliary work (share of auxiliary workers out of total employment: 16%). Moreover, people from these countries work predominantly within a few service sectors such as the hotel and catering sector and staff leasing, which make up a very small share of total employment.

For example, 14% of employees liable for social insurance – and 40% of part-time workers – in the hotel and catering sector come from the countries in question. By contrast, this sector accounts for only 3% of total employees liable for social insurance, and for 13% of part-time workers. As a result of low skill levels, average gross monthly earnings of refugees in full-time work are just over half as high as the median earnings figure for all full-time workers.

The ongoing development of new technologies is set to increase the future challenges for the labour market integration of refugees from crisis and developing countries, and in general for the labour market integration of those with a low level of education. However, the labour market opportunities of these people are also dependent upon political decisions concerning the flexibility and permeability of the labour market as well as the adoption of suitable measures to stimulate the labour market.

KOF advises Swiss politicians with its evidence-based research. For example, in a project conducted with the Federal Department of Economic Affairs, Education and Research, it is currently investigating how the placement of potentially disadvantaged people by the regional employment agencies could be improved.