Jobs for immigrants: don’t blame discrimination

Immigrants' average earnings are well below those of native Swedes. But the differences have less to do with discrimination than with over-regulation, high taxes and high welfare, says Nima Sanandaji of think-tank Captus.

Is it more difficult to get a job in Sweden if you have a foreign name? A recently published report “Beyond ethnicity” (Swedish title: “Bortom etnicitet”), published by the Confederation of Swedish Enterprise, suggests that ethnicity does not play as big a role in the Swedish labour market as many assume.

For many years it has been an uncontested truth that the failure of Swedish society to integrate immigrants is due to employers discriminating against workers with foreign names.

But according to figures presented by the report’s author, Farbod Rezania, ethnicity does not play an important part when selecting people for jobs. Age, the level of education and the time spent in Sweden are factors that to a much greater extent influence the situation of immigrants in the labour market.

Rezania points to the fact that the number of immigrants with jobs has increased from 319,000 in 1993 to 436,000 in 2006. During this period the number of people working in Sweden increased by around 342,000, which means that a third of this increase was amongst immigrants.

Interestingly, the number of immigrants from other Nordic countries active in the Swedish labour market decreased during the period, which means that fully 40 percent of the net creation of employment benefited non-Nordic immigrants.

Rezania’s report supports the assertion that immigrants are being better integrated into society and the job market than they were before. It also shows that the problems that remain cannot be blamed entirely on prejudiced employers– the statistics simply do not support this simplistic view.

But still, the problems of failed integration in Sweden remain.

A report from the researchers Ekberg and Hammarstedt from 2002 shows that those with a foreign citizenship in 1968 had a 22 percent higher yearly income from work compared to native Swedes. In 1999 the corresponding figure was 45 percent lower – a decrease of totally 67 percentage points. Whilst racism has decreased dramatically as time has passed, the situation of those born abroad has worsened.

Another relevant statistic is that people born abroad in 2001 on average received more than seven times as much welfare support than those born in Sweden. Between 1993 and 2000, 37 percent of immigrants in Sweden with origins in the Middle East were part of households that had received welfare support, compared to only 3 percent of those born in Sweden and 5 percent of those born in other Nordic countries.

But if prejudiced employers are not the problem, what is?

The failure of Swedish society to integrate immigrants is a part of major political developments that have occurred during the past four decades. The expansion of Swedish welfare state since the 1960s has created a situation where the incentives to work have been reduced whilst the incentives to live off government handouts have increased. At the same time, a heavily regulated working market creates a situation where it is very difficult for immigrants to enter the labour market.

Employers are not to blame for the failed integration policies of Sweden, the problem has a more political nature. For Swedish integration to work we need to strive towards a free labour market, less generous welfare benefits and less punishing tax rates. Such reforms might not be popular, but are needed nonetheless.

Nima Sanandaji

Nima Sanandaji is chief executive of think-tank Captus