Foreign graduates earn less than Swedes: study

Foreign-born degree holders are paid less than their Swedish-born colleagues even when they have similar jobs, a new study shows.

Foreign graduates earn less than Swedes: study
The pay gap also varies between different professions. Photo: Fredrik Sandberg/TT

Professionals born in countries not in the EU or North America lag furthest behind. In the private sector they earn 15 percent less than those born in Sweden to Swedish parents, according to a study looking at members of the Swedish Confederation of Professional Associations (Saco), which represents university graduates on the job market.

Even when contributing factors such as gender, age, job or position are taken into account, a -8.1 percent “unexplained pay gap” remains, claims the study. For degree holders from the EU or North America there is a -3.2 percent unexplained pay gap in the private sector between them and Swedish-born graduates.

“Considering that we studied a group of foreign-born people with a strong position in the Swedish labour market, graduates with highly qualified jobs, I did not expect to see as big differences as this when it came to those born outside the EU and North America,” Saco researcher Josefin Edström told The Local.

The public sector gap is somewhat smaller: -5.5 percent for those employed by county authorities (landsting), -4.4 percent for municipalities (kommuner) and -3.4 percent for the state, according to Saco's report.

READ ALSO: Education doesn't always pay in Sweden, study suggests

The pay gap also varies between different professions. For example, foreign-born economics or finance graduates not from the EU or North America earn 10.2 percent less in the private sector after factoring in gender, age and so on, while there's almost no gap between foreign and native doctors in the public sector.

The situation for foreign workers on the Swedish labour market is a hotly debated issue, and several organizations and lobby groups have urged employers to drop the need for perfect Swedish when filling jobs. Many have also argued that immigrants are discriminated against when applying for jobs or higher wages. 

READ ALSO: Foreign degree holders face language hurdle

Doctors from outside the EU earn almost the same as Swedish doctors. Photo: Henrik Montgomery/TT

“Unexplained pay gaps can, as the expression suggests, not be explained. It's not the same as being unfair or caused by discrimination. It could be due to other factors that affect your salary that we do not have any information about,” said Edström.

“At the same time, the major differences in pay we're seeing in the private sector for people born in other parts of the world suggests that their salary is not based solely on knowledge and competence.”

But she said that even differences in pay that can be explained “do not mean these differences are unproblematic”. For example, the study also found that fewer foreigners than Swedes hold managerial positions, which Edström said could suggest a “glass ceiling” for foreigners climbing the career ladder.

“Trade unions and employers need to work actively to create a skills-based recruitment process. Knowledge and competence should determine your chances of getting a job and how much you get paid – not your country of birth or the country where you got your education.”

She urged unions and businesses to review their criteria for determining staff salaries.

“If there are criteria that are clear fika table qualifications – for example being sociable, flexible and speaking perfect Swedish – they should obviously not be included when you get paid for how well you have carried out your work,” said Edström.

READ ALSO: 'Why it's time for Sweden to fully accept English in the workplace'

For members


Reader question: When am I eligible for a Swedish pension?

A reader got in touch to ask how long he had to work in Sweden before he was eligible for a pension. Here are Sweden's pension rules, and how you can get your pension when the time comes.

Reader question: When am I eligible for a Swedish pension?

The Swedish pension is part of the country’s social insurance system, and it can seem like a confusing beast at times. The good news is that if you’re living and working here, you’ll almost certainly be earning towards a pension, and you’ll be able to get that money even if you move elsewhere before retirement.

You will start earning your Swedish general pension, or allmän pension, once you’ve earned over 20,431 kronor in a single year, and – for almost all kinds of pension in Sweden – there is no time limit on how long you must have lived in Sweden before you are eligible.

The exception is the minimum guarantee pension, or garantipension, which you can receive whether you’ve worked or not. To be eligible at all for this, you need to have lived in Sweden for a period of at least three years before you are 65 years old. 

“There’s a limit, but it’s a money limit,” Johan Andersson, press secretary at the Swedish Pension Agency told The Local about the general pension. “When you reach the point that you start paying tax, you start paying into your pension.”

“But you have to apply for your pension, make sure you get in touch with us when you want to start receiving it,” he said.

Here’s our in-depth guide on how you can maximise your Swedish pension, even if you’re only planning on staying in Sweden short-term.

Those who spend only a few years working in Sweden will earn a much smaller pension than people who work here for their whole lives, but they are still entitled to something – people who have worked in Sweden will keep their income pension, premium pension, supplementary pension and occupational pension that they have earned in Sweden, even if they move to another country. The pension is paid no matter where in the world you live, but must be applied for – it is not automatically paid out at retirement age.

If you retire in the EU/EEA, or another country with which Sweden has a pension agreement, you just need to apply to the pension authority in your country of residence in order to start drawing your Swedish pension. If you live in a different country, you should contact the Swedish Pensions Agency for advice on accessing your pension, which is done by filling out a form (look for the form called Ansök om allmän pension – om du är bosatt utanför Sverige).

The agency recommends beginning the application process at least three months before you plan to take the pension, and ideally six months beforehand if you live abroad. It’s possible to have the pension paid into either a Swedish bank account or an account outside Sweden.

A guarantee pension – for those who live on a low income or no income while in Sweden – can be paid to those living in Sweden, an EU/EEA country, Switzerland or, in some cases, Canada. This is the only Swedish pension which is affected by how long you’ve lived in Sweden – you can only receive it if you’ve lived in the country for at least three years before the age of 65.

“The guarantee pension is residence based,” Andersson said. “But it’s lower if you haven’t lived in Sweden for at least 40 years. You are eligible for it after living in Sweden for only three years, but it won’t be that much.”