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Youth Labor in TransitionInequalities, Mobility, and Policies in Europe$

Jacqueline O'Reilly, Janine Leschke, Renate Ortlieb, Martin Seeleib-Kaiser, and Paola Villa

Print publication date: 2018

Print ISBN-13: 9780190864798

Published to Oxford Scholarship Online: January 2019

DOI: 10.1093/oso/9780190864798.001.0001

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Europe’s promise for jobs?

Europe’s promise for jobs?

Labor market integration of young European Union migrant citizens in Germany and the United Kingdom

Chapter:
(p.419) 14 Europe’s promise for jobs?
Source:
Youth Labor in Transition
Author(s):

Thees F. Spreckelsen

Janine Leschke

Martin Seeleib-Kaiser

Publisher:
Oxford University Press
DOI:10.1093/oso/9780190864798.003.0014

Abstract and Keywords

This chapter examines the labor market integration of recent migrant youth from Central and Eastern Europe (EU8) countries, Bulgaria and Romania (EU2), Southern Europe, and the remaining European Union in the German and UK labor markets. The chapter measures levels of employment, income, marginal employment, fixed-term employment, (solo) self-employment, and the skills/qualification mismatch of each group compared to nationals before and after the financial crisis. Despite institutional differences, young EU citizens are well integrated into the respective labor markets (especially in the United Kingdom) in terms of employment rates. However, EU youth migrants’ qualitative labor market integration seems to mirror the existing stratification across regions of Europe: EU8 and EU2 citizens often work in precarious and nonstandard employment, youth from Southern Europe take a middle position, and youth from the remaining EU countries do as well or better on several indicators compared to their native peers.

Keywords:   migration, employment, self-employment, skills, income, financial crisis, youth, European Union, nonstandard employment, stratification

14.1. Introduction

Migrant youth are faced with the double disadvantage of labor market entry and problems associated with assimilation and discrimination in the broad context of migrant life courses (Kogan et al. 2011, 75). In the words of Hooijer and Picot (2015, p. 5), “Migrants are by definition labour market entrants” (see also Kogan 2006). Although there is some literature on barriers to labor market integration for recent immigrants in general (Kogan 2006; Andrews, Clark, and Whittaker 2007; Clark and Lindley 2009; Demireva 2011; Altorjai 2013), little country-comparative evidence is available on the working conditions of recent young EU migrant workers. Also, to date, only a few studies have explicitly compared migrant citizens from different European Union (EU) countries of origin with regard to their labor market outcomes (Akgüç and Beblavý 2015; Höhne and Schulze Buschoff 2015; Recchi 2015) while simultaneously taking into account the different institutional contexts in the countries of destination.

Against this backdrop, this chapter focuses on the quantitative and qualitative labor market integration of recent young EU migrant citizens1 from Central and Eastern Europe (CEE, EU8),2 Romania and Bulgaria (EU2), and Southern European countries (South-EU),3 who are living in Germany and the United Kingdom.4 To contextualize our analysis, results are also presented for (p.420) the old EU member states (EU-Rest)5 and for third-country nationals (TCNs). Quantitative labor market integration is captured by examining the levels of employment of each group compared to nationals. Qualitative labor market integration is captured by comparing income, forms of nonstandard employment, and particularly marginal, fixed-term, and (solo) self-employment, as well as skills/qualification mismatch of each group against nationals. Germany and the United Kingdom were selected as destinations because these two countries not only have very different labor markets and welfare regimes but also are major destination countries for intra-EU migration (Galgóczi and Leschke 2015). A comparison between the two countries is of special interest given that intra-EU migration—in contrast to the openness of the British labor market in the past—was one of the key issues in the debate leading up to the 2016 Brexit referendum in the United Kingdom, whereas major European politicians, such as the German chancellor Angela Merkel, are outspoken advocates of freedom of movement.

On the basis of the quantitative and qualitative labor market indicators outlined previously, this chapter addresses the following research questions: How well are recent young migrants integrated in the labor market relative to their peers in the respective destination countries? Does the degree of labor market integration reflect structural differences between the regions of origin (in particular, CEE and Southern European countries) and macroeconomic changes caused by the economic crisis after 2008? Is there evidence that quantitative and qualitative labor market integration of recent young EU migrants varies across welfare regimes?

The novelty of our research is its comparative perspective at the level of both country group of origin and destination countries. The analyses describe the situation in both Germany and the United Kingdom using—for the most part—proportions and means across the different migration groups. Furthermore, in line with the public debates reflecting on “migrants” as a holistic group, characteristics such as skill levels are not controlled for, nor are young EU citizens’ undoubtedly various motives for migrating (Verwiebe, Wiesböck, and Teitzer 2014) taken into account. Thus, this chapter investigates the aggregate differences between young nationals and the recent EU migrant population in Germany and the United Kingdom, with a focus on the precrisis and postcrisis periods, in order to provide an assessment of their situation.6

The following section briefly presents the economic and welfare-state context of the two receiving countries in order to formulate expectations with regard to the labor market integration of EU citizens. Section 14.3 presents the data, definitions, and measures. Section 14.4 contains the empirical results, focusing on forms of nonstandard employment, skills/qualification mismatches, and income. Finally, the discussion draws out commonalities and differences in relation to the region of origin and receiving countries.

(p.421) 14.2. Economic and welfare-state contexts

Young migrants face the same risks and challenges with regard to labor market integration as all young people, as well as those difficulties that are specific to migrants. Labor market “outsiderness”—inactivity, unemployment, low income, and low employment protection—is increasingly problematic for young people across Europe (Seeleib-Kaiser and Spreckelsen 2018), leading to a “new generation with higher exposure to systematic labor market risks” (Chung, Bekker, and Houwing 2012, 301). Youth vulnerability to labor market outsiderness is due in part to limited work experience, which impacts on the transition from education to employment (Brzinsky-Fay 2007; Schmelzer 2008). Early career insecurity is exacerbated by a prevalence of fixed-term contracts and “last-in, first-out” principles. In addition, the dualization literature (Emmenegger et al. 2012) has highlighted the risk of migrants becoming labor market outsiders who are exposed to (insecure) precarious employment and low wages (Standing 2009).

Access to the labor market by EU migrant citizens from EU8 countries has differed significantly between Germany and the United Kingdom. Whereas EU8 migrant citizens had more or less immediate access to the UK labor market after the accession of the CEE countries in 2004, Germany applied strict transition rules until 2011 (Fihel et al. 2015). Prior to the 2008–2009 economic crisis, and after 2012, the United Kingdom had strong economic pull factors for EU migrants—low unemployment, overall good economic performance, and a liberal regulatory regime coupled with language advantages. By contrast, weak economic growth and comparatively high unemployment rates made Germany less attractive up until the economic crisis. Nevertheless, long-term traditions of migration from CEE countries, including particular inflows for seasonal labor, the existence of migration networks, and geographic proximity, played important roles in attracting EU migrant workers to Germany (for details, see Kogan 2011). EU2 migrants were restricted from entering the German and the UK labor markets as employees for the maximum possible transition period of 7 years following the 2007 EU enlargement.

As a result of the asymmetric economic development within the EU after 2008, the growing German economy became much more attractive for intra-EU labor migrants, whereas the crisis had a dampening effect on the UK labor market. Given rising unemployment and a shift in migration policies (transitional measures for workers from Romania and Bulgaria and changes in benefit entitlements), the United Kingdom became comparatively less attractive during the crisis period (Tilly 2011). Hence, the labor market integration of migrants in Germany is likely to have improved over time, whereas an inverse trend might be visible in the United Kingdom. The impact of transition measures is expected to be visible in particular with regard to the share of (solo) self-employed migrant citizens in the economy because the freedom of establishment can be used to (p.422) “circumvent” employment restrictions (for more details on self-employment, see Ortlieb, Sheehan, and Masso, this volume).

Quantitative labor market integration of (young) EU migrant citizens might be easier in the United Kingdom than in Germany given the two countries’ different school-to-work transition regimes (Walther and Pohl 2005; Hadjivassiliou et al., this volume) and, in particular, the prevalence of general skills in the United Kingdom. Strongly institutionalized vocational education systems and a relatively strong reliance on specific skills, as found in Germany (Hall and Soskice 2001), can represent an entry barrier to migrant employment and might thus potentially also lead to more segmentation between nationals and migrants in qualitative labor market outcomes. Irrespective of institutional labor market and welfare-state differences (Esping-Andersen 1990; Hall and Soskice 2001; Hall 2007), both Germany and the United Kingdom have highly segmented labor markets, as evidenced in the low-wage sectors. Similarly, both countries have institutionalized job categories at the outer fringes of the labor market: “minijobs” in Germany and “zero-hours contracts” in the United Kingdom. In addition, trade union density has been declining substantially during recent decades in both countries. The German labor market is also segmented with regard to job security, partly as a result of strict employment protection for insiders, which differs significantly from the relatively low overall level of employment protection in the United Kingdom (Organization for Economic Co-operation and Development (OECD) 2013).

Empirical research by Fleischmann and Dronkers (2010) suggests that country-of-origin effects can be more significant for labor market integration than the nature and characteristics of the destination labor market. There are several reasons for potential differences in labor market integration by country or region of origin. Wage differentials between country of origin and destination country and differences in reservation wages might be a result of much lower (exportable) unemployment benefits. As Bruzelius, Reinprecht, and Seeleib-Kaiser (2016) have shown, the exportable weekly unemployment benefit of an ideal-typical unemployed Romanian worker moving to another EU member state is approximately €27/$32, compared to the benefit of €228/$267 for an unemployed German worker. Low exportable benefits are likely to expose migrants from CEE countries and Southern Europe to precarious work. Compared to migrants from EU-Rest countries, they might thus also be more likely to take up jobs below their skill levels or that do not reflect their formal qualifications, leading to qualification and skill mismatches (McGuinness, Bergin, and Whelan, this volume). This problem will be even more pronounced for youth migrants, given that young people typically are less often eligible for unemployment benefits compared to adults because of insufficient contribution records (Leschke and Finn, this volume).

Overall, our expectation is to find a clear stratification of labor market integration by EU migrant citizens’ region of origin as a result of differences in (p.423) reservation wages and variations in the application of transition measures. We expect to find less labor market integration overall and more segmentation compared to nationals in Germany than in the United Kingdom. This would reflect the stronger reliance of the German labor market on specific compared to general skills and the recent precarization and dualization trends (Lehndorff 2015), which indeed are also found in the United Kingdom (Leschke and Keune 2008). We expect

  • a segmentation of labor market integration by region of origin in terms of employment (quantitative integration), income, and quality of jobs (qualitative integration), with potentially more segmentation in Germany;

  • higher rates of solo self-employment of EU8 and EU2 migrants in Germany and of EU2 migrants in the United Kingdom as a result of institutional and transition arrangements; and

  • improving quantitative and qualitative labor market integration of EU youth migrants over time in Germany, with an inverse trend in the United Kingdom because of economic developments.

14.3. Data, definitions, and measures

In our analysis, we define youth as young people aged 20–34 years. As a consequence of data restrictions, migrants are identified slightly differently between the United Kingdom and Germany.7 This chapter studies recent migrants, specifically those who arrived in the respective receiving country within the previous 5 years (Rienzo 2013). The region-of-origin effects regarding EU migrant citizens are best studied among those who have arrived recently because after 5 years of residence, EU migrant citizens have the same social rights as nationals, irrespective of their economic activity or economic status. Moreover, more established migrants might have already caught up with or assimilated with their national peers.

The analyses utilized the German Microcensus8 and the UK Quarterly Labour Force Survey (UK-LFS),9 both of which are the national inputs to the European Labour Force Survey (EU-LFS), rendering them relatively comparable in terms of sampling and indicators. However, the UK-LFS has been known to underestimate migrant populations (Martí and Ródenas 2007; Longhi and Rokicka 2012). The same is likely to be true for the German Microcensus because the questionnaire is only available in German (with translation assistance into English for the interviewers).10 Because of the sampling design, both data sets largely exclude short-term migrants (e.g., seasonal workers) and cross-border or posted workers. Furthermore, the numbers for youth migrant workers are comparatively small, (p.424) particularly when broken down by region of origin. Consequently, the data were pooled across waves to increase estimation samples and reliability. The results are provided with confidence intervals reflecting often small case numbers.11

The chapter combines data for 2004–2009 and 2010–2014 for the United Kingdom and for 2005–2008 and 2009–2012 for Germany so as to assess differences between the precrisis and crisis periods. Proportions and means were estimated for national youth and EU migrant citizen youth using the standard weights from the Microcensus and the UK-LFS. These account for nonresponse and adjust for demographic factors, namely age, nationality, and gender.

Table 14.1 summarizes the dimensions of labor market integration and their corresponding indicators in the German and UK data. Comparable measures and international standard classifications were used. Thus, employment is operationalized according to the International Labour Organization convention.12 (p.425)

Table 14.1 Measuring dimensions of labor market integration

Germany

United Kingdom

Quantitative integration

Employment, unemployment, inactivity

ILO

ILO

Qualitative integration

Marginal employment

Minijobs (earnings < €400/approx. $470)

Gross hourly wages at or below the national minimum wage according to age groupa

Fixed-term employment

Employees only

Employees only

(Solo) self-employment

Self-employed without employees

Self-employed without employees

Skill/qualification mismatch

Mean ISEIb score for skill level (low, medium, and high: ISCEDc)

Mean ISEI score by origin of education (school, work-related, and university)

Income

Net hourly income (broad: including social benefits) adjusted for inflation (CPI)—only persons whose main source of income is employment

Net hourly income (pay)d adjusted for inflation (CPI)

(a) UK minimum wage limits differed over time: prior to 2010, the minimum wage increased at age 18 years and at age 22 years; subsequent to 2010, the age thresholds were 18 and 21 years, with a lower minimum for apprentices (GOV.UK 2016b).

(b) International Socio-Economic Index of Occupational Status (ISEI; Ganzeboom and Treiman 2003), calculated using syntax from the GESIS Institute (http://193.175.238.45/missy-qa/de/materials/MZ/tools/isei); for a critical account of the ISEI measure, see Schimpl-Neimanns (2004).

(c) The International Standard Classification of Education (ISCED) was created using routines available at GESIS (Lechert, Schroedter, and Lüttinger 2006).

(d) Proportions estimated using a zero-inflated Poisson regression, adjusted for illness/absence in reference week (United Kingdom only).

CPI, consumer price index; ILO, International Labour Organization.

Marginal employment is the key dimension that was conceptualized differently in the two countries. Marginal employment in Germany is characterized by the prevalence and recent increase of so-called “minijobs.” Minijobs pay a maximum monthly wage of €450/$525 (€400/$470 until 2013) and are, in principle, exempt from social insurance contributions (Voss and Weinkopf 2012). These low-paying jobs are often topped up with in-work benefits (Bruckmeier et al. 2015)—similar to tax credits in the United Kingdom and United States. They are of particular relevance given the absence of a statutory minimum wage in Germany until 2015. In the United Kingdom, marginal employment was measured as employment at or below the national minimum wage. Temporary employment was operationalized as employees being on fixed-term contracts.

Self-employment can be very heterogeneous, taking place at both the high end and the low end of the labor market (Ortlieb and Weiss 2015), whereby self-employed workers without employees (solo self-employed) have worse labor market outcomes than do self-employed with employees. Self-employed workers in Germany, unlike the United Kingdom, are not obliged to contribute to social insurance. Hence, self-employed workers with comparatively low earnings are likely to have insufficient social insurance coverage (Schulze Buschoff and Protsch 2008).

Qualification mismatch and skill mismatch were assessed by comparing the average occupational status for a qualification (skill level) among natives against the corresponding status for the same qualification (skill level) among migrants (see Section 14.4.3.2 for an explanation of the distinction between the two types of mismatch). Although this is a fairly standard way of comparing skills–occupation mismatch, such a relative measure has the disadvantage that immigrants may be clustered in specific immigrant occupation niches (Joassart-Marcelli 2014), which could potentially distort the results. In this regard, subjective measures on qualification mismatch would be more appropriate, but they are not available in the context of the research presented here. Income was measured somewhat differently in Germany and the United Kingdom. In both countries, net hourly income is analyzed; however, in Germany this refers to income including social benefits and is only recorded for persons whose main source of income is employment. By contrast, income in the United Kingdom refers to pay from employment only, which in principle will exclude all benefits because even (Working or Child) Tax Credits are paid directly to claimants (GOV.UK 2016a). However, the respective survey question does not explicitly exclude other income. Income is adjusted for inflation using the respective country’s consumer price index (Destatis 2016; Office of National Statistics 2015b).

14.4. Results

14.4.1. Demographic Characteristics of Young European Union Migrant Citizens

In Germany and the United Kingdom, EU migrant citizens, especially those from EU8 and EU2 countries, increased as a share of all recent migrants from (p.426) pre- to postcrisis (for details, see Leschke et al. 2016). Notably, and despite the economic crisis, we observe no relative increase for Southern European migrant citizens in the United Kingdom compared to the precrisis period. A relative increase can be observed for this group for the entire period in Germany, as well as a steep absolute increase since the crisis (Destatis 2012).

Recent EU migrant citizens in Germany and the United Kingdom are predominantly young, aged 20–34 years (Table 14.2). In Germany, gender proportions differ considerably across migrant groups, with relatively more female CEE youth and fewer female EU-South and EU-Rest youth. Gender proportions seem similar among youth migrant groups in the United Kingdom, except for fewer females among EU-South youth. Postcrisis, more young migrant citizens are students in Germany (13%–30%) than in the United Kingdom (9%–23%).

Table 14.2 Demographics of recent migrants to Germany and the United Kingdom, precrisis and postcrisis periods

Destination

Region of origin

Youth, % (aged 20–34 years)

Females, % (of youth migrants)

Students, % (of youth migrants)

Precrisis

Postcrisis

Precrisis

Postcrisis

Precrisis

Postcrisis

Germany

CEE (EU8)

72.5

65.0

67.4

58.4

18.1

12.8

Bulgaria/Romania (EU2)

52.4

52.9

66.0

50.2

36.1

19.0

EU-South

66.9

63.5

46.3

43.0

24.2

29.8

EU-Rest

67.0

58.2

48.5

45.4

24.2

26.5

Third country (TCN)

68.7

71.4

53.7

54.7

25.2

28.7

United Kingdom

CEE (EU8)

70.0

60.7

46.2

51.3

12.4

8.6

Bulgaria/Romania (EU2)

68.7

67.1

50.1

51.1

17.7

14.9

EU-South

63.3

61.6

53.4

44.0

17.7

14.3

EU-Rest

53.3

53.2

50.4

55.8

15.9

14.3

Third country (TCN)

55.9

57.4

49.4

50.3

24.0

23.1

CEE, Central and Eastern Europe; TCN, third-country nationals.

Sources: Pooled German Microcensus (2005–2012) and pooled UK-LFS Survey (2004–2014).

14.4.2. Quantitative Labor Market Integration: Economic Activity

Figure 14.1 records the employment, unemployment, and inactivity levels of young EU migrant citizens. Overall, they are well integrated compared to TCNs, and several groups have improved their status over time. In the United Kingdom, CEE migrants have higher employment rates compared to their native peers, whereas in Germany they have lower employment rates, which, however, have increased from pre- to postcrisis. This result is consistent with a labor demand argument, given the comparatively robust economic growth in Germany, the gradual opening up of the labor market in particular for qualified CEE migrants, and the end of transition measures for CEE nationals in 2011. The different proportions of youth in the respective employment statuses reflect the different shares of students among the migrant groups (e.g., larger proportions of students correspond to higher proportions of inactive youth because the inactive status is defined as including students; see Table 14.2).

Europe’s promise for jobs?Labor market integration of young European Union migrant citizens in Germany and the United Kingdom

Figure 14.1 Employment status of recent youth migrants compared to nationals (Germany/United Kingdom, precrisis/postcrisis periods). Weighted estimates adjusted for sampling design.

Source: Pooled German Microcensus (2005–2012) and pooled UK-LFS (2004–2014).

14.4.3. Qualitative Labor Market Integration: Prevalence of Nonstandard Employment

Despite finding (relatively) positive quantitative employment integration levels, particularly in the postcrisis period, the results presented here demonstrate significant shortcomings in the quality of employment. Quality of employment is gauged by the prevalence of nonstandard employment, skills–occupation and qualification–occupation mismatch, and wages. Forms of nonstandard employment are reported separately; however, they tend to overlap and often correlate with low wages (Leschke 2015; on youth labor market outsiderness, see Seeleib-Kaiser and Spreckelsen 2018). (p.427)

(p.428) 14.4.3.1. Nonstandard Employment

In both countries, the results (Figure 14.2) show higher fixed-term employment levels among all migrant groups compared to their native peers, with larger differences in Germany, partially reflecting the weaker overall employment protection in the United Kingdom (OECD 2013). The higher level of fixed-term (p.429) contracts very likely reflects the labor market entrant status of recent migrants, irrespective of the host country. German nationals (postcrisis) have the longest fixed-term contracts and cite “being in education or training” as the main reason, whereas CEE nationals frequently mention probation periods (Leschke et al. 2016, Table 4a). CEE and EU-South nationals state “not finding a permanent job” as the main reason for involuntary fixed-term employmentmore than other migrant groups and especially more than Germans (Leschke et al. 2016, Table 4a). Notably, one cannot discern consistent substantial changes in temporary employment from pre- to postcrisis.

Europe’s promise for jobs?Labor market integration of young European Union migrant citizens in Germany and the United Kingdom

Figure 14.2 Temporary employment of recent youth migrants compared to nationals (Germany/United Kingdom, precrisis/postcrisis periods). Weighted estimates adjusted for sampling design.

Source: Pooled German Microcensus (2005–2012) and pooled UK-LFS (2004–2014).

The proportions of solo self-employment (self-employed without an employee; Figure 14.3) attest strongly to the labor market impact of the post-enlargement transition regimes (Fihel et al. 2015). Restrictions on the freedom of movement of labor applied to EU8 and EU2 migrants in Germany and to EU2 migrants in the United Kingdom. Consequently, EU migrant citizens from these countries were able to use the freedom of establishment to gain access to the labor market on the basis of self-employment (with some sectoral restrictions in place for Germany, including construction and commercial cleaning), which led to higher shares of solo self-employed EU8 and EU2 youth in Germany and to significantly higher solo self-employment among EU2 youth migrant citizens in the United Kingdom. These proportions declined slightly in Germany for EU8 nationals in the postcrisis period when transition measures were phased out. (p.430)

Europe’s promise for jobs?Labor market integration of young European Union migrant citizens in Germany and the United Kingdom

Figure 14.3 Solo self-employment (i.e., self-employed without employees) of recent youth migrants compared to nationals (Germany/United Kingdom, precrisis/postcrisis periods). Weighted estimates adjusted for sampling design.

Source: Pooled German Microcensus (2005–2012) and pooled UK-LFS (2004–2014).

In addition to solo self-employment, it seems pertinent to analyze marginal employment. In Germany, youth from EU8, EU2, and Southern European countries have higher shares in minijobs compared to natives. Nationals from the EU-Rest countries have the lowest and TCNs the highest shares in this form of employment (Figure 14.4).13

Europe’s promise for jobs?Labor market integration of young European Union migrant citizens in Germany and the United Kingdom

Figure 14.4 Share of minijobs among employed recent youth migrants compared to nationals (Germany, postcrisis period). * Maximuum pay <€450/$525, no social insurance contributions.

Source: Pooled German Microcensus (2009–2012).

Although the United Kingdom has a lower earnings limit for national insurance contributions, somewhat similar to German minijobs, employment at the national minimum wage constitutes the main form of marginal employment (more than 5% of all jobs).14 Youth from CEE are more likely to earn a minimum or below-minimum hourly wage compared to their United Kingdom peers. This also holds for EU2 but not for EU-South or EU-Rest youth. If anything, the latter have a lower share working at the minimum wage. Mirroring the German findings, a larger proportion of TCNs compared to nationals earn a minimum hourly wage in the United Kingdom (Figure 14.5).

Europe’s promise for jobs?Labor market integration of young European Union migrant citizens in Germany and the United Kingdom

Figure 14.5 Hourly pay at/below the minimum wage for recent youth migrants compared to nationals (United Kingdom, postcrisis period). Estimates based on hourly pay ≤ minimum wage threshold.

Source: Pooled UK-LFS (2010–2014).

14.4.3.2. Skill Mismatch and Qualification Mismatch

Several studies highlight a skills–occupation mismatch, particularly among CEE migrant workers in EU15 countries (European Integration Consortium 2009; Bettin 2012; Engels et al. 2012). This mismatch refers to situations in which the occupation a person works in requires a different skill level from what the person has at the present time. The “requirement” should be viewed in relative terms, referring, for example, to the average skill level in an occupation. (p.431) Similarly, a qualification–occupation mismatch refers to the difference between the formal qualification a person holds and the qualification level of the person’s occupation.

The measures of both skill and qualification mismatches are relative here, using the mean occupational status of the native youths in a skills/qualification category as a reference point (their status level is indicated by the horizontal line in each panel of Figures 14.6 and 14.7). Pooled data are presented here combining (p.432) the pre- and postcrisis periods because of the low case numbers resulting from the division of the migrants into three groups according to their skill levels. The following results should be viewed with caution, given the differences between the indicators used (see Table 14.1), namely skills (Germany) and qualifications (United Kingdom). Therefore, the following sections refer correspondingly to skill mismatch and qualification mismatch in order to highlight the limited comparability of the measures.

Recent youth migrants from EU8 and EU2 work consistently in lower status jobs compared to their German peers (Figure 14.6). In the United Kingdom (Figure 14.7), the same holds for EU8 youth migrants (on the low rate of return to education for Polish migrants in the United Kingdom, see Kacmarczyk and Tyrowicz 2015) but not for their Bulgarian and Romanian peers. Consistently, young recent migrants from the Rest-EU find higher status jobs in the same skills bracket as their native peers in both Germany and the United Kingdom.

Europe’s promise for jobs?Labor market integration of young European Union migrant citizens in Germany and the United Kingdom

Figure 14.6 Levels of skill mismatch in Germany for recent youth migrants compared to nationals. *Mean ISEI-08 by educational background (**ISCED).

Source: Pooled German Microcensus (2005–2012).

Europe’s promise for jobs?Labor market integration of young European Union migrant citizens in Germany and the United Kingdom

Figure 14.7 Levels of qualification mismatch in the United Kingdom for recent youth migrants compared to nationals. *Mean ISEI-08. Weighted estimates adjusted for sampling design.

Source: Pooled UK-LFS (2004–2014).

EU-South migrants with tertiary education seem to achieve on average higher status jobs compared to their native peers in Germany. Those with medium- or low-skilled backgrounds fare consistently worse than their native peers. For the United Kingdom, in contrast, EU-South nationals with tertiary education have comparatively poor occupational outcomes. The same holds true, although with smaller gaps, for those with work-related qualifications.

In Germany, migrant workers with medium skill levels (secondary and post-secondary nontertiary education) might have particular problems applying their skills (Engels et al. 2012), which again might follow from the importance of specific rather than general skills in the German economy.

(p.433) 14.4.3.3. Income Differentials

Migrant–native income differentials have long been studied (Andrews et al. 2007) in their own right. The focus here is instead on the comparison between youth migrant groups: Figure 14.8 presents the average hourly income levels of the different groups as a percentage of those of their German/UK peers.

Europe’s promise for jobs?Labor market integration of young European Union migrant citizens in Germany and the United Kingdom

Figure 14.8 Wage–income differentials for recent youth migrants compared to nationals in Germany and the United Kingdom. Estimates: Logarithm of net income adjusted for inflation (GER: Destatis, 2016; UK: CPI base 2005, Source: Office for National Statistics 2015).

Source: Net hourly income from German Microcensus (2005–2012); net hourly income from pooled UK-LFS (2004–2014).

Using the broad Microcensus income measure including social benefits (see Table 14.1), but restricting it to those people who state that their main income derives from work, Germany appears to be comparatively equal in terms of income, with slightly lower net income among EU2 migrants and considerably higher income among EU-South and EU-Rest youth (+11% and +31%, respectively). By contrast, EU8 migrants and, to a lesser extent, EU-South migrants and TCNs report lower income compared to their national peers in the United Kingdom. The experience of lower wages does not apply to migrants from the EU-Rest; both in the United Kingdom and in Germany, these EU migrant citizens do better than their native peers.

14.5. Discussion

14.5.1. Quantitative and Qualitative Labor Market Integration

European Union migrant citizens have generally high employment rates, especially in the United Kingdom. However, EU migrant citizens from CEE countries are more often in precarious employment compared to Southern European and particularly EU-Rest migrants. The latter’s qualitative labor market integration is close to or better than that of nationals. Both countries show by far the worst (p.434) outcomes for TCNs on quantitative labor market integration (low employment rates and high inactivity).

These better results for EU migrant citizens might be due to their privileged status compared to that of TCNs, based on the principle of nondiscrimination in relation to nationals. Given free labor mobility, their migration channels differ substantially from those of TCNs, who often come as asylum seekers or under family reunification regulations.

The United Kingdom seems to achieve better quantitative labor market integration of EU migrant citizens (particularly from CEE countries) compared to Germany. This might be explained by the UK economy’s orientation toward general rather than specific skills, which facilitates the integration of youth migrants. Furthermore, the improvements in EU migrants’ quantitative labor market integration that are visible in Germany during our second observation period are consistent with a labor demand argument, for unemployment significantly declined during this period.

In terms of qualitative labor market integration, the over-representation of migrant workers in nonstandard employment in Germany is not surprising. Given the high degree of dualization of the German labor market, flexibility needs are achieved at the margins—for example, through higher levels of fixed-term employment, solo self-employment (particularly for CEE migrant citizens during the transition period), and minijobs.

(p.435) The findings on wage income and skill and qualification mismatches—in addition to reflecting issues such as linguistic barriers, transferability of skills, and potential migrant niche effects generated by migrant networks—point to an interesting segmentation of EU migrants according to region of origin. For the United Kingdom, which arguably provides a more clear-cut wage measure than the German data, our analysis points to lower wages for young recent CEE migrants compared to their national peers, higher wages for EU-Rest migrants, and no significant wage differences between nationals and EU-South migrants. EU8 migrants show pronounced skill (Germany) and qualification (United Kingdom) mismatches in their occupations; the results for EU-South migrants are more mixed; and EU-Rest migrants, particularly in Germany, seem to perform better than nationals on this indicator.

These intra-EU differences in qualitative labor market outcomes might partly be explained by destination-country wage differentials and by differences in reservation wages because of much lower (exportable) unemployment benefits (Bruzelius et al. 2016). These potentially render migrant citizens from CEE countries and, to some degree, EU-South migrants more willing than EU-Rest migrants to work under precarious conditions, for low wages, and below their skill/qualification levels. The results for EU2 and EU-South migrants differ between Germany and the United Kingdom, potentially pointing to migrant network effects and the role of general versus specific skills. Crucially, the segmentation of labor market integration outcome seems to reflect structural differences by regions of origin.

The analysis shows that contextual factors, such as transition arrangements, had a clear impact on migration movements, for the share of EU migrant citizens, especially those from CEE countries, increased in both destination countries. In addition, their levels of solo self-employment indicate a response to the previous transition arrangements even though this calls for further analysis taking selectivity into account. The analysis did not identify large relative increases of EU-South migrants, which were quite salient in UK media reporting in the run-up to the Brexit referendum. By contrast, we were able to identify an increasing trend for this group in Germany.

14.5.2. Limitations

The analysis has a number of limitations. First, the pooling of data makes it difficult to identify the effects of the transition periods. The limited panel possibilities of the UK-LFS data mean the labor market outcomes of recent youth migrant workers are only examined in two time periods. Thus, improved labor market integration due to better language skills, acquaintance with working culture norms, and better networks is not accounted for (see Prokic-Breuer and McManus’s (2016) notion of “apparent qualification mismatch”).

(p.436) Sampling biases mean that the data capture “better integrated” recent migrants, who might not fully represent migrants as such. In both countries, the data mainly capture residents, thus under-representing seasonal workers, posted workers, or more recent migrants (see Section 13.3 on methods).

Comparability issues arise from the use of partially harmonized data (e.g., migrant definition, marginal employment, and skill and qualification mismatch with one’s occupation). Most of these reflect data constraints, but also country-specific labor market arrangements (e.g., minijobs). Despite these limitations, the findings are rather consistent across measures and with our theoretical expectations.

14.6. Conclusions

Despite institutional differences between labor markets and welfare regimes, as well as the different transition regimes, we identified significant similarities in the labor market integration of young EU migrant citizens across Germany and the United Kingdom.

Young EU citizens who recently migrated are well integrated in the respective labor markets (particularly in the United Kingdom), as measured by overall employment rates. However, EU youth migrants’ qualitative labor market integration as measured here by income, marginal, fixed-term, and (solo) self-employment, as well as skills/qualification mismatch, is segmented by their region of origin: EU8 and EU2 citizens often work in precarious and nonstandard employment, youth from Southern Europe take a middle position, and youth from the remaining EU countries do as well or better than their native peers on several indicators. Notably, this segmentation can be observed for these migrant groups without a detailed analysis of demographic characteristics.

A number of broad questions for future research derive from the previously discussed findings. Crucially for labor market and social policy research, does the availability and exportability of unemployment benefits influence the segmentation of labor market integration outcomes by region of origin? For example, do these result in observable differences in EU migrant citizens’ reservation wages and support options, which in turn affect their labor market positions in the countries of destination?

Finally, and more generally, the question arises as to whether, at the micro level, EU cross-border labor mobility simply replicates the existing stratification of young people across Europe or whether migration gives young EU citizens an opportunity to improve their relative labor market position compared to their position in the country of origin and their initial position in the country of destination. The corresponding question on the macro EU-wide level is whether, and in what way, young EU citizens’ migration can contribute to an economically and socially ever closer European Union.

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Notes:

(1) Throughout the chapter, we use the term EU migrant citizen because our analysis focuses on those EU citizens who have migrated from one member state to another. Working EU migrant citizens have the same rights as nationals and can be differentiated from the category of EU mobile workers (e.g., posted or cross-border workers), for whom different regulations apply; see Bruzelius and Seeleib-Kaiser (2017).

(2) The EU8 countries acceded the union in May 2004 and are composed of the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Slovakia, and Slovenia.

(3) Greece, Italy, Portugal, and Spain; Malta and Cyprus.

(4) Throughout the text, reference is made to the United Kingdom, in line with the main data source, the UK-LFS.

(5) Austria, Belgium, Denmark, France, Ireland, Luxembourg, Netherlands, Sweden (and, for Germany only, the European Free Trade Association countries), Germany (UK analysis only), and the United Kingdom (German analysis only).

(6) We particularly thank Silvana Weiss, Franziska Meinck, and Jonas Felbo-Kolding for helpful comments on earlier drafts of this chapter. The chapter also received two reviews from María González Menéndez and Paweł Kaczmarczyk, which were motivating and insightful. Previous versions of the chapter received comments in January 2016 and January 2017 at the STYLE meetings. We further thank Noor Abdul Malik and Magnus Paulsen Hansen for their help with preparing the manuscript and Niamh Warde for her excellent language editing. Finally, we thank Renate Ortlieb for her guidance, support, and patience as section editor and Jackie O’Reilly for getting us all there in the end.

(7) For the United Kingdom, migrants are defined as having a different country of birth than the United Kingdom, no UK citizenship, and UK residency for between 1 and 5 years. For Germany, migrants are defined as having non-German citizenship and having migrated to Germany within the previous 5 years.

(8) The Microcensus is a representative sample containing demographic and labor market information from 1% of all households in Germany. All persons who have right of residence in Germany, whether living in private or collective households, or at their main or secondary residence, are sampled and are obliged to participate (Research Data Center of the Federal Statistical Office and Statistical Offices of the Länder).

(9) The LFS is the largest social survey in the United Kingdom. All adult members from a rotating sample of 41,000 private households are interviewed in five consecutive quarters. The sample size makes it the best data set available for (p.438) analyzing the labor market situation of recent migrants (Office for National Statistics 2015a).

(10) In the German case, there is an obligation to participate, and nonparticipation is penalized. The UK-LFS makes efforts to conduct face-to-face interviews with the help of interpreters if no household member speaks English.

(11) Analysis of the German data was carried out by Janine Leschke (FDZ Forschungsprojekt: 2014–2631), and that of the UK data and figures was performed by Thees F. Spreckelsen.

(12) According to the EU-LFS definition, persons working at least 1 hour in the reference week are counted as employed and are asked questions relating to their employment status. The analyses, unless otherwise stated, thus include students and those in vocational training.

(13) Only information for 2009–2012 has been used. Because the earlier measure is incomparable, these data also capture short-term employment (often seasonal) and “one-Euro-jobs”—an employment integration measure under the subsidiary welfare scheme.