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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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How do labor market intermediaries help young Eastern Europeans find work?

How do labor market intermediaries help young Eastern Europeans find work?

Chapter:
(p.443) 15 How do labor market intermediaries help young Eastern Europeans find work?
Source:
Youth Labor in Transition
Author(s):

Renate Ortlieb

Silvana Weiss

Publisher:
Oxford University Press
DOI:10.1093/oso/9780190864798.003.0015

Abstract and Keywords

This chapter examines the entry routes of young migrants from Eastern Europe into the Austrian labor market, focusing on the role of labor market intermediaries (LMIs) such as public employment services, online job portals, and temporary work agencies. It takes account of the perspectives of both employers and young migrants. The findings suggest that online job portals are the most prevalent type of LMI. Relatedly, informational services are more relevant than matchmaking and administrative services. The relevance of LMI types and services varies across sectors, indicating that LMIs to varying degrees fulfill specific functions in these sectors, such as reduction of transaction costs, risk management, and network building. The more nuanced understanding of entry routes provided by this chapter will help in the development of theoretical models explaining youth migration and design policy measures aimed at improving the labor market opportunities of young migrants from Eastern Europe.

Keywords:   youth unemployment, young migrants, migrant workers, East–West migration, labor market intermediaries, public employment service, online job portals, recruitment agencies, recruitment strategies, job search

15.1. Introduction

Mainstream economists view the geographic mobility of workers as a prerequisite for well-functioning labor markets.1 Relatedly, policy measures aimed at increasing the mobility of young people, such as the Youth on the Move flagship initiative launched by the European Commission in 2010, are said to be effective means to combat youth unemployment (European Commission 2010; O’Reilly et al. 2015). Against the background of the high relevance of youth mobility, as endorsed by both academics and policymakers, and given the high numbers of young migrants from Eastern Europe working in Western Europe (Kahanec and Fabo 2013; Akgüç and Beblavý, this volume), the following question arises: How did these young migrants find work in a foreign country? This question is important because the existing literature suggests that migrants from Eastern Europe struggle to find jobs with good working conditions in Western Europe (Favell 2008; Galgóczi and Leschke 2012; Spreckelsen, Leschke, and Seeleib-Kaiser, this volume). Thus, in order to be able to develop theoretical models explaining these difficulties and to design policy measures aimed at improving the labor market opportunities of young migrants from Eastern Europe, detailed knowledge about their routes into employment is crucial.

In the migration literature, entering a foreign labor market is typically conceived as a process in which several actors are involved. Apart from the migrants themselves, employers are key actors in that they may fill vacant job positions with migrants (Moriarty et al. 2012; Ortlieb and Sieben 2013; Scott (p.444) 2013; Cangiano and Walsh 2014; Ortlieb, Sieben, and Sichtmann 2014). In addition, migrants often draw on informal networks of friends and relatives to find a job and to (temporarily) settle abroad (Agunias 2009; Lindquist, Xiang, and Yeoh 2012). Finally, an important role may be played by labor market intermediaries (LMIs) such as public employment services, online job portals, and temporary work agencies. Previous research shows that LMIs act as significant facilitators of globalized labor markets (Freeman 2002; Coe, Johns, and Ward 2007; Elrick and Lewandowska 2008). Nonetheless, despite the increasing numbers of LMIs worldwide within the past few years (Bonet, Cappelli, and Hamori 2013; CIETT 2016) and the growing body of LMI research in Europe (Andersson and Wadensjö 2004; Findlay and McCollum 2013; Friberg and Eldring 2013; Sporton 2013), the role of these actors in trans-European job search and recruiting is not yet fully understood.

This chapter addresses this knowledge gap. We concentrate on young EU8 citizens—that is, people younger than age 35 years from Estonia, Latvia, Lithuania, Poland, the Czech Republic, Slovakia, and Hungary. We examine the role of LMIs for young EU8 migrants entering the Austrian labor market, thereby taking the perspectives of young EU8 migrants, Austrian employers, and LMIs into account. Austria is particularly suitable for studying East–West youth migration in Europe because it is a receiving country with geographical proximity and historically strong ties to Eastern Europe, it has a comparatively good overall labor market situation, and it hosts a large number of EU8 migrants (Benton and Petrovic 2013). At the same time, we posit that our findings offer insights into underlying labor market processes that prevail in other countries as well.

In order to capture specific features of the role of LMIs, we focus on three industrial sectors: high-tech/information technology (IT), hospitality, and 24-hour domestic care. Our choice was determined both by the high number of EU8 migrants and by the strong labor demand that characterize these three sectors, enabling good observation of entry processes. Furthermore, this selection allows us to account for different skill levels, gender compositions, and types of employment relations. To theorize on differences between the three sectors, we apply a framework proposed by Benner (2003). According to this framework, LMIs fulfill three specific functions for both employers and workers: They reduce transaction costs, build social networks, and help manage risks. We suppose that these functions are of different importance in the three sectors. Thus, the role of LMIs for young EU8 migrants entering the Austrian labor market will vary across the three chosen sectors.

Our research relies on 60 semistructured interviews with young EU8 migrants, employers, LMIs, and labor market experts. We find that young EU8 migrants across the three sectors use a broad range of entry ports, including different types of LMIs. They mainly use informal networks and online platforms providing information on job vacancies, working conditions, and general country characteristics. In addition, in the 24-hour domestic care sector, young (p.445) EU8 migrants contact agencies that match caregivers with private households and assist with various kinds of paperwork. We also find that, especially in the high-tech/IT and 24-hour domestic care sectors, LMIs reduce transaction costs and risks for both employers and workers. LMIs play a more important role in job search and recruiting processes in these sectors than in the hospitality sector, in which the transaction costs and risks attached to employment relations are comparatively low.

Overall, our research shows that LMIs are important facilitators of youth transitions from Eastern Europe to the West. LMIs can help reduce youth unemployment in Eastern Europe by providing informational, matchmaking, and administrative services to both employers and jobseekers. Our research findings provide a more nuanced understanding of the labor market entry paths of young migrants and the many-faceted role of LMIs in these processes. Taking account of the perspectives of both employers and young migrants, and focusing on sectoral specificities, we go beyond the existing literature on youth migration in Europe.

The chapter is structured as follows. In Section 15.2, we summarize the literature on LMIs, focusing on different types of LMIs and their services. In Sections 15.3 and 15.4, we elucidate our theoretical framework and describe our methods, including the research context of Austria. In Sections 15.4–15.6, we present findings regarding the salience of different LMI types and services in the three sectors and then turn, in Section 15.7, to specific functions of LMIs in the three sectors. In the concluding Section 15.8, we suggest avenues for future research.

15.2. Types and services of labor market intermediaries

Labor market intermediaries serve to mediate the relationship between employers and workers. The controversy associated with LMIs has centered on whether or not they exploit vulnerable workers and whether or not they facilitate job matching. On the one hand, the types of LMIs that receive heightened media attention related to exploitative practices are, in general, a marginal part of this market. On the other hand, the range of legal LMIs is considerably varied. They include traditional public employment services, online job portals, temporary work agencies, and highly specialized executive search firms, as well as non-governmental organizations (NGOs) and social enterprises concerned with the labor market integration of vulnerable people.

To enable a systematic view of these different kinds of institutions, scholars have proposed several frameworks that categorize LMIs in terms of diverse criteria. Table 15.1 presents prototypes of LMIs, drawing on the categorizations by Benner (2003), Agunias (2009), Autor (2009), and Bonet et al. (2013). We categorize different types of LMIs based on their (p.446) (p.447) organizational structure and funding as either private-sector or public-sector intermediaries. Thereby, private-sector LMIs typically are paid by employers, whereas their services are cost-free to jobseekers.2 Depending on the services LMIs offer to employers and jobseekers, we further distinguish between information providers, matchmakers, and administrators. Information providers either sell or offer cost-free information about vacancies, job profiles, and candidate profiles. Matchmaking services include job and candidate diagnosis, assignment of qualified candidates to jobs, and monitoring of a probation period. Administrative services refer to the full spectrum of human resource management, such as payroll, training, and career planning. Administrator LMIs such as temporary work agencies often act as an employer who hires out personnel to client firms.

Table 15.1 Types of labor market intermediaries

Type of LMI

Organizational structure and funding

Services offered to employers and jobseekers

Private sector

Public sector

Information provider

Matchmaker

Administrator

Public employment service (e.g., Austrian/AMS, European/EURES)

X

X

X

Temporary work agencies (e.g., Adecco, ISS, Manpower)

X

X

X

Recruitment agencies, executive search firms (e.g., Kienbaum, Hill, Boyden)

X

X

Online job portals (e.g., monster.com, karriere.at, ams.at, ec.europa.eu/eures)

X

X

X

X

Social media (e.g., LinkedIn, Facebook)

X

X

Educational institutions (e.g., universities, vocational schools)

X

X

X

AMS, Austrian Public Employment Service; EURES, European Employment Services; LMI, labor market intermediary.

Sources: Authors’ compilation based on Benner (2003), Agunias (2009), Autor (2009), and Bonet et al. (2013).

Previous research on the role of LMIs for labor market outcomes of (young) migrants has produced mixed results. There is evidence that migrants recruited by LMIs obtain better employment contracts compared to migrants using informal social networks; for example, they are more likely to obtain higher wages (Bonet et al. 2013; Findlay and McCollum 2013). However, LMIs have also been found to increase the risk of devaluation of foreign professional skills (Samaluk 2016). Moreover, their recruiting and selection procedures are not always free of discriminating biases against migrants (Bonet et al. 2013). Also, in some cases, LMIs have been associated with fraud and exploitation of migrant workers (Agunias 2009; van den Broek, Harvey, and Groutsis 2016).

A considerable body of research revolves around temporary work agencies. This type of LMI can have a negative impact on the labor market outcomes of its employees, especially the highly vulnerable group of (young) migrants (McDowell, Batnitzky, and Dyer 2008; Autor and Houseman 2010; Sporton 2013). At the same time, for persons with otherwise limited employment prospects, temporary work agencies can act as stepping stones into employment (Andersson and Wadensjö 2004; Arrowsmith 2006; Heinrich, Mueser, and Troske 2007; Voss et al. 2013).

However, it is unclear whether these findings can be applied to the context of East–West youth migration in Europe. In addition, although previous research suggests that the role of LMIs differs between sectors (see Section 15.3), there is currently no systematic comparative evidence with regard to youth labor migration. In the following, we explore the role of LMIs in shaping East–West youth migration in Europe in greater detail.

15.3. Theoretical framework: Functions of labor market intermediaries across industrial sectors

Prior research based on either single-sector (Benner 2003; Fitzgerald 2007; Findley and McCollum 2013; Thörnquist 2013) or multisector studies (Friberg (p.448) and Eldring 2013; Sporton 2013; Cangiano and Walsh 2014; van den Broek et al. 2016) indicates that the role of LMIs varies across sectors. However, there is as yet no coherent theoretical framework explaining these differences. A promising approach has been suggested by Benner, who theorizes on the relationship between LMI activities and regional development. Based on a case study on Silicon Valley, the author argues that distinctive functions of LMIs can help firms adapt to changing labor markets, which in turn is crucial for doing business in an environment driven by knowledge work and rapid innovation. This reasoning can be applied to explaining the role of LMIs in shaping East–West youth migration in Europe.

According to Benner (2003), LMIs fulfill three functions in the labor market. First, LMIs reduce transaction costs for both employers and workers. Because LMIs specialize in certain fields, they possess information and access to other resources that help both employers and workers minimize search costs as well as costs related to contracting and monitoring. Second, LMIs function as network builders for both employers and workers. By connecting various individuals and institutions with one another, LMIs can replace informal networks, facilitating person–job matching processes as well as key business activities such as innovation. Third, LMIs help employers and workers manage risks, such as firms’ risks related to volatile demand in product markets and workers’ risks related to job loss. Although these three functions of LMIs may be observed throughout the entire labor market, we maintain that their importance varies across sectors, depending on the transaction costs and the need to build networks and manage risks.

15.4. Methods

15.4.1. Research Context: EU8 Migrants Working in Austria

Austria belongs to the group of EU15 countries that restricted labor movement for EU8 citizens following the enlargement of the European Union in May 2004. Austria and Germany were the only countries that maintained their restrictions until the end of the period of transitional arrangements in April 2011. After the restrictions had been fully removed in May 2011, a growing number of EU8 citizens entered the Austrian labor market. However, it is important to note that EU8 citizens had the opportunity also before May 2011 to (legally) work in Austria, with or without the assistance of LMIs. Work permits were issued for sectors suffering from labor shortages, and self-employed migrants were allowed to offer their services if they fulfilled certain occupational requirements.

Figure 15.1 presents the number of EU8 migrants working in Austria between 2007 and 2015, differentiated by age. In accordance with the available data, EU8 migrants are defined for this figure based on their citizenship. The graph includes (p.449) both EU8 citizens who migrated themselves and second-generation migrants. However, the vast majority of these people, and especially those who trigger variation within the curves, are first-generation migrants—that is, EU8 citizens who migrated themselves.

How do labor market intermediaries help young Eastern Europeans find work?

Figure 15.1 Number of EU8 migrants working in Austria, 2007–2015 (employees and self-employed).

Source: Austrian Labor Market Service Monitoring of Occupational Careers (Erwerbskarrieremonitoring, AMS 2016, personal communication); authors’ calculations.

According to Figure 15.1, a total of 206,294 EU8 migrants worked in Austria in 2015 as either salaried employees or self-employed, which is more than 5% of the Austrian labor force and almost three times as many EU8 migrant workers as in 2007 (68,965 persons). People younger than age 35 years account for 36% of the EU8 migrants (73,650 persons). Men outnumber women, with the major differences emerging for the group of adults aged older than 35 years at the beginning of the period of data availability in 2007 and for the group of adults aged between 25 and 34 years after May 2011—when the restrictions for labor movement had been lifted. Although the available data do not allow for conclusive interpretation of these gaps, we suggest that they reflect gender segregation of the labor market in association with both increasing business trends in women-dominated sectors and political efforts to legalize the work of migrants in such sectors.

15.4.2. Key Characteristics of the Selected Sectors

We selected three sectors to gain deeper insight into the role of LMIs by juxtaposing the specific types and functions of LMIs in these different sectors, namely high-tech/IT, hospitality, and 24-hour domestic care. The selection is based on the following three criteria: (1) Both the number of young EU8 migrants working in these sectors and the labor demand should be considerably high; (2) the skill (p.450) level should vary across these sectors; and (3) the gender composition should vary across these sectors.3 The three sectors are briefly described next.

The high-tech/IT sector is characterized by a long-lasting labor shortage, prompting employers to recruit employees from abroad. The skill level is generally high, and the majority of employees are men. In comparison with the hospitality and the 24-hour domestic care sectors, firms in the high-tech/IT sector are larger, they more often operate in international markets and with business alliances, and their personnel management is more professional.

The hospitality sector is characterized by a high share of young migrants among employees, a fairly high labor demand, high labor fluctuation, low or medium skill level, and a balanced gender composition.

The 24-hour domestic care sector is characterized by a very high share of migrants among caregivers. The required skill level is low, and the vast majority of caregivers are women.4 A particularity of this sector is that caregivers usually work as self-employed on the basis of service contracts with private households. For the sake of simplicity, in the following we refer to private households as “employers,” given that the relationships between private households and caregivers resemble those between employers and employees. Caregivers usually live in the same household as their clients for a period of 2 weeks, followed by a break of 2 weeks. During the absence of one caregiver, a colleague takes over. These caregiver tandems usually remain the same over a longer period of time, often up until the client moves into a care home or dies. Legislation related to this sector is complex as a result of the self-employment status of caregivers.

15.4.3. Data

The data we use in this chapter originate from a larger research project comparing East–West and North–North youth migration in Europe (Hyggen et al. 2016). Our empirical material comprises data from 60 semistructured interviews conducted with young EU8 migrants, representatives of employers and LMIs, and labor market experts. We conducted the interviews between September 2014 and August 2015. Each interview lasted between 30 and 90 minutes. Table 15.2 presents the number of interviews we conducted with the different types of interviewees in the three selected employment sectors.

Table 15.2 Sample characteristics: Type of interviewees and industrial sectors

Interviewees

Sector

High-tech/IT

Hospitality

Care

General

Total

Young migrants

5

9

8

22

Employers

5

5

5

15

LMIs

5

2

6

2

15

Labor market experts

1

1

1

5

8

Total

16

17

20

7

60

IT, information technology; LMIs, labor market intermediaries.

Of the interviewed EU8 migrants, the majority were from Hungary or Slovakia. Fifteen were women and seven were men. Their average age was 28.8 years (ranging from 18 to 36 years), with an average age at the time of migration of 25.4 years. The period of time they had been working in Austria ranged from a few months to 14 years (median, 2 years). The employers were of varying sizes, ranging from one-person “companies” in the case of private households and small companies typical of the hospitality sector to large companies with a few thousand employees, especially in the high-tech/IT sector. LMIs were private-sector agencies, public-sector institutions, and NGOs of varying sizes.

(p.451) 15.5. What types of labor market intermediaries do EU8 migrants and Austrian employers use?

In our sample, private-sector LMIs appear to be more relevant for connecting employers with jobseekers compared to public-sector LMIs. In the high-tech/IT sector, the EU8 migrants mainly used cost-free online job portals. In addition, they found jobs via direct search on the websites of potential employers in Austria. None of the young interviewees working in this sector had been in contact with an agency. Many employers in the high-tech/IT sector have long-standing business relationships with different kinds of for-profit agencies. For instance, they use executive search firms to fill top management positions, recruitment agencies to find employees with specific skills, and temporary work agencies for large-scale projects.5

Although employers from all the sectors stated that they use the informal networks of their (migrant) employees to recruit personnel from abroad, some employers in the high-tech/IT sector strategically use the informal recruitment channel by providing financial bonuses to employees who recommend job candidates. The employers’ representatives stated that this strategy is highly effective because employees who recommend a job candidate not only are familiar with the candidate but also informally instruct and supervise their new co-worker. In addition, some of the employers in our sample recruit personnel from their subsidiaries in EU8 countries. Others collaborate with public-sector or private-sector universities in EU8 countries.

In the hospitality sector, EU8 migrants stated that in addition to public-sector or commercial online job portals, unsolicited applications via phone calls or personal visits to restaurants and hotels are effective ways to find a job in Austria. Some employers use public-sector online job portals also for validating the professional skills and the foreign certificates of job candidates. Some of them found employees via the public employment service or social media. One employer in our sample collaborated with a vocational school (p.452) in Hungary, from which this employer directly recruited graduates. In general, employers in the hospitality sector only very seldom use recruitment agencies. Exceptions include the filling of high-level positions such as chef de rang. The majority do not use LMIs at all; rather, they recruit personnel via informal networks, or they select candidates from the pool of unsolicited job applications.

In the 24-hour domestic care sector, for-profit agencies are by far the most prevalent LMIs. A particularity of this sector is that agencies receive fees from both private households and caregivers. According to one of the intermediaries interviewed, an estimated one-third of caregivers from EU8 countries use agencies. However, our interviewees indicated that EU8 migrants prefer finding a family through their own networks in order to save money. The caregivers interviewed also stated that they switched between different agencies and sometimes searched for a family without an agency. Likewise, private households use either informal networks or for-profit agencies because they lack the competence and the time to find an appropriate caregiver. Often, they need a caregiver on short notice—for instance, after a family member has suffered a stroke.

Overall, the interviewed young EU8 migrants from all three sectors use LMIs whenever they are searching for information and cannot draw on their informal networks of friends and family. According to them, some jobseekers neither intentionally contacted an LMI to find a job in Austria nor did they notice that they were interacting with a recruitment agency and not with an employer. Because LMIs often place job offers in their own name and do the first screening of job candidates, it is not always clear to applicants that they would factually be working for another employer. Neither is it always clear to them that the job is located in a foreign country. For instance, one woman from Hungary working in the hospitality sector reported that she had searched for a job in her home country. It was only during the job interview that she learned that her future workplace would be in Austria. The agency doing the job interview also managed her travel to Austria and all registration formalities. Although this procedure enabled the woman to find employment, she expressed personal fears associated with this journey into the unknown.

15.6. What kinds of services offered by labor market intermediaries do EU8 migrants and Austrian employers use?

According to our interview data, of the variety of services made available, jobseekers and employers from all three sectors most often use the information services of LMIs. In contrast, matchmaking and administrative services are less salient. EU8 migrants search for information not only regarding job vacancies (p.453) but also regarding working conditions and general host-country characteristics. Employers are especially interested in information on the skills and work experience of job candidates. They use online job portals to obtain information on their counterparts and simultaneously to provide information about themselves. A special informational service offered by an agency in the 24-hour domestic care sector was the provision of data related to the criminal records of caregivers from Slovakia.

Compared with information services, matchmaking services are far less often used. Matchmaking services are especially relevant in the high-tech/IT and the 24-hour domestic care sectors. In the hospitality sector, employers only sporadically use matchmaking services by LMIs to fill high-skill positions. Recruitment agencies and matching algorithms implemented in online job portals usually preselect job applications and provide a short list of the best qualified job candidates to employers. In some cases, recruitment agencies additionally monitor a probation period of job candidates. If it turns out that a proposed candidate is less qualified for the position than expected, the agency suggests another candidate.

In our sample, administrative services offered by LMIs were less prevalent than informational or matchmaking services. However, in the 24-hour domestic care sector, they are highly relevant. Although the agencies in the 24-hour care sector do not act as the employers of the caregivers, they offer further services before and after matchmaking. For example, they assist caregivers with paperwork, for instance, regarding the obligatory registration as self-employed at the Austrian Economic Chamber and in the social insurance system. Often, they organize the caregivers’ travel between their home towns and their places of work in Austria. Some of them additionally offer training, for instance, in caring or in the German language. A particularly important service, as stated by caregivers, is the assignment to a new household at short notice if a client moves into a care home or dies. Private households also avail of the paperwork assistance provided by LMIs, for example, in relation to applications for state subsidies. In addition, they use a replacement service in the event that a caregiver becomes unavailable. These “full-service” arrangements are unique for the 24-hour domestic care sector. In the high-tech/IT sector, if employers use the administrative services of agencies, these typically include payroll, performance monitoring, and replacement of hired workers in the event of longer absences or other kinds of failure. In the hospitality sector, employers almost never use the administrative services offered by LMIs.

Beyond existing categorizations of LMI services into informational, matchmaking, and administrative services, in our interviews we identified a further kind of service, namely the provision of access to job candidates from abroad (without preselection of candidates, matchmaking, or provision of further information). Specifically, employers in the high-tech/IT and the hospitality sectors use special activities of universities and other educational institutions in EU8 countries to find qualified personnel. Examples include universities in EU8 (p.454) countries hosting student job fairs at which Austrian employers can present themselves and universities or other educational institutions in EU8 countries organizing student competitions for internships in Austrian firms. Although such access services are typically related to high-skill positions, our interview data indicate that employers from all three sectors use access services when they face an extreme scarcity of qualified job candidates in Austria. In addition, LMIs enable access to job candidates from EU8 countries through close collaboration with LMIs in these countries. For instance, some agencies operating in the 24-hour domestic care sector draw on a “chain of LMIs” consisting of several agents in Slovakia, some of whom had previously worked as caregivers in Austria. These LMI chains help bridge language barriers and geographic distance.

15.7. What functions do labor market intermediaries fulfill?

15.7.1. Transaction Cost Reduction

In our sample, the eminent importance of LMIs as reducers of transaction costs becomes clearly visible across all three sectors. The fact that employers and jobseekers act in a transnational context complicates the search for and the validation of information. Thus, the costs associated with establishing contracts are higher than those in local or national contexts. Different languages or state regulations related to required professional certificates, for instance, further increase transaction costs.

In all three sectors, LMIs in the form of online job portals effectively lower information costs for both employers and jobseekers. Depending on the sector, further types of LMIs are used to lower different kinds of transaction costs. In the high-tech/IT sector, even firms with a professional personnel management department face high transaction costs in certain situations, leading them to use various kinds of agencies. In the hospitality sector, personnel management is usually less professionalized because of the smaller firm sizes. However, given that these firms receive many unsolicited job applications and screening of job candidates is comparatively easy, transaction costs are lower. Thus, with the exception of a few high-level positions, there is little need for employers in the hospitality sector to use other LMIs than online job portals. In the 24-hour domestic care sector, private households usually lack the competence and time to search for an appropriate caregiver. Moreover, as lay employers, they can be challenged by comparatively complex legislation. Thus, transaction costs are relatively high. Specialized agencies reduce these transaction costs for the employers, and they also reduce the search costs of the caregivers. Given that Austrian agencies often collaborate with other institutions located in an EU8 country, EU8 citizens can easily obtain information closer to where they live and in their first language. Finally, for both private households and (p.455) caregivers, agencies reduce contracting costs by assisting with the required paperwork.

15.7.2. Risk Management

Partly interrelated with their function as reducers of transaction costs, LMIs also reduce the risks attached to recruitment and job search, particularly if they act as matchmakers or administrators. This function is especially relevant in the 24-hour domestic care sector, in which LMIs reliably replace caregivers or private households when a relationship terminates. For caregivers, agencies reduce the general risks associated with job search because the assignment of a new client usually takes less than 2 weeks. In addition, for both private households and caregivers, agencies reduce the risk of unintended illegal activities due to nonfamiliarity with social protection or trade legislation. Furthermore, some agencies in this sector reduce risks by securing acceptable working conditions (including fair pay) by acting as a contact point for caregivers who otherwise would be at the private households’ mercy.

Unlike in the 24-hour domestic care sector, the risk management function plays a minor role only in the high-tech/IT and the hospitality sectors. Specifically, interviewees in the hospitality sector stressed that the risk of inappropriate matching of job candidates with positions is very low. Because newly hired employees only need little training and because fluctuation in this sector is generally high, employees and employers can be comparatively easily replaced. In the high-tech/IT sector, in cases in which recruitment agencies monitor a probation period of job candidates and replace failing candidates, they manage the risks associated with candidate misfit.

15.7.3. Network Building

The network-building function of LMIs is less pronounced in our sample than the functions as reducers of transaction costs and risks. Although LMIs replace informal networks of both jobseekers and employers with regard to their function as information providers, they contribute less to the development of new networks. Rare examples of the network-building function include online job portals and social media, creating communities that especially help the interviewed young EU8 migrants to obtain further information. Although such communities exist in all industries, agencies in the 24-hour domestic care sector additionally connect their clients with other businesspeople, such as drivers who manage caregivers’ travel between their home towns and their places of work in Austria.

15.8. Conclusions

Our research provides in-depth insight regarding the entry ports of young EU8 migrants into the Austrian labor market and regarding the role of LMIs in (p.456) different sectors. The findings indicate that young EU8 migrants across sectors preferably use informal networks or cost-free informational services provided by online job portals. In addition, in the high-tech/IT sector, young EU8 migrants search for information on company websites; in the hospitality sector, they spontaneously call or visit potential employers of their own accord; and in the 24-hour domestic care sector, they pay agencies to establish relationships with private households. These search strategies are often complemented with recruitment activities by employers using LMIs to gain access to job candidates in EU8 countries.

LMIs facilitate entry into the Austrian labor market especially in the high-tech/IT and the 24-hour domestic care sectors, in which they are important substitutes for informal networks. In these two sectors, LMIs—also in the form of agencies—play an important role in that they reduce transaction costs and risks for both young EU8 migrants and Austrian employers. In contrast, in the hospitality sector, agencies are far less important, which can be explained by the lower transaction costs and risks attached to employment relations in this sector.

Although this chapter offers a more nuanced understanding of EU8 migrants’ routes into employment in Austria, the quality of this employment remains an open question. Relatedly, the impact of the different entry ports on job quality cannot be fully assessed. In other words, although our findings indicate that LMIs are important facilitators of youth transitions from Eastern Europe to the West, the question of the consequences of these transitions for the labor market outcomes of young people from Eastern Europe remains open. LMIs may either secure good working conditions or hamper them by exploiting the weak power position of young EU8 migrants in the Austrian labor market.

Another limitation of our research is sample and response bias. Specifically, it was difficult to approach agencies operating in the 24-hour care sector, which reflects the complex circumstances in which these LMIs work. Those agencies that granted an interview were apparently not among the “black sheep” exploiting migrant caregivers that were mentioned by some interview partners. Moreover, the overall positive description of recruiting processes and working conditions, as perceived by interviewees across all sectors and interview types, should be carefully interpreted because social desirability may have contributed to these depictions.

In view of these limitations, further research on the role of LMIs in shaping East–West youth migration in Europe is needed, in particular regarding the impact of different entry ports on labor market outcomes. In addition, although we have argued that Austria is a particularly apt case for studying East–West migration, future research focusing on other receiving countries is required. Given that our research findings indicate that the importance of entry ports and the importance of LMIs vary across sectors, future research should take account of these differences.

References

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Notes:

(1) We thank Christer Hyggen and Hans-Christian Sandlie for productive and stimulating collaboration in our research on this topic. Jan Brzozowski provided helpful comments on a previous version of the chapter. We are also grateful to Sabrina Franczik and Isabella Bauer for their assistance in data collection, as well as to Janine Leschke, Jacqueline O’Reilly, and Martin Seeleib-Kaiser for their guidance in preparing the text.

(2) We exclude membership-based LMIs—which are the third type identified by Autor (2009)—from our analysis because neither the activities of guilds nor the collective action of unions are relevant to our research question.

(3) A theoretical rationale for selecting the three sectors is provided by labor market segmentation theory (Reich, Gordon, and Edwards 1973; Piore 1986). According to this theory, labor markets consist of a primary segment characterized by stable employment relations, higher wages, and better opportunities for training and career development; and a secondary segment characterized by higher turnover rates, low wages, and poor opportunities for training and career development. We maintain that these differences between labor market segments are associated with differences in the role of LMIs. Whereas the high-tech/IT sector is a prototypical example for the primary segment, the hospitality and the 24-hour domestic care sectors are examples for the secondary segment. Thereby, the 24-hour domestic care sector differs from the hospitality sector in that legislation is much more complex in the former sector. Given that previous research highlights the impact of legislation on migration (Garapich 2008; Lindquist et al. 2012; Cangiano and Walsh 2014), we posit that the role of LMIs also varies between the hospitality sector and the 24-hour domestic care sector.

(4) Depending on the needs of the client, specific training of caregivers is required—for instance, in palliative care. However, the typical caregivers in our study are people who only look after the client and do some housework, without providing any medical treatment or special care.

(5) Although temporary work agencies often are associated with low-skill work in the secondary labor market segment, they also operate in high-skill areas such as engineering and IT design.