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ABSTRACT

In the context of longstanding and significant differences between the labour market outcomes of the native-born and immigrants, the labour market integration of immigrants has been a key policy issue in Norway. The differences are largely attributable to the prevalence of family and humanitarian migrants in the past, since these have outcomes that are not as good as those of labour migrants in most countries.

Evidence from many OECD countries shows that immigrants, in particular recent arrivals, tend to be especially affected by an economic downturn. The available tentative evidence on unemployment suggests that this is also the case in Norway in the current downturn, particularly with respect to the many recent labour migrants from the new EU member countries. Since this can have a lasting effect on their labour market outcomes, it is important that the integration of immigrants remains a priority for policy.

In the years prior to the downturn, labour market outcomes have clearly improved with the favourable economic conditions, and current overall outcomes are fairly positive compared to the past. Although strong labour migration from Eastern Europe has contributed to the increase in the employment rate for the migrant population as a whole, the outcomes of more longstanding migrant groups have improved as well.

In parallel, there has been much effort to enhance the labour market integration of immigrants, in particular of recent arrivals. How much of the improvement in outcomes is due to these efforts and how much is attributable to the improved labour market conditions and the shift toward more labour migration is difficult to discern. The testing time for integration is thus occurring now with the economic downturn.

The labour market integration of immigrants and their children has to be seen in the context of Norway’s high GDP per capita (second highest in the OECD), low unemployment and high labour market participation of both genders. It also has to be viewed against the backdrop of a Nordic-type welfare state. The labour market and social security system is characterised by a rather high degree of wage compression with wages largely determined by centralised bargaining, high net replacement rates in particular for low earners with many children, a large public sector and a relatively “active” labour market policy.

More attention should be paid to low-skilled immigrants, whose outcomes are unfavourable in international comparison. This seems to be attributable to a mix of disincentives to work and limited availability of low-skilled jobs. To overcome these obstacles, more targeted training and education measures should be considered.

More could also be done to make better use of the skills of migrants who have acquired their qualifications in non-OECD countries. There appears to be a large discount of foreign qualifications in the labour market, but there is some uncertainty related to this since little is known about migrants’ foreign qualifications. This is an important gap in the data infrastructure which should be tackled in order to get a better picture of the use of migrants’ skills in the labour market and, linked with this, possible remedial action.

There are a number of shortcomings in the process of the assessment and recognition of foreign qualifications which need to be tackled. In particular, there seems to be a shortage of “bridging” offers for persons whose degree is not considered fully equivalent to a Norwegian one. Likewise, the currently limited possibilities for the assessment and recognition of vocational competences, both acquired formally and informally, should be expanded with a specific focus on immigrants, in co-operation with the social partners.

Given the rather recent nature of larger-scale migration to Norway, the overall infrastructure for integration is well-developed. Immigrants were prioritised in active labour market policy measures for the ordinary unemployed, and this seems to have had a beneficial effect. Although this prioritisation ended in 2009 in favour of an individual assessment of the work capability of each unemployed, some indirect targeting is likely to remain since immigrants are a central target group of labour market policy in general.

However, few immigrants are currently participating in wage-subsidy programmes, in spite of the fact that this has been shown to be a particularly effective tool for the labour market insertion of immigrants, both in Norway and in other OECD countries. Likewise, there are few measures that aim at overcoming the structural disadvantage which migrants face in the labour market due to their lack of networks. A broader sponsorship of mentorship programmes would be beneficial in this respect.

Newly arrived humanitarian migrants and the family members of humanitarian migrants (both already settled and newly arriving ones) have to participate in a two-year introduction programme if they lack basic qualifications. The programme seems adequately targeted, but it discourages early labour market entry, which can be counterproductive. Norway tries to disperse humanitarian migrants across the country, and the distribution is based on negotiations between the state and municipalities. The process is lengthy, and small municipalities are not always able to provide integration programmes to the refugees which are tailored to their needs. This suggests that the settlement process could be made more effective if it took into account the fact that needs differ according to ability. Municipalities could specialise in the integration of certain migrant groups, and a longer-term commitment should be linked with financial incentives.

The Norwegian labour market seems to place much emphasis on full mastery of the Norwegian language and indeed, Norway invests significant amounts in providing language training. There is, however, some uncertainty regarding the quality of the training which is provided, and municipalities’ incentives to provide training which is adapted to migrants’ skills could be strengthened. The right to language training should also be extended to immigrants from EEA countries.

Much emphasis has been put in recent years on a better integration of immigrants into the large public sector in Norway. These have included the obligation to interview at least one person of immigrant background for new positions and, on a trial basis since 2009, to give preference to immigrant candidates for a job offering if they have the same qualifications as natives. There is some evidence that these and other efforts in the public sector at all levels have paid off. Over the past five years, the public sector has contributed disproportionately to higher employment among non-OECD migrants who have been in Norway for longer.

An emerging issue is the labour market integration of the native-born children of immigrants, who are now entering the labour market in greater numbers. Their labour market outcomes lag behind those of comparable children of natives, although the differences do not appear to be larger than in other OECD countries. They have particular difficulties in finding apprenticeship places, and this process can be expected to become more difficult now for all groups in the economic downturn. A greater involvement of educational institutions in the process of finding places would seem helpful in this respect, as well as additional incentives to employers to overcome their reluctance to hire apprentices with an immigrant background. Children of immigrants would also especially benefit from a larger participation in kindergarten before the age of four, the age-range for which they are currently most underrepresented. One obstacle to this is the “cash-for-care” subsidy which provides strong disincentives to send children into early childhood educational institutions. Since the subsidy also seems to hamper the labour market integration of immigrant women, there seems to be a strong case for abolishing it. The amount saved through the abolition of the subsidy should be used to create more places in formal institutions in those parts of the country where there are still shortages.

Despite numerous governmental action plans since 1992, most other stakeholders tend not to attribute much weight to the issue of labour market discrimination against immigrants, nor have there been testing studies in Norway thus far that would quantify its importance. This shortcoming should be overcome and indeed, first steps have been taken in this direction, and a testing study is currently under way. A potentially important step in overcoming selective hiring procedures is the obligation for employers to establish and implement active measures to promote equality and prevent discrimination against immigrants, introduced in early 2009. However, small and medium-sized enterprises are excluded from this obligation, despite some tentative signs that this is the part of the labour market where selective hiring is most pronounced. For monitoring to be an accepted tool, the administrative burden on employers has to be limited; and its effective implementation should be promoted thorough incentives and administrative support, notably for small and medium-sized enterprises.