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Characteristics and Outcomes of Migrants in the UK Labour Market

11 Jan 2016

This briefing gives an overview of the key characteristics (age, education and occupation) and labour market outcomes (employment rates, unemployment rates, and wages) of migrants in the UK labour market.

  1. Key Points
    • Migrant workers are, on average, slightly younger than UK-born workers. About 36% of foreign-born workers were aged between 25 and 35 years old in 2014, while 24% of UK-born workers were in that age group. However, a higher percentage of UK-born workers are among the youngest (aged 16-24) and oldest (aged 46-55) demographic cohorts in the labour force.
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    • Since 1993, the employment rate for migrants has been lower than that of UK-born individuals. In recent years, the difference between migrant and UK-born employment rates has narrowed for men, but has stayed constant among women.
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    • On average, between 1993 and 2014 the unemployment rate of foreign-born people in Britain has been higher than that of UK-born people.
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    • Male migrants are concentrated in the two lowest paid occupational categories (elementary and processing occupations) and in one of the highest paid occupational categories (professional), while female migrants are more concentrated in professional jobs (e.g. nurses, engineering professionals, information technology and telecommunication, and health professionals), elementary (e.g. cleaners, kitchen and catering assistants), and personal service work.
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    • In 2014, nearly one in two recent migrants, defined as those born abroad who have spent fewer than 5 years in the UK, were in the highest educational category compared to one in four of the UK-born population.
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    • Since the late 1990s, migrants’ average hourly wages have exceeded those of UK-born workers.
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  1. Understanding the Evidence

    Most of the analysis in this briefing discusses data on foreign-born people. Whenever relevant, the analysis separates out recent migrants, defined as foreign-born people who have been living in the UK for 5 years or less. It is important to emphasise that the averages reported in this briefing often mask considerable variation among different groups of migrants.

    All data in this briefing paper are taken from the Labour Force Survey (LFS). The analysis focuses on individuals of working age (i.e. 16-64 years for men and 16-59 years for women). Unless indicated otherwise, both full-time and part-time workers are considered, while the inactive population (i.e. those not working or looking for work) is excluded.

Foreign-born workers are younger than UK-born workers

Foreign-born workers tend to be younger than their UK-born counterparts (Figure 1). In 2014 the average age of a UK-born worker was 39 compared to the foreign-born average age of 38. Nearly 34% of foreign-born workers were aged between 25 and 35 years old, while nearly 22% of UK-born workers were in that age group.
However, a higher percentage of UK-born workers are among the youngest (aged 16-24) and oldest (aged 46-55) demographic cohorts in the labour force.

From 1999-2009, the percentage of foreign-born workers increased in the 25-35 year-old age group, and slightly decreased in the older group (aged 46 and over) – in contrast to the UK-born workforce. Since 2009 this pattern has been less clear. The trends for foreign-born women are very similar to those for men, except that the percentage of men aged 25-35 has always been slightly higher than that of women. About 74% of foreign-born workers who arrived in the UK between 2009 and 2014 are distributed in the two younger groups (17% in the 16- 24 age group and 56% in the 25-35 age group). In contrast, the percentage of recent foreign-born workers in the older group is very small (less than 2%).

Figure 1

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Employment gap between foreign-born and UK-born men has been narrowing

A key indicator of labour market outcomes is the employment rate measuring the share of the employed in the total working-age population. Historically, employment rates of the foreign-born have, on average, been lower than those of the UK-born (Aldin et al. 2010). From 1993 to 2007, the employment rates for both male and female migrants was lower than the corresponding rates for the UK-born (Figure 2). However, since 2008 the employment rates of male migrants (79% for 2014) has been similar to that of UK-born males (77% for 2014), while those of female migrants (62% for 2014) has remained lower than that of UK-born females (72% for 2014).

Figure 2

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Employment rates vary between countries of origin: A8 migrants have higher employment rates

The averages reported above mask significant variations in employment rates between different groups of migrants. In 2014 the employment rates of male workers from the A8 (90%), Australia (88%), India (85%), Bangladesh (85%), EU-14 (80%), and America (81%) were higher than those of UK-born men (77%) (see Figure 3).

In contrast, migrants from some Asian countries experience significantly lower employment rates than the UK-born. The differences are particularly large among women. Only female workers coming from Australia  and A8 countries have higher employment rates than UK-born women (respectively 83%, 75% and 72%). While female workers from the EU-14 have similar employment rate as those from the UK (73% and 72% respectively). The employment rate of female workers from Bangladesh and Pakistan is about one third that of UK-born women.

Figure 3

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Unemployment rates of the foreign-born have been higher than those of the UK-born

The unemployment rate measures the share of the economically active population who are unemployed. The economically active population includes all people who are employed (i.e. employees or self-employed) and unemployed (i.e. without work, but currently available and seeking work).

Since 1993, unemployment rates of foreign-born and UK-born workers have followed a similar trend, decreasing up to 2001, increasing in the late 2000s, and decreasing from 2013 (see Figure 4). In the last few years, the unemployment rate of foreign-born men converged with that of UK-born men. In contrast, UK-born women have a lower unemployment rate than foreign-born women.

Figure 4

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Occupational profiles

There can sometimes be a mismatch between an individual’s educational attainment and the skill level required for his or her job in the UK. Specific groups of foreign-born workers (e.g. recent migrants from the A8 countries) are known to be frequently employed in jobs that do not correspond with their education and skills.

In 2014 greater shares of foreign-born men were employed in professional occupations (e.g. software professionals and health professionals) and in the two lowest paid occupations: elementary (e.g. cleaners, kitchen and catering assistants) and processing occupations (e.g. transport drivers, food, drink and tobacco process operators), compared to UK-born men (see Figure 5). About 29% of foreign-born male workers were employed in elementary and processing occupations compared to 21% of their UK-born counterparts.

Figure 5

The differences in occupational profiles between foreign-born and UK-born women (see Figure 6) are broadly similar to those of men. A greater share of female migrants is employed in professional, and at the low-skilled end in elementary and processing occupations.

About 24% of the female migrants in the professional occupations are nurses and midwives.

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Figure 6

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Compared with their UK-born counterparts, the foreign-born workforce has become more educated

Based on the age at which individuals completed full-time education, between 1993 and 2014 there was an improvement in educational attainment for both foreign-born and UK-born workers (see Table 1). However, foreign-born men and women showed higher educational attainment than their UK-born counterparts during this period, with the educational attainment gap rising over time. Recently arrived foreign-born workers in particular have been more educated than both UK-born workers and all other migrants. In 2014, around 9% of recently arrived male foreign-born workers had only completed education up to 16 years of age, compared to 18% for all male foreign-born workers, and nearly 45% for UK-born men. In 2014, nearly one in two recent migrants was in the highest educational category compared to one in four UK-born workers.

Table 1 – Education of foreign-born and UK-born workers in the UK

Percentage of group with each level of education, employed only
  1993    2014
Age completed educationUK-bornAll foreign-bornRecent foreign-bornUK-bornAll foreign-bornRecent foreign-born
Panel A: Men      
16 or under65.938.212.445.117.79.2
17-2019.93033.828.734.336.8
21 or older14.231.853.826.348.154
Panel B: Women      
16 or under59.734.113.837.714.37.3
17-2026.742.142.834.136.434.6
21 or older13.625.643.428.149.358.1

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Wages of migrants have been converging with those of the UK-born, but A8 migrants have lower wages

Figure 7 plots the real hourly wage for foreign-born and UK-born men and women from 1993 to 2014. The analysis is limited to workers who are employees, both full-time and part-time, considering only their main job. To limit the effect of outliers, only observations with an hourly wage between one and a hundred pounds at 2014 levels are included. On average, women (both foreign-born and UK-born) earn lower hourly pay than men. For example in 2014 the real hourly wages for female UK-born and foreign-born were £12.2 and £12.4  respectively, while those for the male UK-born and foreign-born were respectively £15.2 and £14.6. Female migrants’ hourly earnings were higher than those of UK-born women during the entire period under consideration. There has, however, been a trend of convergence in recent years.

Figure 7

In contrast, UK-born men’s wages have exceeded those of male migrants since 2005. This is likely to be a result of the higher share of A8 migrants who, being employed in lower skilled occupations, have been earning a lower hourly wage. In fact, although characterised by very high employment rates, workers from the A8 countries earn the lowest average wages among different groups of migrants considered (see Table 2) after workers from Bangladesh. Workers from Pakistan  are also relatively poorly paid. On the other hand, workers from Australia have the highest hourly wage followed by workers from America, EU-14, and India nationals. The trends are similar for female migrants, though the differences with the female UK-born are less marked.

Table 2 – Average hourly wage (£) by country of birth, 2014

 Men (£)Women (£)
A89.298.43
EU-1417.8313.78
America17.9715.05
India16.6712.5
Pakistan10.610.46
Bangladesh8.539.38
Other Asia14.1512.58
Africa15.112.07
Australia21.1817.65
UK15.2312.17

All figures are based on both part-time and full-time workers; however, differences in labour market outcomes may arise when accounting for those in part-time or full-time jobs. For example, in 2014 a lower share of female migrants were in part-time jobs than their UK-born counterparts (35% and 42% respectively). Although on average there are fewer men in part-time jobs than women, in 2014 the percentage of foreign-born men in part-time jobs (12%) was higher than that of their UK-born counterparts (9%). In both cases this percentage is higher than in the past. Moreover, in 2014 7.9% of migrant workers in part-time jobs were also full time students. The percentage of UK-born working part-time and studying full time is slightly higher (8.5%).

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Evidence gaps and limitations

The LFS is likely to underestimate the number of migrants in the UK. See the briefing on ‘Migrants in the UK Labour Market: An Overview‘ for further discussion and the Data sources and limitations section of the Migration Observatory.

The LFS includes two measures that classify educational attainment: “age at which individuals completed full-time education” and “highest qualification achieved”. The latter measure is problematic because it is based on UK schooling, which means that using this variable to define foreign-born people’s educational attainment may not classify them in their appropriate level of education.

Following the existing literature, the age at which individuals left full-time education is used to compare the level of education of employed foreign-born and UK-born (Dustmann et al. 2013; Wadsworth 2010). Workers can be classified in three educational groups: completed education at 16 or under, between 17 and 20, and at 21 or older; the analysis in this briefing is based on this classification.

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References

  • Aldin,V., D. James, and J. Wadsworth. “The Changing Shares of Migrants’ Labour in Different Sectors and Occupations in the UK Economy: An Overview.” In Who Needs Migrant Workers? Labour Shortage, Immigration and Public Policy, edited by Martin Ruhs and Bridget Anderson. Oxford: Oxford University Press, 2010.
  • Dustmann C., T. Frattini, and I. Preston. “The Effect of Immigration along the Wage Distribution.” Review of Economic Studies 80, no. 1 (2013): 145-173.
  • Wadsworth, J. “The UK Labour Market and Immigration.” National Institute Economic Review No. 213 (2010): R35-R42.

Further reading

  • Dickens, R. and A. Mcknight. “Assimilation of Migrants into the British Labour Market.” CASE Working Paper no. 133, Centre for Analysis of Social Exclusion, London School of Economics, 2008. http://eprints.lse.ac.uk/28244/1/CASEpaper133.pdf
  • Lemos, S. and J. Portes. “New Labour? The Impact of Migration from Central and Eastern Countries on the UK Labour Market.” The B.E. Journal of Economic Analysis and Policy 14, no. 1 (2013): 299-338.
  • Manacorda  M., A. Manning and  J. Wadsworth. “The Impact of Immigration on the Structure of Wages: Theory and Evidence from Britain.” Journal of the European Economic Association 10, no 1 (2012):120–151.

Related material

With thanks to Martin Ruhs, Carlos Vargas-Silva and Jonathan Wadsworth for comments and suggestions on an earler version of this briefing.

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