understanding immigrants and the labour market · brooks, clive understanding immigrants and the...

Brooks, Clive Understanding Immigrants andthe Labour Market Canberra, Bureau ofImmigration, Multicultural and PopulationResearch/Australian Government PublishingService, 1996.

by Clive BrooksBureau of Immigration,Multicultural and PopulationResearch

Section 1 Introduction

Immigration is the permanent movement ofpeople to one country from another. There aremany reasons why people permanently leave thecountry they have been living in - to be withtheir families, to obtain better jobs, or becausethey cannot remain in or return to their owncountry.

How well immigrants do in Australia is ofteninfluenced by their success in gaining a job andthe type of job they find. Policy-makers are alsointerested in the impact of immigrants on thenumber and availability of jobs, wage levels andother work conditions. The term labour marketrefers to the market in which interactionbetween employers and the labour forcedetermines employment, unemployment, wagesand working conditions.

Most people have an opinion about howimmigration affects the labour market. Someexpress concern about its impact. Their mainworries are that immigration will causeunemployment to rise - the 'migrants are takingour jobs' argument - and that employers arebringing in skilled workers from overseas ratherthan training local workers. On the other hand,there is concern that because unemploymentrates are higher for immigrants than forAustralia-born people, taxpayers are supporting

immigrants through the social security system.

This booklet shows that the answer to thequestion 'How do immigrants affect the labourmarket?' has to cover many issues. These areconcerned with the impact of immigrants onthe labour market and with how immigrantsfare in it. The findings of Australian researchstudies are used to throw some light on theseissues.

The remainder of this section presents somebasic information about Australia's migrationprogram. Section 2 briefly outlines the way thelabour market works, and discusses some basicconcepts and definitions. In section 3 theimpacts of immigration on the labour marketare summarised, while section 4 discusses theexperiences of immigrants in it. Finally, section5 presents some concluding remarks and someaspects of the subject that still need to bestudied.

Australia's migration program

Australia currently operates two migrationprograms to regulate the inflow of peopleseeking to settle in Australia - the Migration(Non-Humanitarian) Program and theHumanitarian Program. The factors that theseprograms seek to balance are:

• the capacity to contribute to Australia'seconomy;

• the recognition of the value and importanceof family migration to Australia's social andeconomic goals;

• the maintenance of Australia's humanitariancommitment.

The first two factors are the focus of theMigration (Non-Humanitarian) Program. This

1Making Mult icultural Australia Understanding Immigrants and the Labour Market

Understanding Immigrantsand the Labour Market

program has two main components - Familyand Skill migration. People wishing toimmigrate under the Family component have tobe sponsored by an Australian citizen orpermanent resident. The Skill componentconsists of a number of categories for peoplewith special occupational skills, distinguishedtalents or a business background that will makean economic contribution to Australia. Peoplewishing to enter under certain categories withinthe Family and Skill components are assessedaccording to their labour market potential. TheHumanitarian Program allows for the entry ofrefugees and other people facing infringementsof their human rights.

In addition to the above programs, NewZealand citizens are free to immigrate toAustralia under the Trans-Tasman TravelArrangement.

Some statistics on immigration

Many people have immigrated to Australia sincethe end of the Second World War... thesenumbers have varied over time, with morepeople arriving during good economic timesand fewer during times of recession. Since 1945the number of settlers arriving in Australia hasvaried from a low of 52,748 in 1975-76 to ahigh of 185,099 in 1969-70. In 1994-95, thelatest year for which data are available, 87,428people came to Australia as settlers.

This does not mean that in 1994-95 anadditional 87,428 people were seeking jobs as aresult of immigration. For a start, a quarter ofthe immigrants in 1994-95 were below the legalworking age of 15 years. Not all of theremaining three-quarters of immigrant arrivalswere necessarily looking for work. Some mayhave been too old and may have come toAustralia for their retirement. Others may havepreferred not to work so they could look aftertheir young children. Indeed, 53 per cent ofimmigrants who arrived in 1994-95 wereneither working nor looking for work beforethey came to Australia.

People also leave Australia permanently as

emigrants. The net addition to the Australianpopulation from immigration is accordingly thedifference between the number of immigrantsand the number of emigrants. In 1994-95,26,948 people left Australia permanently sothat, after the intake of 87,428 people, the netmigration gain was 60,480 people.

Section 2 Labour Market Concepts andDefinitions

How the labour market works

Much use is made of the term 'labour market'.But what does it mean? A market is a placewhere buyers and sellers interact to determinehow much of a commodity will be bought andsold, and for what price. In the labour marketthe 'buyers' are employers, the 'sellers' arepeople of working age (that is, aged 15 yearsand older) who want a job, and the price oflabour is wages and other employment relatedcosts (such as payroll tax, etc.).

Labour markets are concerned with people andtheir skills and abilities relative to employerneeds. Wages are important in attracting peopleto jobs, but other factors such as workingconditions, job security and career prospects alsocount.

Labour market indicators

Labour market activity can be measured byindicators such as labour force participation,employment, unemployment and vacancies.People of working age who are either workingor actively looking for a job are said to be in thelabour force. Employment refers to the number ofpeople in jobs, unemployment refers to thenumber of people looking for jobs and vacanciesare the number of jobs that employers cannotfill. If the number of people willing to work isthe same as the number of workers employerswant, then there will be no unemployment orvacancies. In reality, the chances of thisoccurring are quite remote.

Unemployment occurs when there are

2Making Multicultural Australia Understanding Immigrants and the Labour Market

insufficient jobs available for those seekingwork. Vacancies occur when more jobs areavailable than there are people wanting them.Because jobs have a skill or ability component,vacancies can also occur even when there isunemployment due to skill mismatches betweenthe jobs and the people seeking them.

The main indicators of labour marketperformance are the participation rate and theunemployment rate. The participation rate is thepercentage of working-age people who areparticipating in the labour force. Generally it islikely that a relatively high proportion ofworking-age people want to work, apart fromthose who are undertaking some form ofeducation, are looking after children or areretired. The labour market may not beperforming as well as it could if the labour forceparticipation rate fails due to peoplewithdrawing from the labour force because theythink they cannot find a job.

The unemployment rate is the percentage of thelabour force who are unemployed. A relativelylow unemployment rate indicates that thelabour market is performing well in matchingjobs with workers. There is some debate amongeconomists about what is a low unemploymentrate. This is because there are submarkets withinthe labour market and some unemployment canarise because those looking for work do nothave the skills or abilities to suit the jobs onoffer.

How labour market indicators are measured

Information on the main indicators of labourmarket activity (labour force participation,employment and unemployment) are providedmonthly by the Australian Bureau of Statistics(ABS) in its publication The Labour ForceAustralia. While it might be thought thatunemployment is a straightforward concept (forinstance, those people who do not have a job)there are a number of criteria that have to bemet before the ABS records a person as beingunemployed. First, a person who does not havea job must actually want to work (for instance,retired people do not have a job, but because

they do not want to work they are notconsidered unemployed). Next a person must be'actively' looking for work. Active steps includeapplying for jobs, answering newspaper jobadvertisements and checking or registering withan employment agency. Finally, the person mustbe available to start work immediately.

Other measures of unemployment are availablebut these are the by-product of statistics kept foradministrative purposes. Because of this they arenot generally regarded as being as accurate asthe ABS figures. The Department of SocialSecurity has data on the number of peoplereceiving unemployment allowances (the 'dole'),but not every unemployed person is eligible foran unemployment allowance. This is mainly dueto the income test - for example, many marriedwomen do not receive unemploymentallowances because their husbands work. On theother hand, some people receivingunemployment allowances may not be 'actively'looking for work or are not available to startwork straight away.

The ABS records a person as being employed ifhe or she has worked at least 1 hour in a week.Although there may be concerns about the rigiddefinitions used by the ABS in measuringlabour force activity, these definitions doconform to international standards so that thelabour force situation of Australia can be easilycompared with those of overseas countries.

Another indicator of labour market activity isvacancies, which are measured every 3 monthsby the ABS. A vacancy is defined as a jobavailable for immediate filling and for whichrecruitment action (for instance advertising ajob or notifying employment agencies) has beentaken. The Department of Employment,Education and Training measures vacancies forskilled occupations each month. TheCommonwealth Employment Service (CES)also provides quarterly information on thenumber of vacancies registered with it. However,not all vacancies are registered with the CESand those that are tend to be in non-professional occupations.

3Making Multicultural Austral ia Understanding Immigrants and the Labour Market

Section 3The Impact of Immigration onthe Labour Market

Issues of contention

What concerns are there about the impact ofimmigration on the labour market? It is said bysome people that 'immigrants are taking thejobs of Australians', 'immigrants go straightonto the dole queues'; 'immigrants preventAustralians from getting wage rises'; 'employersare importing skilled immigrants so they don'thave to train Australian workers'; and'immigrants are making Australia lessproductive'. Other people, however, see benefitsin immigration, such as adding to Australia'sskills base and stimulating economic activity.Many factors on both the demand as well assupply side of the labour market are relevant,and the research evidence cannot confirm all theconflicting public perceptions.

Unemployment

The arrival of immigrants to Australia increasesthe available supply of labour. Will this lead toincreased unemployment as more people will belooking for the same number of jobs or, sinceimmigrants also add to the demand for labour,will the overall effect be positive? Immigrantshave to buy goods and services, rent or buyhouses and, in the case of newly arrivedimmigrants, buy all that is required to establisha new household. Immigrants also bring fundswith them that can be invested. For thesereasons immigrants create jobs in Australia.

(Statistics show) ...increases in the net migrationrate (net migration, i.e. immigration lessemigration, as a percentage of the Australianpopulation) are not associated with increases inthe unemployment rate. In general, the reversehas been the case - increases in the netmigration rate have gone along with falls in theunemployment rate. Quite a large number ofAustralian studies have looked at the impact ofimmigration on the unemployment rate and allhave found that overall immigration, despite the

fears of some commentators, does not lead toincreases in the unemployment rate. The lessonfrom this is that when assessing the impact ofimmigration on the unemployment rate, effectson both the demand and supply sides of thelabour market have to be taken into account.

However, while immigration may not affect theunemployment rate of all people in theAustralian labour force, immigrants, especiallythose from a non-English-speaking background(NESB), do have higher unemployment ratesthan the Australia-born. Those immigrants whoh a ve recently arrived in Australia have the highestunemployment rates. The reasons for theseoutcomes are looked at in section 4. What willbe looked at here is the claim of somecommentators that immigrants go straight ontothe 'dole queue' after arriving in Australia andthat immigrants are overusers of theunemployment allowances system.

A number of studies have looked at thisparticular issue. They are all in agreement thatunemployed immigrants are less likely to receiveunemployment benefits than their Australia-born counterparts. This was the case for boththose receiving the Job Search Allowance (JSA) -those unemployed for less than 12 months, oraged between 15 and 18 years and unemployedfor any period - and those receiving theNEWSTART Allowance (NSA) - those agedover 18 years and unemployed for 12 months ormore). ...while the proportion of theu n e m p l oyed who we re receiving unemploy m e n tallowances has increased over the 1990-92recession, a higher proportion of the Australia-born unemployed were receiving unemploymentallowances than the overseas-born unemployed.Because the definitions of unemployment forstatistical purposes and for allowance eligibilitydiffer, the numbers receiving unemploymentallowances do not correspond to the numbersunemployed as measured by the ABS.

It could be argued that the unemployment rateof immigrants is understated becauseimmigrants are more likely than the Australia-born to be participating in a labour marketprogram. Unemployed people participating in


labour market programs are generally notrecorded as being unemployed, especially thosein programs that involve employment. However,in recent years only about a tenth of peopleparticipating in labour market programs wereoverseas-born. This share is considerably lowerthan their share of unemployment of around athird, or of their share of the labour force ofclose to a quarter.

Wages and prices

Another concern, expressed particularly byworkers and unions, is that immigrants may puta ceiling on wage increases. If immigration leadsto more people competing for jobs thenemployers are better able to resist pressures forwage rises. Immigrants who have arrived fromlow-wage countries may regard a low Australianwage as being quite high and be less likely topush for wage rises. Again, when dealing withthis issue both sides of the labour market haveto be taken into account. As was explainedearlier, immigrants also create jobs. This couldreduce competition for jobs so that pressure forwage rises may not occur.

This is not to say that immigration has no effecton wages. Those sectors of the economy facinglabour shortages for particular occupationsusually have to offer higher wages to attractlabour. Skilled immigrants can relieve wagepressures in those occupations. Another schoolof thought argues that if the demand ofimmigrants for infrastructure and governmentspending (such as housing, hospitals andschools) is seen by the Australia-born to delayadvances in their living standards, then theymay seek compensation through higher wages.

Wage differentials can exist between immigrantsand Australia-born workers, but these usuallyoccur in particular industries or occupations sothat at the economy-wide level the differencesare small. (Wage differences are discussed inmore detail in section 4 on the labour marketexperiences of immigrants.)

While workers may regard higher wages asdesirable, this may not be so if these lead to

increased prices. Indeed, the real value of wages,in terms of their purchasing power, may not riseif higher wages are offset by even higher prices.Higher prices may also occur if the demand forgoods and services expands more quickly thanthe capacity of the economy to produce them.There have been concerns that the high demandfor goods and services by immigrants in theirinitial years in Australia may cause higher prices.However, while immigrants may have a highdemand for goods and services, they also enablethe economy to expand by increasing the supplyof labour and by investing the money theybrought with them.

It can be seen that there are many argumentsabout why immigration should affect wages andprice levels. These effects could be either goodor bad for the economy. A number of studieshave been carried out to see what effectimmigration has had on money wages, the realvalue of wages and prices. These studies haveconcluded that immigration has no effect onany of them. Once again the demand side andsupply side effects of immigration balance eachother.

Skill gain

Some concern has been expressed that theavailability of skilled immigrants discouragesemployers from training their existing workforces. Indeed... from the late 1980s onwards ahigher proportion of immigrants arriving inAustralia were skilled (measured by their havingworked in the more highly skilled occupations)than was the case for the Australia-born workforce. Australian employers may not beretraining their existing work forces because it ischeaper to employ immigrants who have theskills they want.

Some commentators have questioned whether itmatters if skill shortages are met throughimmigration or through retraining. Employerswill choose the cheapest and most cost-effectivemeans of obtaining skilled workers, and skilledimmigrants have been trained at the expense oftaxpayers or employers in overseas countries.However, while bringing in skilled workers from


overseas may be cost-effective in the short term,it may cause problems in the long term. There isno certainty that as world economies becomemore globalised, skilled immigrants will want tokeep coming to Australia in sufficient numbers.If they did not, Australia would be left with alarge number of people with outdated skills anda training system less capable of delivering therequired training.

However, the immigration of skilled workersdoes not necessarily result in Australian workersreceiving less training. Some of the skillsimmigrants bring may be new or different andare not taught in Australian traininginstitutions. Australians working alongside theseskilled immigrants can pick up these new ordifferent skills. On-the-job training can be justas important as more formal training.

Several studies have examined the effect ofskilled immigrants on the training of Australianworkers. No evidence was found that employerswere using skilled immigrants as a substitute totraining Australian workers. One study foundthat skilled immigrants tended not to work inindustries that had high levels of training.However, this outcome was due to skilledimmigrants being more likely than Australia-born workers in similar occupations to beworking in industries that had low levels oftraining, rather than immigrants being asubstitute for training. Another study foundthat skilled immigrants actually transferred theirskills to their Australian co-workers as part ofdoing their jobs. This skill transfer was useful tothe co-workers and would not have happened ifthe skilled immigrants were not workingalongside them.

Productivity

Some commentators suggest that immigration islowering Australia's productivity. One reasongiven is the increasing number of NESBimmigrants. If immigrants have greaterdifficulty than others in communicating withfellow workers, their productive contributionmust be less, regardless of their skills andabilities. As the level of technology in Australian

industry increases workers have to be trained inits use so that it can be employed effectively. Ifimmigrants face difficulties in being trainedbecause of English language problems they willnot be able to be as productive as Australia-bornworkers. On the other hand, language diversitycan be regarded as a resource that can be used todevelop markets in countries where English isnot the main language spoken.

Another line of argument is that immigrantswill reduce productivity because they will causeinvestment to be diverted from the equipmentand technology required to improveproductivity to less productive uses such as theconstruction of housing, schools and hospitalsto meet the needs of the immigrant population.However, this assumes that the amount of fundsavailable in Australia is fixed. Immigrants bringfunds with them which could be used to financeinvestment in Australia. Funds will be attractedfrom international capital markets ifinvestments in productive capital offer attractiverates of return.

Other commentators have argued thatimmigration has increased Australia'sproductivity. As discussed above, immigrantstend to be more highly skilled than Australia-born workers. It has also been claimed thatimmigrants should be more highly motivated.This is because it takes a high level ofmotivation to decide to move from one countryto another and then actually make the move.However, some groups of immigrants, such asrefugees, may have no real choice in leavingtheir former countries. It is also claimed that, atleast for their initial period of residence inAustralia, immigrants are likely to want to workharder both to make a favourable impression ontheir new employers and to establish themselvesin their new country. These factors could lead toimmigrants being more productive thanAustralia-born workers.

Quite a few studies have looked at therelationship between immigration andproductivity, although conclusive results arehard to obtain due to problems in accuratelymeasuring productivity. These suggest that the


impact of immigration on productivity has beenminor. Although there is evidence thatimmigration has led to an increase ininfrastructure investment, which would benefiteveryone living in Australia, the impact of thisinvestment on the Australian economy has notbeen sufficiently investigated.

Summary

This section has examined the cases for andagainst immigration having a beneficial impacton the labour market. It appears that many ofthe concerns that immigration will have anundesirable effect on the labour market arisebecause only the demand or the supply side ofthe market has been considered rather than bothtogether. The demand and supply sides have abalancing effect, as shown in the research resultsthat immigration has only a small effect onunemployment rates, wages, prices andproductivity. Also, skilled immigrants were notfound to be used as a substitute for trainingAustralia-born workers. As a result, fears aboutthe negative labour market impact ofimmigrants are unfounded.

This conclusion does not mean that individualimmigrants always succeed in the labourmarket. Indeed, many immigrants, particularlythose from a non-English-speaking background,are disadvantaged in the labour marketcompared with the Australia-born. The labourmarket experiences of immigrants are examinedin section 4.

Section 4Immigrants' Labour MarketExperience

Immigration is likely to be viewed as beingsuccessful, by both immigrants themselves andthe Australia-born, if immigrants are successfulin the labour market. The work environmentcan help introduce a recently arrived immigrantto the ways of the Australian community as wellas providing the money required to establish anew home. If immigrants are unable to get workafter they have arrived they may have to besupported by the social security system. The

evidence from Australian studies is that theeconomic and social benefits of immigration aregreatest when all the skills and talents ofimmigrants are being used fully.

Most people would judge labour market successas having a job. However, having a job may notbe a good indicator of success if immigrants arenot fully using their skills and abilities (forexample, an overseas-trained doctor working asa hospital orderly). Judging whether immigrantshave been successful or not requires anexamination of other factors like earnings andoccupational status.

This section examines the experiences ofimmigrants in the labour market using a varietyof indicators of success. What is clear from allmeasures is that ability to speak English is veryimportant. The discussion that follows dividesimmigrants into those from an English-speakingbackground and those from a non-English-speaking background.

Labour force participation rate

The labour force participation rate is theproportion of the population of working agewho are either working or looking for a job....English-speaking background immigrants had,until the late 1980s at least, a higher labourforce participation rate than that for theAustralia-born. While NESB immigrants hadhigher participation rates than the Australia-born in the late 1970s, since 1985 they havebeen lower than that of the Australia-born. Thisis the result of their participation rates fallingover time while those of the Australia-born havebeen rising. What factors might explain theseoutcomes?

Researchers have found that the participationrates of immigrants are relatively low duringtheir first few years in Australia. After the initialperiod of adjustment, the participation ofimmigrants in the labour force is similar to thatof the Australia-born. Much of the differencebetween the participation rates of ESB andNESB immigrants appears to be due to thelower level of English skills of NESB


immigrants. The recent decline in theparticipation rates of NESB immigrants is partlydue to the effect of the 1990-92 recession, aswell as the changing structure of the NESBimmigrant population to contain relatively morepeople with characteristics likely to lead to lowerlabour force participation, such as being older.

Unemployment rate

The unemployment rate of ESB immigrants issimilar to that of the Australia-born, but therate for NESB immigrants is higher... It is likelythat immigrants will experience someunemployment on their arrival in Australiaunless they have a job arranged (as would be thecase for immigrants who have employersponsorship). As immigrants spend more timein Australia their employment prospects arelikely to improve. The Australian research onimmigrants and unemployment has four mainfindings. These are:

• A lack of English language skills is a majorfactor behind the higher unemployment ratesof NESB immigrants.

• After allowing for English language skills, thetime spent in Australia is the next mostimportant factor, with unemployment ratesfalling as more time is spent in Australia.

• Refugees have the highest unemploymentrates, but this is mostly because they havepoor English language skills, have arrivedrecently and have suffered traumaticexperiences before immigrating (for examplesome have been tortured).

• The educational qualifications obtained byimmigrants before they came to Australia donot help them to get jobs to the same extentas similar qualifications gained in Australia.

These four factors affect people from differentcountries to varying degrees. People fromLebanon and Vietnam have particularly highunemployment rates (about three to four timeshigher than the unemployment rates for theAustralia-born), mainly because they are

refugees, have poor English language skills, arerecent arrivals and have qualifications that arenot recognised in Australia. People fromcountries with a level of economic developmentsimilar to Australia's fare much better (forexample, immigrants from Germany, althoughhaving a non-English-speaking background,experience an unemployment rate below that ofthe Australia-born).

Structural changes in the Australian economy,such as the declining importance ofmanufacturing industry while service industriesare becoming more important, may be a factorbehind the higher unemployment rates ofNESB immigrants. These immigrants areoverrepresented in manufacturing comparedwith their Australia-born and ESB counterparts.Employers also want highly skilled workers andthis can disadvantage NESB immigrants as theyare overrepresented in the lower skilledoccupations. The research findings on theimpact of these structural changes does notreach a consensus. Some researchers have foundonly a small impact from structural change. Butthe prevailing conclusion is that structuralchange since at least the mid-1970s has led tohigher unemployment, especially for NESBimmigrants.

Hidden unemployment and underemployment

Some people who would like a job are notcounted in the official unemployment statisticsbecause they are not 'actively' looking forwork... These people are said to be in 'hiddenunemployment'. The reasons why some do notactively seek work are varied and include illhealth, lack of suitable child care, lack of jobopportunities and problems due to lack ofEnglish language skills and cultural background.Little research has been done on the differencesin underemployment according to birthplace.

One of the few studies undertaken examined'discouraged job-seekers' (a group within thosenot actively looking for work...). These arepeople without a job who are not activelylooking for work because they believe that theirjob-seeking will be unsuccessful either because


employers will not be interested in them orbecause there are no jobs available for them.While the discouraged job-seeker category ismore restrictive than the hidden unemploymentcategory, it is the only one for which data areavailable. This study found that immigrantswere more likely to be discouraged job-seekersthan were workers born in Australia. Whilethere did not appear to be any differencebetween ESB and NESB immigrants, oncefactors such as age, gender and reason forleaving their last job were considered, NESBimmigrants showed a higher incidence thanESB immigrants of being discouraged job-seekers.

Another group of people who are not fully usingtheir skills are those classified as underemployed.Underemployment occurs when workers areworking fewer hours than they would like to orwhen their jobs do not require all of their skills.Research has shown that little difference existsbetween birthplace groups in terms of hours ofunderemployment. However, once factors suchas age, gender, family status, occupation andindustry are taken into account there is someevidence of higher rates of underemploymentamong NESB immigrants. That is, NESBimmigrants do not use their skills to the sameextent as ESB immigrants or those born inAustralia. This is especially the case for thosewho gained their skills before immigrating toAustralia. This situation could be partly due tonon-recognition of qualifications gainedoverseas.

Earnings

Having a job is only one indicator of labourmarket achievement. Another indicator is thewage and salary income that is gained fromworking. A large number of research studieshave examined this issue.

The overall finding from the Australian researchis that immigrants do not appear to be worse offthan the Australia-born in terms of earnings. Itis clear, however, that education does notincrease the earnings of immigrants to the sameextent it does for the Australia-born. Part of the

explanation of this outcome is that educationlevels in some countries do not correspond toAustralian levels.

An alternative point of view is that if it is truethat immigrants are more willing to movearound, are more motivated and have greaterabilities than the Australia-born - the sorts ofcharacteristics that might be expected ofimmigrants - there is likely to be a certainamount of earnings discrimination that is notdetected in the research.

Occupational status and attainment

Occupational status is a further indicator oflabour market success. Some researchers haveargued that people from particular birthplacestend to work in a small number of occupationsand it is difficult for them to find jobs in otheroccupations. An example of this is the tendencyof NESB immigrants to be concentrated in thelower skilled occupations, such as thoseassociated with manufacturing. However, it isalso argued that immigrants improve theiroccupational status over time - their first job inAustralia may be relatively low skilled but theygradually move into more highly skilledoccupations the longer they stay in Australia.

There have been mixed findings from theAustralian research regarding the occupationalprogress of immigrants. Most studies find thatthere are differences between the types ofoccupations held by the Australia-born andimmigrants, especially NESB immigrants. Amajor factor for this difference is the difficultyin transferring overseas-gained skills andexperience to the Australian workplace.

Quality of work life

Even if immigrants do not face disadvantages intheir earnings or occupations, their labourmarket success may be lower than that of theAustralia-born if they are more likely to:

• work under poor conditions, exposing themto ill health and injury;


• work in repetitious or unsatisfying jobs;

• undertake the more menial, dangerous anddirty jobs.

The Australian research findings have generallyindicated that immigrants, particularly NESBimmigrants, have less satisfying jobs. However,most of this research has involved small studiesof particular workplaces, which makes itdifficult to generalise the findings. A study ofthe communications industry found that, aftertaking into account factors related to jobsatisfaction such as wages, job security and skillsuse and development, immigrants fromMediterranean and Middle Eastern countrieshad higher levels of job satisfaction thanimmigrants from other countries and theAustralia-born. Again it is difficult to generalisethe results from this industry to others.

Higher job turnover and absenteeism mayindicate job dissatisfaction. One study foundNESB immigrants to have lower job turnoverrates than the Australia-born, while the reversewas the case for ESB immigrants. Theseoutcomes would not be expected if NESBimmigrants were less satisfied in their jobs.Another study found that, after allowing for avariety of personal and work-related factors,there were no differences in absenteeismbetween the birthplace groups. However, tworecent studies have found that some workplaceswith high concentrations of NESB workers havehigher job turnover and absenteeism.

Many studies of the working lives of immigrantshave examined occupational health and safetyexperiences. Most of these studies have lookedat immigrants' workers' compensationpayments. They have shown that immigrants,especially NESB immigrants, suffer moreindustrial injury and illness than Australia-bornworkers. However, because these studies arebased on industries or workplaces whereimmigrants are concentrated, or compareindustrial accident rates against theconcentration of immigrant employment acrossindustries, their conclusions can be misleading.Only one very detailed study has been

undertaken and this showed that, after allowingfor industry and occupation, there was nodifference between the industrial injury rates ofdifferent birthplace groups.

Self-employment and entrepreneurship

A common view of the successful immigrant(especially those of Southern European or Asiandescent) is the self-employed shop-owner. NESBworkers are more likely to be employers or self-employed than are ESB and Australia-bornworkers. There are a variety of reasons whyimmigrants might be more likely to go intosmall business.

The first explanation focuses on the culturalresources or predisposition of certain ethniccommunities to enter small businesses. Thesecond relates to the development of ethnicenclaves. In other words, ethnic communitiesthemselves create demands for goods andservices, which in turn create opportunities andniches for immigrant entrepreneurs. The thirdexplanation is that ethnic businesses arise inresponse to cultural antagonism or of restrictedjob opportunities. Immigrants may use self-employment as an alternative to unemployment.The fourth explanation is that part of Australia'smigration program targets people who havebusiness skills and capital.

However, to date the findings of the Australianresearch on this topic are full of contradictions.No consensus yet exists on the key issues ofwhether immigrants are more entrepreneurialthan the Australia-born and, if so, why.

Barriers to immigrant labour marketachievements

Five factors have been identified in theAustralian research as preventing immigrantsfrom reaching their full potential in the labourmarket. These are prejudice, lack of English-language skills, lack of recognition ofqualifications, lack of involvement in tradeunions and unsympathetic managementpractices. While studies have identified thatAustralians have some prejudice towards

1 0Making Multicultural Australia Understanding Immigrants and the Labour Market

immigrants, there is little evidence that thisresults in discrimination against immigrants byemployers. In other words, while someemployers may desire to discriminate againstimmigrants, very few actually do.

Many research studies have identified that thelower level of English-language skills of NESBimmigrants contributes to their higherunemployment rates, lower earnings andoverrepresentation in lower skilled occupations.These findings reflect the disadvantagesassociated with poor communication skills.Research has found that English-language abilitydepends on education and the amount of timespent in Australia. Immigrants who are educatedin Australia tend to have better English-language abilities than those educated overseas.However, immigrants have to be able to seesome labour market benefit from improvingtheir English skills before they will do so. Someof those working in the lower skilledoccupations may not consider it worthwhile, orcircumstances may not allow them, to improvetheir English-language skills.

There are many studies showing that NESBimmigrants do not gain as much from theireducation as do ESB immigrants or theAustralia-born, particularly if their educationwas obtained overseas. This may be becauseeducation in some countries is of a lower ordifferent standard to Australian education. Itmight also be due to the lack of recognitiongiven to overseas qualifications that are similarto Australian qualifications. The evidence showsthat immigrants are disadvantaged because ofthe lack of recognition given to their overseasqualifications, although the extent of thisdisadvantage has been harder to establish.

Recent developments such as the moves towardsthe recognition of prior learning (where coursecredits are given for skills already possessed) andcompetency-based training (where the focus ison the skills actually needed to do a job) shouldhelp to reduce the problems faced byimmigrants in having their skills andqualifications recognised.

Until recently little was known about theparticipation of immigrants in work-relatedtraining. It might be expected that immigrantsreceive less training as they are more costly totrain (as a result of poor English-language skills)or are more likely to change jobs. The prejudiceof some employers against immigrants may alsoresult in them receiving less training. The majorstudy in this area found that NESB immigrantswere far less likely to receive work-relatedtraining than ESB immigrants or those born inAustralia. However, this did not appear to bethe result of discrimination by employers.Employers were more likely to support thetraining of NESB workers than that of otherworkers. The main explanation for the lowerincidence of training among NESB immigrantswas difference in age, gender, education,experience, occupation, industry and workplacesize.

It is claimed that one reason for thedisadvantages immigrants experience in theirworking lives is their lack of involvement intrade unions, combined with the lack ofattention paid by unions to their overseas-bornmembers. There has been only a limited amountof research in this area. NESB union memberswere found to be underrepresented among full-time union officials, although there were widevariations according to countries of birth. Aswell, this underrepresentation had decreasedsignificantly over time. While NESB unionistswere found to be less involved than othermembers in union affairs, this mainly related tothose from particular birthplaces who haddifficulty communicating in English. Someunions were found to have policies for dealingwith their NESB members and for targetingsome of their services to these members. Overtime, more unions have recognised the need tocater for their immigrant members.

There is an argument that personnel andmanagement practices should incorporate theneeds of immigrant workers such as their lack ofEnglish-language skills, cultural differences andpoor understanding of Australian laws. Thestudies undertaken on this topic indicate thatnot many Australian companies make special


provisions for their immigrant workers. Evenwhen schemes have existed they have not beenparticularly effective.

Section 5Conclusion

Overview of the research

This book has looked at two aspects ofimmigration and the labour market. The first isthe impact that immigration has on the overalllabour market and some key macroeconomicfactors associated with the labour market. Thesecond is the experiences of immigrants withinthe labour market. Overall, the consensus ofAustralian research is that immigration has hadat least a small positive effect on the labourmarket as a whole. This is becauseunemployment rates and wages are largelyunaffected by immigration, which has probablyassisted increases in the skill levels of theAustralian work force. Whether this conclusioncontinues to be true will be influenced by theskill composition of future immigrant intakes.

It is clear that the experiences of immigrants inthe labour market vary between NESB and ESBimmigrants. The experiences of ESB immigrantsare generally very similar to those of peopleborn in Australia, while NESB immigrants aregenerally less successful in the labour marketthan the other two birthplace groups. Of courseNESB immigrants come from a diverse range ofbirthplaces and not all experience the outcomesobserved for NESB immigrants as a whole.

It is clear that NESB immigrants, whencompared with the Australia-born, are less likelyto participate in the labour force (partly due toNESB immigrants being more likely to bediscouraged in their job search), have higherrates of unemployment, and are more likely tobe underemployed. Many studies have foundthat poor English-language skills and the shorttime since arrival in Australia are major reasonsfor these outcomes. The difficulty NESBimmigrants face in gaining recognition for theskills, experience and qualifications theyobtained before coming to Australia is another

important factor. Lower earnings and loweroccupational status are further outcomes of thislack of recognition of abilities.

There is a feeling that immigrants, especiallyNESB immigrants, experience a lower qualityworking life than do ESB immigrants orAustralia-born workers. This may be so in somejobs, but no overall conclusion can be drawnfrom the existing research. There is an image ofimmigrants, particularly those from certainbirthplaces - such as southern European andsome Asian countries - as being more likely tobe involved in a small business, particularly as ashopkeeper. Research has not been able to reacha consensus on the reasons for this.

Immigrants may not be able to reach their fullpotential due to factors such as discrimination,poor English-language skills, lower education,inattentive trade unions and unsympatheticpersonnel practices. Of these factors, thestrongest evidence is for the adverse impact ofpoor English-language skills. Little directevidence exists of employer discriminationagainst immigrants. Trade unions andmanagement appear to have paid little attentionto the special needs of immigrant workers,although this is gradually changing.

Aspects of the subject that still need to bestudied

While a large number of factors relating to theexperience of immigrants in the labour markethave been studied, the evidence on some ofthese is patchy and inconclusive. Some issues,which are outlined below, have not yet beenexamined in detail by researchers. It has beenclaimed that the labour market experience ofimmigrants changes as they live in Australialonger. However, until very recently it has notbeen possible to track individual immigrantsover time. The Bureau's Longitudinal Study ofImmigrants to Australia, which commenced in1994, will collect a range of information abouthow the experiences of individual immigrantsvary over time. Several of the issues discussed inthis book can be re-examined using informationfrom this survey to give a better picture of how


immigrants progress in the workplace over time.

One of the major barriers to immigrant labourmarket achievements is the difficulty of gainingrecognition of qualifications and skills gainedoverseas. This is a topic worthy of moresystematic investigation. Studies could examineskilled immigrants who work in a wide range ofprofessions and trades to see the extent to whichtheir skills relate to the competencies required intheir jobs.

Many of the issues associated with the quality ofimmigrant working life have not beencomprehensively examined. Existing studieshave typically focused on one industry ororganisation so that their findings cannot begeneralised to all immigrants. Moreinvestigation is required so that findings relevantto a large number of immigrants can be made.Unfortunately, there are often no readilyavailable data that would be suitable for thesemore comprehensive studies.

Some factors that can influence immigrantexperiences in the labour market have beenmentioned only in passing but have not beenexamined. One of these is motivation. It is oftenstated that immigrants are likely to be morehighly motivated than the Australia-bornbecause they have actually moved from theirformer country in search of a better future.However, few satisfactory studies have examinedthe motivation levels of immigrants.

It is generally assumed that labour marketdisadvantage is due to poor English-languageskills, but it may be the case that the opposite istrue - that is, immigrants may not consider itworthwhile to improve their English-languageskills if they do not think this will improve theirsituation. If the conventional assumption doesnot hold then misleading interpretations may begiven to research findings. In particular,discrimination against immigrants by employersmay not be detected. This is an issue that couldbe investigated.

Regional variations in labour market experiencesare also poorly researched. A few studies have

examined the experience of immigrants inparticular regional labour markets, but there hasbeen no research on how immigrant labourmarket experiences have varied between regions.

Select Bibliography

Brooks, C. & Williams, L. S. 1995, Immigrants andthe Labour Market: The 1990-94 Recession andRecovery in Perspective, AGPS, Canberra.

Baker, M. & Wooden, M. 1991, Immigration andTraining, AGPS, Canberra.

Foster, W. & Baker, L. 1991, Immigration and theAustralian Economy, AGPS, Canberra.

Stromback, T. with Biffl, G., Bushe-Jones, S.,Clarke, J., Dawkins, P., Nicholls, S. & Preston, A.1993, Immigration, Skill Transfer and Restructuringin Western Australia, AGPS, Canberra.

Wooden, M. 1993, Underemployment, HiddenUnemployment and Immigrants, AGPS, Canberra.

Wooden M., Holton, R., Hugo, G. & Sloan, J.1994, Australian Immigration: A Survey of theIssues, 2nd edn, AGPS, Canberra.


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