Earnings gap among migrants from new Member States observed

Dobbins, Tony

Overview

Article

Earnings gap among migrants from new Member States observed

Published: 24 June 2008

Tony Dobbins

Pay and income

On 30 April 2008, the Economic and Social Research Institute (ESRI [1]) published a study on The immigrant earnings disadvantage across the earnings and skills distributions: The case of immigrants from the EU’s new Member States in Ireland [2]. It concludes that migrant workers from the new Member States (EU10 – the 10 countries that joined the EU in 2004) earn between 10% and 18% less than Irish native citizens in similar occupational positions. According to ESRI, this earnings gap is higher than that observed for other immigrant groups such as those from the United Kingdom and the ‘old’ 15 EU Member States (EU15 – prior to 2004 enlargement). The study highlights that the earnings difference may be related to the fact that migrants from the EU10 are generally the most recent arrivals in the country.[1] http://www.esri.ie/[2] http://www.esri.ie/publications/latest_publications/view/index.xml?id=2556

A new study by the Economic and Social Research Institute published in April 2008 shows that the average earnings difference between migrants from the 10 Member States that joined the EU in 2004 and Irish nationals is between 10% and 18%. The study reveals that the pay disadvantage of migrants generally increases with the level of educational attainment. Moreover, not having English language proficiency impacts negatively on migrants’ earnings in Ireland.

On 30 April 2008, the Economic and Social Research Institute (ESRI) published a study on The immigrant earnings disadvantage across the earnings and skills distributions: The case of immigrants from the EU’s new Member States in Ireland. It concludes that migrant workers from the new Member States (EU10 – the 10 countries that joined the EU in 2004) earn between 10% and 18% less than Irish native citizens in similar occupational positions. According to ESRI, this earnings gap is higher than that observed for other immigrant groups such as those from the United Kingdom and the ‘old’ 15 EU Member States (EU15 – prior to 2004 enlargement). The study highlights that the earnings difference may be related to the fact that migrants from the EU10 are generally the most recent arrivals in the country.

However, when taking into account the different educational categories and earnings distribution, a more variable picture of the earnings difference experienced by migrant workers from the EU10 emerges.

About the study

The study is based on data from the 2006 National Employment Survey (NES) – NES is a workplace survey, covering both the private and public sectors. The survey is carried out by the Central Statistics Office (An Phríomh Oifig Staidrimh na hÉireann, CSO) and data is collected at the enterprise level.

In 2006, about 8,000 enterprises with more than three employees were contacted, of which 4,845 responded, resulting in employee information on 67,766 individuals. The ESRI study comprised a population sample of just below 50,000 employees, following the exclusion of employees with missing earnings information and part-time students of the survey sample, in addition to restricting the sample to persons of working age.

Minimal wage gap in low-skilled occupations

The wage difference is found to be either non-existent or low for people with low skills levels and for people at the lower end of the earnings distribution. The highest earnings gap recorded in these two categories of workers surveyed is 4%. In sharp contrast, wage differentials between native Irish citizens and migrants from the EU10 are significantly higher for those employees with higher skills levels and at the upper end of the earnings distribution. In this case, the difference in earnings amounts to up to 18%. In other words, the wage gap increases relative to the employees’ educational attainment and is higher along the earnings distribution.

ESRI measures earnings as the hourly pay rate for each individual employee. Employees’ hourly pay rates are derived from the employers’ responses to the survey questions on both employees’ gross monthly pay and their total work hours paid in the reference period of March 2006.

The average hourly earnings for the ESRI population sample as a whole was estimated to be €19.47. For Irish native citizens, average hourly earnings are estimated to be €19.86, compared with €15.63 for migrant workers.

Migrants from the EU10 are shown to experience the highest earnings disadvantage, earning up to 18% less than Irish nationals in similar occupations. Of the other groups of immigrants, migrants from the EU15 and non-EU/non-English speaking countries experience an earnings disadvantage of between 7% and 14%, respectively. Meanwhile, migrants from the UK and non-EU/English speaking countries suffer no disadvantage in terms of earnings when compared with Irish nationals. In fact, English speaking workers from outside the EU earn on average 6% more than their Irish counterparts. According to the ESRI survey results, it appears that not having English language proficiency has a significant negative impact on migrants’ earnings in Ireland.

Average hourly earnings differentials

Table 1 outlines ESRI data on hourly pay differentials for Irish nationals and migrants from the EU10, as well as showing differences by gender.

**Table 1: Average hourly earnings for Irish nationals and migrants, by gender, 2006 (€)**
Nationality	Total	Male	Female
Irish	19.86	21.15	18.48
Migrants (total)	15.63	15.85	15.34
of whom:
UK	19.62	20.82	18.24
EU13*	17.10	17.77	16.41
EU10	11.40	11.99	10.48
Non-EU English speaking nationals	22.39	24.14	20.48
Non-EU non-English speaking nationals	13.81	13.09	15.04

Note: EU13 refers to the EU15 excluding Ireland and the UK.

Source: ESRI, 2008, p. 22

According to the study’s authors, the findings would tend to suggest that the pay gap for migrants from the EU10 is related to a failure to capture a full return on human capital. In explaining the existing pay gap between migrants and Irish nationals in similar occupations, the study emphasises the importance of skills transferability for EU10 migrants in Ireland.

Higher educational attainment

The ESRI study provides data on the highest educational attainment for both Irish nationals and migrants. When looking at the distribution of both employee groups across educational levels, migrants tend to have attained a higher educational level than native Irish people; some 54% of migrants have obtained a third-level qualification or above, compared with 45.1% of Irish nationals.

However, significant differences in educational attainment exist across the various migrant sub-categories, and again migrants from the EU10 stand out. According to the ESRI categories, migrants from the EU10 are the only group of immigrants with ‘a lower proportion of people with higher-level qualifications than the native Irish’. While the ESRI study found no evidence of an earnings disadvantage between Irish nationals and migrants from the EU10 at the lowest level of educational attainment, it found that the pay disadvantage generally increases with the level of education. The pay gap ranges from 6% for those with secondary-level qualifications to 14% for those with postgraduate qualifications.

Table 2 outlines the distribution of educational attainment for native Irish citizens and migrants.

**Table 2: Educational attainment for Irish nationals and migrants, 2006 (%)**
Nationality	Primary	Secondary	Post-secondary	Third-level degree	Postgraduate
Irish	7.6	37.1	10.2	35.5	9.6
Migrants (total)	6.5	24.2	15.3	39.9	14.1
of whom:
UK	6	29.8	14.4	36.6	13.2
EU13	5	18.1	10.7	41.8	24.2
EU10	6.8	27.6	28.2	28.4	8.9
Non-EU English speaking national	2.7	19.7	6.6	52.1	18.9
Non-EU non-English speaking	9.1	18.8	9.1	51.1	18.9

Source: ESRI, 2008, p. 19

Tony Dobbins, IRN Publishing

Eurofound recommends citing this publication in the following way.

Eurofound (2008), Earnings gap among migrants from new Member States observed, article.