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Outcomes of Migrants in the UK Labour Market

06 Aug 2018

This briefing gives an overview of employment rates, unemployment rates, and wages of migrants in the UK labour market.

  1. Key Points
    • In recent years, the employment rate for foreign-born men has increased over time and now exceeds that of UK-born men. Foreign-born women are less likely to be employed than UK-born women
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    • Eastern European migrants have higher employment rates than their UK counterparts while Asian women have lower employment rates
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    • Unemployment rates of the foreign-born compared to the UK born are higher among women and lower among men
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    • Since the early 2000s, male UK-born median hourly wages have exceeded those of male foreign-born workers. Among women, median hourly pay is similar for the UK and non-UK born
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    • Foreign-born workers have more education than the UK born, and their education levels have increased over time
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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 (defined as 16-64 for both men and 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.

    The terms A8 and A2 refer to migrants from countries that joined the EU in 2004 and 2007 respectively. A8 (meaning “Accession 8”) refers specifically to migrants from Hungary, Latvia, Lithuania, Poland, Estonia, The Czech Republic, Slovakia and Slovenia while (similarly “Accession 2”) refers to migrants from Romania and Bulgaria.

The employment rate for foreign born men has increased over time and now exceeds that of UK-born

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 1). However, since 2006 the employment rates of male migrants (83% for 2017) have risen and now exceed that of UK-born males (79% for 2017). Among female migrants the employment rate (64% for 2017) has remained lower than that of UK-born females (72% for 2017), although the gap has narrowed slightly over time.

Figure 1

Source: Labour Force Survey, Q1-Q4

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Employment rates vary between countries of origin: Eastern European migrants have higher employment rates and Asian women have lower employment rates

The averages reported above mask significant variations in employment rates between different groups of migrants. In 2017 the employment rates of male workers from the A2 (92%), Oceania (91%), A8 (91%), EU (88%), India (86%), EU-14 (83%) North America (82%), Africa (80%) Pakistan (80%), were higher than those of UK-born men (79%). Only male workers from other Asian countries (i.e. excluding Pakistan and India) have lower employment rate as those from the UK (see Figure 2).

In contrast, migrants from some Asian countries experience significantly lower employment rates than the UK- born. The differences are particularly large among women. Female workers coming from Oceania, A2, and A8 countries have higher employment rates than UK-born women (respectively 78%, 76% and 75%) and female workers from EU have similar employment rate as those from the UK (72%). However, the employment rate of women from Pakistan is less than half that of UK-born women.

Figure 2

Source: Labour Force Survey, Q1-Q4

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Unemployment rates of the foreign-born compared to the UK born are higher among women and lower among men

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 3). In the last few years, the unemployment rate of foreign-born men fell slightly below that of UK-born men. In contrast, UK-born women have a lower unemployment rate than foreign-born women.

Figure 3

Source: Labour Force Survey, Q1-Q4

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

Figure 4 plots the median real hourly wage for foreign-born and UK-born men and women from 1993 to 2017. 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 those with an hourly wage reported as being between one and a hundred pounds are included. Among women, hourly pay for the UK and non-UK born has been quite similar since the late 2000s. For example in 2017 the median real hourly wages for female UK-born and foreign-born were £10.20 and £10.00 respectively. Among men, the UK-born earn more than the foreign-born, at respectively £12.50 and £11.60 in 2017.

Figure 4

Source: Labour Force Survey, Q1-Q4

UK-born men’s wages have only exceeded those of male migrants since 2005. This is likely to be a result of the higher share of A8 (and subsequently also A2) migrants who, being employed in lower skilled occupations, have been earning a lower hourly wage. Although characterised by very high employment rates, workers from the A2 and A8 countries earn the lowest median wages among different groups of migrants considered (see Table 1). Workers born in Pakistan are also relatively poorly paid. On the other hand, workers from Oceania have the highest hourly wage followed by workers from North America and India the EU-14. The trends are similar for female migrants, though the differences with the female UK-born are less marked.

Table 1

Median hourly wage (£) by country of birth, 2017

 Men (£)Women (£)
Oceania18.3113.74
A29.228.33
A89.438.22
Pakistan9.5010.00
Other Asia11.459.63
Africa11.5510.17
UK12.5010.23
EU-1414.4311.53
India14.5812.50
North America16.9413.83
Source: Labour Force Survey, Q1-Q4

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 2017 a lower share of female migrants were in part-time jobs than their UK-born counterparts (35% and 41% respectively). Although on average there are fewer men in part-time jobs than women, in 2015 the percentage of foreign-born men in part-time jobs (12%) was higher than that of their UK-born counterparts (11%). In both cases this percentage is higher than in the past. Moreover, in 2017 11.8% 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 (12.2%).

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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 2017 there was an improvement in educational attainment for both foreign-born and UK-born workers (see Table 2). 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 2017, around 10% of recently arrived male foreign-born workers had only been in full-time education until 16 years of age, compared to 16% for all male foreign-born workers, and 40% for UK-born men. In 2017, nearly one in two recent migrants was in the highest educational category compared to one in three UK-born workers.

Table 2

Education of foreign-born and UK-born workers in the UK

Percentage of group with each level of education, employed only
19932017
Age completed educationUK-BornAll Foreign-BornRecent Foreign-BornUK-BornAll Foreign-BornRecent Foreign-Born
Panel A: Men
16 or under65.737.411.340.216.210.4
17-2019.9303428.732.534.7
21 or older14.432.654.631.151.354.9
Panel B: Women
16 or under60.225.51336.417.210.3
17-2026.439.942.832.132.327.9
21 or older13.434.644.331.550.661.9
Source: Labour Force Survey, Q1-Q4

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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, Madeleine Sumption and Jonathan Wadsworth for comments and suggestions on an earlier version of this briefing.

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