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Economists Suggest Lower Wages to Immigrants Who Start Working

Economists Suggest Lower Wages to Immigrants Who Start Working

Marlena Bontas, an immigrant from Romania, thinks that paying a lower salary to immigrants would widen the gap between them and the Finnish workers. Picture: Tony Öhberg for Finland Today

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In a recent poll of prominent Finnish economists, a significant 58 percent agreed that immigrants should be paid a lower wage than Finns in the workforce. The economists, some from large academic institutions such as Hanken School of Economics, The University of Jyväskylä and the University of Helsinki, came to the conclusion based on different criteria to judge immigrants’ skills and their capabilities to partake in the workforce.

The case of language, education and integration were some of the topics discussed between the economists and experts. Vesa Vihriälä, the managing director at Research Institute of the Finnish Economy (ETLA), who is strongly in favor of this temporary reduction in wages, argued that working on a temporary basis with lower remuneration would allow immigrants greater opportunities to integrate, improve productivity and become employed. However, according to a paper by VATT Institute for Economic Research, certain groups of immigrants, such as those born in Afghanistan, Iraq and Somalia, had substantially lower employment rates, earned less and received more social benefits than other immigrant groups or natives from 1990–2013.

The gap in employment and earnings between immigrants and natives did decrease over time but remained large. Ten years after arriving in Finland, the average earnings of immigrant men from these countries were only 22–38 percent of the average earnings of native men of the same age. The relative earnings of women were even smaller. Furthermore, the difference in social benefits persisted over time despite the narrowing of earnings gaps.

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[alert type=red ]“It might be good to have some sort of incentive for Finnish employers to be less discriminatory.”[/alert]

The managing director of Research Institute of the Finnish Economy ETLA argues that paying a temporary lower wage to immigrants would provide them a greater opportunity to integrate. Picture: Tony Öhberg for Finland Today

Further research indicates that time spent in Finland has a favorable effect on a person’s employment situation. As a person stays longer in Finland, their occurrence of employment increases. This situation holds true more so for women than for men. Also, labor migrants often manage to find employment, whereas humanitarian migrants have more difficulties in the job market.

Roope Uusitalo, a prominent economics professor at the University of Jyväskylä, clarified his stance on the topic. “It’s not about paying immigrants less. This touches upon anyone with a lower level of experience coming to an industry and lacking in specific skills whether young or old, immigrant or Finn. In the construction industry, a small program offering six euros an hour is already in place, aimed at newcomers to the industry. Although many of these employees are from foreign countries, the program is not intended to target immigrants specifically.”

Kevin McCarthy, an American and graduate of the University of Helsinki entering the job market, said that paying significantly lower wages to immigrants would be discriminatory. However, he states that paying less might encourage employers reluctant to hire foreigners to do so more frequently. “It might be good to have some sort of incentive for Finnish employers to be less discriminatory,” he said.

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Marlena Bontas, an immigrant to Finland from Romania, had this to say. “I don’t think paying immigrants lower wages is a good thing. First, immigrants are already discriminated in the Finnish workplace and, involving them in such programs will widen the gap between them and the Finnish workers. There will be even more hostility toward foreigners in the job market which will not benefit anyone. Second, as an immigrant in Finland, I know that it gets much easier to learn Finnish while working with the locals. My Finnish wouldn’t have gotten to such a good level if I didn’t work and communicate in Finnish for the past six years. So, giving equal chances of employment to the foreigners will increase their confidence and encourage them, even more, to learn Finnish and excel at it.”

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Paying lower wages to people based on their immigration status can be perceived as discriminatory. Paying immigrants less also echoes sentiments of a general gender-based inequality, exploiting a portion of the legal workforce.

Picture on the front page: Pedro Ribeiro Simões

About The Author

Shashank Mane

Shashank is an Indian-born writer and sports coach living in Finland.

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