Free movement of (overqualified) migrant workers

Published 23 February 2016 / By COMPAS Communications

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Academic research and Migration Observatory briefings have repeatedly shown that the foreign-born workforce is more educated relative to their UK-born counterparts. At the same time foreign born workers are more likely to work in both professional and low paid occupations than the UK born. Specific groups of foreign-born workers, such as migrants from the A8 countries are frequently employed in jobs which do not correspond with their qualification levels.

This situation is often described as over-qualification - a mismatch between an individual’s educational attainment and the skill level required for his or her job. The consequences of over-qualification have multiple impacts on workers. Over-qualification tends to be associated with lower job-satisfaction, which could adversely affect work performance, thus can jeopardise career progression and slower labour market integration. In my own to be published research I found that immigrants might be more sensitive to over-qualification: those migrant workers who work in a matched job (i.e. are not over-qualified) appear to be more satisfied with their job than their UK born counterparts. At the same time, over-qualification incur greater job-satisfaction penalty for immigrants than for the UK born.

Over-qualification brings wage penalty - these people, based on their qualifications should be earning more than they are. However, many migrant workers have chosen to accept this penalty, partly on the basis that it is offset by higher earnings for low-skilled work in the UK than for arguably more suitable high-skilled work in their countries of origin.

The relative wage penalty of over-qualification accumulates over time leaving such workers more financially vulnerable in key stages of their life, such as family expansion or retirement. Restricting welfare support of low wage earners and their families might further accelerate financial risks that over-qualified workers are likely to face.

The problem is particularly prevalent among migrants in the UK from the new EU member states such as the A8 (the Czech Republic, Cyprus, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Slovakia, Slovenia) and the A2 (Bulgaria, and Romania) and Croatia. Approximately 29% of foreign-born graduates from these new EU member states work in low-skilled occupations, while the corresponding proportion is 6% for both UK born and EU14 migrants and 11% for Non-EEA workers.

Proportion of graduates working in low-skilled jobs by country of birth

Source: ONS, Labour Force Survey 2015, q3. Note: Low-skilled occupations include elementary occupations, plant machine operatives, sales and customer services (SOC 2010 Major group 7, 8 and 9). EU14 countries are: Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Netherlands, Portugal, Sweden, Spain and Iceland, Switzerland and Norway. New Member states are: Bulgaria, Croatia, Czech Republic, Cyprus, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Romania, Slovakia, and Slovenia. Non-EEA countries are the remaining countries not covered by the other two groups.

The literature argues that over-qualification is likely to be a temporary phenomenon among both UK born and immigrants in some stages of their working life. For the UK born it is likely to occur at the early phase of their working life after leaving formal education and transitioning to the labour market by taking up the first job. For immigrants, over-qualification might be a short-term consequence of an international move, which over the medium- or long-term is likely to diminish as migrants’ become more settled and their labour market integration progresses in the destination country (for example, after their language proficiency improves, and they develop more local ‘know how’ and networks).

But is this the reality of the situation? There are fundamental questions about what type of progression routes exist for a medium or high-skilled migrants working in low-paid low-skilled jobs in the UK. The demand for such labour exists and is likely to exist in the future. Although employment growth in the UK is mainly driven by the growth in high skilled jobs, in recent years the proportion of growth in employment in medium- and low-skilled occupations has also increased.

Free movement of EU workers has provided the UK with essentially unrestricted access to labour willing to fill in low-skilled job vacancies (especially from new EU member states). In a historical context, migration to the UK from new EU member states is a rather recent phenomenon, which raises the question of whether or not over-qualification is an inherent feature of ‘free movement’. The answer remains to be seen.