Longer stay narrows immigrants-native Finns income gap

The differences in the employment rate and income between immigrants and people with Finnish background narrow along with the length of stay in Finland, according to a report commissioned by the Ministry of Economic Affairs and Employment.

The employment rate and average income vary strongly among people who have arrived in Finland for different reasons, especially in the early stages of their stay, said the report published on Monday.

According to the report, the employment and income of EU citizens as well as those arriving on the basis of international protection, family ties and studies are typically low in the first years of residence in Finland.

On the other hand, people who have arrived in Finland with a work permit have a high employment rate and earnings in the early years.

However, the differences in employment between the groups diminish considerably along with the length of stay in Finland.

During the first ten years of residence in Finland, employment of people from EU countries and those arriving on the basis of international protection and family reunification increases, whereas employment among those arriving with a work permit falls.

After ten years, the employment rate is around 80 per cent among EU citizens and those arriving with a work permit, about 70 per cent among persons arriving on the basis of family or studies, and about 60 per cent among beneficiaries of international protection.

However, there are still major differences in earned income after ten years. The earned income of people arriving on the basis of international protection is less than half of the income of those arriving with a work permit after ten years of residence.

The trend in income transfers and net income transfers received reflects the development of employment and income.

The people arriving in Finland on the basis of international protection receive considerably more income transfers than other immigrant groups, especially in their first years of residence.

The amount of net income transfers received by EU citizens and persons arriving on the basis of work and studies tend to be similar to the amount received by people with Finnish background after ten years.

In the first few years, the employment and income of people arriving with a work permit are higher than that of persons of the same age and gender with a Finnish background in the same year, but they fall slightly below those of their Finnish counterparts in ten years’ time.

After ten years of residence, the average income of EU citizens and students with a residence permit is slightly more than 80 per cent of the income of people of the same age with a Finnish background.

The earned income of people arriving on the basis of international protection and family reunification is initially low and even after ten years they earn less than half of the income of those with a Finnish background.

The report also explored immigrants’ participation in education and training in Finland as well as emigration. With the exception of people arriving in Finland with a residence permit for studies, only few immigrants participate in education leading to a degree shortly after their arrival in the country. However, after the first few years, around 40 per cent of persons arriving in Finland on the basis of international protection take part in upper secondary education, for example. About 17 per cent of the immigrants included in the data had left Finland within ten years.

The study was carried out by VATT Institute for Economic Research. The report is based on the Finnish Immigration Service’s information on residence permit decisions in 2011–2021 and Statistics Finland’s extensive register data.