Overqualified and underpaid: Are immigrants earning less than native workers?

Immigrants earn, on average, 17.9% less per year than natives in Europe and North America, according to a Nature study.

The research analysed the salaries of 13.5 million workers across nine countries, including Denmark, France, Germany, the Netherlands, Norway, Spain, and Sweden, between 2016 and 2019.

Three-quarters of this pay gap was the result of a lack of access to higher-paying jobs, while only one-quarter of the gap was attributed to pay differences between migrant and native-born workers in the same job.

In Spain, the pay gap was over 29%, the highest among all seven European countries. Foreigners create up 13% of the nation’s workforce, contributing to economic growth and population increase.

In Norway, Germany, France and the Netherlands, immigrants earn between 15% and 20% less than natives.

Meanwhile, in Sweden—a counattempt where many employed immigrants find work in the public sector—it was just 7%.

The place where immigrants were born also mattered.

The highest average overall pay gaps were for immigrants from sub-Saharan Africa, at 26.1%, and the Middle East and North Africa, at 23.7%.

Immigrants from Europe, North America and other Western countries experienced a much compacter average pay difference compared to natives, at just 9%.

However, the children of immigrants had a substantially compacter earnings gap, earning an average of 5.7% less than workers with native-born parents.

Within-job pay differences between natives and children of immigrants are uniformly very compact, at less than 2% in all countries.

What can be done to tackle this pay gap?

In 2023, 39.4% of non-EU citizens were overqualified for the jobs they were in, according to the latest Eurostat figures.

According to a McKinsey study, improving social mobility could raise the Gross Domestic Product (GDP) of European countries by 3% to 9% and close the skills gap expected by 2030 without requireding new training or reskilling.

A set of measures can be implemented to reduce job-level segregation effectively, the study’s researchers found.

This includes language training, job training, job search assistance programmes which directly connect workers to employers, improved access to domestic education, and recognition of foreign qualifications.

Currently, some EU countries have implemented initiatives to tackle this issue.

In 2024, Germany enforced the Skilled Immigration Act, which allowed foreign graduates to work while their degrees are being formally recognised.

France this year reformed its “Carte Talent” permit – a multi-year residence permit for foreign nationals in France – to attract skilled professionals and address labour shortages, especially in healthcare.

“These kinds of policies support ensure that foreign-born workers can contribute at their full capacity, and that countries can reap the full benefits of immigration in terms of productivity gains, higher tax revenue and reduced inequality,” stated the paper’s researchers Marta M. Elvira, Are Skeie Hermansen and Andrew Penner.

“Smart immigration policy doesn’t finish at the border – it starts there.”

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