Foreign workers integrate quickly and earn more than locals

When they first arrive in Switzerland, immigrant women earn slightly more than Swiss women on average. By their fifth year in the country, the difference in earnings is more than 20%. Keystone

Foreign workers integrate quickly and successfully into the Swiss labour market, earning more than Swiss workers on average after five years. While foreign men enter the workforce quicker, foreign women who stay in the workforce earn 20% more than Swiss women after five years.

This is according to a studyExternal link commissioned by the State Secretariat for Economic Affairs (SECO), which investigated the success rate of immigrants who entered the Swiss labour market between 2003 and 2013 compared to Swiss natives.

Researchers from the University of Zurich and University of St Gallen analysed average incomes and employment rates for immigrants aged 25 to 55 who stayed in Switzerland for at least five years. The reference group was made up of Swiss women and men aged between 25 and 55 who, during the same period, had continuous salaried activity.

Regression analysis accounted for considerable demographic differences such as age, education and location. For example, under-25s and over-55s are underrepresented among foreigners, while low and highly skilled workers are overrepresented. Immigrants are also largely concentrated in urban areas.

Catch-up effect for men

The study shows that immigrant men enter the labour market quickly. The employment rate is 16 percentage points lower for immigrant men than Swiss men initially but is only 3 points behind locals after five years.

Foreign male workers also have 6.4% lower incomes than Swiss when they arrive but quickly surpass their Swiss counterparts in the first year and after five years have a 1.9% higher income than locals.

While the reasons are unclear, researchers surmise that this catch-up effect could be the result of better language skills, wider network, or greater understanding of the local labour market.

While high wages are partly due to the small number of high-paid foreign executives in the country, researchers found that even low-skilled workers integrate well in terms of earnings.

Big gaps for women

The study paints a different picture for foreign women, who often arrive in the country with more professional experience than Swiss women. Foreign women already earn more than Swiss women in the year of their arrival. By the fifth year, the difference in earnings for immigrant women is more than 20% relative to Swiss women.

However, the initial gap between the employment rate of female immigrants and Swiss women is even greater than that of men with a 27-percentage point gap in the first year. While it reduces over time, it is still twelve percentage points below that of Swiss women of comparable status.

Debunking immigration myths

The backdrop for the study is a heated debate about immigration and political rhetoric around restrictions on foreign worker arrivals. The findings debunk the popular belief that immigrants are satisfied with lower pay, potentially driving Swiss out of the labour market.

While the number of immigrants in paid employment is lower upon arrival, it decreases sharply over the five years, which the researchers argue is an indicator of successful integration. The findings also show that immigrants from European Union or European Free Trade Association countries integrate easier than those from third-party countries in terms of employment and wages.