1.4.2008 | Von:
Andreas Damelang
Max Steinhardt

On the integration of foreigners in the labour market

The placement of foreigners in the labour markets of each respective city is illustrated below by means of selected indicators.
Murat Atasoy steht auf dem Hof des Polizeipräsidiums Frankfurt/Main neben einem Streifenwagen (Foto vom 14.12.2010). Der Polizeihauptkommissar ist Einstellungsberater der Frankfurter Polizei. Der 33 Jahre alte Atasoy, der vor rund 13 Jahren bei der Schutzpolizei anfing, hat türkische Wurzeln.Policeman in Frankfurt with an immigrant background. (© picture-alliance/dpa)

Employment shares and unemployment rates
Employment sharesunemployment rates
in %in %
Source: Federal Statistical Office, Federal Employment Agency, own calculations

If we compare the percentages of foreign workers in the labour markets of each city, enormous differences become apparent. Just 8% of persons in gainful employment in Hamburg and Berlin are foreign, whereas in Frankfurt, Munich and Stuttgart the percentages are almost double that. Naturally, this indicator is influenced by the proportion of the population comprising foreigners, respectively, and is intended primarily as an illustration of the importance of foreign workers in the cities. What is more meaningful, however, is the rate of unemployment when Germans and foreigners are regarded separately. It is worth comparing two aspects of this. Firstly, there are big differences between the cities in the level of unemployment independent of nationality. Proportionally, Berlin has approximately two and a half times as many unemployed German and foreign persons as Munich and Stuttgart. Secondly, comparison within the individual cities shows that, with the exception of Frankfurt, the percentage of unemployed foreigners is twice that of unemployed Germans.

When comparing what is happening within individual cities, however, we need to examine the stated differences in the levels of unemployment. Thus, for example, the proportion of unemployed foreigners in Munich and Stuttgart is lower (16% each) than that of Germans in Berlin (18%). It is also interesting to compare Frankfurt and Hamburg, as they both show similar figures for the unemployed German population (approx. 10%), yet demonstrate large differences for foreigners: there are six percent fewer unemployed foreigners in Frankfurt than in Hamburg (19% v. 25%). When the situation generally in the labour market is considered, therefore, foreigners are better placed in Frankfurt than in other cities.

Level of education and average wage
Share of employed persons with secondary or tertiary educationAverage wage (per day)
in %in €
Source: Federal Statistical Office, Institute for Employment Research, own calculations

Average wage (per day) serves as a further informative indicator for describing the integration of foreigners in the labour market when we differentiate between German and foreign employees. The proportion of employees with secondary or tertiary education provides additional information about the qualifications of employed foreigners.

With regard to average wage too, employed foreigners fare worse than Germans. Once again there are significant differences between the cities, which can be explained, above all, by the differing regional economic strength. Employees in Berlin earn the least, on average, regardless of nationality. As might be expected, salary levels are highest in Frankfurt, Stuttgart and Munich. In Stuttgart and Munich the relative wage gap between foreign and German employees is just 24% and 25% respectively, whereas in the other cities it is just under 30% [1]. Analyses indicate, therefore, that the potential for the integration of foreign workers is highest in Frankfurt, Munich and Stuttgart.

What are the reasons for the poorer placement?

At the root of the differing placement levels on the labour market is, above all, the unequal endowment with human capital. If we compare the proportion of employed persons with secondary education (vocational training) and tertiary education (university and college degree), we can discern big differences between German and foreign employees. Nearly twice as many German employees as foreign employees have received secondary or tertiary education. By implication, it could be construed that foreign employees are not qualified, but this is not necessarily so. The differences also derive in part from the migration-related devaluation of human capital. One of the problems here is that there is no standard nationwide regulation in Germany for the recognition of educational qualifications gained abroad. This is particularly important in Germany because access to skilled jobs is channelled especially through certified evidence of training and education (cf. Shavit and Müller 1998).

Comparison of educational variables has shown that foreign employees are disproportionately often employed as unskilled workers. It can, however, be assumed that a certain proportion will find themselves in this category due to the non-recognition of qualifications gained abroad. Consequently, it is apparent that some of the potential of foreign workforces goes unused. One starting point for political measures, therefore, is to closely scrutinise the practice for recognising foreign academic qualifications. It would be possible here to follow Denmark's example and create a legal foundation for recognition procedures in all professional areas. Advice offered to immigrants concerning the possibilities of obtaining recognition for qualifications gained abroad could also be extended (cf. Englmann and Müller 2007). Furthermore, it is necessary to promote more strongly the (further) qualification of foreign employees by means of targeted measures.

We can conclude that the position of foreign employees in urban labour markets is significantly poorer and that this can be discerned in both the rate of unemployment and in the average wage. In many cases this can be attributed to a lower level of qualification. As a consequence, it is questionable whether the integration of foreign employees in the labour market is sustainable in the long term, since low-skilled work forces are strongly dependent on economic influences and in times of economic difficulties are the first to be pushed out of the labour market. In addition, the transferal of labour-intensive production processes in the course of globalisation, is such that, in all probability, the proportion of jobs available for the low-skilled will diminish still further.

Education and qualifications increase chances in the labour market

Since most of the disadvantages described above can be explained primarily by a lower endowment of foreigners with human capital (cf. Granato and Kalter 2001; Plahuta 2007) and since the necessity for measures with regard to qualification has been elucidated, the question now arises as to whether the disadvantages in the labour market disappear if a person has successfully undergone training in Germany. The opportunities for employment subsequent to vocational training are of particular importance in this regard, for if disadvantages are already suffered in the transition process, then it is difficult for a person to make up for them during the course of their life (cf. Dietrich and Abraham 2005).

Share of foreigners and Germans who find a job after completing vocational educationShare of foreigners and Germans who find a job after completing vocational education Lizenz: cc by-nc-nd/2.0/de (bpb)
The figure left illustrates the probability of labour market integration, or more exactly the probability of finding employment after completing dual vocational training in Germany. The average rate of integration for West Germany is 71% for all trainees and 66% for all foreign trainees. With the exception of Berlin and Hamburg which have a dramatically low rate of integration for foreign trainees (37% and 59%), the employment situation in the observed cities for all foreign trainees is better than the national average and is, in addition, almost as good as that for the German group. It can thus be concluded that education and qualifications increase the possibility of integration in the labour market and significantly reduce disadvantages, and that the promotion of education and qualification must therefore be one of the central concerns of a meaningful integration policy. In order to take different economic circumstances into account, measures to promote integration must additionally be tailored towards regional conditions. Despite regulations at a national and state level (e.g. language courses and the education system respectively), there is considerable scope for urban integration measures.


The relative wage gap is measured in the form of the salary difference as a percentage of the wage of employed German workers.



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